Wethy v. Cash Store et al
MEMORANDUM OPINION AND ORDER re 10 MOTION to Dismiss and Compel Arbitration filed by The Cash Store, Cash Store. It is therefore ORDERED that Defendant Cottonwood Financial Texas, LLC d/b/a The Cash Store and Cash Store's M otion to Dismiss and Compel Arbitration (Dkt. #10) is hereby GRANTED and Plaintiff's case is DISMISSED without prejudice. If Plaintiff desires to proceed, he must submit his claims to arbitration. Signed by Judge Amos L. Mazzant, III on 4/30/2015. (kls, )
United States District Court
EASTERN DISTRICT OF TEXAS
DAVID M. WETHY
THE CASH STORE & CASH STORE
CASE NO. 4:14-CV-809
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant Cottonwood Financial Texas, LLC d/b/a The Cash
Store and Cash Store’s Motion to Dismiss and Compel Arbitration (Dkt. #10). Having considered
the relevant pleadings, the Court finds that the motion should be granted.
Plaintiff David W. Wethy (“Plaintiff”) initiated this action based upon alleged violations of
the Fair Debt Collection Act (“FDCPA”) and the Texas Finance Code §§392.001, 392.101 and
392.403(c) by Defendant Cash Store and The Cash Store (“Defendant”) (Dkt. #1 at ¶ 1). As an
affirmative defense, Defendant asserted that Plaintiff’s claims are subject to arbitration (Dkt. #5 at
On September 27, 2013, Plaintiff entered into a Credit Services Agreement (“CSA”) with
Riverchase Capital, LLC (“Riverchase”) n/k/a Cottonwood Financial Texas, LLC (Dkt. #10 at p.
2). Cottonwood Financial Texas, LLC was converted from Cottonwood Financial Texas L.P., on
December 31, 2014, prior to merging with Riverchase on December 31, 2014 (Dkt. #10 at p. 2).1
Under the CSA, Plaintiff agreed that the Federal Arbitration Act (“FAA”) would govern the
agreement and Plaintiff would arbitrate all disputes with Riverchase. The first page of the CSA
¹ Defendant’s Motion to Compel states that Cottonwood Financial Texas, LLC was converted from Cottonwood
Financial Texas L.P., on December 31, 2014, prior to merging with Riverchase on December 31, 2014. However, the
Vineyard affidavit cited by Defendant states that the relevant acts took place on December 14, 2014 (Dkt. #12-1).
contained a “Notice of Arbitration Provision,” and pages three through five contained a “Waiver of
Jury Trial and Arbitration Provision” (Dkt. #12-2). The CSA also included a certification by
Plaintiff stating: “You certify that you have read and understand the Waiver of Jury Trial and
Arbitration Provision above.” (Dkt. #11-2 at p. 7; Dkt. #10 at p.4). Plaintiff did not opt out of the
September 27, 2013, CSA arbitration provision.
Plaintiff also entered into three more CSAs with Riverchase, dated October 10, 2013,
October 25, 2013, and December 2, 2013, respectively (Dkt. #12-7; Dkt. #12-8; Dkt. #12-9). Each
of the CSAs contained the exact same arbitration provisions, and Plaintiff did not opt out of any of
Consistent with the CSA arbitration provision, Defendant submitted an arbitration demand
to Plaintiff on February 20, 2015, by Certified Mail Return Receipt Requested (Dkt. #11-2 at pp. 12, 6). Plaintiff did not respond to the arbitration demand.
On April 3, 2015, Defendant filed this motion asking the Court to compel arbitration and
dismiss the case (Dkt. #10). No response was filed.
The FAA “expresses a strong national policy favoring arbitration of disputes, and all doubts
concerning the arbitrability of claims should be resolved in favor of arbitration.” Wash. Mut. Fin.
Group, LLC v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004) (quoting Primerica Life Ins. Co. v. Brown,
304 F.3d 469, 471 (5th Cir. 2002)). The FAA “leaves no place for the exercise of discretion by a
district court, but instead mandates that district courts shall direct the parties to proceed to arbitration
on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v.
Byrd, 470 U.S. 213, 218 (1985).
When considering a motion to compel arbitration, the Court must address two questions.
Graves v. BP Am., Inc., 568 F.3d 221, 222 (5th Cir. 2009). “First, whether there is a valid agreement
to arbitrate, and second, whether the dispute in question falls within the scope of the arbitration
agreement.” Id. (citing Fleetwood Enters. Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir. 2002)).
In regard to the first question of contract validity, the Court should apply “ordinary state-law
principles that govern the formation of contracts.” Id. (citing First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995). The second question of scope is answered “by applying the
‘federal substantive law of arbitrability....’” Id. (quoting Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 626 (1985)).
The Court finds that there is a valid agreement to arbitrate. Plaintiff offers the Court nothing
to indicate that the CSAs are not valid. All the claims Plaintiff has asserted in this lawsuit are based
on alleged violations of the FDCPA or certain provisions of the Texas Finance Code. Those claims
fall within the broad definition of “dispute” within the CSA’s arbitration provision. Plaintiff also
agreed in the CSAs that “all disputes” included any counterclaims by Defendant, and “all claims
asserted by us [Defendant] against you [Plaintiff]” (Dkt. #12-2 at pp. 3-4). Because all claims and
the counterclaims fall under the parties’ agreement to arbitrate, Plaintiff must assert his claims
against Defendant in arbitration rather than in this Court. Moreover, the Court is aware of no federal
statute or policy which renders Plaintiff’s claims nonarbitrable.
Under the FAA, once a court finds that arbitration is required, it must stay the underlying
litigation to allow arbitration to proceed. 9 U.S.C. § 3. When all of the issues raised in a lawsuit must
be submitted to arbitration, dismissal of the lawsuit without prejudice is appropriate. Alford v. Dean
Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992).
It is therefore ORDERED that Defendant Cottonwood Financial Texas, LLC d/b/a The Cash
Store and Cash Store’s Motion to Dismiss and Compel Arbitration (Dkt. #10) is hereby GRANTED
and Plaintiff’s case is DISMISSED without prejudice. If Plaintiff desires to proceed, he must
submit his claims to arbitration.
SIGNED this 30th day of April, 2015.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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