Sanchez v. Hertz Car Sales

• Decision Date: 06 December 2021
• Docket Number: Civil Action 4:21-cv-00691-O-BP
• Parties: GABRIEL SANCHEZ, Plaintiff, v. HERTZ CAR SALES, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

GABRIEL SANCHEZ, Plaintiff, v. HERTZ CAR SALES, et al., Defendants.

Civil Action No. 4:21-cv-00691-O-BP

United States District Court, N.D. Texas, Fort Worth Division

December 6, 2021

FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

HAL R RAY, JR., UNITED STATES MAGISTRATE JUDGE

Before the Court is pro se Plaintiff Gabriel Sanchez's Motion to Remand (ECF No. 12) and Defendants' Motions to Compel Arbitration (ECF Nos. 16, 20-21), with their Brief in Support (ECF No. 17). After considering the pleadings and applicable legal authorities, the undersigned RECOMMENDS that United States District Judge Reed O'Connor DENY Plaintiff's Motion to Remand, GRANT Defendants' Motions to Compel Arbitration, DENY all remaining pending motions as moot, and DISMISS this case with prejudice.

I. BACKGROUND

Gabriel Sanchez sues three Defendants relating to the repossession of his 2017 Nissan Sentra. See ECF No. 7. Sanchez purchased the vehicle from Defendant Hertz Car Sales (“Hertz”) under a retail installment contract (the “Contract”). Id. at 6. Hertz assigned its Contract rights to Defendant American Credit Acceptance, LLC (“ACA”), which had financed Sanchez's purchase. See id.; ECF No. 17-1 at 4, ¶ 6. Under the Contract, Sanchez agreed to make monthly installment payments, and he “entered the vehicle as collateral.” ECF No. 7 at 6-7. ACA says Sanchez “fell behind on his monthly payments, ” so it directed Defendant Hide and Seek Recovery (“H&S”) to repossess the vehicle. ECF No. 17-1 at 5, ¶ 8. According to Sanchez, H&S “illegally repossessed” the vehicle.” ECF No. 7 at 2.

Sanchez sued Defendants in the 348th Judicial District Court of Tarrant County, Texas. ECF No. 1-1 at 5-10. His state court original petition asserted claims under Texas civil and criminal statutes and the federal Fair Debt Collection Practices Act (“FDCPA”). Id. at 9. When Defendants did not file an answer or responsive pleading, Sanchez filed a motion for default judgment. Id. at 3, 36-37. Two days later, ACA removed the case to this Court based on Sanchez's FDCPA claim, with Hertz and H&S consenting to the removal. ECF No. 1 at 1-2, 4.

Sanchez moves the Court to remand (ECF No. 12), while Defendants oppose (ECF Nos. 27-29) and move the Court to compel arbitration and dismiss this case under the Contract and the Federal Arbitration Act (“FAA”). ECF Nos. 16, 20-21.

II. LEGAL STANDARDS

A. Removal and Remand

A defendant to a civil action filed in state court may remove the action to federal court if it could have been filed there originally. 28 U.S.C. § 1441(a). Federal courts “have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. The case arises under U.S. law if “federal law creates the cause of action.” Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 808 (1986). The plaintiff may object to removal and move to remand the case under 28 U.S.C. § 1447(c). It is the removing party's burden to show that federal jurisdiction, and thus removal, is proper. Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 528 (5th Cir. 2009).

Whether federal jurisdiction is proper depends upon “the claims in the state court petition as they existed at the time of removal.” Clewis v. Medco Health Sols., Inc., 578 Fed.Appx. 469, 471 (5th Cir. 2014) (quoting Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)). Any doubts are resolved against federal jurisdiction. Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir. 2000). Upon removal, the district court “shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy.” 28 U.S.C. § 1367(a).

B. Federal Arbitration Act

Where applicable, the FAA “requires courts to enforce private arbitration agreements.” New Prime Inc. v. Oliveira, __ U.S. __, 139 S.Ct. 532, 536 (2019). The Court should grant a motion to compel arbitration under the FAA if “the parties agreed to arbitrate the dispute in question” and no “legal constraints external to the parties' agreement foreclosed the arbitration of those claims.” Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996) (citing and quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 628 (1985)). If the parties do not raise any external legal constraints, the inquiry narrows to whether the parties agreed to arbitrate the dispute, which involves two considerations: (1) whether the parties have a valid arbitration agreement, and (2) whether the dispute falls within the agreement's scope. Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006) (quoting Webb, 89 F.3d at 258).

The Court may consider “the pleadings and evidence on file.” Jackson v. Royal Caribbean Cruises, Ltd., 389 F.Supp.3d 431, 444 (N.D. Tex. 2019) (treating motion to compel arbitration like motion for summary judgment). It is the moving parties' burden to “prove the existence of an agreement to arbitrate by a preponderance of the evidence.” Grant v. Houser, 469 Fed.Appx. 310, 315 (5th Cir. 2012); see also Amerigas USA, LLC v. Standard Cap. SA, Inc., No. 3:21-cv-0072-B, 2021 WL 5052658, at *2 (N.D. Tex. Nov. 1, 2021) (citing Grant, 469 Fed.Appx. at 315). The movants must proffer “competent evidence showing the formation of an agreement to arbitrate.” Gallagher v. Vokey, 860 Fed.Appx. 354, 357-58 (5th Cir. 2021). The burden then “shifts to the party opposing arbitration to demonstrate either that the agreement is invalid or, at a minimum, to allege the dispute is outside of the agreement's scope.” Grant, 469 Fed.Appx. at 315.

If the Court concludes that whether the parties agreed to arbitrate their dispute is “in issue, ” then the Court should “proceed summarily to the trial thereof.” Gallagher, 860 Fed.Appx. at 357 (quoting 9 U.S.C. § 4). If the Court concludes it is not in issue, then the FAA authorizes the Court to compel arbitration. EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (citing 9 U.S.C. § 4). The Court bears in mind that “[t]he FAA expresses a strong national policy favoring arbitration of disputes, and all doubts concerning the arbitrability of claims should be resolved in favor of arbitration.” Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002).

III. ANALYSIS

A. Defendants properly removed this case from state to federal court.

Removal is proper if, at the time of removal, the state court petition asserts a claim arising under federal law. Compare Clewis, 578 Fed.Appx. at 471 (removal was proper because “[w]hen the case was removed to federal court, [Plaintiff's] state court petition contained a federal claim for violation of the Americans with Disabilities Act”), with Dupree v. PennyMac Loan Servs., LLC, No. 3:16-cv-0632-N-BK, 2016 WL 5875016, at *3 (N.D. Tex. Sept. 2, 2016), rec. adopted, 2016 WL 5870961 (N.D. Tex. Oct. 7, 2016) (remand was proper when “Defendant concede[d] that the original petition alleged no federal claims”).

At the time Defendants removed this case, Sanchez's state court petition asserted a claim arising under federal law: “[T]here are penalties available under the Federal Fair Debt Collection Practices Act [of] $1, 000 for each violation.” ECF No. 1-1 at 8. The prayer for relief requested $2, 000 in damages under the FDCPA. Id. at 9. The FDCPA is a federal law, see 15 U.S.C. §§ 1692- 1692p, which creates a cause of action against its violators. See § 1692k (“Civil Liability”). Sanchez's claim for relief under the FDCPA triggers this Court's jurisdiction under 28 U.S.C. § 1331, such that Defendants could remove Sanchez's state court civil action under 28 U.S.C. § 1441(a).

The case remains removable even though Sanchez filed a post-removal motion to amend his pleadings by withdrawing the FDCPA claim. ECF No. 11. In that motion, which he filed the same day as his Motion to Remand, Sanchez says he “wasn't aware of the issue with the Federal Claim until the Defendants filed a notice of removal.” Id. at 3. Even so, “a plaintiff's voluntary amendment to a complaint after removal to eliminate the federal claim upon which removal was based will not defeat federal jurisdiction.” Boelens v. Redman Homes, Inc., 759 F.2d 504, 507 (5th Cir. 1985). The Court's review remains confined to the claims asserted in the state court petition upon removal. Clewis, 578 Fed.Appx. at 471. To the extent the purpose of the motion to amend is to defeat removal, the motion is unavailing and should be denied.

Sanchez also challenges removal in light of his state court motion for default judgment: “[I] question the timing of ACA Attorney, Hertz Car Sales Attorney and Hide and Seek Recovery Attorney to deprive the state court subject matter jurisdiction shortly after the Plaintiff filed a motion for default judgment.” ECF No. 33 at 2. A pending state court motion for default judgment does not defeat removal. Burch v. JPMorgan Chase Bank, N.A., No 3:19-cv-0645-N-BH, 2019 WL 4919018, at *3 (N.D. Tex. Sept. 3, 2019), rec. adopted, 2019 WL 4918100 (N.D. Tex. Oct. 4, 2019). To the extent Plaintiff challenges the timeliness of removal, Defendants carry their burden in showing they timely filed their notice of removal. See generally Id. at *2 (construing similar fact scenario as a challenge to removal timeliness). Defendants had thirty days to remove this case from the date they received service of process of the state court case. Murphy Bros. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 354 (1999) (discussing 28 U.S.C. § 1446(b)). Sanchez claims ACA and Hertz received service of process on May 1; H&S, on May 5. ECF No. 12 at 1-2. At the earliest, the removal period would have...