Wheeler v. Cavalry SPV I, LLC
| Decision Date | 23 March 2022 |
| Docket Number | 20-cv-1055-wmc |
| Parties | Amanda WHEELER, Plaintiff, v. CAVALRY SPV I, LLC, Defendant. |
| Court | U.S. District Court — Western District of Wisconsin |
Matthew Curtiss Lein, Lein Law Offices, Hayward, WI, Robert Welcenbach, Welcenbach Law Offices, S.C., Milwaukee, WI, for Plaintiff.
Matthew O. Stromquist, Pilgrim Christakis LLP, Chicago, IL, for Defendant.
In this case, plaintiff Amanda Wheeler alleges that defendant Cavalry SPV I, LLC ("Cavalry") violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq. , as well as Wis. Stat. § 100.18, by filing a small claims action against her despite not previously providing a proper right to cure letter as required by Wis. Stat. § 425.105. In response, defendant has moved to compel arbitration of plaintiff's claims. (Dkt. #9.) For the reasons discussed below, the court will grant defendant's motion, and dismiss this case without prejudice to either party.
On or about October 10, 2009, Wheeler obtained a Citi Sears credit card from Citibank. Citibank cardmember accounts are governed by written card agreements, which are amended from time to time. Defendant has attached a copy of the card agreement ("the Agreement" or "the 2016 Agreement"), which it asserts governed Wheeler's account in 2016 and 2017. This Agreement includes an arbitration provision, which states in relevant part:
(Gauper Decl., Ex. A (Cardholder Agreement) (dkt. #10-1) 6-7 (emphases in original).) "[W]e, us, and our" is defined to mean "Citibank, N.A." (Id. at 2.)
The arbitration provision also specifies certain exclusions, including that: "Individual Claims filed in a small claims court are not subject to arbitration, as long as the matter stays in small claims court." (Id. at 7.) The Agreement further states more generally that it "is binding on you unless you close your account within 30 days after receiving the card and you have not used or authorized use of the card," as well as that "[f]ederal law and the law of South Dakota ... govern the terms and enforcement of this Agreement." (Id. at 2, 8.) Finally, the Agreement explains that "[w]e may assign any or all of our rights and obligations under this Agreement to a third party." (Id. at 8.)
After adoption by amendment, Citibank mailed a copy of the 2016 Agreement to Wheeler as a current card holder at her address in Hayward, Wisconsin. Additionally, Citibank's regular business practice was to: mail these written card agreements to the cardmember; note in the cardmember's record if mail is returned as undeliverable; and track when a cardmember rejects a card agreement. Citibank has no records that any card agreement sent to Wheeler was returned as undeliverable or that Wheeler rejected any agreement. Moreover, Wheeler used the card as late as June 5, 2017.
On June 27, 2019, after Wheeler's account had been charged off, Citibank "sold all rights, title[,] and interest in the Account to Cavalry SPV I, LLC." (Gauper Decl. (dkt. #10) ¶ 12.) Defendants provide a copy of this Bill of Sale and Assignment, which states in part:
THIS BILL OF SALE AND ASSIGNMENT dated June 27, 2019, is by Citibank, N.A. ... to Cavalry SPV I, LLC .... For value received and subject to the terms and conditions of the Master Purchase and Sale Agreement dated February 18, 2019 and Addendum No. 9 dated June 24, 2019, between Buyer and the Bank (the "Agreement"), the Bank does hereby transfer, sell, assign, convey, grant, bargain, set over and deliver to Buyer, and to Buyer's successors and assigns, the Accounts described in Exhibit 1 to the Addendum and the final electronic file.
(Gauper Decl., Ex. C (dkt. #10-3) 2.)
9 U.S.C. § 2. The Supreme Court has explained that the FAA evinces a "national policy favoring arbitration." AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 346, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (quoting Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006) ). To that end, the FAA "leaves no place for the exercise of discretion," but rather mandates that courts "shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (emphasis in original). Moreover, any doubts as to whether the arbitration clause is susceptible to an interpretation that would cover the asserted dispute should be "resolved in favor of coverage." AT & T Techs., Inc. v. Commc'ns Workers of Am. , 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). Still, the party seeking to compel arbitration has the burden of showing that the parties are bound by the arbitration clause. A.D. v. Credit One Bank, N.A. , 885 F.3d 1054, 1063 (7th Cir. 2018).
"At bottom ... arbitration is contractual." Scheurer v. Fromm Fam. Foods LLC , 863 F.3d 748, 752 (7th Cir. 2017). Thus, "[w]hether a binding arbitration agreement exists is determined under principles of state contract law." Tinder v. Pinkerton Sec. , 305 F.3d 728, 733 (7th Cir. 2002) (citing 9 U.S.C. § 2 ; First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ). Here, the 2016 Agreement produced by defendant (which, as discussed below, is the operative agreement) provides that South Dakota law governs the terms and enforcement of the Agreement, and so that is the law that this court will apply.2
In addition to what appears on its face to be a binding agreement, defendant argues that: the arbitration provision in the Agreement is valid and enforceable; plaintiff's claims fall within the scope of the arbitration provision; and this court, therefore, must compel arbitration. In response, plaintiff offers a number of contrary arguments. First, she questions the relevance of the 2016 Agreement, arguing instead that the agreement that she received when she first opened her account in 2009 is the operative one. Second, she asserts that any agreement she had with Citibank does not extend to Cavalry. Third, she argues that even if Calvary had a right to arbitrate with Wheeler, it waived this right.3 Each of these arguments are addressed in turn below.
Plaintiff first argues that the relevant card agreement is the one Wheeler was presented with when first opening her account in 2009, not the 2016 Agreement produced by defendant. However, defendant has produced evidence showing that the terms of the 2016 Agreement were properly offered to plaintiff; that she accepted; and that the Agreement was operative during the time relevant to this suit (namely, when Wheeler's account was charged off in 2017). In particular, defendant has shown that it was Citibank's regular business practice to mail amended cardholder agreements to its cardholders, and even more specifically that it had mailed the terms of the 2016 Agreement to Wheeler. Indeed, plaintiff does not dispute that she received that agreement, and Citibank has no record of it being returned as undeliverable.
Further, the Agreement expressly states that it is binding on the cardholder "unless you close your account within 30 days after receiving the card and you have not used or authorized use of the card." (Cardholder Agreement (dkt. #10-1) 2.) Citibank has no record of Wheeler closing her account; indeed, defendant has shown that plaintiff continued to use her card after receiving the 2016 Agreement. Thus, the mailing of the 2016 Agreement constituted an offer and Wheeler's continued use of her card was an acceptance of the terms and conditions -- including the arbitration clause -- set forth in the Agreement. See S.D. Codified Laws § 54-11-9 (...
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...in the “current litigation,” which negated any allegations of delay as to the prior litigations. Id. at 995-96. Similarly, in Wheeler v. Cavalry SPV I, LLC, the court that the right to compel arbitration was not waived even where the defendant had initiated a prior small claims action again......