Rosales v. Portfolio Recovery Associates, LLC
Filing
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MEMORANDUM Opinion and Order: The Court grants defendant's motion to compel arbitration. Signed by the Honorable Sharon Johnson Coleman on 10/5/2020. Mailed notice. (ym, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IRIS ROSALES,
Plaintiff,
v.
PORTFOLIO RECOVERY
ASSOCIATES, LLC,
Defendant.
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Case No. 18-cv-0997
Judge Sharon Johnson Coleman
MEMORANDUM OPINION AND ORDER
Plaintiff Iris Rosales brought this class action complaint against Portfolio Recovery
Associates, LLC (“PRA”) alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. §
1692, et. seq (“FDCPA”) and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815
ILCS 505/2, et. seq (“ICFA”) relating to PRA’s attempt to collect an unpaid bill connected with a
consumer credit card. Before the Court is PRA’s motion to compel arbitration. For the reasons
stated below, the Court grants PRA’s motion.
Procedural Background
The Court originally granted PRA’s motion to compel arbitration in January 2019, but upon
reconsideration, allowed limited discovery regarding PRA’s purchase of Rosales’ debt from the
original creditor, World Financial Network Bank (“WFNB”), along with whether PRA purchased
the right to enforce the arbitration clause in consumer credit card agreement. Whether PRA’s
purchase of Rosales’ charged-off account conferred upon PRA the right to arbitrate is the only issue
remaining in this motion because the Court has already decided that PRA did not waive its right to
arbitrate, both in the January 2019 ruling and upon reconsideration. In addition, the parties do not
dispute that the credit card agreement at issue has an arbitration clause, which states: “Arbitration
may be elected by any party with respect to any Claim.” (R. 45, Ex. B. ¶ 30(4)).
Legal Standard
A motion to dismiss under Rule 12(b)(3) for improper venue is the appropriate procedure
when a litigant seeks to dismiss a lawsuit based on an arbitration agreement. Faulkenberg v. CB Tax
Franchise Sys., LP, 637 F.3d 801, 808 (7th Cir. 2011). When making a determination under Rule
12(b)(3), district courts may consider materials outside of the pleadings, including the parties’
arbitration agreement. Continental Cas. Co. v. Am. Nat’l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005). In
determining whether an agreement’s arbitration clause controls, federal courts apply state-law
principles of contract formation. Gupta v. Morgan Stanley Smith Barney, LLC, 934 F.3d 705, 710 (7th
Cir. 2019).
Discussion
Whether PRA has the right to enforce the arbitration agreement is a matter of the Court
construing the September 9, 2011 Purchase and Sales Agreement between PRA, the Purchaser, and
WFNB, the Seller. In construing the parties’ intent, it is black letter law that courts give contract
terms that are clear and unambiguous their plain and ordinary meaning in the context of the contract
as a whole. See Royce v. Michael R. Needle P.C., 950 F.3d 939, 951 (7th Cir. 2020). The relevant section
of the September 2011 agreement, Sale of Accounts, states in part:
(a) Purchaser represents and warrants to Seller that Purchaser’s primary purpose in
purchasing Charged-off Accounts is to attempt legal collection of the Unpaid
Balances owed on such Charged-off Accounts.
(b) Subject to the terms of this Agreement, on each Closing Date, Seller will sell,
assign and transfer to Purchaser and Purchaser shall purchase all of Seller’s rights,
title and interest in and to eligible Charged-off Accounts[.]
(R. 104, 9/09/11 Purchase & Sales Agmt.) Under the plain and ordinary meaning of the contract,
PRA purchased all of WFNB’s rights, title, and interest in the charged-off accounts.
PRA also provides the unrebutted sworn affidavit of Meryl Dreano, the Custodian of
Records at PRA, as well has her deposition testimony, to further support the fact that PRA
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purchased all of WFNB’s rights in the charged-off accounts. In her declaration, Dreano averred:
Iris Rosales, plaintiff in the above-captioned matter (“Rosales”), maintained a credit
card account with Victoria’s Secret. The original creditor of Rosales’ Victoria’s
Secret account is World Financial Network Bank. After Rosales failed to pay her
past due balance on the account, Rosales’ account was charged-off and PRA
purchased Rosales’ account on August 28, 2012, acquiring all rights, title, and interest
in the account from World Financial Network Bank.
(R. 32-1, Ex. A, Dreano Decl. ¶ 4.) PRA attached this declaration to its motion to compel before
the parties conducted discovery. At her deposition, Dreano testified as follows:
Q: What do you mean by the phrase you used, quote, acquiring all rights, title, and
interest in the account from World Financial Network Bank, period, end quote?
A: That means that we [PRA] acquired 100 percent of their [WFNB] interest in this
particular account and they retained no interest in the account.
…
Q: And do you, do you have any personal knowledge as to whether PRA acquired
the right to enforce arbitration in relation to Miss Rosales’ account?
A: Yes.
Q: What’s the basis for your personal knowledge?
A: The information in the credit card agreement.
…
Q: [W]hat’s your basis for stating that PRA obtained the right to enforce any
arbitration terms that might be contained within the credit card agreement, which is
Exhibit 2?
A: There is an arbitration provision in the credit card agreement. And when the
account was assigned to [PRA], those rights were assigned to us.
…
Q: Now, what I want to circle back to, though, is what’s the basis for your personal
understanding that PRA acquired the right to enforce the arbitration language that is
contained in Exhibit 2 – which is the credit card agreement?
A: To the best of my knowledge, when we purchase the accounts from the seller, we
require all of their rights and interest in the accounts to do what’s ever necessary in
collections. So when we purchase the accounts, we’re stepping into the shoes of the
seller. And if they have the right to enforce arbitration under the credit card
agreement, then we have that right.
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(98-2, Ex. B, 6/19/19 Dreano Dep., at 39-51.) Under this additional support, it is clear that PRA
obtained the rights to enforce the arbitration clause when it purchased Rosales’ charged-off account.
Rosales has not set forth any evidence that PRA did not acquire the rights to arbitrate
disputes under the credit card agreement, even though the Court granted the parties the opportunity
to conduct discovery. Also, Rosales does not argue that the September 9, 2011 Purchase and Sales
Agreement is ambiguous, and thus extrinsic evidence is necessary to determine the parties’ intent.
See Roberts v. Alexandria Transp., Inc., 968 F.3d 794, 799 (7th Cir. 2020). As such, based on the
unequivocal language of the Purchase and Sales Agreement, as well as the supporting declaration
and deposition testimony, PRA obtained the right to enforce the arbitration clause once it purchased
Rosales’ charged-off account.
Conclusion
Based on the foregoing, the Court grants defendant’s motion to compel arbitration.
IT IS SO ORDERED.
Date: 10/5/2020
Entered: _____________________________
SHARON JOHNSON COLEMAN
United States District Judge
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