Young v. Exeter Fin. Corp.
| Decision Date | 08 August 2019 |
| Docket Number | NO. 3:19-0363,3:19-0363 |
| Parties | DARRELL C. YOUNG v. EXETER FINANCE CORP. |
| Court | U.S. District Court — Middle District of Tennessee |
By Order entered May 23, 2019 (Docket Entry No. 6), this pro se civil action was referred to the Magistrate Judge for pretrial proceedings under 28 U.S.C. §§ 636(b)(1)(A) and (B), Rule 72(b) of the Federal Rules of Civil Procedure and the Local Rules of Court.
Presently pending is Defendant's motion to compel arbitration and stay proceedings (Docket Entry No. 16). Plaintiff opposes the motion. See Docket Entry No. 17. For the reasons set out below, the undersigned respectfully recommends that the motion be granted.
Darrell C. Young ("Plaintiff") is a resident of Lewisburg, Tennessee. On February 2, 2018, he purchased a truck from Newton Nissan South, an automobile dealership in Shelbyville, Tennessee. In order to finance the purchase, he entered into a retail installment sales contract with the dealership that was assigned to Exeter Finance Corp. ("Exeter" or "Defendant") at the time of the purchase. He contends that the loan ("Loan 1") was transferred to Williston Auto later that month and that he made his monthly loan payments for March, April, May, and June to Williston Auto. He alleges that he entered into a new retail installment sales contract ("Loan 2") with Newton Nissan South on June 4, 2018, for the same truck, a contract that was assigned to Exeter the same day, and that he made his monthly loan payments to Exeter "up to November." However, he alleges that he did not receive credit for the four payments he made on Loan 1 and that Exeter wrongfully repossessed the truck in November 2018. Plaintiff alleges that the truck was necessary for his business and that he was financially harmed because of the wrongful repossession of the truck.
On May 1, 2019, Plaintiff filed this lawsuit pro se and in forma pauperis against Exeter, bringing a breach of contract claim and seeking compensatory damages in the amount of $134,000.00. Although he filed the lawsuit pursuant to federal question jurisdiction under 28 U.S.C. § 1331, the Court construed the complaint as asserting diversityjurisdiction under 28 U.S.C. § 1332 and directed that process issue to Defendant. See May 23, 2019, Order.
Defendant filed a timely answer (Docket Entry No. 13),1 and thereafter filed the pending motion to compel arbitration and to stay this case. Defendant argues that the Court should stay this case and compel arbitration of Plaintiff's claim because the contracts at issue contain arbitration provisions that give either party the right to elect to submit to binding arbitration any claim or dispute arising out of or related to the loan agreements. See Motion (Docket Entry No. 16). Defendant argues that the breach of contract claim asserted by Plaintiff is within the scope of the arbitration provision and must be resolved through arbitration in light of Defendant's decision to elect arbitration. Id.
Plaintiff has filed a brief response in opposition to the motion. See Docket Entry No. 17. Plaintiff does not dispute that the loan agreements that he signed contain an arbitration provision. Instead, he argues that Loan 1 is "null and void" because it was sold to Williston Auto and that Loan 2 was breached because not all payments were applied to the loan account. Id. Plaintiff finally contends that he "doesn't feel an arbitrator would serve justice as much as this court would." Id.
The question of whether the Plaintiff's claim must be arbitrated is governed by the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq. (2011). The FAA provides that a written 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. Where a litigant establishes the existence of a valid agreement to arbitrate the dispute at issue, the Court must grant the litigant's motion to compel arbitration and stay or dismiss proceedings until the completion of arbitration. Glazer v. Lehman Bros., Inc., 394 F.3d 444, 451 (6th Cir. 2005) (citing 9 U.S.C. §§ 3-4).
When asked to compel arbitration, a federal court must determine: (1) whether the parties agreed to arbitrate; (2) the scope of the arbitration agreement; (3) whether Congress intended the claims raised to be nonarbitrable; and, (4) if some claims are nonarbitrable, whether to stay the remainder of the proceedings pending arbitration. See Stout v. J.D. Byrider, 228 F.3d 709, 214 (6th Cir. 2000). However, this is a limited review. See Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004); Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003). There is a strong presumption in favor of arbitration under the FAA, Morrison v. Circuit City Stores, Inc., 317F.3d 646, 652-53 (6th Cir. 2003), and any doubts regarding arbitrability must be resolved in favor of arbitration. Fazio v. Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir. 2003).
In the instant case, there is no question that the loan agreements contain a written arbitration provision that was agreed to by the parties. Indeed, the loan agreements are entitled "Retail Installment Sale Contract - Simple Finance Charge (With Arbitration Provision)" and contain a specifically identified "Arbitration Provision," which provides, in part:
Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action.
See Exhibits 1 and 2 (Docket Entry Nos. 16-1 and 16-2) to Defendant's motion. Additionally, the loan agreements contain two signature lines, that were signed by Plaintiff, and which specifically state:
The Court further finds that the broad scope of the arbitration agreement covers the breach of contract claim raised by Plaintiff. "In the Sixth Circuit, the test for determining whether a disputefalls within the scope of a broad arbitration clause is if 'an action can be maintained without reference to the contract or relationship at issue, the action is likely outside the scope of the arbitration agreement - along with the presumption in favor of arbitrability and the intent of the parties.' " Dillard v. Signature Healthcare Fentress County, 2015 WL 5320544, at *7 (M.D.Tenn. Sept. 11, 2015) (Sharpe, J.) (quoting NCR Corp v. Korala Assocs., Ltd., 512 F.3d 807, 814 (6th Cir. 2008)). Issues pertaining to breach of the contract, the crediting of loan payments, and possession of the vehicle are all inherently matters that arise out of and pertain to loan agreements and obligations created on the parties by those agreements. Finally, Plaintiff does not raise a federal statutory claim that is not subject to arbitration.
The party opposing arbitration has the burden to prove that there is a genuine issue of material fact as to the validity of the agreement to arbitrate. See Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). Plaintiff has not met his burden. His arguments against mandatory arbitration do not provide grounds upon which to deny the motion to compel arbitration. First, Plaintiff contend that the Court, not an arbitrator, would do a better job of providing "justice" on his claims. However, an arbitration agreement is not rendered unenforceable simply because it forecloses a party's ability to seek a court proceeding for his claim. See Cooper v. MRM Inv. Co., 367 F.3d 493, 506 (6th Cir. 2004). Second, Plaintiff contends that the contracts are "null and void" because Loan 1 was assigned and/or sold to Williston Auto and because Loan 2 was breached by Defendant. Neither of these arguments raises a viable legal theory showing that the arbitration provision is unenforceable. Generally, contractual rights can be assigned, Petry v. Cosmopolitan Spa Int'l, Inc., 641 S.W.2d 202, 203 (Tenn.Ct.App. 1982), overruled on other grounds by Copeland v. Healthsouth/Methodist Rehab. Hosp., LP, 565 S.W.3d 260 (Tenn. 2018), and the contracts at issue permitted assignment. Thus, theassignment of Loan 1 to Williston Auto in no way voids or nullifies...
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