Holland v. LVNV Funding, LLC

• Decision Date: 21 October 2016
• Docket Number: CASE NO. 5:16-CV-00069
• Parties: HURLEY HOLLAND PLAINTIFF v. LVNV FUNDING, LLC DEFENDANT
• Court: U.S. District Court — Western District of Kentucky

HURLEY HOLLAND PLAINTIFF v. LVNV FUNDING, LLC DEFENDANT

CASE NO. 5:16-CV-00069

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY PADUCAH DIVISION

October 21, 2016

Memorandum Opinion

This matter is before the Court upon Defendant LVNV Funding, LLC's Motion to Compel Arbitration. [DN 10.] Plaintiff Hurley Holland has responded, [DN 12], and LVNV has replied, [DN 15]. Additionally, this Court granted Holland leave to file a sur-reply, which he did. [DN 18.] LVNV responded to Holland's sur-reply. [DN 20.] Fully briefed, this matter is ripe for adjudication. For the following reasons, LVNV's Motion to Compel Arbitration [DN 10] is GRANTED, and this case is dismissed.

I. Facts and Procedural History

In March 2014, Plaintiff Hurley Holland opened a credit card account with Credit One Bank, N.A. See [DN 1 at 3.] Holland used the card to make "personal, family, and household purchases . . . ." [DN 1 at 3.] Holland's relationship with Credit One was governed by the Visa/MasterCard Cardholder Agreement, Disclosure Statement and Arbitration Agreement (the "Agreement"). [DN 20-1.] Among other things, the Agreement states, "The Arbitration Agreement provided to you with this Agreement governs the enforcement by you and us of your and our legal rights under this Agreement." [Id. at 4.] The arbitration provision itself is located at the end of the Agreement. In a section entitled "Claims Covered," the Agreement provides:

Claims subject to arbitration include, but are not limited to . . . collection matters relating to your account; . . . the application, enforceability or interpretation of this Agreement, including this arbitration provision; and any other matters relating to your account, a prior related account or the resulting relationships between you and us. Any questions about what Claims are subject to arbitration shall be resolved by interpreting this arbitration provision in the broadest way the law will allow.

Claims subject to arbitration include not only Claims made directly by you, but also Claims made by anyone connected with you or claiming through you, such as a co-applicant or authorized user of your account, your agent, representative or heirs, or a trustee in bankruptcy. Similarly, Claims subject to arbitration include not only Claims that relate directly to us, a parent company, affiliated company, and any predecessors and successors (and the employees, officers, and directors of all of these entities), but also Claims for which we may be directly or indirectly liable, even if we are not properly named at the time the Claim is made.

Claims subject to arbitration include Claims based on any theory of law, any contract, statute, regulation, ordinance, tort (including fraud or any intentional tort), common law, constitutional provision, respondeat superior, agency or other doctrine concerning liability for other persons, custom or course of dealing or any other legal or equitable ground (including any claim for injunctive or declaratory relief). Claims subject to arbitration include Claims based on any allegations of fact, including an alleged act, inaction, omission, suppression, representation, statement, obligation, duty, right, condition, status or relationship.

[Id. at 6.]

Eventually, Holland defaulted on his credit card debt, resulting in Credit One charging off his account.¹ Pursuant to a series of self-executing agreements, Credit One assigned a number of charged-off accounts, including Holland's, to FNBM, LLC. See [DN 10-2; DN 10-4 (listing accounts).] Then, on January 16, 2015, a series of transactions occurred. FNBM sold the charged-off accounts to Sherman Originator III LLC ("Sherman III"), [DN 10-2], and Sherman III sold the accounts to Sherman Originator LLC ("Sherman Originator"), [DN 10-3]. In turn,Sherman Originator sold the accounts to LVNV, the entity that currently holds Holland's debt. [DN 10-3.]

On August 5, 2015, LVNV filed suit against Holland in Graves County, Kentucky District Court, seeking to collect Holland's outstanding credit card debt. [DN 1 at 3.] The parties soon entered into an Agreed Judgment in Graves District Court on August 26, 2015. [DN 1-1.] The judgment awarded LVNV "the principal sum of $719.17 together with interest from date of judgment on the principal balance at the rate of 12.00% per annum[.]" [Id. at 1.] LVNV "agree[d] to limit execution of the . . . judgment to the filing of a Notice of Judgment Lien" as long as Holland made $50.00 monthly payments to LVNV's counsel. [Id.] Holland made four such payments totaling $200.00. [DN 1 at 4.] Pursuant to the judgment, LVNV filed a lien on Holland's real property on November 15, 2015. [DN 1-2.] The Notice of Judgment Lien calculated the amount owed as follows:

Total judgment amount as of November 04, 2015:

$661.76

Principal amount:

$632.67

Accrued interest:

$16.09

Interest rate:

12.000%

Costs:

$13.00

Attorney fees:

$0.00

[Id. at 1.]

Holland filed the instant action on May 10, 2016, alleging that LVNV's Notice of Judgment Lien violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. [DN 1.] Because, according to Holland, the Agreed Judgment "did not award LVNV its court costs or any other post judgment costs," [id. at 1], LVNV violated the FDCPA in two ways. First, he alleges that LVNV wrongfully "included the [$13.00] lien recording fee it paid to the Graves County Clerk" in the Notice of Judgment Lien. [Id. at 2.] Second, he alleges that LVNV wrongfully "applied $113.50 of the $200.00 paid by Mr. Holland towards the Agreed Judgmentto recover its court costs," [id. at 4], and failed to "properly file and serve a bill of costs pursuant to Ky. R. Civ. P. 54.04," [id. at 2]. Additionally, Holland alleges that LVNV engages in "a pattern and practice" of violating the FDCPA by routinely seeking to collect costs and fees to which it is not entitled, and asserts a cause of action on behalf of all similarly situated Kentucky consumers. [Id. at 2.]

LVNV answered the complaint, [DN 4], and shortly thereafter filed this motion to compel arbitration, [DN 10]. Holland responded,² [DN 12], and LVNV replied, [DN 15]. Additionally, Holland filed a motion for leave to file a sur-reply and a proposed sur-reply memorandum. [DN 16; DN 18.] The Court granted Holland's motion, [DN 21], and LVNV responded to Holland's sur-reply, [DN 20]. This matter is therefore ripe for adjudication.

As explained in the following pages, LVNV's motion [DN 10] is GRANTED. The Federal Arbitration Act evidences a strong federal policy in favor of arbitration. In keeping with that policy, whenever a party moves to compel arbitration pursuant to a contractual provision, courts engage in limited review to see if a valid arbitration agreement exists, and if the particular dispute falls within the scope of that agreement. Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003). If the answer to both questions is yes, the Federal Arbitration Act requires the court to compel the parties to arbitration. 9 U.S.C. § 4. In this case, Holland's Cardholder Agreement with Credit One provided that either party could elect to send "any controversy or dispute" to arbitration. [DN 20-1 at 6.] As Credit One's ultimate assignee, LVNV possesses the right to compel arbitration of this dispute, which falls within the scope of the Agreement'sarbitration provision. Because all of Holland's claims must proceed to arbitration, the Court may properly dismiss Holland's case.

II. Standard of Review

The Federal Arbitration Act provides that a written agreement to arbitrate disputes arising out a contract involving interstate commerce "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. A party seeking to enforce an arbitration agreement may request that litigation be stayed until the terms of the arbitration agreement have been fulfilled. Id. § 3. Upon such application, "[t]he court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." Id. § 4.

Before compelling arbitration, the Court "must engage in a limited review to determine whether the dispute is arbitrable." Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004) (quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003)). Such review requires the Court to determine (1) whether "a valid agreement to arbitrate exists between the parties," and (2) whether "the specific dispute falls within the substantive scope of the agreement." Id. (quoting Javitch, 315 F.3d at 624). With respect to the arbitration agreement's validity, "the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate." Great Earth Companies, Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002) (internal quotation marks and citations omitted). With respect to the agreement's scope, "there is a presumption of arbitrability in the sense that an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance thatthe arbitration clause is not susceptible of an interpretation that covers the asserted dispute." AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 650 (1986) (internal citations and quotation marks omitted). In other words, keeping in mind the "strong federal policy in favor of arbitration . . . any ambiguities in the contract or doubts as to the parties' intentions should be resolved in favor of arbitration," Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000), especially when the arbitration clause is written broadly to encompass all claims arising under the contract, AT & T Techs., 475 U.S. at 650.

III. Discussion

This case involves a...