Stewart v. Conn Appliances, Inc.

• Decision Date: 20 October 2022
• Docket Number: 22-2480-JTF-tmp
• Parties: ARNEZZ STEWART, Plaintiff, v. CONN APPLIANCES, INC., Defendant.
• Court: U.S. District Court — Western District of Tennessee

ARNEZZ STEWART, Plaintiff,
v.
CONN APPLIANCES, INC., Defendant.

No. 22-2480-JTF-tmp

United States District Court, W.D. Tennessee, Western Division

October 20, 2022

REPORT AND RECOMMENDATION

Tu M. Pham Chief United States Magistrate Judge

Before the court is defendant Conn Appliances, Inc.'s (“Conn's”) Motion to Compel Arbitration and Motion to Dismiss, filed on August 11, 2022.^[1](ECF No. 8.) Pro se plaintiff Arnezz Stewart filed a response on September 19, 2022. (ECF No. 10.) On September 22, 2022, Conn's filed attachments A (an invoice) and B (a promissory note) in support of the motion. (ECF Nos. 13 and 14.) For the reasons below, it is recommended that Conn's Motion to Compel Arbitration be granted and Stewart's complaint be dismissed without prejudice.

I. PROPOSED FINDINGS OF FACT

1

Conn's is a furniture retailer with its principal place of business in Beaumont, Texas. (ECF No. 1.) Arnezz Stewart is a resident of Memphis, Tennessee. (Id.) On October 8, 2019, Stewart purchased a furniture set from Conn's for a total of $4,969.88. (ECF No. 13.) He opted to finance his purchase. (Id.) During this transaction, Stewart signed an invoice and a promissory note containing an arbitration clause. (ECF Nos. 13 and 14.) The promissory note is titled “Tennessee Promissory Note and Security Agreement (With Arbitration Clause).” (ECF No. 14.) The fourth page of this document includes a box with the title “Arbitration Clause,” which appears in all capital letters and is underlined. (Id.) In the text below, the box contains the language “You or I may elect to resolve any Claim exclusively by binding individual arbitration.” (Id.) It further states that a “Claim includes but is not limited to: Claims about the enforcement or interpretation of any other part of this Note; Claims alleging fraud or misrepresentation; and any other Claims under common law, equity, or concerning federal, state, or local law or regulation.” (Id.) Finally, the note contains a provision that states, “[t]he Federal Arbitration Act governs this Clause.” (Id.)

On January 18, 2022, Stewart contacted Conn's to “resolve a balance error on the account.” (ECF No. 1-1 at PageID 6.) “[A] total balance due was agreed upon and the agreed upon balance was

2

paid on January 18, 2022.” (Id.) However, on February 17, 2022, Conn's contacted Stewart regarding an additional balance due. (Id.) Stewart was told that the previous payment had not been sufficient to close the account. (Id.) As a result of this dispute, Stewart's credit score was negatively impacted. (Id.)

Stewart filed suit in the Circuit Court for Shelby County, Tennessee on July 26, 2022. (ECF No. 1-1.) In his complaint, Stewart alleged that he “has sustained mental anguish, pain, suffering, intense emotional distress, and punitive damages” in the amount of $200,000. (Id.) On July 26, 2022, Conn's filed a notice of removal with this court. (ECF No. 1.) It alleged diversity of citizenship and an amount in controversy greater than $75,000. (Id.)

Following removal, Conn's filed the present Motion to Compel Arbitration and Motion to Dismiss. (ECF No. 8.) It asks the court to enforce the arbitration clause contained in the promissory note, compel arbitration, and dismiss this case. (Id.) Stewart filed a response on September 19, 2022. (ECF No. 10.) Stewart's response reads, in its entirety,

Before the court is plaintiff Arnezz Stewart motion to reject arbitration and motion to proceed with filed lawsuit on August 11, 2022. Plaintiff has reached out to defendant for arbitration on multiple and many occasions and defendant has yet to return phone calls. This in my opion [sic] is the defendant's law representation is acting in bad faith. So I'm asking the court to proceed

3

and grant arguments contained therein

(ECF No. 10.)

II. PROPOSED CONCLUSIONS OF LAW

A. Applicable Law

The arbitration clause at issue is governed by the Federal Arbitration Act (“FAA”). “The FAA applies to arbitration agreements in any ‘contract evidencing a transaction involving commerce.'” Swiger v. Rosette, 989 F.3d 501, 505 (6th Cir. 2021) (quoting 9 U.S.C. § 2); Stutler v. T.K. Constructors Inc., 448 F.3d 343, 345 (6th Cir. 2006). The Supreme Court has interpreted this language to refer to transactions that involve interstate commerce. Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 281 (1995). The claims in this case involve a transaction for the purchase of furniture by a citizen of Tennessee from a corporation based in Texas. (ECF No. 1-1 at PageID 6.) This transaction is reflected in the promissory note containing the arbitration clause. (ECF No. 14.) Furthermore, the arbitration clause provides that “[t]he Federal Arbitration Act governs this Clause.” (ECF No. 14.) No party has disputed its applicability. The undersigned will therefore analyze the agreement under the FAA.

The primary purpose of the FAA is to “‘ensur[e] that private arbitration agreements are enforced according to their terms.'”

4

AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011) (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989)). Section 2 of the FAA states that an agreement “to settle by arbitration a controversy arising out of” a covered contract “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 Supreme Court has described this provision “as reflecting both a liberal federal policy favoring arbitration” and the “fundamental principle that arbitration is a matter of contract.” Concepcion, 563 U.S. at 339 (internal quotation marks and citations omitted). “The FAA places arbitration agreements on an equal footing with other contracts and requires courts to enforce them according to their terms.” Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010) (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006) and Volt Info., 489 U.S. at 478); see also Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013) (stating that “courts must ‘rigorously enforce' arbitration agreements according to their terms”) (citation omitted).

“Section 4 of the [FAA] sets forth the procedure to be followed by a district court when presented with a motion to compel arbitration.” Winn v. Tenet Healthcare Corp., No. 2:10-cv-02140-JPM-cgc, 2011 WL 294407, at *1 (W.D. Tenn. Jan. 27, 2011) (citing

5

9 U.S.C. § 4; Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002)). In relevant part, that section provides as follows:

A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement . . . The 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 . . . If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.

9 U.S.C. § 48; see also Great Earth Cos., 288 F.3d at 889-90; Winn, 2011 WL 294407, at *2.

A district court considering a motion to compel arbitration has four tasks: (1) it must determine whether the parties...