Cach, LLC v. Potter

• Decision Date: 03 March 2017
• Docket Number: No. 2016–90–Appeal.,KC 13–780,2016–90–Appeal.
• Citation: 154 A.3d 939
• Parties: CACH, LLC v. Brandon POTTER.
• Court: Rhode Island Supreme Court

154 A.3d 939

CACH, LLC

v.Brandon POTTER.

No. 2016–90–Appeal.

KC 13–780

Supreme Court of Rhode Island.

March 3, 2017

For Plaintiff: Meghan Barry, Esq., Lynda L. Laing, Esq.

For Defendant: Brandon Potter, Pro Se.

Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

OPINION

Justice Robinson, for the Court.

The defendant, Brandon Potter, appeals from a grant of summary judgment in favor of the plaintiff, CACH, LLC (CACH), in this credit card debt collection action. He contends on appeal that the hearing justice erred in granting CACH's motion for summary judgment. He further posits that the hearing justice committed error in denying his motion to compel arbitration and his motion to amend his answer. This case came before the Supreme Court for oral argument on January 25, 2017 pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. After a close review of the record and careful consideration of the parties' arguments (both written and oral), we are satisfied that cause has not been shown and that this appeal may be decided at this time.

For the reasons set forth below, we affirm the judgment of the Superior Court.

IFacts and Travel

The defendant is in debt in the amount of $10,288.04, plus statutory interest and costs, under a credit card account which he opened and maintained with Bank of America, N.A. At some point, Bank of America assigned the right to collect the debt to CACH. On July 22, 2013, CACH filed a complaint in Superior Court whereby it sought to recover the above-referenced amount. On May 7, 2014, Mr. Potter eventually filed an answer to the complaint. ¹

Notably, that answer did not include a demand for arbitration.

Well over a year later, on September 28, 2015, CACH filed a motion for summary judgment. Thereafter, on December 8, 2015, Mr. Potter filed an objection to CACH's motion as well as a motion to compel arbitration and to dismiss the case (or, in the alternative, stay proceedings) pursuant to the arbitration provision of the Cardholder Agreement entered into between Mr. Potter and Bank of America.² On January 11, 2016, a hearing was held on CACH's motion for summary judgment. At that hearing, the hearing justice denied Mr. Potter's motion to compel arbitration because he had failed to raise a right to arbitrate as an affirmative defense in his answer. Then, after denying Mr. Potter's request for a continuance, the hearing justice proceeded to consider CACH's summary judgment motion and Mr. Potter's objection thereto. At the conclusion of the hearing, the justice granted CACH's motion for summary judgment.

On January 14, 2016, Mr. Potter filed a motion to amend his answer so as to include a demand for arbitration as an affirmative defense, and he also filed a motion to reconsider and vacate the Superior Court's grant of CACH's motion for summary judgment. On January 25, 2016, following another hearing, the hearing justice denied Mr. Potter's motions. Orders granting plaintiff's motion for summary judgment and directing the entry of judgment in plaintiff's favor entered the same day. Thereafter, Mr. Potter filed a notice of appeal.

IIAnalysis

AMr. Potter's Motion to Compel Arbitration

Mr. Potter contends that the hearing justice erred in denying his motion to compel arbitration and dismiss the case. He posits that the Superior Court lacked subject matter jurisdiction over the action as a result of the arbitration provision in the Cardholder Agreement. As evidence of his intent to arbitrate the dispute, he directs this Court's attention to the fact that he did not "participate in any discovery, file a counterclaim, submit interrogatives [sic], or challenge the plaintiff's standing at any point prior to filing for arbitration * * *." He adds that he is seeking to enforce the arbitration clause in the Cardholder Agreement in order to obtain relief for violations of the federal Fair Debt Collection Practices Act and the federal Fair Credit Reporting Act.

In denying Mr. Potter's motion to compel arbitration, the hearing justice stated that an assertion that a dispute is subject to arbitration must be affirmatively pled in an answer or a defendant would run the risk of having it deemed waived; he held that Mr. Potter had failed to raise a demand for arbitration in his answer and that such a demand had, accordingly, been waived. After a thorough review of the record and Mr. Potter's arguments on appeal, we are in complete agreement with the hearing justice.

Initially, we note that our review of a trial court's denial of a motion to compel arbitration is conducted de novo. DeFontes v. Dell, Inc., 984 A.2d 1061, 1066 (R.I. 2009).

Rule 8(c) of the Superior Court Rules of Civil Procedure provides that, "[i]n pleading to a preceding pleading, a party shall set forth affirmatively * * * arbitration and award * * * and any other matter constituting an avoidance or affirmative defense." It has been our consistent holding that arbitration is an affirmative defense and that "a defending party seeking arbitration must specifically plead the right to arbitrate in its answer or the defense will be deemed waived." Soprano v. American Hardware Mutual Insurance Co., 491 A.2d 1008, 1010 (R.I. 1985) ; see also Associated Bonded Construction Co. v. Griffin Corp., 438 A.2d 1088, 1091 (R.I. 1981). Moreover, we have stated that "a defending party who fails to plead an affirmative defense, thereby waiving it, may not later move to dismiss the opponent's complaint under [Rule 12 of the Superior Court Rules of Civil Procedure], using that waived affirmative defense as a basis for dismissal." Associated Bonded Construction Co., 438 A.2d at 1091. Yet, Mr. Potter sought to do precisely that in the instant case. He failed to raise a demand for arbitration as an affirmative defense in his answer and then some time later moved to compel arbitration and to dismiss CACH's case based on the arbitration provision in the Cardholder Agreement. Accordingly, it is our judgment that the hearing justice did not err in denying Mr. Potter's motion to compel arbitration.³

BMr. Potter's Motion to Amend

Mr. Potter argues that the hearing justice should have granted his motion to amend his answer to add a demand for arbitration as an affirmative defense due to this Court's liberal policy in favor of amendment. He further avers that there would be no prejudice to CACH if he were permitted to amend his answer and that any delay in his moving to amend his answer was not, by itself, sufficient reason to deny his motion.

We accord great deference to the decision by a hearing justice to grant or deny a motion to amend and will not disturb his decision unless he abused his discretion. Lomastro v. Iacovelli, 56 A.3d 92, 94 (R.I. 2012) ; see also Harodite Industries, Inc. v. Warren Electric Corp., 24 A.3d 514, 529 (R.I. 2011). Rule 15(a) of the Superior Court Rules of Civil Procedure states that "leave [to amend] shall be freely given when justice so requires." It has been our view that that rule allows for amendment "absent a showing of extreme prejudice." Wachsberger v. Pepper, 583 A.2d 77, 78 (R.I. 1990). We apply such a liberal interpretation "in order to facilitate the resolution of disputes on their merits rather than on blind adherence to procedural technicalities." Id. And we have stated that "mere delay is not enough to deny the amendment." Inleasing Corp. v. Jessup, 475 A.2d 989, 992 (R.I. 1984).

In spite of our generally liberal approach to motions to amend, after a thorough review of the record before us, we are unable to perceive any abuse of discretion by the hearing justice in the instant case. Mr. Potter filed his motion to amend his answer over a year and a half after he filed his answer. Moreover, in addition to our taking into account the delay of Mr. Potter in filing his motion to amend, it is clear to us that extreme prejudice to CACH would result if amendment were to be permitted at this late date: having filed a complaint in Superior Court in July of 2013 and having subsequently gained relief in Superior Court, CACH would now be forced to start all over again with arbitration. Additionally, we also find the following reasoning in favor of denying Mr. Potter's motion to amend to be the most convincing: if amendment were to be permitted in this case, it would effectively allow Mr. Potter to circumvent our well-established rule that a demand for arbitration is an affirmative defense which must be raised in an answer or run the risk of having it deemed waived. See Associated Bonded Construction Co., 438 A.2d at 1091. Accordingly, we hold that the hearing justice did not abuse his discretion in denying Mr. Potter's motion to amend his answer.

CCACH's Motion for Summary Judgment

Finally, Mr. Potter contends that the hearing justice erred in granting CACH's...