Davis v. Automax Dodge Chrysler Jeep et al

Filing 13

ORDER for the reasons stated, plaintiffs motion to remand 7 is DENIED; defendant ME/CUs motion to dismiss 4 is GRANTED, and plaintiffs claims against ME/CU are DISMISSED; plaintiff is granted leave to file an amended complaint seeking to state a claim against ME/CU within 14 days; defendant Automax's motion to compel arbitration 11 is GRANTED; plaintiff's claims against Automax are ordered to arbitration and further proceedings in this case against Automax are STAYED pending completion of the arbitration process. Signed by Honorable Joe Heaton on 7/23/2018. (cla)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
HARRY JACKSON DAVIS,
Plaintiff,
vs.
AUTOMAX DODGE CHRYSLER
JEEP, et al.
Defendants.

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NO. CIV-18-488-HE

ORDER
Plaintiff Harry Davis brought this action in state court against defendants Automax
Dodge Chrysler Jeep and Municipal Employees Credit Union of Oklahoma City (ME/CU).
Plaintiff claims that the defendants wronged him by entering false information in a vehicle
loan credit application on his behalf and by failing to independently verify the information
prior to approving him for the loan. Defendants removed the case to this court.
Here, Automax has re-filed a motion to compel arbitration of the claims against it.
ME/CU has moved to dismiss on the basis of failure to state a claim. Plaintiff has not
responded to either of those motions, but has filed a motion to remand the case to state
court.
Motion to Remand
Plaintiff seeks remand on the basis he did not mean to assert an independent federal
claim, that the predominant thrust of his case is based on state law claims, and that Automax
waived its right to remove by filing a motion to dismiss in state court. None of those
grounds are persuasive.

Plaintiff’s sixth cause of action explicitly relies on the federal Truth In Lending Act,
citing 15 U.S.C. § 1601 et seq. as one basis for the claim. That is sufficient to be a basis
for federal question jurisdiction and the assertion of a greater number of state law claims
does not eliminate the necessary jurisdictional basis.
Plaintiff argues that Automax waived its right to remove by filing a motion to
dismiss in state court. A defendant can be deemed to have waived the right to remove by
taking some substantial offensive or defensive pre-removal action in the state court action
indicating a willingness to litigate in that tribunal. City of Albuquerque v. Soto Enters.,
Inc., 864 F.3d 1089, 1098 (10th Cir. 2017). To invoke that rule, the waiver must be “clear
and unequivocal, meaning that ‘short of [the defendant] seeking an adjudication on the
merits,’ the ‘right to removal is not lost.’” Id. (quoting PR Grp., LLC v. Windmill Int’l,
Ltd., 792 F.3d 1025, 1026 (8th Cir. 2015)). Here, Automax’s motion did not seek to resolve
the merits of the dispute in state court. Rather, it sought to compel arbitration of the claims
against it, and asked the state court to dismiss or stay the case pending that arbitration.
That is not a request for the state court to adjudicate the merits of the case. The weight of
authority appears to conclude that motions to compel arbitration filed pre-removal are not
a basis for waiver. See MG Bldg. Materials, Ltd. v. Paychex, Inc., 841 F. Supp. 2d 740,
752-3 (W.D.N.Y. 2012); Tillis v. Cameron, No. 07-cv-0078-WKW, 2007 WL 2806770, at
*4 (M.D. Ala. 2007) (citing cases).
The petition plainly stated a claim based on federal law and no basis for waiver of
the right to remove has been shown. The motion to remand will therefore be denied.

2

ME/CU’s Motion to Dismiss
ME/CU’s motion asks the court to dismiss plaintiff’s claims against it. While
ME/CU advances several grounds for dismissal, including some based on facts or
circumstances outside the scope of the pleadings, the court concludes the petition fails to
state a claim against MC/CU and the motion should be granted on that basis. 1 None of the
claims include a factual basis for concluding that ME/CU, as the lender, had a duty to
investigate or verify the credit information submitted to it nor is there any basis alleged for
concluding that this defendant had a fiduciary or other “special relationship” with the
plaintiff that could be a basis for claim. See First Nat. Bank and Trust Co. of Vinita v.
Kissee, 859 P.2d 502, 510 (Okla. 1993).
ME/CU’s motion to dismiss will be granted. In light of the various documents
referenced in defendant’s submissions, the court has considerable doubt whether plaintiff
will be able to state a claim against the lender in any amended pleading. However, as the
basis for dismissal here is Rule 12(b)(6), and as remediation by amendment is at least
theoretically possible, he will be granted leave to amend.
Automax’s Motion to Compel Arbitration
Automax’s motion here is substantially the same as its motion filed pre-removal in
state court, and seeks to compel plaintiff to submit his claims against Automax to
arbitration. As with ME/CU’s motion, plaintiff has not responded to it. The court
concludes the motion shows a sufficient basis for the relief sought.

1

Plaintiff’s failure to respond to the motion may also be a basis for granting the motion,
L.Cv.R. 7.1(g).

3

Automax relies on an agreement to arbitrate included in the purchase order for the
vehicle involved.

Agreements to arbitrate are enforceable under both federal and

Oklahoma law. Once an agreement to arbitrate has been established, “doubts concerning
the scope of arbitrable issues should be resolved in favor of arbitration.” Nat'l Am. Ins. Co.
v. SCOR Reinsurance Co., 362 F.3d 1288, 1290 (10th Cir. 2004). In determining whether
an agreement exists at all, the general rule is to apply ordinary state-law principles
governing the formation of contracts. Summit Contractors, Inc. v. Legacy Corner,
L.L.C., 147 F. App'x 798, 800–01 (10th Cir. 2005) (unpublished) (federal courts “should
apply ordinary state-law principles that govern the formation of contracts” when
determining whether a valid agreement exists) (quoting First Options of Chi., Inc. v.
Kaplan, 514 U.S. 938, 944 (1995)).
Here, Automax’s submissions are sufficient to show the necessary agreement to
arbitrate and there is no apparent basis for contesting that this dispute is within the scope
of the agreement. The motion will therefore be granted.
Under the Federal Arbitration Act, if an issue is referable to arbitration under a
written arbitration agreement, the court “shall on application of one of the parties stay the
trial of the action until such arbitration has been had....” 9 U.S.C. § 3. While dismissal
rather than a stay may be appropriate in some circumstances, the court concludes, in light
of the statute and as claims potentially remain against the co-defendant, that further
proceedings here against Automax should be stayed pending completion of the arbitration.

4

Conclusion
For the reasons stated, plaintiff’s motion to remand [Doc. #7] is DENIED.
Defendant ME/CU’s motion to dismiss [Doc. #4] is GRANTED, and plaintiff’s claims
against ME/CU are DISMISSED. Plaintiff is granted leave to file an amended complaint
seeking to state a claim against ME/CU within 14 days. Defendant Automax’s motion to
compel arbitration [Doc. #11] is GRANTED. Plaintiff's claims against Automax are
ordered to arbitration and further proceedings in this case against Automax
are STAYED pending completion of the arbitration process.
IT IS SO ORDERED.
Dated this 23rd day of July, 2018.

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