Daniels et al v. Diamond Resorts Financial Services, Inc.

Filing 18

MEMORANDUM OPINION AND ORDER granting #7 MOTION by Diamond Resorts Financial Services, Inc. to compel arbitration and this complaint is dismissed without prejudice to arbitration; denying as moot #9 MOTION for oral argument on the motion to compel arbitration. Signed by Judge John T. Copenhaver, Jr. on 3/18/2019. (cc: counsel of record) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
STEPHEN LOWELL DANIELS
and LORI LEE DANIELS,
Plaintiffs,
v.

Civil Action No. 2:18-cv-00561

DIAMOND RESORTS FINANCIAL
SERVICES, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is defendant’s motion to compel arbitration,
filed May 18, 2018.

Also pending is defendant’s motion for oral

argument on its motion to compel arbitration, filed May 25,
2018.

I.

Background

On June 17, 2016 and November 27, 2016, plaintiffs
Stephen Lowell Daniels and Lori Lee Daniels, both citizens of
West Virginia, Not. Removal, ECF No. 1, at ¶ 7, entered into
separate contractual agreements with defendant Diamond Resorts
Financial Services, Inc. (“DRFS”), a Nevada corporation with its
principal place of business in Nevada, id. at ¶ 8, for the
“purchase and sale of certain property in the nature of a
timeshare.”

Compl., ECF No. 1-1, at ¶¶ 3-4.

The June 17, 2016

purchase agreement concerned the purchase of a timeshare in
Virginia, and the November 27, 2016 purchase agreement concerned
the purchase of a timeshare in Tennessee.

See ECF No. 7, Exs.

A, B, at 1.
Plaintiffs initiated this action in the Circuit Court
of Kanawha County, West Virginia on March 5, 2018.
Removal, ECF No. 1, at ¶ 1.

Not.

The plaintiffs allege that after

their attorney sent a formal demand letter to defendant,
invoking the consumer protections of 15 U.S.C. § 1692c(a)(2)1 and
the West Virginia Consumer Credit and Protection Act (“WVCCPA”),
W. Va. Code § 46A-1-101 et seq., defendant proceeded to call the
plaintiffs forty-four times seeking to collect a debt.
ECF No. 1-1, at ¶¶ 7-8, 54-58.

Compl.,

The plaintiffs seek relief for

unlawful debt collection under the governing state Act and
request that “this Court cancel the debt owed to the Defendant
or its principal pursuant” to the WVCCPA.

1

Id. at 7.

“Without the prior consent of the consumer given directly to
the debt collector or the express permission of a court of
competent jurisdiction, a debt collector may not communicate
with a consumer in connection with the collection of any debt .
. . if the debt collector knows the consumer is represented by
an attorney with respect to such debt and has knowledge of, or
can readily ascertain, such attorney's name and address, unless
the attorney fails to respond within a reasonable period of time
to a communication from the debt collector or unless the
attorney consents to direct communication with the consumer.”
15 U.S.C. 1692c(a)(2).
2

Not mentioned in the complaint is the fact that the
purchase agreements were entered into with Diamond Resorts U.S.
Collection Development, LLC (“Developer”), a Delaware limited
liability company with its principal place of business in
Nevada.

See ECF No. 7, Exs. A, B, at 2.

Developer is an

indirect subsidiary of Diamond Resorts International, Inc.
(“DRI”), a company with a network of more than 400 vacation
destinations.

Def.’s Mem. Supp. Mot. Compel Arbitration

(“Def.’s Mem.”), ECF No. 8, at 1-2.

DRFS is also an indirect

subsidiary of DRI and affiliate of Developer.

Id. at 2.

Defendant removed this action to this court on April
12, 2018, pursuant to 28 U.S.C. § 1332.
1, at ¶ 5.

Not. Removal, ECF No.

Defendant subsequently moved to compel arbitration

of this matter pursuant to the identical arbitration provisions
set forth in the purchase agreements of June 17, 2016 and
November 27, 2016.

Def.’s Mem., ECF No. 8, at 2-3.

According

to the defendant, “arbitration is appropriate because a valid
arbitration agreement exists and the issues in this case fall
within its purview.”

Def.’s Mot., ECF No. 7, at 1.

The purchase agreements detail that the Federal
Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, will govern the
arbitration provision and that Nevada law “shall govern to the
extent that state law is relevant under the FAA in determining
3

the enforceability of this Arbitration Provision.”

ECF No. 7,

Exs. A, B, at ¶ 18(e).
The arbitration provision includes three relevant
subsections.

First, the purchase agreements contain an opt-out

provision that permits a purchaser to notify the seller within
thirty days if the purchaser does not want the arbitration
provision to apply by sending a letter to the seller “STATING
THAT THE ARBITRATION PROVISION DOES NOT APPLY.”

Id. at ¶ 18(a).

Next, the arbitration provision states that “[u]nless
Purchaser has exercised his or her opt-out right pursuant to
Section 18(a), upon the election of Purchaser or any Company
Party, any Claim between Purchaser and such Company Party shall
be resolved by binding individual (and not class) arbitration.”
Id. at ¶ 18(c).
Finally, the arbitration provision defines several of
the terms used in Paragraph 18(c).

“Company Party” is defined

as “Seller and/or the Association, their affiliates and the
agents, representatives, members, employees, officers and/or
directors of such entities, if and to the extent that any Claim
is asserted by or against such entity or person.”

Id. ¶ 18(b).

“‘Claim’ means any legal claim, dispute or controversy between
any Company Party and Purchaser, including statutory, contract
and tort disputes of all kinds and disputes involving requests
4

for declaratory relief, injunctions or other equitable relief.”2
Id.
The plaintiffs have filed a response in opposition to
defendant’s motion in which they object to the enforcement of
the arbitration provision on several grounds.

The defendant has

since filed its reply.

II.

Standard of Review

The FAA was enacted in 1925 and codified as Title 9 of
the United States Code in 1947.

Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 25 (1991).

Its purpose was to “reverse

the longstanding judicial hostility to arbitration agreements
... and to place [them on] the same footing as other contracts.”
Id.

Additionally, the Gilmer court noted:
statutory claims may be the subject of an arbitration
agreement, enforceable pursuant to the FAA . . . . In
these cases we recognized that “[b]y agreeing to
arbitrate a statutory claim, a party does not forgo
the substantive rights afforded by the statute; it
only submits to their resolution in an arbitral,
rather than a judicial, forum.”

Id. at 26 (quoting Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 628 (1985)).

2

The FAA provides

“‘Claim’ does not include any individual action brought by a
Purchaser in small claims court or an equivalent court, unless
such action is transferred, removed, or appealed to a different
court . . . .” Id.
5

that arbitration clauses in contracts concerning interstate
commerce are “valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of
any contract.”

9 U.S.C. § 2.

The FAA reflects “a liberal

federal policy favoring arbitration agreements.”

Moses H. Cone

Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
“Accordingly, due regard must be given to the federal policy
favoring arbitration, and ambiguities as to the scope of the
arbitration clause itself resolved in favor of arbitration.”
Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002)
(internal citations and quotations omitted).

Thus, a district

court must grant a motion to compel arbitration when “a valid
arbitration agreement exists and the issues in a case fall
within its purview.”

Id. (citing United States v. Bankers Ins.

Co., 245 F.3d 315, 319 (4th Cir. 2001)).
In this circuit, a party may compel arbitration under
the FAA if it can demonstrate:
(1) the existence of a dispute between the parties,
(2) a written agreement that includes an arbitration
provision which purports to cover the dispute, (3) the
relationship of the transaction, which is evidenced by
the agreement, to interstate or foreign commerce, and
(4) the failure, neglect or refusal of the defendant
to arbitrate the dispute.
Id. at 500-01 (quoting Whiteside v. Teltech Corp., 940 F.2d 99,
102 (4th Cir. 1991)).

6

The Adkins court also observed that “‘even though
arbitration has a favored place, there still must be an
underlying agreement between the parties to arbitrate.’” Id. at
501 (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir.
1997)).

“Whether a party agreed to arbitrate a particular

dispute is a question of state law governing contract
formation.”

Id. at 501 (citing First Options of Chicago, Inc.

v. Kaplan, 514 U.S. 938, 944 (1995)); see also Sydnor v. Conseco
Fin. Servicing Corp., 252 F.3d 302, 305 (4th Cir. 2001)
(citation omitted).

“Generally applicable contract defenses,

such as fraud, duress, or unconscionability, may be applied to
invalidate arbitration agreements without contravening § 2” of
the FAA.

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687

(1996).

III. Discussion

The plaintiffs object to the arbitration provision’s
enforcement in this matter on three different grounds.

First,

plaintiffs contend that DRFS may not sue to enforce the
arbitration provision of the purchase agreements inasmuch as it
is not a party to either of the purchase agreements.
Resp., ECF No. 10, at 1-2.

Pls.’

Second, plaintiffs assert that they

did not agree to arbitrate claims “arising from unlawful debt
7

collection” and that such claims are “outside the scope of the
arbitration agreement.”

Id. at 3.

Finally, plaintiffs argue

that the arbitration provision is unenforceable because it is
not mutually binding.

Id. at 3-6.

A. DRFS may enforce the arbitration provision

Plaintiffs contend that DRFS is a third-party debt
collector, “not within the scope of ‘affiliated’ timeshare
companies for which the Plaintiff agreed to arbitrate claims or
disputes with.”

Id. at 2.

This argument is not persuasive.

The arbitration provision explicitly provides that a
Company Party is

the “Seller and/or the Association, their

affiliates and the agents, representatives, members, employees,
officers and/or directors of such entities, if and to the extent
that any Claim is asserted by or against such entity or person,”
and that “any Claim between Purchaser and such Company Party
shall be resolved by binding individual (and not class)
arbitration.”

ECF No. 7, Exs. A, B., at ¶ 18(b)-(c).

Attached to its reply, the defendant provides the
declaration of Mr. Benjamin La Luzerne, Esq., in-house counsel
for DRI.

ECF No. 11-1.

Mr. La Luzerne states therein that DRFS

is a subsidiary of DRI who is charged with collecting delinquent

8

maintenance fees owed by DRI timeshare owners.

Id. at ¶¶ 3-4.

He also asserts that Developer is a subsidiary of DRI.

Id. at ¶

5.
Black’s Law Dictionary defines “affiliate” as “[a]
corporation that is related to another corporation by
shareholdings or other means of control; a subsidiary, parent,
or sibling corporation.”

Affiliate, Black’s Law Dictionary

(10th ed. 2014).
Here, it is clear that DRFS is an affiliate of the
seller, Developer, and as such, claims between it and the
purchasers are to be resolved in binding arbitration.3

B. WVCCPA claim is covered under the arbitration provision

Contrary to plaintiffs’ assertions, claims for
unlawful debt collection arising under 15 U.S.C. § 1692c(a)(2)
and the WVCCPA are not outside the scope of the arbitration
provision.
The arbitration provisions of both purchase
agreements, which were signed on separate occasions by the

3

Inasmuch as the court has found that DRFS is an affiliate under
the terms of the arbitration provision, it does not address
plaintiff’s argument that non-parties should not able to impose
a contractual agreement to arbitrate.
9

plaintiffs, specify that “any Claim between Purchaser and such
Company Party shall be resolved by binding individual . . .
arbitration.”

ECF No. 7, Exs. A, B, ¶ 18(c).

Further, “‘Claim’

means any legal claim, dispute or controversy between any
Company Party and Purchaser, including statutory, contract and
tort disputes of all kinds.”

Id. at ¶ 18(b).

The court considers this arbitration clause to be
broad, as it does not limit arbitration to the contract, but
rather “embraces every dispute between the parties having a
significant relationship to the contract regardless of the label
attached to the dispute.”

J.J. Ryan & Sons, Inc. v. Rhone

Poulenc Textile, S.A., 863 F.2d 315, 321 (4th Cir. 1988) (In
determining whether an arbitration clause was broad, the court
noted that the difference in the phrases “in connection with”
and “may arise out of or in relation to” was largely semantic.).
Inasmuch as the court determines the scope of the arbitration
clauses to be broad, “any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration.”
Moses H. Cone Mem’l Hosp., 460 U.S. at 25; see also Choice
Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707,
711 (4th Cir. 2001) (“[W]e may not deny a party’s request to
arbitrate an issue unless it may be said with positive assurance
that the arbitration clause is not susceptible of an

10

interpretation that covers the asserted dispute.”) (quoting Am.
Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d
88, 92 (4th Cir. 1996)).
Here, there is a statutory dispute between a “Company
Party” and the “Purchaser.”

The plain language of the

arbitration provision indicates that allegedly unlawful debt
collection claims, which apparently arose out of plaintiffs’
failure to pay maintenance fees as required under the purchase
agreements,4 are covered under the arbitration provision.

C. Enforceability of the arbitration provision

Finally, plaintiffs’ contention that the arbitration
provision is not enforceable, inasmuch as the defendant is not
also compelled to arbitrate claims it may have against
plaintiffs, lacks merit.
West Virginia’s choice-of-law rules, which direct the
court in determining which state’s laws to apply in deciding the

4

“Purchaser understands and agrees that in accordance with
provisions of the Collection Instruments, the Association is
empowered to levy and collect Assessments . . . for management
and maintenance expenses.” ECF No. 7, Exs. A, B, at ¶ 7(a).
11

enforceability of this arbitration provision, have been
accurately summarized as follows:
A federal district court sitting in diversity applies
the choice-of-law rules of its forum state. Wells v.
Liddy, 186 F.3d 505, 521 (4th Cir. 1999). West
Virginia law provides that “the law of the state in
which a contract is made and to be performed governs
the construction of a contract when it is involved in
litigation in the courts of this State.” Gen. Elec.
Co. v. Keyser, 166 W.Va. 456, 275 S.E.2d 289, 292
(1981) (quoting Mich. Nat'l Bank v. Mattingly, 158
W.Va. 621, 212 S.E.2d 754, 755 (1975)). West Virginia
law further provides that a choice-of-law provision
“will be upheld unless the chosen state has no
substantial relationship to the parties to the
transaction or unless the application of the law of
the chosen state would be contrary to the fundamental
public policy of” this state. Bryan v. Mass. Mut.
Life Ins. Co., 178 W.Va. 773, 364 S.E.2d 786, 790
(1987).
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Coe, 313 F. Supp.
2d 603, 609 (S.D.W. Va. 2004).
Here, it appears that the purchase agreements were
signed while the plaintiffs were on vacation in Virginia and
Tennessee, respectively.

Def.’s Mem., ECF No. 8, at 2.

However, the parties also specifically agreed, as a part of the
purchase agreements, in two separate places that “this Agreement
shall be exclusively governed by and construed in accordance
with the laws of Nevada without regard to its choice of law
rules,” ECF No. 7, Exs. A, B, at ¶ 17, and “Nevada law shall
govern to the extent that state law is relevant under the FAA in

12

determining the enforceability of this Arbitration Provision,”
id. at ¶ 18(e).
West Virginia upholds these choice of law provisions
“unless the chosen state has no substantial relationship to the
parties to the transaction.”

Bryan, 178 W.Va. at 777, 364

S.E.2d at 790 (citing Keyser, 166 W. Va. at 470, 275 S.E.2d at
297).

Developer, the other party to the contract, has its

principal place of business in Nevada, although it is a Delaware
limited liability company.

Further, DRFS, a party to this

litigation, and apparently the debt collection entity related to
Developer, is a Nevada corporation with its principal place of
business in Nevada.

There is a substantial relationship between

those parties and Nevada, and there does not appear to be any
indication that the contract formation laws of Nevada are
contrary to the public policy of West Virginia.
The terms of the agreement also clearly and
unambiguously state Nevada law would apply to the extent that
state law is necessary to demonstrate the arbitration
provision’s enforceability.

See Coe, 313 F. Supp. 2d at 610

(“By executing the relevant agreements, the state court
plaintiffs clearly indicated their assent to the terms of the
agreements. . . . The court accordingly finds that the state
court plaintiffs and [defendant] validly agreed to apply New
13

York law to the present dispute.”).

Plaintiffs do not assert

which state’s laws should govern the enforceability of the
arbitration provision, and defendant asserts, without
explanation, that West Virginia’s laws govern.5

However, “[i]f

the parties did so agree, then the law of the chosen forum
governs all claims related to the rights and duties of the
parties’ agreement.”

Coe, 313 F. Supp. 2d at 609 (citing

Restatement (Second) of Conflicts of Laws § 187 cmt. d).
Accordingly, the court looks to Nevada contract law to
determine whether the arbitration provision is enforceable.
Under Nevada law, “[b]asic contract principles
require, for an enforceable contract, an offer and acceptance,
meeting of the minds, and consideration.”
P.3d 1254, 1257 (Nev. 2005).

May v. Anderson, 119

“[C]onsideration may be any

benefit conferred or any detriment suffered.”

Shydler v.

Shydler, 954 P.2d 37, 42 (Nev. 1998) (quoting Nyberg v. Kirby,
188 P.2d 1006, 1010 (Nev. 1948)).

Courts in Nevada have found

that a mutual promise to be bound by the arbitration process
serves as adequate consideration.

5

The court
arbitration
cite Nevada
Appeals for
courts.

Thrash v. Towbin Motor Cars,

notes that in supporting its claim that the
provision lacks mutuality, the plaintiffs do not
law, and instead rely on cases from the Court of
the Fourth Circuit and California and Montana state
14

No. 2:13-cv-01216-MMD-CWH, 2013 WL 6210632, at *2 (D. Nev. Nov.
26, 2013) (citing Circuit City Stores, Inc. v. Najd, 294 F.3d
1104, 1108 (9th Cir. 2002) (interpreting California contract
law)).

Other courts have held similarly.

See, e.g., Johnson v.

Circuit City Stores, 148 F.3d 373, 378 (4th Cir. 1998) (finding
that the arbitration agreement was supported by consideration
when both parties agreed to be bound by the arbitration
process).
As noted above, the arbitration provision explicitly
states that “upon the election of Purchaser or any Company
Party, any Claim between Purchaser and such Company Party shall
be resolved by binding individual (and not class arbitration).”
ECF No. 7, Exs. A, B, at ¶ 18(c).

Apart from the small-claims

exception in the arbitration provision, which allows only the
purchaser to bring certain claims in small claims court, the
arbitration provision is binding on both parties and all
disputes between the parties are subject to arbitration, if one
of the parties chooses to arbitrate.

See id. at ¶ 18(a), (b).

Plaintiffs, however, in an attempt to demonstrate that the
arbitration provision is unilaterally binding on them, reference
two aspects of the purchase agreements as well as one in the
promissory notes that were signed in association with those
purchase agreements.

In support of their argument, set out next

15

below, plaintiffs cite Noohi v. Toll Bros., 708 F.3d 599 (4th
Cir. 2013), a case interpreting Maryland law which invalidated
an arbitration agreement for lack of mutuality because it
unambiguously bound only one party to arbitration.
13.

Id. at 611-

While Noohi applies Maryland contract law, the principle it

propounds, that in order for an arbitration provision to be
enforceable it must mutually bind both parties, is a sound one
and is relevant here.
First, plaintiffs assert that inasmuch as the smallclaims exception contained in the arbitration provision permits
the defendant to compel arbitration if a claim brought in small
claims court “is transferred, removed, or appealed to a
different court,” the ability of plaintiffs to avoid arbitration
is illusory.

Pls.’ Resp., ECF No. 10, at 3.

This argument is

unpersuasive.

If the plaintiffs chose to bring an action in

small claims court, in order for the matter to be “transferred,
removed, or appealed,” some aspect of the case, such as the
amount in controversy, must have changed in order to allow the
transfer or removal to another court.6

On direct appeal,

presumably the small claims exception would continue to apply.

6

Other courts have specifically noted that the inclusion of
small claims carve-outs was “intended to benefit, not injure,
consumers.” See Jenkins v. First Am. Cash Advance of Georgia,
LLC, 400 F.3d 868, 879 (11th Cir. 2005).
16

The plaintiffs, of course, initiated this action in the Circuit
Court of Kanawha County, not small claims court.

The plaintiffs

did not object to defendant’s notice of removal which asserted
that the amount in controversy was more than $75,000.00.
Not. Removal, ECF No. 1, at ¶¶ 9-17.

See

This case does not involve

the small-claims exception.
Next, plaintiffs refer to the promissory notes
associated with the purchase agreements, which state:
In the event that counsel is employed to collect all
or any part of the indebtedness evidenced hereby,
whether at maturity or following acceleration, to the
extent permitted by law Maker agrees to pay Holder’s
reasonable attorneys’ fees, whether suit be brought or
not (including any fees associated with appeals or
bankruptcy proceedings), and all other costs and
expenses reasonably incurred in connection with
Holder’s collection efforts.
ECF No. 10, Exs. C, D, at 3, 7 (emphasis added).

Plaintiffs

contend that the holder of this note, Developer, has a right to
sue, not just arbitrate.

Indeed, either party may sue but that

does not mean the issues in dispute would not be resolved by
arbitration.
this lawsuit.

The promissory notes, however, are not in issue in
The plaintiffs initiated this action based on

debt collection calls made by DRFS in connection with the
purchase agreements which they explicitly mention and attach to
the complaint and which expressly provide for arbitration.

17

See

Compl., ECF No. 1-1, at ¶¶ 3-4; see also ECF No. 1-1, Ex. A, at
8-16; ECF No. 1-1, Ex. B, at 17-27.
Finally, plaintiffs point to Paragraph 14(c), which is
identical in both purchase agreements and pertains to the
process by which Seller would pursue default against the
Purchaser.

Specifically, plaintiffs note that “Seller . . . may

enforce the Seller Security Interest in accordance with Article
9 of the UCC . . . or pursue any other remedy available to
Seller, at law or in equity . . . .”
14(c).

ECF No. 7, Exs. A, B, at ¶

This subsection has no bearing on the arbitration

provision.

This sentence is part of the default clause, not the

arbitration provision, and it merely states that the Seller may
pursue whatever remedies are available, not the forum in which
it may do so.

Additionally, this portion of the purchase

agreement would be applicable even if the purchaser did not
exercise the thirty-day right to opt out of the arbitration
provision.
As has been noted repeatedly, the arbitration
provision in the purchase agreements states that when the
purchaser has not opted out of the purchase agreements, if
either party wishes to arbitrate, then “any Claim between
Purchaser and such Company Party shall be resolved by binding
individual (and not class) arbitration.”
18

Id. at ¶ 18(b).

While

the arbitrator may make use of the clause in the “Default”
section to determine what remedies are available, it is
irrelevant to whether the arbitration provision is mutually
binding.
Inasmuch as the plaintiffs have failed to demonstrate
that the arbitration provision is not mutually binding, their
suggestion that the provision is unconscionable is without
merit.7

For the same reasons set forth above, the arbitration

provision is not substantively unconscionable.

See Ting v.

AT&T, 319 F.3d 1126, 1149 (9th Cir. 2003), cert. denied, 540
U.S. 811 (2003) (“Where an arbitration agreement is concerned,
the agreement is unconscionable unless the arbitration remedy
contains a ‘modicum of bilaterality.’”) (quoting Armendariz v.
Found. Health Psychcare Servs., Inc., 6 P.3d 669, 691-92 (Cal.
2000)).

Further, there is no procedural unconscionability – the

opt-out clause in the arbitration provision is written in all
capital letters and in bolded font, and it provides the
purchasers with the opportunity to opt-out of the arbitration
provision for thirty days after signing each agreement without

7

The court notes that plaintiffs cite several California state
cases in support of their contention that the arbitration
provision lacks mutuality. See Pls.’ Resp., ECF No. 10, at 6.
However, inasmuch as all those cases void arbitration clauses as
unconscionable due to a lack of mutuality, they are not
applicable here, where both parties are bound by the arbitration
provision.
19

affecting any other provisions in those agreements.

See ECF No.

7, Exs. A, B, at ¶ 18(a); D.R. Horton, Inc. v. Green, 96 P.3d
1159, 1162 (Nev. 2004), overruled on other grounds by U.S. Home
Corp. v. Michael Ballesteros Trust, 415 P.3d 32 (Nev. 2018) (“A
clause is procedurally unconscionable when a party lacks a
meaningful opportunity to agree to the clause terms either
because of unequal bargaining power, as in an adhesion contract,
or because the clause and its effects are not readily
ascertainable upon a review of the contract.”).
For the foregoing reasons, the court finds the
arbitration provision to be enforceable.

D. Claim is referable to arbitration

The court now turns to the application of the elements
set forth in Adkins necessary for the court to compel
arbitration.
In Sections III.A and III.B above, the court
indirectly evaluated whether there was “the existence of a
dispute between the parties” and “a written agreement that
includes an arbitration provision which purports to cover the
dispute.”

See Adkins, 303 F.3d at 500-01.

There is a dispute

between DRFS and the plaintiffs, as evidenced by the allegations

20

in the complaint, and the WVCCPA claim made against DRFS is a
covered claim under the arbitration provision.

The first two

elements of Adkins are therefore established.
It is undisputed and the court likewise finds that the
third element – that the agreement affects interstate
commerce – is met because plaintiffs are West Virginia citizens
who purchased timeshares in Virginia and Tennessee from
Developer, who is a Delaware limited liability company with its
principal place of business in Nevada.
Finally, the fourth element is satisfied inasmuch as
plaintiffs have thus far refused to arbitrate this dispute, as
evidenced by their opposition to DRFS’s motion to compel
arbitration.
Accordingly, the arbitration provision in the purchase
agreements covers plaintiffs’ claim and the court must compel
arbitration.

E.

Dismissal of the action

DRFS contends that if the motion to compel arbitration
is granted the case should be dismissed rather than stayed.
Def.’s Mem., ECF No. 8, at 8-9.

21

The FAA states that a court satisfied that the claims
of a suit are arbitrable “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.

“Notwithstanding the terms of § 3 . .

. dismissal is a proper remedy when all of the issues presented
in a lawsuit are arbitrable.”
10.

Choice Hotels, 252 F.3d at 709-

A district court may, therefore, dismiss a case rather than

merely stay it.

Greenville Hosp. Sys. v. Employee Welfare

Benefit Plan, 628 Fed. App’x 842, 845-46 (4th Cir. 2015).
In this case, because the sole claim brought jointly
by both plaintiffs is subject to arbitration, and would properly
be referred there, dismissal is warranted in lieu of a stay.

IV.

Conclusion

For the foregoing reasons, it is ORDERED that
defendant’s motion to compel arbitration be, and it hereby is,
granted and that this complaint is dismissed without prejudice
to arbitration.

It is further ORDERED that defendant’s motion

for oral argument on the motion to compel arbitration be, and
hereby is, denied as moot.

22

The Clerk is directed to transmit copies of this
memorandum opinion and order to all counsel of record.
ENTER: March 18, 2019

23