Brown v. Green Tree Services, LLC, C.A. No. 2:06-2777-PMD.

• Decision Date: 28 February 2008
• Docket Number: C.A. No. 2:06-2777-PMD.
• Citation: 585 F.Supp.2d 770
• Court: U.S. District Court — District of South Carolina
• Parties: John M. BROWN, Plaintiff, v. GREEN TREE SERVICES, LLC, and American Bankers Life Assurance Company of Florida, Defendants.

585 F.Supp.2d 770

John M. BROWN, Plaintiff, v. GREEN TREE SERVICES, LLC, and American Bankers Life Assurance Company of Florida, Defendants.

C.A. No. 2:06-2777-PMD.

United States District Court, D. South Carolina, Charleston Division.

February 28, 2008.

COPYRIGHT MATERIAL OMITTED

James Kevin Holmes, Steinberg Law Firm, Charleston, SC, Mary Leigh Arnold, Mary L. Arnold Law Office, Mt. Pleasant, SC, for Plaintiff.

Brian A. Calub, Jennifer L. Mallory, Brian P. Crotty, Nelson Mullins Riley and Scarborough, Columbia, SC, Merritt G. Abney, Nelson Mullins Riley and Scarborough, Charleston, SC, for Defendants.

ORDER

PATRICK MICHAEL DUFFY, District Judge.

This matter is before the court upon Defendant Green Tree Servicing, LLC's Motion to Compel Arbitration and Dismiss or Stay Action.¹ Plaintiff John M. Brown ("Plaintiff' or "Brown") has filed a Response in Opposition to Green Tree Servicing's motion. For the reasons set forth herein, Defendant Green Tree Servicing's motion is granted.

BACKGROUND

On July 28, 1999, Plaintiff received an unsolicited phone call at his home from Green Tree Financial Servicing Corporation ("Green Tree I"). Green Tree I told Plaintiff that it could refinance his home and consolidate his debts, which would lower his monthly payments, and Plaintiff deposed he was told he could protect his family with credit life and disability insurance in the event of his death or disability during the term of the new loan. (Pl. Dep. 19:13-20:23; 103:5-103:24.) A few days later, a Green Tree I agent went to Plaintiffs home and discussed the terms of the loan. (Pl.'s Dep. 25:21-27:21.)

Closing was held on August 17, 1999, at Green Tree I's office. On that date, as part of a loan transaction with Green Tree Financial Servicing Corporation, Plaintiff executed a note in the amount of $60,295.81. The note indicated that interest on the unpaid principal was at a yearly rate of 11.290%, and it called for 239 payments of $587.46 per month. In addition, the note called for a "balloon payment" of $42,732.46, due on September 1, 2019. On page two of two, the note contained the following arbitration provision:

9. ARBITRATION

All disputes, claims, or controversies arising from or relating to this Agreement or the relationships which result from this Agreement, or the validity of this arbitration clause or the entire Agreement, shall be resolved by binding arbitration by one arbitrator selected by Lender with Borrower's consent. This arbitration agreement is made pursuant to a transaction involving interstate commerce, and shall be governed by the Federal Arbitration Act, Title 9 of the United States Code. 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 or opportunity 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, EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY LENDER (AS PROVIDED HEREIN). 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 agreement. Borrower agrees that Borrower shall not have the right to participate as a representative or a member of any class of claimants pertaining to any claims arising from or relating to this Agreement. The parties agree and understand that the arbitrator shall have all powers provided by law and the Agreement. 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, Lender retains an option to use judicial or non-judicial relief to enforce a security agreement relating to the collateral secured in a transaction underlying this arbitration agreement, to enforce the monetary obligation or to foreclose on the collateral. Such judicial relief would take the form of a lawsuit. The institution and maintenance of an action for judicial relief in a court to foreclose upon any collateral, to obtain a monetary judgment or 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 Agreement, including the filing of a counterclaim in a suit brought by Lender pursuant to this provision.

On May 31, 2003, Plaintiff was involved in a motor vehicle accident, and Plaintiff asserts he became totally and permanently disabled as a result of this accident. (Resp. in Opp'n at 5.) On July 8, 2003, Plaintiff filed a claim with Defendant American Bankers Life Assurance Company of Florida ("American Bankers"), the issuer of the disability policy at issue in this case. (Pl.'s Dep. 61:14-62:10; 120:21-120:25.) Although American Bankers originally paid disability benefits to Plaintiff, it stopped paying such benefits on September 22, 2006. Such payments stopped because while Plaintiff deposed that he was "led to believe" the insurance continued for the life of the loan, (Pl.'s Dep. 27:17-27:20), the insurance in fact expired in September of 2006.

On October 5, 2006, Plaintiff brought suit against Green Tree Financial Servicing Corporation a/k/a Green Tree Services, LLC; Green Tree Insurance Agency; and American Health and Life Insurance Company d/b/a Assurant Group a/k/a American Bankers Life Assurance Company of Florida, listing causes of action for (1) breach of an insurance contract, (2) negligent misrepresentation, (3) bad faith, (4) conversion, (5) civil conspiracy, and (6) temporary and permanent restraining order. (See Compl.) It appears Plaintiff filed this suit because, among other things, he was concerned that he would lose his home.

On September 21, 2007, Plaintiff filed a Motion to Amend Complaint, and all defendants consented to such amendment. Accordingly, Plaintiffs Motion to Amend Complaint was granted, and an Amended Complaint was filed on October 16, 2007. The Amended Complaint listed two defendants, Green Tree Services, LLC, and American Bankers Life Assurance Company of Florida. (See Am. Compl.) The causes of action listed in the Amended Complaint are as follows: (1) breach of contract; (2) violation of Home Owners Equity Protection Act (HOEPA); (3) fraud; (4) constructive fraud; (5) breach of fiduciary duty; (6) negligent misrepresentation; (7) violation of the unfair trade practices act; (8) unconscionability; and (9) temporary and permanent restraining order. (See Am. Compl.) Thereafter, on November 9, 2007, Green Tree Servicing filed a Motion to Compel Arbitration and Dismiss or Stay Action, which Plaintiff opposes.²

ANALYSIS

The parties agree that the Federal Arbitration Act, 9 U.S.C. § 1 et. seq., ("FAA") governs this action. 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, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Underlying this policy is Congress's view that arbitration constitutes a more efficient dispute resolution process than litigation. Hightower v. GMRI, Inc., 272 F.3d 239, 241 (4th Cir.2001). Accordingly, "due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself must be resolved in favor of arbitration." Volt Info. Scis., Inc. v. Bd. of Tr. of Leland Stanford Jr. Univ., 489 U.S. 468, 475-76, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). The Fourth Circuit has said that arbitration "`should not be denied unless it may be said with positive assurance that the arbitration [agreement] is not susceptible of an interpretation that covers the asserted dispute.'" Peoples Sec. Life Ins. Co. v. Monumental Life Ins. Co., 867 F.2d 809, 812 (4th Cir.1989) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)).

In the Fourth Circuit, arbitration is appropriate under the FAA if a litigant 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." Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir.1991); see also Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir.2002). Even though arbitration is favored, "`there still must be an underlying agreement between the parties to arbitrate.'" Adkins, 303 F.3d at 501 (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir.1997)). State law governs the determination of whether a party agreed to arbitrate a particular dispute. Id. (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)); see also Senior Mgmt., Inc. v. Capps, 240 Fed.Appx. 550, 552-53 (4th Cir. 2007). The FAA also provides that a party "may seek revocation of a contract under `such grounds as exist at law or in equity,' including fraud, duress, and unconscionability." Sydnor v. Conseco Fin. Servicing Corp., 252 F.3d 302, 305 (4th Cir. 2001) (quoting 9 U.S.C. § 2).

Green Tree Services seeks an order of this court compelling arbitration pursuant to 9 U.S.C. § 4, asserting (1) the FAA evidences a strong policy favoring arbitration; (2) even as a nonsignatory defendant, it can enforce this arbitration agreement; and (3) arbitration should be compelled because Plaintiff's claims fall within the scope of the arbitration agreement. (Mem. in Supp. at 4-9.) Plaint...