Crosby v. Credit Acceptance Corporation et al

Filing 10

ORDER denying 3 Motion to Compel Arbitration. Signed by District Judge John Corbett O'Meara. (WBar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

JAMES CROSBY,
Plaintiff,
Case No. 15-10786
v.
Hon. John Corbett O’Meara
CREDIT ACCEPTANCE CORP.,
Defendant.
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ORDER DENYING DEFENDANT’S
MOTION TO COMPEL ARBITRATION
Before the court is Defendant Credit Acceptance Corporation’s motion to
compel arbitration, which has been fully briefed. For the reasons explained below,
Defendant’s motion is denied.
BACKGROUND FACTS
Plaintiff James Crosby contends that Defendant Credit Acceptance
Corporation violated the Fair Credit Reporting Act by reporting and failing to
request the removal of certain information from his credit report. Plaintiff claims
that he is a victim of identity theft and that the debt reported – for the purchase of a
Chrysler PT Cruiser – did not belong to him.
Credit Acceptance Corporation (“CAC”) states that Plaintiff purchased a

used vehicle in March 2012 from Monarch Car Corporation in Detroit, Michigan.
According to CAC, Plaintiff signed a retail installment contract, which contained
an arbitration clause. CAC contends that Plaintiff made 25 of the 42 payments
under the contract before defaulting. The default was reported on Plaintiff’s credit
report. Based upon the arbitration clause in the installment contract, CAC argues
that this matter must proceed to arbitration.
Plaintiff disputes the debt and contends that he never signed the retail
installment contract, has never done business with Monarch Car Corporation or
Credit Acceptance Corporation, has never purchased a Chrysler PT Cruiser, and
never made the payments on the vehicle. See Pl.’s Ex. A (Affidavit of James
Crosby).
LAW AND ANALYSIS
Under the Federal Arbitration Act, a written agreement to arbitrate disputes
arising out of a transaction in interstate commerce “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.” 9 U.S.C. § 2. “Before compelling an unwilling party to arbitrate,
the court must engage in a limited review to determine whether the dispute is
arbitrable; meaning that a valid agreement to arbitrate exists between the parties
and that the specific dispute falls within the substantive scope of that agreement.”
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Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003).
Here, the parties dispute whether a valid agreement to arbitrate exists. “In
order to show that the validity of the agreement is ‘in issue,’ the party opposing
arbitration must show a genuine issue of material fact as to the validity of the
agreement to arbitrate.” Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 889 (6th
Cir. 2002). This showing “mirrors that required to withstand summary judgment
in a civil suit.” Id. Accordingly, the court views “all facts and inferences drawn
therefrom in the light most favorable” to the nonmoving party and determines
“whether the evidence presented is such that a reasonable finder of fact could
conclude that no valid agreement to arbitrate exists.” Id.
Plaintiff has presented evidence, in the form of a sworn affidavit, that he was
the victim of identity theft and did not sign the retail installment contract
containing the arbitration clause. Although Defendant suggests that Plaintiff’s
statement is not credible, the court must view the evidence in the light most
favorable to Plaintiff. Plaintiff contends that he did not sign the agreement, and it
“is firmly established that an arbitration clause obtained by forgery is not valid.”
Fazio v. Lehman Bros. Inc., 340 F.3d 386, 397 (6th Cir. 2001). Because a
reasonable finder of fact could conclude that no valid arbitration agreement exists,
the court will deny Defendant’s motion at this time. A final determination on
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Defendant’s motion requires a trial on the issue of the validity of the agreement.
See 9 U.S.C. § 4; Great Earth, 288 F.3d at 889 (“If the validity of the agreement to
arbitrate is ‘in issue,’ the court must proceed to a trial to resolve the question.”);
Chastain v. Robinson-Humphrey Co., Inc., 957 F.2d 851, 856 (11th Cir. 1992)
(directing district court to proceed to trial pursuant to 9 U.S.C. § 4 on whether
parties are bound by agreement to arbitrate).
ORDER
IT IS HEREBY ORDERED that Defendant’s motion to compel arbitration is
DENIED.
s/John Corbett O’Meara
United States District Judge
Date: July 10, 2015

I hereby certify that a copy of the foregoing document was served upon
counsel of record on this date, July 10, 2015, using the ECF system.

s/William Barkholz
Case Manager

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