Rowe v. Affordable Motors, Inc., 3:17-cv-1592 (VAB)
| Decision Date | 30 November 2018 |
| Docket Number | No. 3:17-cv-1592 (VAB),3:17-cv-1592 (VAB) |
| Parties | RUTH ROWE and HORACE ROWE, Plaintiffs, v. AFFORDABLE MOTORS, INC. and CREDIT ACCEPTANCE CORP., Defendants. |
| Court | U.S. District Court — District of Connecticut |
On April 23, 2018, Defendant Credit Acceptance Corporation ("Credit Acceptance" or "CA") filed a motion to compel arbitration and stay all proceedings in this action. Motion to Compel Arbitration, dated Apr. 23, 2018 ("CA Mot."), ECF No. 20. Ruth Rowe and Horace Rowe ("Plaintiffs") have failed to file any opposition to the motion for over seven months, and have not responded to an Order to Show Cause directing any such response to be filed by November 6, 2018.
As explained below, because Mr. and Ms. Rowe's failure to respond may be deemed sufficient cause to grant the motion, and because the motion and pleadings do not provide any basis for the Court to otherwise deny the motion, Credit Acceptance's motion to compel arbitration and stay all proceeding is GRANTED.
The original transaction that gave rise to this litigation is not in dispute. On September 24, 2016, Ruth Rowe and her son Horace Rowe ("Plaintiffs"), both residents of Bridgeport, Connecticut, entered into a Retail Installment Contract to purchase a used 2007 BMW 3-series automobile from Affordable Motors, Inc. ("Affordable Motors"), a Connecticut corporation that operates an automobile dealership in Bridgeport, Connecticut. See Complaint, dated Sept. 23, 2017 ("Compl."), ECF No. 1, ¶¶ 2, 3, 9, 14-19; Memorandum of Law in Support of CA Mot., dated Apr. 23, 2018 ("CA Mem."), annexed to CA Mot., ECF No. 20-1, at 2-3. Credit Acceptance, a Michigan corporation, "was the assignee of the contract and, under its terms, subject to all claims and defenses that Plaintiffs could assert against Affordable Motors up to the amounts paid." Compl. ¶¶ 4, 25.
The Rowes, however, allege, inter alia, that Affordable Motors charged them a higher price than was advertised, attempted to deliver a different BMW 3-series than the one they had purchased, and—when the Rowes would not accept the different vehicle—refused to refund the Rowes' deposit and down payment. Id. ¶¶ 20-24, 26-35. They further allege that after this, they contacted Credit Acceptance, which stated it would investigate the matter. Id. ¶ 36. The Rowes allege, however, that Credit Acceptance subsequently claimed the Rowes had violated the contract, "repossessed" and sold the undelivered car, and began pursuing a $2,271.62 deficiency payment, plus fees, costs, and interest, against the Rowes. Id. ¶¶ 37-43. The Rowes allege that Credit Acceptance's actions have negatively affected their credit rating, which they allege caused Mr. Rowe to be denied student loans necessary to afford his college education. Id. ¶¶ 44-45.
On September 23, 2017, the Rowes sued Affordable Motors and Credit Acceptance ("Defendants"), alleging that Defendants' actions violated, inter alia, express warranties to the Rowes, the Truth in Lending Act, 15 U.S.C. § 2301 et seq., the Connecticut Unfair Trade Practices Act ("CUTPA"), CONN. GEN. STAT. § 42-110a et seq., and the Connecticut Creditors Protection Act, CONN. GEN. STAT. § 36a-645 et seq. Id. ¶¶ 46-89. The Rowes seek "actualdamages, statutory damages, common law punitive damages, statutory punitive damages, an order rescinding the sale, attorney's fees and costs." Id. at 11.
After a significant period of delay, Affordable Motors and Credit Acceptance were served on February 26, 2018 and March 8, 2018, respectively. See Summons Returned Executed, filed Mar. 2, 2018, ECF No. 10; Summons Returned Executed, filed Mar. 8, 2018, ECF No. 11. Defendants subsequently moved for and were granted three extensions of time to answer, move, or otherwise respond to the Complaint. See Orders, dated Mar. 21, 2018, Mar. 27, 2018, and Apr. 22, 2018.
On April 23, 2018, Credit Acceptance filed a motion to compel arbitration and stay all proceedings in this action under Sections 2 through 4 of the Federal Arbitration Act ("FAA"). CA Mot. Credit Acceptance asserts that Affordable Motors assigned all "right, title and interest, including its security interest, in and to the Contract and the Vehicle," to Credit Acceptance. CA Mem. at 2.
Credit Acceptance alleges that Plaintiffs agreed to be bound by an arbitration clause contained in the Retail Installment Contract. That provision states that either party (including Credit Acceptance) "may require any Dispute to be arbitrated and may do so before or after a lawsuit has been started over the Dispute or with respect to other Disputes or counterclaims brought later in the lawsuit." See Retail Installment Contract, dated Sept. 24, 2016 ("Contract"), annexed as Ex. A to Mem., ECF No. 20-2, at 4-5.
Credit Acceptance therefore contends that "since the parties have unequivocally agreed that, after invocation by one of the parties, whether before or after a lawsuit has been started . . . any and all Disputes arising out of or in any way related to the Contract should be resolved by binding arbitration pursuant to the rules and procedures of either [the American ArbitrationAssociation] or JAMS, this Court should compel arbitration and stay this action pending arbitration." CA Mem. at 5.
More than six months have passed since Credit Acceptance moved to compel arbitration, and no opposition has been filed. Based on the lack of activity on the docket, Plaintiffs have also failed to otherwise attempt to prosecute this action.
On October 23, 2018, the Court ordered Plaintiffs to show cause why the motion to compel should not be granted by November 6, 2018. Order to Show Cause, dated Oct. 23, 2018, ECF No. 25. To date, Plaintiffs—who are represented by counsel—have not responded to the Court's Order.
"Failure to submit a memorandum in opposition to a motion may be deemed sufficient cause to grant the motion, except where the pleadings provide sufficient grounds to deny the motion." D. Conn. L. Civ. R. 7(a)(2).
The FAA "establishes a national policy favoring arbitration when the parties contract for that mode of dispute resolution." Preston v. Ferrer, 552 U.S. 346, 349 (2008). Section 2 of the FAA provides 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. Section 4 of the FAA enables any "party aggrieved" by the failure of another to arbitrate under a written agreement for arbitration to petition a United States District Court "for an order directing that such arbitration shall proceed in the manner provided for in such agreement." 9 U.S.C. § 4.
Courts follow a two-part test to determine whether claims are subject to arbitration considering "(1) whether the parties have entered into a valid agreement to arbitrate, and, if so, (2) whether the dispute at issue comes within the scope of the arbitration agreement." In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d 113, 128 (2d Cir. 2011). "A court may not deny arbitration where there is a valid arbitration agreement that covers the asserted claims." Davis v. Macy's Retail Holdings, Inc., No. 3:17-cv-1807 (JBA), 2018 WL 4516668, at *2 (D. Conn. Oct. 22, 2018) (citation omitted).
In the context of a motion to compel arbitration brought under the FAA, courts apply "a standard similar to that applicable for a motion for summary judgment." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003); see also McAllister v. Conn. Renaissance Inc., No. 3:10-cv-1488 (WWE), 2011 WL 1299830, at *3 (D. Conn. Apr. 5, 2011) (). The party seeking to compel arbitration must "substantiate [its] entitlement [to arbitration] by a showing of evidentiary facts" that support its claim that the other party agreed to arbitration. Oppenheimer & Co., Inc. v. Neidhardt, 56 F.3d 352, 358 (2d Cir. 1995). "If the party seeking arbitration has substantiated the entitlement by a showing of evidentiary facts, the party opposing may not rest on a denial but must submit evidentiary facts showing that there is a dispute of fact to be tried." Id. If the evidence suggests a genuine issue of material fact, the district court must summarily proceed to trial. Bensadoun, 316 F.3d at 175 (citing 9 U.S.C. § 4).
The district court, "upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . . ." 9 U.S.C. § 3; Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016)("The district court must stay proceedings once it is 'satisfied that the parties have agreed in writing to arbitrate an issue or issues underlying the district court proceeding.'") (quoting WorldCrisa Corp. v. Armstrong, 129 F.3d 71, 74 (2d Cir. 1997)).
Credit Acceptance argues that the parties entered into a valid agreement to arbitrate and that the dispute clearly falls within the scope of the arbitration agreement. Based on the evidence before the Court, and in the absence of any showing by Plaintiffs that there is any genuine dispute as to either of these issues, the Court agrees.
Whether the Retail Installment Contract was a valid agreement to arbitrate is a matter of state contract law. See First Options of Chi. v. Kaplan, 514 U.S. 938, 944 (1995) (...
To continue reading
Request your trial