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Loyola v. American Credit Acceptance LLC

United States District Court, E.D. Washington

April 15, 2019

HECTOR LOYOLA and LINDA LOYOLA, Plaintiffs,
v.
AMERICAN CREDIT ACCEPTANCE LLC; PAR INC.; and JILLIAN RAE LEE-BARKER, doing business as Coeur d'Alene Valley Recovery Services, Defendants.

          ORDER GRANTING DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS PLAINTIFFS' CLAIMS

          SALVADOR MENDOZA, JR. UNITED STATES DISTRICT JUDGE

         Before the Court, without oral argument, is Defendants American Credit Acceptance LLC, Par Inc., and Jillian Rae Lee-Barker's Motion to: (1) Compel Arbitration and (2) Dismiss All Claims, ECF No. 6. Plaintiffs Hector and Linda Loyola allege Defendants are jointly and severally liable for repossessing a motor vehicle in breach of the peace. ECF No. 1. The Loyolas sue Defendants Par and Lee-Barker for violating the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692f(6); sue Defendant American for violating the Uniform Commercial Code (“UCC”), as codified at Revised Code of Washington (“RCW”) section 62A.9A-609(b)(2); and sue all Defendants for violating the Consumer Protection Act (“CPA”), RCW 19.86.020. Id. at 3-5. Defendants seek to compel the Loyolas to arbitrate all their claims. Having reviewed the pleadings and the file in this matter, the Court is fully informed and grants the motion.

         BACKGROUND

         On October 30, 2016, the Loyolas bought a 2012 Dodge Journey on credit from LHM Toyota Spokane, in Spokane, Washington. ECF No. 8-1 at 2-3; ECF No. 8-2 at 2-3; ECF No. 9-1 at 2; ECF No. 9-2 at 2. As part of the transaction, the Loyolas signed both a Retail Purchase Agreement and a Retail Installment Sale Contract. ECF No. 8-1 at 2-3; ECF No. 8-2 at 2-3; ECF No. 9-1 at 3; ECF No. 9-2 at 3. In each document, the Loyolas gave the dealership a security interest in the vehicle. ECF No. 1 at 2; ECF No. 8-1 at 5; ECF No. 8-2 at 2, 4.

         The dealership assigned the Retail Installment Sale Contract and security interest to American. ECF No. 1 at 2; ECF No. 8-2 at 3. The Loyolas subsequently fell behind on their vehicle payments. ECF No. 1 at 2; ECF No. 8 at 3. American hired Par to repossess the vehicle on its behalf and Par, in turn, hired Lee-Barker to accomplish the repossession in its stead. ECF No. 1 at 2; ECF No. 8 at 3.

         The Loyolas allege that, on November 26, 2018, Lee-Barker repossessed the vehicle by breaking and removing the latch on their locked gate, stealing the latch, entering the fenced area surrounding their home, and taking the vehicle from that location. ECF No. 1 at 2.

         The Loyolas filed this lawsuit on January 2, 2019, alleging Defendants are jointly and severally liable for violating the FDCPA, UCC, and CPA by repossessing the vehicle in breach of the peace. ECF No. 1. The Retail Purchase Agreement contains an arbitration agreement, which provides,

Purchaser(s) and Dealer (“Parties”) agree to resolve by binding arbitration any Dispute that arises between them under or relating to this Agreement and transaction as set forth in Paragraph 20 . . . .
. . . .
20. AGREEMENT TO ARBITRATE: Purchaser(s) and Dealer (“Parties”) agree, except as otherwise provided in this Arbitration Provision, to resolve by binding arbitration any Dispute that arises between them under or relating to this Agreement, whether based in part or in whole on contract, tort, common law, statute, regulation or equity, including but not limited to: any dispute related to or arising out of the application for credit; any negotiations, promises, representations, undertakings or warranties; the Vehicle and any products/services purchased from Dealer; the Retail Installment Contract (except where such Contract includes its own dispute resolution provision, in which case such provisions shall control any claim arising under or relating to said Contract); and any claims regarding the validity, enforceability or scope of this Arbitration Provision. The Parties retain the right to exercise self-help or provisional remedies, such as repossession, and to file a replevin action in court. In addition, neither Party is required to arbitrate any individual claim (as opposed to a class action) that is pled and properly within the jurisdiction of a small claims court (or equivalent state court). Until a Party requests arbitration, either Party may proceed with such other rights and remedies and shall not be deemed to have waived the right to request arbitration by doing so. A Party invoking arbitration after the filing of a court action must do so within thirty (30) days of the service of the Complaint or other pleading initiating the action or transferring the action to a higher trial court. Arbitration proceedings shall be initiated and conducted before a single arbitrator selected in accordance with the Arbitration Rules then in effect of the selected Alternative Dispute Resolution Agency. If the procedures set forth herein conflict with the Arbitration Rules of the Alternative Dispute Resolution Agency, the procedures set forth in this Arbitration Provision shall control. If the Dealer initiates arbitration proceedings, it will pay the entire cost of the initial filing fees and any administrative or arbitrator's fees. If Purchaser initiates arbitration proceedings, he/she will pay any initial filing fees and administrative or arbitrator's fees up to a maximum of $500 and the Dealer shall pay any such fees and costs in excess of $500. Each Party shall be responsible for its own attorney and expert fees and any other costs incurred. The arbitrator may decide which Party is responsible for paying any costs and fees as part of the decision and award. The arbitration hearing shall be conducted in the county and state where the Dealership is located (unless the Parties agree otherwise) and the Parties consent to the jurisdiction of the courts of said county and state for purposes of enforcing this Arbitration Agreement and the arbitrator's decision. The arbitrator shall apply federal and Washington law in making an award and shall issue a written decision with a supporting opinion. The decision of the arbitrator shall be final and binding, except for any right of appeal under the Federal Arbitration Act and applicable Arbitration Rules. The cost of appeal shall be borne by the appealing Party. If a Party unsuccessfully challenges the arbitrator's award or fails to comply with it, the other Party is entitled to recover the costs, including reasonable attorneys' fees, of defending or enforcing the award.
The Parties expressly agree that the Federal Arbitration Act (9 U.S.C. § 1, et seq.) shall govern any arbitration under this Agreement. This Arbitration Provision shall survive any termination of this Agreement. Nothing in this Arbitration Provision shall be interpreted as limiting or precluding the arbitrator from awarding monetary damages or other relief provided for by law. If any part of this Arbitration Provision is found to be void or unenforceable, the remaining provisions shall remain in full force and effect, including but not limited to the Parties' waiver of the right to have a trial by jury and payment of attorney fees and costs.

ECF No. 8-1 at 3, 5.

         On February 5, 2019, Defendants invoked this arbitration agreement, in writing, as to all of the Loyolas' claims against them. ECF No. 7 at 2. The Loyolas refused to arbitrate their claims against Defendants. Id.

         LEGAL STANDARD

         Under the Federal Arbitration Act (“FAA”), “[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . 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. Further,

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 which, save for such agreement, would have jurisdiction . . . in a civil action . . . of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement.

         9 U.S.C. § 4. “[U]pon 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.” Id. But “[i]f 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.” Id.

         The Court's basic role under the FAA is to determine whether a valid arbitration agreement exists between the litigants and, if so, whether their agreement encompasses the dispute at issue. See Kilgore v. KeyBank, Nat. Ass'n, 718 F.3d 1052, 1058 (9th Cir. 2013) (en banc). The Court may decide as a matter of law whether a valid arbitration agreement exists between the litigants, but it may do so “[o]nly when there is no genuine issue of fact concerning the formation of the agreement.” Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1141 (9th Cir. 1991) (internal quotation marks omitted). Further, when the party opposing arbitration contends he or she has no valid arbitration agreement with the party seeking arbitration, the Court “should give to the opposing party the benefit of all reasonable doubts and inferences that may arise.” Id.

         DISCUSSION

         A. The arbitration agreement encompasses all disputes at issue here.

         The litigants do not dispute that this case concerns “[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction.” 9 U.S.C. § 2. Instead, the litigants dispute the scope of the arbitration agreement.

         Under the FAA, contracting parties “may agree to have an arbitrator decide not only the merits of a particular dispute but also ‘gateway questions of arbitrability, such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.'” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524, 529 (2019) (quoting Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010)). “When the parties' contract delegates the arbitrability question to an arbitrator, a court may not override the contract. In those circumstances, a court possesses no power to decide the arbitrability issue. That is true even if the court thinks that the argument that the arbitration agreement applies to a particular dispute is wholly groundless.” Id. “Just as a court may not decide a merits question that the parties have delegated to an arbitrator, a court may not decide an arbitrability question that the parties have delegated to an arbitrator.”[1] Id. at 530.

         “[C]ourts ‘should not assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.'” Id. at 531 (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). “When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally . . . should apply ordinary state-law principles that govern the formation of contracts.” First Options, 514 U.S. at 944. Under Washington state law, the parties' intent “may be discovered not only from the actual language of the agreement, but also from ‘viewing the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.'” Scott Galvanizing, Inc. v. Nw. EnviroServs., Inc., 844 P.2d 428, 432 (Wash. 1993) (quoting Berg v. Hudesman, 801 P.2d 222, 228 (Wash. 1990)).

         Here, the arbitration agreement provides,

Purchaser(s) and Dealer (“Parties”) agree to resolve by binding arbitration any Dispute that arises between them under or relating to this Agreement and ...

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