Cashcall, Inc. v. Moses

Filing 20

ORDER GRANTING 11 Appellant's Motion to Stay. As the Court has now granted Appellant Cashcall's Motion to Stay the Adversary Proceeding Pending Appeal, Cashcall is directed to notify the Court within fourteen (14) days of the entry of th is Order whether it intends to proceed with its separate appeal of the issue of stay pending appeal and whether it requires a ruling from this Court on its Motion for Leave to Appeal filed in case number 5:13-CV-689-BO. Signed by US District Judge Terrence W. Boyle on 11/20/2013. Counsel is directed to read Order in its entirety for critical information and deadlines. (Fisher, M.)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NORTH CAROLINA
EASTERN DIVISION
N0.4:13-CV-223-BO

CASHCALL, INC.,
Appellant,
v.
OTERIA Q. MOSES,
Appellee.

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ORDER

ON APPEAL FROM THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WILSON DIVISION

This cause comes before the Court on appellant Cashcall, Inc.'s motion to stay adversary
proceeding. A hearing was held on the matter before the undersigned on November 14, 2013, at
Raleigh, North Carolina. For the reasons discussed below, the motion to stay is granted.
DISCUSSION
Cashcall seeks a stay of the underlying adversary action that is now proceeding in the
bankruptcy court during the pendency of its appeal of the bankruptcy court's order declining to,
inter alia, compel arbitration of the adversary proceeding. Moses filed for bankruptcy pursuant
to Chapter 13 on August 1, 2012. Cashcall filed a proof of claim in the bankruptcy proceeding
representing the unpaid balance of the loan. Moses subsequently filed an adversary proceeding
against Cashcall, objecting to the proof of claim and seeking a declaratory judgment that the debt
owed to Cashcall is void as violative of the North Carolina Consumer Finance Act. Moses also
alleges that Cashcall engaged in acts prohibited by debt collectors under North Carolina law.

Cashcall moved to dismiss Moses' claims against it in the adversary proceeding, or to stay the
proceeding and compel arbitration. By order entered January 3, 2013, the bankruptcy court
denied Cashcall' s motion to dismiss or to stay and compel arbitration. Cashcall then sought a
stay in the bankruptcy court of the adversary proceeding in its entirety pending Cashcall's appeal
of the bankruptcy court's order declining to dismiss or compel arbitration. Cashcall's request for
stay pending appeal was denied by order entered April 2, 2013. 1
In Levin v. Alms & Assocs., Inc., the Fourth Circuit held that an appeal ofthe issue of
arbitrability under the Federal Arbitration Act "automatically divests the [lower court] of
jurisdiction over the underlying claims and requires a stay of the action, unless the [lower court]
certifies the appeal as frivolous or forfeited." 634 F.3d 260, 266 (4th Cir. 2011). This holding
was not addressed by the bankruptcy court in declining to issue a stay in the instant action. In its
order, the bankruptcy court relied in part on the position of the Second Circuit regarding
divestiture of jurisdiction pending appeal of the issue of arbitrability, but that position was
expressly rejected by the Fourth Circuit in Levin. !d., 634 F.3d at 264 (finding unpersuasive the
rationale of Second Circuit in Motorola Credit Corp. v. Uzan, 388 F.3d 39 (2nd Cir. 2004)).
This Court has not been presented with any authority that would persuade it that Levin
does not require a stay of the underlying adversary proceeding in light ofCashcall's appeal ofthe
issue of arbitrability. Nor has the bankruptcy court certified that Cashcall's appeal is frivolous or
has been forfeited. Accordingly, the Court hereby STAYS the adversary proceeding pending the
outcome of Cashcall' s appeal of the bankruptcy court's order denying its motion to dismiss or to
stay and compel arbitration. See also In re Butler, Civil Action Nos. 2:13-9261,2:13-0048, 2013

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Cashcall has also filed a separate appeal of the order denying its request to stay the adversary
proceeding pending appeal. See 5:13-CV-689-BO.
2

WL 2102969 (S.D.W.V. May 14, 2013) (applying holding in Levin to stay adversary proceeding
during pendency of appeal on issue of arbitrability).
CONCLUSION
For the foregoing reasons, the motion to stay the adversary proceeding [DE 11] is
GRANTED. The clerk is DIRECTED to provide a copy of this order to the bankruptcy court.
As noted above, Cashcall has also separately moved for leave to appeal the bankruptcy
court's order denying its motion to stay the adversary proceeding pending appeal. As the Court
has now granted Cashcall's motion to stay filed in this matter, Cashcall is DIRECTED to notify
the Court within fourteen ( 14) days of the date of entry of this order whether it intends to proceed
with its separate appeal of the issue of stay pending appeal and whether it requires a ruling from
this Court on its motion for leave to appeal filed in case number 5:13-CV-689-BO.

SO ORDERED.
This lQ day ofNovember, 2013.

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