BEILER v. FIFTH THIRD BANK
Filing
38
MEMORANDUM OPINION AND ORDER signed by JUDGE THOMAS D. SCHROEDER on 06/20/2014, that for the reasons stated, the court finds that Fifth Third's fraud and negligent misrepresentation claims are covered by the Credit Card Agreement's arbitration clause. IT IS THEREFORE ORDERED as follows: 1. Foster's motion to dismiss, stay, and to compel arbitration (Doc. 20 ) is GRANTED IN PART AND DENIED IN PART. Fifth Third's fraud and negligent misrepresentation cl aims against Foster shall be arbitrated. Pursuant to 9 U.S.C. § 3, the remaining claims in this case will be STAYED pending arbitration, and the motions to dismiss by Beiler and Foster (Docs. 20 and 25 ) will be DENIED WITHOUT PRE JUDICE to being renewed following the resolution of the arbitration. 2. The original motions filed by Beiler and Foster (Docs. 10 , 12 ) are DENIED AS MOOT. 3. Foster's motion to participate in electronic filing (Doc. 19 ) is GRANTED. 4. The parties shall file a joint report of arbitration every ninety (90) days. Failure to file such reports may result in dismissal of the action. (Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
PAMELA F. BEILER,
)
)
Plaintiff,
)
)
v.
)
)
FIFTH THIRD BANK,
)
)
Defendant and Third
)
Party Plaintiff,
)
)
v.
)
)
SCOTT A. FOSTER AND PAM F. BEILER, )
)
Third Party Defendants. )
1:13CV867
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
This
is
an
action
involving
alleged
unlawful
telephone
calls in violation of the Telephone Consumer Protection Act of
1991 (“TCPA”), 47 U.S.C. § 227 et seq.
Plaintiff Pamela F.
Beiler claims that Defendant Fifth Third Bank (“Fifth Third”)
violated
phone.
the
TCPA
by
making
unauthorized
calls
to
her
cell
Fifth Third alleges that it already settled such claims
with Beiler’s husband, Scott A. Foster, after he claimed the
cell
phone
against
numbers
both
of
were
them.
his,
Before
so
the
the
bank
court
has
are
filed
the
claims
following:
Beiler’s motions to dismiss Fifth Third’s counterclaim of civil
conspiracy
against
her
(Docs.
10,
25);
Foster’s
motion
to
dismiss the civil conspiracy claim against him and to compel
arbitration
of
Fifth
Third’s
fraud
and
negligent
misrepresentation claims (Docs. 12, 20); and Foster’s motion to
participate
in
electronic
5.3(c)(2) (Doc. 19).
filing
pursuant
to
Local
Rule
For the reasons stated, the motion to
compel arbitration will be granted, the remaining claims will be
stayed pending arbitration, and the court will not reach the
motions
Foster’s
to
dismiss
motion
to
Fifth
Third’s
participate
in
civil
conspiracy
electronic
filing
claims.
will
be
of
the
granted.
I.
BACKGROUND
A.
Beiler’s TCPA Claim
Beiler’s
complaint,
taken
as
true
at
this
stage
proceedings, alleges the following:
In 2008, Foster – Beiler’s husband - applied for a credit
card through Fifth Third.
(Doc. 1 ¶¶ 14, 21.)
Beiler was
unaware that Foster had opened the account, and she has never
been a party to any agreement regarding, or an authorized user
of, any Fifth Third credit cards.
(Id. ¶¶ 22-23.)
The account
went into default, and beginning on October 1, 2009, Fifth Third
began placing calls to cell phone numbers ending in 1563 (the
“1563 number”) and 4711 (the “4711 number,” and collectively
“the phone numbers”) in an attempt to collect amounts allegedly
owed by Foster.
(Id. ¶¶ 24-25.)
Fifth Third called the phone
numbers approximately 300 times between October 1, 2009, and
2
March 17, 2010.
(Id. ¶ 25.)
Beiler alleges that both phone
numbers were issued to her by Verizon Wireless and that Foster
has never been a subscriber to either one.
(Id. ¶ 26.)
The
calls were made by an automatic telephone dialing system without
Beiler’s consent.
B.
(Id. ¶¶ 27-28, 30-31, 34-39.)
Fifth Third’s Counterclaims
In its amended answer and counterclaims (Doc. 14), Fifth
Third admits that Foster applied for a credit card account on
December 24, 2008 (id. ¶ 16), and that it made calls – some of
which used an automatic telephone dialing system - to the phone
numbers to discuss the delinquent status of the account with
Foster (id. ¶¶ 19, 21, 23, 27). 1
Fifth Third further alleges
that Foster listed the 1563 number as his own when he applied
for a credit card.
delinquent,
number.
Fifth
(Id. ¶¶ 41-45.)
Third
began
After the account became
contacting
Foster
at
the
1563
(Id. ¶ 46.)
According to Fifth Third, in response to the calls, Foster
sent demand letters and filed an arbitration claim alleging that
Fifth Third had violated the TCPA and North Carolina law by
contacting him.
(Id. ¶ 47.)
At that time, Foster provided an
affidavit stating he had received over 200 calls on the 1563
number, describing it as “my cellular telephone.”
1
(Id. ¶¶ 48-
Fifth Third only admits that it used an automatic telephone dialing
system to call the 1563 number – it denies that it ever used such a
system to call the 4711 number. (Id. ¶ 21.)
3
49.)
The phone calls allegedly are many of the same calls now
described
in
Beiler’s
complaint.
(Id.
¶
52.)
Earlier,
in
reliance on Foster’s representations, Fifth Third entered into a
Confidential Settlement Agreement (the “Settlement Agreement”)
with Foster.
(Id. ¶¶ 53-54.)
Fifth Third now alleges that Beiler and Foster conspired to
extort
settlement
funds
by
providing
false
or
information regarding ownership of the 1563 number.
62.)
misleading
(Id. ¶¶ 58-
Thus, Fifth Third brings claims of fraud and negligent
misrepresentation
against
Foster
(id.
¶¶
64-85)
and
a
civil
conspiracy claim against both Beiler and Foster (id. ¶¶ 57-63).
C.
Procedural History
Beiler filed her complaint on September 30, 2013.
1.)
civil
(Doc.
Fifth Third timely answered and asserted counterclaims of
conspiracy,
described above.
fraud,
and
(Doc. 4.)
negligent
misrepresentation,
as
Beiler and Foster filed motions to
dismiss, which prompted Fifth Third to file an amended answer
and
counterclaims
on
December
13,
2013,
pursuant
15(a)(1)(B), asserting the same three counterclaims.
to
Rule
(Doc. 14.)
On January 2, 2014, Foster moved to dismiss the civil conspiracy
claim
and
to
compel
misrepresentation
arbitration
claims
answer and counterclaims.
asserted
on
in
(Doc. 20.)
4
the
fraud
Fifth
and
Third’s
negligent
amended
On January 10, Beiler
moved to dismiss the conspiracy claim against her. 2
(Doc. 25.)
Fifth Third has responded to both motions (Docs. 32, 34) and
Beiler and Foster have replied (Docs. 35, 36).
II.
ANALYSIS
Foster moves to compel arbitration on Fifth Third’s fraud
and negligent misrepresentation claims against him on the ground
that it is required by the agreement he accepted when he signed
up for Fifth Third’s credit card (the “Credit Card Agreement”).
The Credit Card Agreement 3 includes a clause stating that “any
Claim will be arbitrated instead of litigated in court.”
21-1 at 6.)
(Doc.
“Claim” is defined as follows:
Any claim, dispute or controversy between you and us
arising from or relating to this [Credit Card]
Agreement, any prior agreement you may have had with
us or the relationships resulting from the [Credit
Card] Agreement or any prior agreement, including the
validity, enforceability or scope of this provision,
the [Credit Card] Agreement, or any prior agreement.
Claim includes claims of every kind and nature,
including
but
not
limited
to
initial
claims,
counterclaims, cross-claims and third party claims and
claims based upon contract, tort, fraud and other
2
Because Fifth Third filed an amended answer and counterclaims, the
original motions to dismiss and to compel arbitration (Docs. 10, 12)
have been mooted.
3
The Credit Card Agreement is not attached to the pleadings.
“[C]ourts may consider a document attached by the defendant to its
motion to dismiss where the document ‘was integral to and explicitly
relied on in the complaint’ and where ‘the plaintiff[] do[es] not
challenge its authenticity.’” Braun v. Maynard, 652 F.3d 557, 559–60
n.1 (4th Cir. 2011) (quoting Am. Chiropractic Ass’n, Inc. v. Trigon
Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004)).
Here, the
Credit Card Agreement is referenced in Fifth Third’s counterclaim,
attached to Foster’s motion to dismiss, and not contested by Fifth
Third.
5
intentional torts, statute, common law and equity.
The term Claim is to be given the broadest possible
meaning and includes, by way of example and without
limitation, any claim, dispute or controversy that
arises from or relates to (a) the Account created by
the [Credit Card] Agreement or any prior agreement or
any balances on the Account (b) advertisements,
promotions or oral or written statements related to
the Account or the terms of financing, and (c) your
use of the Account.
(Id. at 2.)
Foster characterizes the current dispute as one
arising out of that original agreement and contends that Fifth
Third must arbitrate its fraud and negligent misrepresentation
claims.
Arbitration clauses are governed by the Federal Arbitration
Act (“FAA”), 9 U.S.C. § 1 et seq.
General state-law principles
of contract formation and interpretation apply to arbitration
clauses.
Volt
Info.
Scis.,
Inc.
v.
Bd.
of
Trs.
Stanford Jr. Univ., 489 U.S. 468, 475-76 (1989).
contracts,
parties
courts
in
must
crafting
an
give
effect
arbitration
to
the
of
As with all
intention
provision.
Leland
of
the
Stolt-Nielsen
S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 682-83 (2010).
However,
the
arbitration.
FAA
an
decide
arbitration
the
a
heavy
presumption
in
favor
of
Levin v. Alms & Assocs., Inc., 634 F.3d 260, 266
(4th Cir. 2011).
of
creates
This presumption “requires that when the scope
clause
question
in
is
favor
open
of
to
question,
arbitration.”
a
court
Id.
must
(quoting
Peoples Sec. Life Ins. Co. v. Monumental Life Ins. Co., 867 F.2d
6
809, 812 (4th Cir. 1989)).
Because there is no dispute that the
Credit Card Agreement constitutes a valid contract and that the
arbitration clause – if it covers Fifth Third’s claims – is
otherwise enforceable, the court need not consult state contract
law. 4
Rather, the “federal substantive law of arbitrability,
applicable to any arbitration agreement within the coverage of
the
[FAA]”
is
applicable.
Mitsubishi
Motors
Corp.
v.
Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985) (quoting Moses
H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983)); see also Volt Info Scis., 489 U.S. at 485 (Brennan, J.,
dissenting) (the FAA “establishes substantive federal law that
must be consulted in determining whether (or to what extent) a
given contract provides for arbitration”).
The arbitration provision in the Credit Card Agreement is
broad.
A “Claim” includes any dispute, claim, or controversy
“arising from or relating to” the Credit Card Agreement or “the
relationships resulting from” that Agreement.
(Doc. 21-1 at 2.)
The definition even includes an instruction that “[t]he term
Claim is to be given the broadest possible meaning.”
(Id.)
claim falling under this definition must be arbitrated.
Any
(Id. at
6.)
4
The court need not, therefore, distinguish between North Carolina
law, which the parties cite, and Ohio law, which the Credit Card
Agreement’s choice-of-law clause says governs. (Doc. 21-1 at 7.)
7
Under the FAA, “a broadly-worded arbitration clause applies
to disputes that do not arise under the governing contract when
a ‘significant relationship’ exists between the asserted claims
and the contract in which the arbitration clause is contained.”
Long v. Silver, 248 F.3d 309, 316 (4th Cir. 2001), overruled on
other
grounds
(quoting
Am.
by
Hertz
Recovery
Corp.
Corp.
v.
v.
Friend,
559
Computerized
U.S.
77
Thermal
(2010)
Imaging,
Inc., 93 F.3d 88, 93 (4th Cir. 1996)); see Wachovia Bank, Nat’l
Ass’n
v.
Schmidt,
arbitration
American
clauses
Recovery,
445
F.3d
762,
described
and
767
as
Wachovia
(4th
2006).
“broadly-worded”
contained
similar to the instant provision.
Cir.
language
in
The
Long,
strikingly
See Long, 248 F.3d at 316
(clauses in two separate contracts applied to “[a]ny and all
disputes . . . arising out of or in connection with [the first
contract]” and “any dispute arising out of or relating to [the
second contract]”); Am. Recovery, 96 F.3d at 90, 93 (provision
providing that “[a]ny dispute, controversy, or claim arising out
of or relating to [the contract] shall be resolved by binding
arbitration” was “capable of an expansive reach”); Wachovia, 445
F.3d at 766-67 (clause referred to arbitration “any claim or
controversy
arising
out
of,
or
relating
to”
the
contract).
Therefore, the relevant inquiry is whether Fifth Third’s claims
bear a significant relationship to the Credit Card Agreement.
8
Here, there can be no question that such a relationship
exists.
To be sure, there would be no relationship between
Foster and Fifth Third at all absent the Credit Card Agreement.
Cf. Long, 248 F.3d at 318 (holding that a claim for breach of
fiduciary duty was subject to arbitration under a prior contract
that made the plaintiff a shareholder in the corporation because
the claim would not have been valid “but for the existence of
the [original agreement]”).
The claims stem from a Settlement
Agreement that itself was necessitated by Foster’s default on
the
Credit
Card
Agreement.
Therefore,
especially
given
the
presumption of arbitrability, the court finds that Fifth Third’s
fraud and negligent misrepresentation claims, which arise from
the
Settlement
Agreement,
are
significantly
related
to
the
Credit Card Agreement. 5
Although arbitration is required on Fifth Third’s fraud and
negligent misrepresentation counterclaims, several other claims
remain in this case, including Beiler’s original TCPA claim and
5
Although the parties have not noted it, the Credit Card Agreement
also indicates that the parties agreed to have the arbitrator
determine the scope of the arbitration provision itself.
(Doc. 21-1
at 2, 6.)
“Just as the arbitrability of the merits of a dispute
depends upon whether the parties agreed to arbitrate that dispute, so
the question ‘who has the primary power to decide arbitrability’ turns
upon what the parties agreed about that matter.”
First Options of
Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995) (internal citations
omitted) (emphasis in original). Because the clause itself grants the
arbitrator the power to determine whether any particular claim is
arbitrable, this court must “give considerable leeway to the
arbitrator, setting aside his or her decision only in certain narrow
circumstances.” Id.
9
Fifth Third’s civil conspiracy counterclaim.
not a proper remedy.
Thus, dismissal is
Cf. Choice Hotels Int’l, Inc. v. BSR
Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001)
(“[D]ismissal
is
a
proper
remedy
when
all
presented in a lawsuit are arbitrable.”).
of
the
issues
If Fifth Third is
correct that the 1563 number belonged to Foster – an issue that
will likely be resolved in the arbitration – Beiler’s ability to
state a TCPA claim may be affected.
Thus, in order to promote
judicial
confusion
economy
and
to
avoid
and
possibly
inconsistent results, all claims involved in this action will be
stayed pending the outcome of the arbitration between Foster and
Fifth
Third.
See
Am.
Home
Assurance
Co.
v.
Vecco
Concrete
Constr. Co., Inc. of Va., 629 F.2d 961, 964 (4th Cir. 1980);
Newman ex rel. Wallace v. First Atlantic Res. Corp., 170 F.
Supp. 2d 585, 593 (M.D.N.C. 2001) (“If questions of fact common
to
all
actions
arbitration,
the
in
the
matter
district
court
are
likely
action
to
should
be
be
settled
in
stayed.”).
Thus, the court will not reach the motions to dismiss Fifth
Third’s civil conspiracy claims.
III. CONCLUSION
For the reasons stated, the court finds that Fifth Third’s
fraud and negligent misrepresentation claims are covered by the
Credit Card Agreement’s arbitration clause.
IT IS THEREFORE ORDERED as follows:
10
1.
Foster’s motion to dismiss, stay, and to compel
arbitration
(Doc.
DENIED
PART.
IN
20)
is
GRANTED
Fifth
IN
Third’s
PART
fraud
AND
and
negligent misrepresentation claims against Foster
shall be arbitrated.
Pursuant to 9 U.S.C. § 3,
the remaining claims in this case will be STAYED
pending arbitration, and the motions to dismiss
by Beiler and Foster (Docs. 20 and 25) will be
DENIED
WITHOUT
PREJUDICE
to
being
renewed
following the resolution of the arbitration.
2.
The original motions filed by Beiler and Foster
(Docs. 10, 12) are DENIED AS MOOT.
3.
Foster’s
motion
to
participate
in
electronic
filing (Doc. 19) is GRANTED.
4.
The
parties
shall
file
a
joint
arbitration every ninety (90) days.
report
of
Failure to
file such reports may result in dismissal of the
action.
/s/
Thomas D. Schroeder
United States District Judge
June 20, 2014
11
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