Hopkins v. World Acceptance Corp.

Decision Date29 June 2011
Docket NumberNo. 1:10–cv–03429–SCJ.,1:10–cv–03429–SCJ.
Citation798 F.Supp.2d 1339
PartiesRita HOPKINS, individually and on behalf of all others similarly situated, Plaintiff, v. WORLD ACCEPTANCE CORPORATION, World Finance Corporation of Georgia, Fortegra Financial Corporation, Life of the South Corporation, Insurance Company of the South, Lyndon Southern Insurance Company, Defendants.
CourtU.S. District Court — Northern District of Georgia

OPINION TEXT STARTS HERE

Alan G. Snipes, Charles Neal Pope, Paul V. Kilpatrick, Jr., Pope McGlamry Kilpatrick Morrison & Norwood, LLP, Columbus, GA, Jay Forbes Hirsch, R. Timothy Morrison, Wade H. Tomlinson, III, Pope McGlamry Kilpatrick Morrison & Norwood, LLP, Atlanta, GA, Michael Joseph Blakely, Jr., Andersen, Tate & Carr, P.C., Duluth, GA, for Plaintiff.

Brian L. Church, Robert E. Harrington, Robinson Bradshaw & Hinson, Charlotte, NC, Lynette Eaddy Smith, William N. Withrow, Jr., Troutman Sanders, Atlanta, GA, for Defendants.

ORDER

STEVE C. JONES, District Judge.

THIS MATTER is before the Court on Defendants' Motions to Compel Arbitration and Stay Action [Doc. Nos. 20, 21], and Plaintiff's Motion for Continuance to Respond to Defendants' Motions to Compel Arbitration and Stay Action [Doc. No. 28]. For the reasons given below, Defendants' Motions are GRANTED and Plaintiff's Motion is DENIED.

BACKGROUND

Plaintiff Rita Hopkins obtained a series of consumer loans from Defendant World Finance Corporation of Georgia (World Finance–GA).1 (Am. Compl. [Doc. No. 9] ¶¶ 18, 25, 32.) For each loan transaction, Plaintiff and World Finance–GA executed a loan agreement (the “Loan Agreement”) and an arbitration agreement (the “Arbitration Agreement”). ( Id. [Doc Nos. 9–1–9–5] at Exs. A–E.) The Loan Agreement charges Plaintiff a fee for non-recording insurance, also known as non-filing insurance (the “NFI”). ( Id. [Doc Nos. 9–9–5] at ¶¶ 18–85, Exs. A–E.) Plaintiff alleges that the NFI fee resulted in, among other things, breach of contract, unjust enrichment, conversion, violation of Georgia RICO, violation of Georgia's Deceptive Trade Practices Act, and violation of the Truth in Lending Act (“TILA”).

World Finance–GA purchased NFI from companies such as Defendant Insurance Company of the South.2 ( Id. at ¶¶ 63–65; Decl. Mark C. Roland [Doc. No. 20–2] ¶ 8.) Under the NFI, World Finance–GA is ostensibly the insured and Defendant Insurance Company of the South (ICOS) is the insurer; Plaintiff is not indemnified by the NFI. ( See Am. Compl. [Doc No. 9] ¶¶ 70–74; Decl. Mark C. Roland [Doc. No. 20–2] ¶ 8.)

The Loan Agreement contains an ARBITRATION AGREEMENT provision, which states

“BORROWER AND LENDER DO AGREE TO AN ARBITRATION (EXCEPT AS LIMITED IN THE ARBITRATION AGREEMENT) FOR THE SETTLEMENT OF ANY CONTROVERSIES BETWEEN THEM. THE TERMS OF THE ARBITRATION AGREEMENT ARE SET FORTH IN A SEPARATE AGREEMENT. THE PARTIES HEREBY ACKNOWLEDGE THAT THE AGREEMENT OF THE BORROWER TO ENTER INTO THE SEPARATE ARBITRATION AGREEMENT IS A MATERIAL INDUCEMENT TO THE LENDER'S ENTERING INTO THIS AGREEMENT WITH THE BORROWER.

(Am. Compl. [Doc Nos. 9–1–9–3] Exs. A–C (emphasis in original).)

The separate Arbitration Agreement broadly covers all claims filed by a plaintiff:

ALL DISPUTES, CONTROVERSIES OR CLAIMS OF ANY KIND AND NATURE BETWEEN LENDER AND BORROWER ARISING OUT OF OR IN CONNECTION WITH THE LOAN AGREEMENT, OR ARISING OUT OF ANY TRANSACTION OR RELATIONSHIP BETWEEN LENDER AND BORROWER OR ARISING OUT OF ANY PRIOR OR FUTURE DEALINGS BETWEEN LENDER AND BORROWER, SHALL, AT THE REQUEST OF EITHER PARTY, BE SUBMITTED TO SINGLE ARBITRATION AND SETTLED BY SINGLE ARBITRATION IN ACCORDANCE WITH THE UNITED STATES ARBITRATION ACT, THE EXPEDITED PROCEDURES OF THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION (THE “ARBITRATION RULES OF THE AAA”), AND THIS AGREEMENT.... SUCH ARBITRATION SHALL BE CONDUCTED BY A PANEL OF ONE (1) ARBITRATOR SELECTED IN ACCORDANCE WITH THE ARBITRATION RULES OF THE AAA.

( Id. [Doc. Nos. 9–4–9–5] at Exs. D–E ¶ 1 (emphasis in original).)

The Arbitration Agreement also describes the ramifications of the agreement, including a class action waiver:

LENDER AND BORROWER UNDERSTAND AND AGREE (I) THAT EACH OF THEM IS WAIVING RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL; (II) THAT EACH OF THEM IS WAIVING THE RIGHT TO PURSUE A CLAIM AS A CLASS ACTION OR BY CLASS OR MULTI–PARTY ARBITRATION; (III) THAT PRE–ARBITRATION DISCOVERY IN AN ARBITRATION PROCEEDING IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM A COURT PROCEEDING; (IV) THAT THE ARBITRATOR'S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING; AND (V) THAT EITHER PARTY'S RIGHT TO APPEAL OR SEEK MODIFICATION OF RULINGS BY THE ARBITRATOR IS STRICTLY LIMITED.

( Id. at ¶ 9 (emphasis in original).) The agreement also defines arbitration:

Arbitration is a method of resolving disputes between parties without filing a lawsuit in court. The Arbitrator's decision under this Agreement is final and binding on Borrower and Lender. The Arbitrator does not have to give any written reasons for the decision. Borrower is limiting Its right to bring a lawsuit in court, including the right to a jury trial.

( Id. at p. 2.)

The parties' final Arbitration Agreement contains the following opt-out provision, entitled How to Reject this Agreement to Arbitrate:

You may reject this agreement to arbitrate by sending to us at the address that follows a notice (“Rejection Notice”) that we receive within fifteen (15) days of the date of this agreement to arbitrate. Your Rejection Notice must include your full name, your current address, your current telephone number, the loan account number for the loan that you obtained contemporaneously with this agreement to arbitrate, your full social security number for identity verification purposes, and be signed by you.... Any Rejection Notice will apply only to this arbitration agreement and will not apply to any prior or future arbitration agreements that you may enter into with us. The Rejection Notice must be mailed with return receipt requested to: Rejection Notice Department.... In the event of any dispute concerning whether you have provided a timely notice of rejection, you must produce the signed receipt for mailing the Rejection Notice. In the absence of the signed receipt, our received date stamp on the Rejection Notice shall be conclusive evidence of the date of receipt. These instructions constitute the only method that you can use to exercise your right to reject this arbitration agreement.

( Id. at p. 2 (emphasis in original).)

Defendants seek to compel Plaintiff to arbitrate her claims. Plaintiff, in turn, asks for a continuance to respond to Defendants' motions to compel, thus allowing her to conduct discovery into the enforceability of the Arbitration Agreement.

DISCUSSIONI. Defendants' Motions to Compel ArbitrationA. The Federal Arbitration Act Governs This Dispute

The FAA mandates that A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... 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 “involving commerce” provision in 9 U.S.C. § 2 and the “affecting commerce” provision of the Commerce Clause are functional equivalents; they are “words of art that ordinarily signal the broadest permissible exercise of Congress' Commerce Clause power.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003).

Here, the Arbitration Agreement provides that [t]his Agreement and the Loan Agreement are made in interstate commerce.” (Am. Compl. [Doc. No. 9–4–9–5] Exs. D–E ¶ 5.) The presence of interstate commerce is further reflected by the citizenship of the defendants to this action: World Finance–GA is a Georgia Company and World Acceptance is a South Carolina corporation. Indeed, both World Finance–GA and World Acceptance maintain a business presence in South Carolina. Furthermore, Plaintiff's loan transactions involved the interstate transmission of data and the disbursement of funds. ( See Roland Decl. [Doc. No. 20–2]¶ 7.); see also Jenkins v. First Am. Cash Advance of Georgia, 400 F.3d 868, 874–75 (11th Cir.2005) (holding that processing loans across state lines constituted “interstate commerce” within the meaning of 9 U.S.C. § 2). Indeed, Plaintiff admits that Defendants' activities occur in or have an impact on interstate commerce.” (Am. Compl. [Doc. No. 9] ¶ 223.)

And as will be discussed below, the Arbitration Agreement encompasses Plaintiff's claims, and there are no grounds for revoking the agreement. Therefore, the FAA requires this Court to enforce the agreement according to its terms. See Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989).

B. The Arbitration Agreement Requires Arbitration of Plaintiff's Claims

[Q]uestions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.” 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). In light of this policy, the Supreme Court mandates the liberal application of arbitration clauses:

The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.

Id. at 24–25, 103 S.Ct. 927.

Against the backdrop of this policy favoring arbitration, a court uses a two-step process to determine reach of an arbitration agreement. First, a court must ascertain if the agreement's terms reach the plaintiff's claims. Second, a court must decide if any “legal constraints external to the...

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