Willis et al v. Defendant Debt Care USA et al

Filing 129

Verdict. Findings of Fact and Conclusion of Law. The Court FINDS in favor of Defendants and CONCLUDES Plaintiffs claims in this matter are subject to the arbitration terms the Court has already found to be enforceable. Accordingly, the Court directs the parties to confer and to submit jointly no later than December 3, 2012, any necessary closing orders for referral of this matter in its entirety to arbitration. Signed on 11/19/2012 by Judge Anna J. Brown. (bb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

TINA WILLIS and GARY WILLIS,
Plaintiff,

v.

3-11-CV-430-BR
VERDICT
FINDINGS OF FACT
AND
CONCLUSIONS OF LAW

DEBT CARE USA, INC.;
NATIONWIDE DEBT SETTLEMENT
GROUP, LLC; and GLOBAL
CLIENT SOLUTIONS, LLC,
Defendants.
STEVE D. LARSON
JOSHUA L. ROSS
NADINE A. GARTNER
Stoll Stoll Berne Lokting & Lachter P.C.
209 S.W. Oak St., Ste 500
Portland, OR 97204
[phone]
Attorneys for Plaintiffs

GEORGE J. COOPER, III
Dunn Carney Allen Higgins & Tongue
851 S.W. Sixth Ave., Ste 1500
Portland, OR 97204
[phone]
1

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

RICHARD W. EPSTEIN
REBECCA F. BRATTER
Greenspoon Marder, P.A.
200 East Broward Blvd., Ste 1500
Fort Lauderdale, FL 33301
[phone]
Attorneys for Defendants Global Client Solutions LLC
and Nationwide Debt Settlement Group
ROBERT B. MILLER
Kilmer Voorhees & Laurick, PC
732 N.W. 19th Avenue
Portland, OR 97209
GEORGE J. COOPER III
Dunn Carney Allen Higgins & Tongue
851 S.W. Sixth Ave., Ste 1500
Portland, OR 97204
[phone]
Attorneys for Defendant Debt Care USA, Inc.

BROWN, Judge.
This matter is before the Court for a “summary trial” to the
Court on one issue:

Whether Plaintiffs Tina Willis and Gary

Willis agreed to arbitrate their claims against Defendant Global
Client Solutions, LLC.
The parties stipulate the Court shall (1) determine whether
there are questions of both fact and law or only questions
of law as to the existence of an agreement to arbitrate
Plaintiffs’ claims and (2) resolve such questions of law and act
as finder of fact if necessary.

See Stipulation Regarding

Summary Trial Procedures (#120).

2

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

BACKGROUND
Plaintiffs allege Defendants violated Oregon’s Credit Repair
Organizations Act, Oregon Revised Statute § 697.602, et seq.;
Unlawful Trade Practices Act, Oregon Revised Statute § 646.605,
et seq.; and 15 U.S.C. §§ 1679-1679j relating to the federal
regulation of Credit Repair Organizations.

Plaintiffs filed this

action as a class action, but a class has not been certified as
of this date.
On March 30, 2012, the Court granted in part Global’s Motion
(#31) to Compel Arbitration conditioned on whether the Court
finds an agreement to arbitrate Plaintiffs’ claim exists.

In

addition, the Court found Plaintiffs may recover punitive damages
if justified, and Global’s liability for other damages is not
limited to the fees paid by Plaintiffs to Global if they prevail
at arbitration.
The Court, therefore, turns to the sole remaining issue:
Whether Plaintiffs agreed to the arbitration terms that the Court
has already found to be enforceable.

AGREED FACTS1
As of January 19, 2010, Plaintiffs had incurred unsecured

1

Although the parties jointly prepared the “Stipulated
Facts” in the Pretrial Order, Defendant Global separately listed
“Undisputed Facts” because Plaintiffs objected to their
characterization as “Stipulated Facts.”
3

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

credit-card debt totaling $96,652.50.
On January 19, 2010, Plaintiffs electronically signed and
returned the following documents sent to them by Nationwide Debt
Settlement Group:

Global’s Special Purpose Account Application

(SPAA); Nationwide’s Debt Negotiation Program Service Agreement
(DNPSA); and Payment of Fees to Nationwide Debt Settlement Group.
In the SPAA Plaintiffs authorized Global to open a special
purpose account on Plaintiffs’ behalf.

Plaintiffs, however, did

not thoroughly read the SPAA before signing it.
Paragraph 8 of Nationwide’s DNPSA provides in relevant part:
[Tina Willis and Gary Willis] agree that any
claim or dispute by either Client or
Nationwide Debt Settlement Group against the
other, or against employees, agents,
officers, of the other arising from or
relating in any way to this Agreement, shall
be resolved by binding arbitration.
The first paragraph of Global’s SPAA provides in part:
I understand that the Special Purpose
Account’s features, terms, conditions and
rules are further described in an Account
Agreement and Disclosure Statement that
accompanies this Application (the
Agreement’). I acknowledge that I have
received a copy of the Agreement; that I have
read and understand it; that the Agreement is
fully incorporated into this Application by
reference; and that I am bound by all of its
terms and conditions.
(Underlined emphasis added; italicized emphasis in original).
Notwithstanding the italicized language, the Account Agreement

4

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

Disclosure Statement (AADS) had not, in fact, been received by
Plaintiffs.

Instead, approximately one week later on either

January 26, 2010, or January 27, 2010, Global mailed the AADS
that was referred to in the SPAA to Plaintiffs.

The AADS

contains the following arbitration provision:
Arbitration and Application of Law:
In the event of a dispute or claim relating
in any way to this Agreement or our services,
you agree that such dispute shall be resolved
by binding arbitration in Tulsa Oklahoma
utilizing a qualified independent arbitrator
of Global’s choosing. The decision of an
arbitrator will be final and subject to
enforcement in a court of competent
jurisdiction.
PTO, Ex. B at 4.
Thereafter, between February 5, 2010, and November 5, 2010,
Plaintiffs deposited ten monthly payments in the amount of
$1,157.33 each into the Special Purpose Account to be used by
Global to reduce Plaintiffs’ credit-card debt.

DEFENDANTS’ REQUEST FOR JUDICIAL NOTICE (#124)
Pursuant to Federal Rule of Evidence 201(c)(2), Defendants
request the Court to take judicial notice of the pleadings and
other relevant materials filed in the Oregon Court of Appeals in
Citibank South Dakota, N.A., v. Santoro, 210 Or. App. 344, 349
(2006).

Because Plaintiffs have not filed any opposition to

Defendants’ Motion, and it otherwise appears to be in order, the
5

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

Court GRANTS Defendants’ Motion and takes judicial notice of the
materials.

FINDINGS OF FACT
After reviewing and weighing the record, documents,
transcripts of deposition testimony attached to the Pretrial
Order (PTO), and the parties’ respective memoranda filed in this
summary proceeding, the Court finds the following facts by a
preponderance of the evidence:
1.

Neither the SPAA signed by Plaintiffs on

January 19, 2010, nor any documents accompanying the SPAA on
that date refer to arbitration.
2.

Contrary to the recitation in the SPAA, the AADS,

which contains the arbitration provision at issue in this matter,
did not accompany the SPAA that was mailed to and ultimately
signed by Plaintiffs.
3.

PTO, ¶ I (2).

On January 21, 2010, Global electronically

validated the information that Plaintiffs provided in the SPAA
and started processing transactions relating to Plaintiff’s
credit-card balances.

Pls.’ Supplemental Mem., Ex. D, Parsons

Dep. at 142, 145.
4.

Plaintiffs did not receive the AADS, which included

the contract language pertaining to the disputed arbitration

6

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

provision, until on or about January 27, 2010.
Ex. D, Parsons Dep. at 126.

Pls.’ Supp. Mem.,

Until that date, Plaintiffs did not

have actual knowledge about the existence of an arbitration
pertaining to their contractual arrangement with Defendants.
5.

There is not any signature line on the AADS or

Global’s “Welcome Letter” for Plaintiffs’ to acknowledge receipt
of those documents nor is there any provision in the AADS
incorporating the terms of the AADS into the SPAA.
6.

PTO, Ex. B.

The AADS, however, specifically provides its terms,

conditions, and disclosures apply to the Special Purpose Account
that Plaintiffs established with Global.

Id.

PTO, Ex. B at 3.

7.

Plaintiffs did not read the AADS.

Willis Dep.,

8.

Global did not follow up with Plaintiffs to

82:11-13.

determine whether Plaintiffs ever received the AADS.

Pls.’

Supplemental Mem., Ex. D (Parsons Dep. at 150).
9.

Nevertheless, after January 27, 2010, Plaintiffs

were on notice of the existence of the arbitration provision
pertaining to any disputes they may have had with Global
regarding Global’s performance under the SPAA and AADS, and, as
noted, Plaintiffs thereafter made ten monthly payments in the
Special Purpose Account until November 5, 2010.

7

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

CONCLUSIONS OF LAW
As the parties note, the Court must determine whether
the above facts establish as a matter of Oregon law that the
parties agreed to arbitrate their dispute in this matter; i.e.,
(1) whether there was an actual meeting of minds among the
parties as to arbitration; (2) whether, in any event, the
arbitration provision in the AADS was incorporated by reference
into the SPAA; and, if not, (3) whether Global is an intended
beneficiary of the arbitration provision in the DPNSA between
Plaintiffs and Nationwide (See Opin. and Order, issued March 30,
2012, in which the Court concluded the arbitration provision in
the AADS is enforceable except to the extent it precludes
recovery of punitive damages and/or limits Global’s liability to
the amount of fees that Plaintiff paid to Global).
I.

The Parties’ Intent/Meeting of the Minds.
The parties disagree as to whether there was any meeting of

the minds or manifestation of intent by the parties to arbitrate
any dispute over the SPAA and AADS.
A.

Standards.

Whether a contract exists is a question of law for the
court.

Dalton v. Robert Jahn Corp., 209 Or. App. 120, 132

(2006)(quotation omitted).

A “valid contract exists only when

there is a meeting of the minds and where all [essential] terms

8

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

are either agreed upon or there is a method agreed upon by which
open and disputed terms can be settled, such that nothing is left
for future negotiation.”

Id. (citation omitted).

“‘Oregon subscribes to the objective theory of contracts.
In determining whether a contract exists and what its terms are,
we examine the parties' objective manifestations of intent, as
evidenced by their communications and acts.’”

Id. (quoting Ken

Hood Constr. v. Pac. Coast Constr., 201 Or. App. 568, 578
(2005)).

“‘[W]hether parties enter into a contract does not

depend on their uncommunicated subjective understanding; rather,
it depends on whether the parties manifest assent to the same
express terms.’”

Id. (quoting Newton/Boldt v. Newton, 192 Or.

App. 386, 392 (2004)).

See also Citibank South Dakota N.A. v.

Santoro, 210 Or. App. 344, 349 (2006), S. Ct. rev. den. 342 Or.
473 (2007)(A party who receives a credit card in the mail at his
request, does not cancel the credit card, and uses the credit
card is deemed by his conduct to have accepted the contract terms
associated with the use of the credit card).
B.

Conclusion of Law.

The Court concludes when Plaintiffs received the AADS on
January 27, 2010, and thereafter continued to perform
consistently with the terms of the SPAA and the AADS by
continuing to use the services provided to them by Global in

9

- VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

accordance with the provisions of the SPAA (which Plaintiffs
signed) and the AADS (which Plaintiffs did not sign), Plaintiffs
objectively manifested their intent to abide by such terms,
including the requirement that any disputes under those
agreements be arbitrated.
II.

See Santoro, 210 Or. App. at 349.

Incorporation by Reference of AADS Arbitration Provision
in SPAA.
In any event, according to Defendants, the arbitration

provision in the AADS was incorporated by reference into the SPAA
based on the language in the SPAA that the AADS “accompanied” the
SPAA.

Plaintiffs, however, assert the AADS and its accompanying

arbitration provision was not and could not be incorporated by
reference into the SPAA because Plaintiffs did not receive the
AADS with its arbitration provision until a week after the
parties’ agreement was in effect.
A.

Standards.

When a written instrument refers in specific terms to
another writing, the other writing is a part of the contract.
Northwestern Pac. Indem. Co. v. Junction City Water Control
Dist., 295 Or. 553, 558 (1983)(citing Cerino v. Oregon
Physicians' Serv., 202 Or. 474 (1954)).

The Court is not aware

of any authority to the contrary when the other writing is not
simultaneously delivered, but instead is presented at a later
time before the parties perform under the contract.

10 - VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

B.

Conclusion of Law.

The Court concludes no later than January 27, 2010, the date
Plaintiffs acknowledge they received the AADS, the terms of the
AADS were incorporated by reference into the SPAA, and Plaintiffs
accepted the terms of the AADS, including its arbitration
provision, by continuing to use thereafter the services provided
for in the SPAA and the AADS.

The fact that Plaintiffs may not

have read those terms is not material to their enforceability
under Oregon law.

See Santoro, 210 Or. App. at 349.

III. Global as Intended Third-Party Beneficiary of Nationwide’s
Arbitration Provision.
In light of the Court’s conclusion that Plaintiffs are bound
by the arbitration provision in the AADS, the Court does not
reach the issue as to whether Global was an intended third-party
beneficiary of the arbitration provision in the agreement between
Plaintiffs and Nationwide.

VERDICT
For these reasons, and to conclude this summary trial, the
Court FINDS in favor of Defendants and CONCLUDES Plaintiffs’
claims in this matter are subject to the arbitration terms the
Court has already found to be enforceable.
Accordingly, the Court directs the parties to confer and to
submit jointly no later than December 3, 2012, any necessary

11 - VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW

closing orders for referral of this matter in its entirety to
arbitration.
IT IS SO ORDERED.
DATED this 19th day of November, 2012.

/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge

12 - VERDICT, FINDINGS OF FACT, and CONCLUSIONS OF LAW