Barker v. Fox Den Acres, Inc. (In re Barker)
| Decision Date | 20 May 2014 |
| Docket Number | Bankruptcy No. 12–51160.,Adversary No. 13–05027. |
| Citation | 510 B.R. 771 |
| Court | U.S. Bankruptcy Court — Western District of North Carolina |
| Parties | In re Shannon Brooke BARKER, Debtor. Shannon S. Barker, Plaintiff, v. Fox Den Acres, Inc., CMH Homes, Inc., d/b/a Luv Homes, and Bryant Realty, Inc., Defendants. |
OPINION TEXT STARTS HERE
Danielle J. Brudi, Collum Perry PLLC, Mooresville, NC, for Debtor.
ORDER STAYING ADVERSARY PROCEEDING AND COMPELLING ARBITRATION OF CLAIMS BROUGHT IN ADVERSARY PROCEEDING
This matter is before the Court on motions by CMH Homes, Inc. (“CMH”), Fox Den Acres, Inc. (“Fox Den”), and Bryant Realty, Inc. (“Bryant”) to compel arbitration of the claims asserted in the adversary proceedings and to stay the present adversary proceeding pending the outcome of arbitration (the “Motions” [Dkt. Nos. 15, 26] ). The Motions have been fully briefed [Dkt. Nos. 16, 22, 28]; the Court held oral argument on March 27, 2014; and the Motions are ripe for adjudication. For the reasons set out herein, the Motions are GRANTED on the terms set out in this order.
Debtor Shannon S. Barker (“Debtor”) filed a voluntary petition for relief pursuant to Chapter 13 of the Bankruptcy Code on November 30, 2012. On July 11, 2013, Debtor filed the present adversary proceeding as Plaintiff against the Defendants.
The adversary complaint makes allegations concerning the March 2003 transactions pursuant to which Debtor and her late husband (collectively the “Borrowers”) acquired a manufactured home (the “Home”) and the real property upon which the Home was placed (the “Land”). Debtor alleges that the purchases of the Home and the Land arose from a common transaction. The Borrowers purchased the Home from CMH, and in connection with that purchase, the Borrowers executed a Retail Installment Contract—Security Agreement dated February 21, 2003 (the “RIC”) pursuant to which they were obligated to pay for the purchase in installment payments.1 The Borrowers purchased the land from Fox Den, with Bryant serving as the seller's agent for at least some portion of the real estate transaction. Debtor alleges that the transaction with Fox Den began as a lease to purchase, but that, after twenty-four months, the Borrowers entered into a Real Estate Purchase Agreement and Negotiable Instrument with Fox Den.
In her complaint Debtor makes the following allegations:
• That a $10,000 down payment made by the Borrowers in 2003 was not apportionedproperly between CMH and Fox Den so that Borrowers were making a ten percent down payment on the purchase of the Land, and this set of circumstances led to unfavorable and unfair financing terms for the purchase of the Land. Debtor also takes issue with other aspects of the financing with Fox Den.
• That, at the time of her husband's passing, Debtor was informed by VMF (a non-party to the litigation) that a credit life insurance policy that she had purchased had expired and did not provide coverage, which was inconsistent with Debtor's understanding of the insurance.
• That collection efforts by Defendant Fox Den and non-party VMF were inappropriate.
• That the Proof of Claim filed by Fox Den in the Chapter 13 case is inaccurate and should be disallowed.2
In connection with these allegations, Debtor brings the following causes of action: (1) breach of contract against Fox Den and Bryant; (2) unfair and deceptive acts and practices in violation of N.C. Gen.Stat. §§ 75–11, et seq., against Fox Den and Bryant; (3) fraud against Fox Den and Bryant; (4) conversion against Fox Den and Bryant; (5) violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq., against Fox Den and Bryant; (6) violation of North Carolina's statutory prohibited practices by collection agencies, N.C. Gen.Stat. §§ 58–70–90, et seq., against Bryant; (7) violations of the North Carolina Debt Collection Act, N.C. Gen.Stat. §§ 75–50, et seq., against Fox Den and Bryant; (8) intentional infliction of emotional distress, apparently against all Defendants; (9) negligent infliction of emotional distress, apparently against all Defendants; (10) unconscionability, apparently against all Defendants; (11) civil conspiracy; and (12) improper Proof of Claim against Fox Den only.
Defendants have each responded to the Complaint by seeking arbitration of all claims against them, respectively, based on the following arbitration provision in the RIC between CMH and Debtor:
ARBITRATION: All disputes, claims or controversies arising from or relating to this contract, or the subject hereof, or the parties, including the enforceability or applicability of this arbitration agreement or provision and any acts, omissions, representations and discussions leading up to this agreement, hereto, including this agreement to arbitrate, shall be resolved by mandatory binding arbitration by one arbitrator selected by Seller with Buyer's consent. This agreement is made pursuant to a transaction in interstate commerce and shall be governed by the Federal Arbitration Act at 9 U.S.C. Section 1. Judgment upon the award rendered may be entered in any court having jurisdiction. The parties agree and understand that they choose arbitration instead of litigation to resolve disputes. The parties understand that they have a right to litigate disputes in court, but that they prefer to resolve their disputes through arbitration, except as provided herein. THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT
THEY HAVE TO A JURY TRIAL.
The parties agree and understand that all disputes arising under case law, statutory law and all other laws including, but not limited to, all contract, tort and property disputes will be subject to binding arbitration in accord with this contract. The parties agree that the arbitrator shall have all powers provided by law, the contract and the agreement of the parties. These powers shall include all legal and equitable remedies including, but not limited to, money damages, declaratory relief and injunctive relief. Notwithstanding anything hereunto the contrary, Seller retains an option to use judicial (filing a lawsuit) or non-judicial relief to enforce a security agreement relating to the Manufactured Home secured in a transaction underlying this arbitration agreement, to enforce the monetary obligation secured by the Manufactured Home or to foreclose on the Manufactured Home. The institution and maintenance of a lawsuit to foreclose upon any collateral, to obtain a monetary judgment or to enforce the security agreement shall not constitute a waiver of the right of any party to compel arbitration regarding any other dispute or remedy subject to arbitration in this contract, including the filing of a counterclaim in a suit brought by Seller pursuant to this provision.
(Emphasis in original) (hereinafter the “Arbitration Agreement”).
CMH contends that the claims asserted against it fall within the plain language of the Arbitration Agreement and, thus, should be compelled to arbitration. Fox Den and Bryant acknowledge that they do not have a signed arbitration agreement with Debtor and that they are not signatories to the RIC, but they contend that the claims against them should be compelled to arbitration because Debtor has asserted claims against them alleging substantially interdependent and concerted misconduct among all of the Defendants, such that under prevailing law, Debtor is estopped from proceeding with the claims against Fox Den and Bryant in arbitration. At oral argument, counsel for CMH clarified that CMH is requesting arbitration of the causes of action against Fox Den and Bryan based on the manner in which those claims are pled. Debtor opposes arbitration of any of her causes of action.
CMH argues that the Federal Arbitration Act, codified at 9 U.S.C. §§ 1, et. seq. (the “FAA”), and the decision authority thereunder require a stay of the adversary proceeding and an order requiring Debtor's causes of action to be arbitrated. Debtor raises objections to arbitration under North Carolina law and asserts that requiring arbitration of her causes of action would conflict with the Bankruptcy Code. It is this court's view that arbitration of the causes of action against CMH is appropriate and that there exists no conflict between arbitration of Debtor's causes of action and the Bankruptcy Code.
The FAA provides that written agreements to arbitrate “shall be 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 creates “a liberal federal policy favoring arbitration agreements,” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), premised upon a determination by Congress that arbitration includes “efficient, streamlined procedures” that “reduc[e] the cost and increas[e] the speed of dispute resolution.” AT&T Mobility LLC v. Concepcion, 563 U.S. 321, 131 S.Ct. 1740, 1749, 179 L.Ed.2d 742 (2011). Thus, when there is a written agreement to arbitrate, that agreement must be enforced unless there is a legal impediment to its enforcement that is not preempted by the FAA. Id. Where, as here, the agreement to arbitrate includes a delegation clause, which delegates disputes about arbitrability to the arbitrator, the delegation clause must be enforced unless there is a specific challenge to the delegation clause that is separate and distinct from a challenge to the agreement to arbitrate overall. Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 70–71, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). Thus, as a general rule, a court should grant a motion to compel arbitration even if there is a challenge to arbitrability, if (1) there is a written...
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