Thomas v. Progressive Leasing
MEMORANDUM OPINION. Signed by Judge Richard D. Bennett on 10/25/2017. (kw2s, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Civil Action No.: RDB-17-1249
Plaintiff Michael Thomas (“Plaintiff” or “Thomas”) brings this action against
Defendant Progressive Leasing (“Defendant” or “Progressive”), alleging a single cause of
action under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. (Compl.,
ECF No. 1.) Currently pending before this Court is Defendant’s Motion to Compel
Arbitration and to Dismiss or Stay the Litigation. (ECF No. 9.) The parties’ submissions
have been reviewed, and no hearing is necessary. See Local Rule 105.6 (D. Md. 2016). For the
reasons stated herein, Progressive’s Motion to Compel Arbitration and to Dismiss or Stay
the Litigation (ECF No. 9) is GRANTED and this case is DISMISSED.
From September 2015 to February 2017, the Plaintiff Thomas sought financing from
the Defendant Progressive in order to lease jewelry. (Thatcher Decl., ECF No. 9-3 at ¶¶ 5-6.)
Specifically, Thomas applied six times for financing. (Id. at ¶ 5.) For various reasons,
however, Progressive denied Thomas’s applications. (Id. at ¶ 6.) On November 28, 2015,
Plaintiff’s wife, Joann Carter, successfully applied for and entered into a lease with
Progressive to lease diamond earrings and a watch (“the Lease”). (ECF No. 11-1 at 1.) The
Lease contains an arbitration provision requiring arbitration of any “claim, dispute or
controversy between [Carter] and [Progressive] (including any Related Party) that arises from
or relates in any way to this Lease or the Property.” (Def. Exh. 1, ECF No. 9-4 at ¶ 13.) In
addition, the Lease expressly permits Progressive to call Carter at any number that she
provides to Progressive. (Id. at ¶ 9.)
On December 31, 2015, a Progressive representative called Carter on her cell phone
because a payment on the Lease had not been received. (Def. Exh. 2, ECF No. 9-5.) Since
Carter was driving when she received the call, she handed her phone to her husband, the
Plaintiff Thomas, who was also in the car. (Id. at 2.) When Progressive told Thomas that a
payment had not gone through, Thomas told the Progressive representative that Progressive
could contact him to collect the debt and told the representative to write Thomas’s phone
number down. (Id. at 2-3.) In addition, Thomas told the representative to remove his wife’s
credit card number from the account and to “transfer [the account] over” to his credit card
Soon after giving Progressive his phone number and credit card number, Thomas
began receiving calls from Progressive. (ECF No. 1 at ¶ 12.) Like the initial call to Carter, the
calls were made to collect the account balance owed under the Lease. (Id. at ¶ 15.) In his
Complaint, Plaintiff claims that Progressive made the calls using an automatic telephone
dialing system, automated message, and/or prerecorded voices. (Id. at ¶¶ 12, 13.) In addition,
Plaintiff claims that he spoke with additional Progressive representatives and told them to
stop calling. (Id. at ¶ 16.) Despite these requests, Progressive kept calling Thomas, sometimes
multiple times per day. (Id. at ¶ 18.) Plaintiff filed this action on May 5, 2017, alleging that
the Defendant Progressive repeatedly called his cell phone using a telephone dialing system,
in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227. (ECF No. 1.)
Shortly thereafter, Progressive filed a Motion to Compel Arbitration and to Dismiss or Stay
the Litigation based on the arbitration agreement in the Lease between Progressive and
Thomas’s wife. (ECF No. 9.)
STANDARD OF REVIEW
Defendant has filed the pending Motion to Compel Arbitration (ECF No. 9)
pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq. The standard of review
on a Motion to Compel Arbitration pursuant to the FAA is “‘akin to the burden on
summary judgment.’”1 Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 85 (4th Cir.
2016) (quoting Chorley Enterprises, Inc. v. Dickey’s Barbecue Restaurants, Inc., 807 F.3d 553, 564
(4th Cir. 2015)). Therefore, motions to compel arbitration “shall [be] grant[ed] … if the
movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); Rose v. New Day Financial,
LLC, 816 F.Supp.2d 245, 251-52 (D. Md. 2011).
A party seeking to apply the FAA must demonstrate four elements: “‘(1) the existence
of a dispute between the parties, (2) a written agreement that includes an arbitration
1 Although the Fourth Circuit has characterized the standard of review on a Motion to Compel Arbitration as
“akin to the burden on summary judgment,” the pending motion will not be converted to or treated as a
motion for summary judgment. On the contrary, the remedies available to a defendant moving to compel
arbitration are limited to a stay or dismissal of the action. See Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc.,
252 F.3d 707, 709-10 (4th Cir. 2001) (“[T]he FAA requires a district court, upon motion by any party, to stay
judicial proceedings involving issues covered by written arbitration agreements [citing 9 U.S.C. § 3] . . . .
Notwithstanding the terms of § 3, however, dismissal is a proper remedy when all of the issues presented in a
lawsuit are arbitrable. [citing Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992)].”)
provision which purports to cover the dispute, (3) the relationship of the transaction, which
is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect
or refusal of the defendant to arbitrate the dispute.’” Galloway, 819 F.3d at 84 (quoting Rota–
McLarty v. Santander Consumer USA, Inc., 700 F.3d 690, 696 n.6 (4th Cir. 2012)). Therefore,
“although arbitration has a favored place, there still must be an underlying agreement
between the parties to arbitrate.’” Adkins v. Labor Ready, Inc., 303 F.3d 496, 501 (4th Cir.
2002) (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997)). The Supreme Court has
directed courts to “apply ordinary state-law principles that govern the formation of
contracts” and “federal substantive law of arbitratbility.” Hill v. Peoplesoft USA, Inc., 412 F.3d
540, 543 (4th Cir. 2005); see also Heller v. TriEnergy, Inc., 877 F.Supp.2d 414, 423-24
(N.D.W.V. 2012) (explaining that the “one important caveat to the reach of the FAA” is that
state law governs the formation of the contract (citing Hill, 412 F.3d at 543)).
The Plaintiff Thomas does not dispute that there is a valid arbitration agreement
contained in the Lease between Progressive and his wife. Rather, he argues that because he is
neither a signatory nor a beneficiary to the Lease, the arbitration agreement is not
enforceable against him. Progressive asserts that although Thomas is a nonsignatory to the
Lease, he can be compelled to arbitrate under the theory of equitable estoppel.
Whether Thomas is equitably estopped from denying that he is bound to arbitrate is
governed by the Federal Arbitration Act (“FAA”). See R.J. Griffin & Co. v. Beach Club II
Homeowners Ass’n, Inc., 384 F.3d 157, 160 n.1 (4th Cir. 2004) (explaining that determining
whether a nonsignatory is bound by a contract containing an arbitration provision does not
present a state law question of contract formation or validity and therefore courts look to the
FAA to determine whether the non-signatory can be compelled to arbitrate under the
contract); see also Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411,
417 n.4 (4th Cir. 2000) (“Because the determination of whether [the plaintiff], a
nonsignatory, is bound by the … contract presents no state law question of contract
formation or validity, we look to the “federal substantive law of arbitrability” to resolve this
“Equitable estoppel precludes a party from asserting rights ‘he otherwise would have
had against another’ when his own conduct renders assertion of those rights contrary to
equity.” Int’l Paper Co., 206 F.3d at 417-18 (citations omitted). In the arbitration context, the
theory of equitable estoppel recognizes that “it is clear that under some circumstances . . . ‘a
party can agree to submit to arbitration by means other than personally signing a contract
containing an arbitration clause.’” Osborne v. Marina Inn at Grande Dunes, LLC, No. 4:08-cv0490, 2009 WL 3152044, at *9 (D.S.C. Sept. 23, 2009) (quoting Int’l Paper Co., 206 F.3d at
When the signatory to an arbitration agreement seeks to compel a nonsignatory to
arbitrate, the Fourth Circuit applies the “direct benefit” test. Int’l Paper Co., 206 F.3d; R.J.
Griffin, 384 F.3d.2 Under this test, “‘[a] nonsignatory is estopped from refusing to comply
with an arbitration clause when it [is seeking or] receives a direct benefit from a contract
2 The Fourth Circuit has articulated a very similar “rely on test” test when the nonsignatory to an arbitration
agreement is attempting to compel a signatory to arbitrate. Brantley v. Republic Mortgage Ins. Co., 424 F.3d 392
(4th Cir. 2005); Am. Bankers Ins. Group, Inc. v. Long, 453 F.3d 623, 627-28 (4th Cir. 2006). This test applies
equitable estoppel “when the signatory to a written agreement containing an arbitration clause must rely on
the terms of the … agreement in asserting its claims against the nonsignatory.” Brantley, 424 F.3d at 395-96.
containing an arbitration clause.’” R.J. Griffin, 384 F.3d at 161 (quoting Int’l Paper Co., 206
F.3d at 418). This test “recognizes that a nonsignatory should be estopped from denying
that it is bound by an arbitration clause when its claims against the signatory ‘arise from’ the
contract containing the arbitration clause.” Am. Bankers Ins. Group, Inc. v. Long, 453 F.3d 623,
628 (4th Cir. 2006) (citing R.J. Griffin, 384 F.3d at 162); see also Int’l Paper Co., 206 F.3d at 418
(“[A] party may be estopped from asserting that the lack of his signature on a written
contract precludes enforcement of the contract’s arbitration clause when he has consistently
maintained that the other provisions of the same contract should be enforced to benefit
A nonsignatory’s claims “arise from” a contract containing an arbitration provision
when the claims seek to enforce rights contained in that contract. See Riek v. Xplore-Tech Servs.
Private Ltd., No. 1:08CV117, 2009 WL 891914 (M.D.N.C. Mar. 31, 2009) (holding that the
plaintiff was equitably estopped from avoiding an arbitration provision in an agreement
when he was trying to enforce another provision in that same agreement); see also Williamsport
Realty, LLC v. LKQ Penn-Mar, Inc., No. 3:14-CV-118, 2015 WL 2354598, at *5 (N.D.W.V.
May 15, 2015) (“[C]ourts in the Fourth Circuit apply equitable estoppel against a
nonsignatory when the nonsignatory’s claims seek to enforce rights contained in the contract
with the arbitration provision.”).
Defendant Progressive argues that the Plaintiff Thomas is equitably estopped from
avoiding the arbitration provision in the Lease because he “ostensibly shared access to the
leased property,” “voluntarily made payment arrangements” with Defendant, and requested
that Defendant call him directly, “presumably to prevent repossession of the leased property
and to ameliorate Joann’s credit.” (ECF No. 9-2 at 11.) In addition, Progressive argues that
Thomas’s claim derives from the Lease because the claim “is solely based on his allegation
that Prog Leasing placed calls to his number in order to collect payment under the lease,”
and “any calls that were placed by Prog Leasing to Plaintiff were made because Plaintiff
assumed responsibility under the Lease.” (ECF No. 12 at 6) (emphasis omitted). In response,
Plaintiff argues that he cannot be compelled to arbitrate because he is not a signatory to the
Lease and his TCPA claim is a separate tort claim independent of the Lease. (ECF No. 11-1
In Bridge v. Credit One Fin., No. 2:14-cv-1512-LDG-NJK, 2016 WL 1298712 (D. Nev.
Mar 31, 2016), the United States District Court for the District of Nevada addressed a
motion to compel arbitration with similar circumstances. In Bridge, the plaintiff’s mother held
an account with the defendant, Credit One Bank, and the cardholder agreement contained
an arbitration provision. Id. When the plaintiff became concerned that his mother could no
longer keep track of her finances, the plaintiff sought access to his mother’s account
information. Id. The plaintiff then called Credit One Bank, entered his mother’s validation
information, and gained access to her account information. Id. By doing so, his phone
number became associated with the account. Id. When his mother’s account became
delinquent, Credit One Bank called the plaintiff’s phone number to recover the debt. Id.
Subsequently, the plaintiff brought a TCPA claim. Id. at *1-2. Applying equitable estoppel,
the court held that the plaintiff could be compelled to arbitrate because the TCPA claim
arose from and directly related to the duties imposed on Credit One Bank under the
cardholder agreement. Id. at *3 (citing Am. Bankers Ins. Co., 453 F.3d at 627-28). In addition,
the court found that the plaintiff had “benefitted from the agreement by calling Credit One,
inputting his mother’s validation information, and gaining access to his mother’s financial
information.” Id. at *2-3.
Joann Carter, Thomas’s wife, applied for a lease with Progressive during the time that
Thomas tried unsuccessfully six times to enter into his own lease with Progressive. (ECF
No. 9-3 at ¶¶ 5-7.) When Carter’s application was successful, she entered into the Lease with
Progressive that contains the arbitration provision. (Id.) Thomas now argues that because it
is his wife’s—and not his own—signature on the Lease, he cannot be compelled to arbitrate.
However, like in Bridges where the plaintiff voluntarily called the defendant, Progressive only
called Thomas after Thomas voluntarily gave a Progressive representative his phone number
with the intent that Thomas’s information be associated with his wife’s account. The Lease
gives Progressive the right to call any telephone number provided to it. (ECF No. 9-4 at ¶ 9.)
Thereby, when Thomas gave the Progressive representative his phone number, he gave
Progressive the right to call him. The TCPA claim, then, stemming from Progressive’s calls
to Thomas, arises from Thomas giving Progressive the right under the Lease to call him in
the first place. Therefore, as in Bridge, Thomas’s “allegations arise from and relate directly to
the duties imposed on [Progressive under its Lease with Carter], and therefore . . . arbitration
should be compelled even though [Thomas] was not a signatory to the agreement.” Bridge,
2016 WL at *3 (citing Am. Bankers Ins. Co., 453 F.3d at 627-28).
Further, in addition to providing Progressive with his phone number, Thomas also
told the Progressive representative to use his credit card, “transfer [the account] over to my
stuff,” and clear off his wife’s credit card number. (ECF No. 9-5 at 2-3.) By doing so,
Thomas voluntarily assumed the obligation of payment under the Lease, which, if properly
made, prevents Progressive from repossessing the jewelry. Therefore, Thomas derived a
benefit from the Lease. See A.D. v. Credit One Bank, N.A., No. 14-C-10106, 2016 WL
4417077 (N.D. Ill. Aug. 19, 2016) (considering in its equitable estoppel analysis that the
plaintiff seeking to avoid an arbitration clause in a cardholder agreement had previously
benefited from the agreement because it was what authorized her to use her mother’s credit
card). Accordingly, this Court finds that it would be inequitable to allow Thomas to pursue
his TCPA claim against Progressive for calls it made to Thomas to collect on the Lease, and
yet permit him to avoid the arbitration provision in that same Lease.
The Defendant Progressive has requested that this case be dismissed or, in the
alternative, stayed. (ECF No. 9.) While Section 3 of the FAA requires that, where a court is
satisfied that a suit or proceeding is referable to arbitration, the court “shall on application of
one of the parties stay the trial of the action until such arbitration has been had in
accordance with the terms of the agreement, providing the applicant for the stay is not in
default in proceeding with such arbitration.” 9 U.S.C. § 3. Nevertheless, the United States
Court of Appeals for the Fourth Circuit has clearly held that “[n]otwithstanding the terms of
§ 3 . . . dismissal is a proper remedy when all of the issues presented in a lawsuit are
arbitrable.” Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252 F. 3d 707, 709-10 (4th Cir.
2001). Specifically, in light of this Fourth Circuit authority, this Court has dismissed cases
where all the claims were subject to binding arbitration agreements. Doe v. New Ritz, Inc., No.
RDB-14-2367, 2016 WL 1642933 (D. Md. Apr. 26, 2016); SC&H Group, Inc. v. Atlus Group
U.S., Inc., No. WMN-16-1037, 2016 WL 3743055 (D. Md. July 13, 2016); Byrnes v. Santa Fe
Natural Tobacco Co., Inc., No. GLR-16-2445, 2017 WL 713911 (D. Md. Feb 23, 2017). While
Thomas objects to enforcing the arbitration agreement as a whole against him, he does not
contend that, if the agreement applies, his claim against Progressive is beyond the scope of
the Lease’s arbitration provision. Further, this Court has held that TCPA claims may be
properly subject to arbitration. Roach v. Navient Solutions, Inc., 165 F.Supp.3d 343, 348 (D. Md.
2015). Accordingly, Defendant’s Motion to Compel Arbitration and to Dismiss or Stay the
Litigation (ECF No. 9) is GRANTED.
For the reasons stated above, Defendant’s Motion to Compel Arbitration and to
Dismiss or Stay the Litigation (ECF No. 9) is GRANTED and this case is DISMISSED.
A separate Order follows.
October 25, 2017
Richard D. Bennett
United States District Judge
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