Wexler v. LVNV Funding, LLC
| Docket Number | 22 Civ. 1348 (PAE) |
| Decision Date | 30 June 2023 |
| Parties | SHIMSHON WEXLER, on behalf of himself and all others similarly situated, Plaintiff, v. LVNV FUNDING, LLC and RESURGENT CAPITAL SERVICES LP, Defendants. |
| Court | U.S. District Court — Southern District of New York |
This decision resolves a motion to compel arbitration of plaintiff Shimshon Wexler's claims under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq., against defendants LVNV Funding, LLC (“LVNV”) and Resurgent Capital Services, LP (“Resurgent”) (together “defendants”). Wexler's claims are that LVNV falsely claimed to have purchased debt he incurred on a personal credit card and that it and its portfolio manager Resurgent are attempting illegally to collect on that debt.
For the foregoing reasons, the Court grants the motion to compel arbitration.
LVNV is a post-default purchaser of consumer debts. Dkt. 1 (“Compl.”) ¶¶ 10-21. LVNV buys defaulted debts at discounted rates, and then seeks to collect the full amount owed. Id. ¶ 10. Resurgent collects debts owed to third parties. Id. ¶¶ 24, 36. Resurgent manages and collects LVNV's debts. Id. ¶ 25.
At some time before November 1, 2019, Wexler incurred a debt to Citibank on a personal credit card account in his name ending in 4826.[2] Id. ¶¶ 27-28. The “[d]ebt arose out of transactions” that were “primarily for personal, family or household purposes, namely fees alleged to have emanat[ed] from a personal credit card account in [Wexler's] name that was issued by Citibank.” Id. ¶ 28.
At some later point, Wexler alleges, LVNV claims it purchased the debt in connection with this credit card account after default. Id. ¶ 32. This purchase occurred through a series of transactions. First, Citibank transferred its interests in Wexler's account to Sherman Originator III LLC. Dkt. 33 (“Master Purchase Agreement”); Dkt. 27-1 at 1. Second, Sherman Originator III LLC transferred that interest to Sherman Originator LLC. Dkt. 27-1 at 2. Third, and finally, Sherman Originator LLC transferred the interest to LVNV. Id. Through Resurgent, LVNV attempted to collect on Wexler's debt. Compl. ¶ 37.
On February 15, 2021, Wexler visited Resurgent's website, which stated that he owed a balance of $4,409.88 on the debt. Id. ¶¶ 38-39. The website presented the option to make a onetime payment of $1,322.96 to settle the entire debt, for a savings of $3,086.92. Id. ¶¶ 40-41. Wexler paid the $1,322.96. Id. ¶ 42. Resurgent acknowledged this payment in a letter dated February 20, 2021. Id. ¶ 43. Despite making the payment, Wexler disputes that he owed the debt to LVNV, or that LVNV had purchased the debt from Citibank or any other entity. Id. ¶¶ 32, 42; see also Dkt. 43 at 1.
Wexler alleges that, after his payment, defendants continued to attempt to collect on the debt. Compl. ¶ 44. On February 18, 2021, defendants sent Wexler two letters indicating that he owed a balance of $3,086.92, rather than crediting the one-time payment as settling the entire debt. Id. ¶¶ 45-47; id. Exs. A-B. Around March 3, 2021, defendants updated Wexler's credit report to indicate his balance on the debt as being $3,086.92, notwithstanding Wexler's understanding that the one-payment had settled the debt. Id. ¶¶ 68-70. On March 16, 2021, Resurgent emailed Wexler notifying him that he missed his last payment. Id. ¶¶ 56-60.
In support of the motion to compel arbitration, defendants have produced documents reflecting the parties' alleged arbitration agreement and the assignment of Citibank's rights as against Wexler.
The credit card agreement between Wexler and Citibank, see Dkt. 38-5 (“credit card agreement”), provides, in pertinent part:
You or we may arbitrate any claim, dispute or controversy between you and us arising out of or related to your Account, a previous related Account or our relationship (called “Claims”).. . . Except as stated below, all Claims are subject to arbitration, no matter what legal theory they're based on or what remedy (damages, or injunctive or declaratory relief) they seek, including Claims based on contract, tort (including intentional tort), fraud, agency, your or our negligence, statutory or regulatory provisions, or any other sources of law; Claims made as counterclaims, cross-claims, third-party claims, interpleaders or otherwise; Claims made regarding past, present, or future conduct; and Claims made independently or with other claims. This also includes Claims made by or against anyone connected with us or you or claiming through us or you, or by someone making a claim through us or you, such as a co-applicant, authorized user, employee, agent, representative or an affiliated/parent/subsidiary company.
Id. at 11 (emphasis in original).[3] The agreement further provides that “[a]rbitration shall be conducted by the American Arbitration Association (‘AAA') according to . .. the applicable AAA arbitration rules in effect,” and invokes the AAA's rules and forms in describing the arbitral procedures. Id. at 12. The agreement states that the arbitration provision “shall be interpreted in the broadest way the law will allow,” Id. at 11, and “survive[s] changes in this [Credit Card] Agreement and termination of the Account or the relationship between you and us, including the bankruptcy of any party and any sale of your Account, or amounts owed on your Account, to another person or entity,” Id. at 12. A separate section of the agreement provides that “|f federal law and the law of South Dakota govern the terms and enforcement of this Agreement.” Id.
As to the ensuing assignments, defendants have produced (1) a bill of sale and assignment in which Citibank “transfer[s], sell[s], assign[s] ... and deliver[s] to Buyer,” defined as Sherman Originator III LLC, “and to Buyer's successors and assigns, the Accounts” described in an attached spreadsheet, which includes Wexler's account, Dkt. 27-1 at 1; (2) a “transfer and assignment,” in which Sherman Originator III LLC “transfers, sells, assigns,... and delivers to Sherman Originator LLC all of its right, title and interest in and to the receivables and other assets,” including Wexler's account and “electronically stored business records,” Id. at 2, and (3) a transfer and assignment, in which Sherman Originator LLC “transfers, sells, assigns . .. and delivers to LVNV Funding LLC” the same, id.', and (4) a power of attorney under which LVNV retains Resurgent to “service, liquidate and manage accounts receivable on [LVNV's] behalf,” Id. at 17-18.
On February 17, 2022, Wexler filed the Complaint. Dkt. 1. On May 12, 2022, defendants filed motions to compel arbitration and to dismiss. Dkt. 15. In support, defendants submitted a declaration from Patti Sexton, a paralegal employed by Resurgent, attesting to facts indicating, inter alia, that LVNV currently owns Wexler's credit card account. Dkt 20-1. The Sexton Declaration referenced agreements that transferred the account from Citibank to Sherman Originator III LLC, from Sherman Originator III LLC to Sherman Originator LLC, and from Sherman Originator LLC to LVNV. Id. On July 8, 2022, Wexler filed a motion to compel the production of documents concerning the chain of ownership of the account and to stay defendants' motion to compel arbitration. Dkt. 21. On November 16, 2022, the Court ordered defendants to file, on the docket, the four agreements asserted to establish the chain of ownership and Resurgent's relationship to LVNV on the docket, plus a renewed motion to compel arbitration. Dkt. 26.
On November 23, 2022, defendants filed the bill of sale and assignment, Dkt. 27-1 at 1, the transfer and assignment, Id. at 2, and the limited power of attorney, Id. at 17 18. On November 23, 2022, Wexler moved to compel defendants to produce the master purchase and sale agreement (“MPA”) referenced in the bill of sale, Dkt. 28, which the Court granted, Dkt. 30, over defendants' opposition, Dkt. 29. On December 22, 2022, defendants submitted the redacted MPA to the Court for in camera review. Dkt. 36. The Court deemed defendants' production complete, id., and entered a confidentiality order regarding the MPA, Dkt. 37.
On January 2, 2023, defendants renewed their motion to compel arbitration, Dkt. 38, and filed a memorandum of law, Dkt. 38-1 (“MTC Mem.”), and exhibits in support, Dkts. 38-2-5. On January 9, 2023, Wexler opposed the motion to compel. Dkt. 42 (“MTC Opp.”). On January 17, 2023, defendants replied. Dkt. 44 (“MTC Reply”).
The Federal Arbitration Act (“FAA”) provides that an arbitration agreement “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 FAA “creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate.” Mitsubishi Motor Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 (1985) (quoting Moses H. Cone Mem 'I Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983)). Congress enacted the FAA to reverse “centuries of judicial hostility to arbitration agreements” and “to place arbitration agreements upon the same footing as other contracts.” Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11 (1974) (internal quotation marks and citation omitted).
“The question whether the parties have submitted a particular dispute to arbitration, [that is] the question of arbitrability, is an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.” Howsam v Dean Witter Reynolds Inc., 537 U.S. 79, 83...
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