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Mathis v. Lendmark Financial Services, LLC

United States District Court, E.D. North Carolina, Southern Division

July 20, 2017

SHANE MATHIS, individually and on behalf of all others similarly situated, Plaintiff,


          LOUISE W. FLANAGAN United States District Judge

         This matter is before the court on defendant's motion wherein it seeks an order directing arbitration together with dismissal of this action. Should the court not be inclined to dismiss the action, defendant seeks a stay during pendency of arbitration. Should the court decline to refer the matter to arbitration and, instead, reach the merits of defendant's motion, defendant seeks dismissal based upon plaintiff's failure to state a claim. The issues raised are ripe for ruling. For reasons that follow, defendant's motion to compel arbitration is granted and the case is dismissed.


         Plaintiff, a member of the United States Navy (“Navy”), initiated this action September 1, 2016, in the Superior Court of North Carolina, Onslow County, on behalf of himself and others similarly situated, seeking compensatory and punitive damages as well as ancillary relief arising from defendant's refusal to reduce interest rate on a consumer loan pursuant the Servicemembers Civil Relief Act (“Servicemembers Act”), 50 U.S.C. §§ 3901-4043. Defendant removed the action to this court on the basis of federal question jurisdiction pursuant to 28 U.S.C. § 1441(a). On November 7, 2016, defendant filed the instant motion. In support thereof, among other things, defendant relies upon a note dated November 18, 2011, and the affidavit of Loretta Byrd (“Byrd”). In opposition, plaintiff relies upon his affidavit wherein he testifies as to circumstances under which he entered into the subject loan agreement.


         The facts viewed in the light most favorable to plaintiff may be summarized as follows. Defendant is engaged in the business of consumer lending and, in the course of its business, lends to military servicemembers. Plaintiff enlisted in the Navy September 15, 2012, and began active duty April 16, 2013.

         On November 18, 2011, before joining the Navy, plaintiff entered into a note with Green Cap Financial, LLC (“Green Cap”), secured in part by a 2004 Jeep Liberty motor vehicle. Plaintiff borrowed $8, 636.33 at an annual interest rate of 18.35 percent and made regular payments in accordance with the parties' agreed-upon payment schedule. The note was paid and satisfied in full May 30, 2015.

         The following acknowledgment appears on the face of the note:

I, [plaintiff], do hereby acknowledge receipt of a copy of this Promissory Note and Security Agreement. Further acknowledged is the receipt of the proceeds of the loan stated above. I further acknowledge that at the time I received a copy of this Promissory Note and Security Agreement, that such forms were complete and filled-in and that all blanks in such forms we [sic] filled in prior to my executing the same.

(DE 17-2 at 2). It is undisputed that plaintiff's witnessed signature under seal appears directly below the foregoing text. In the bottom right corner appears the mark, “Page 1 of 3[.]” Page three of the note bears the mark “Page 3 of 3” and contains an arbitration agreement. Repeated reference is made to form number “NC0001” on these two pages of the note. Page two, however, is omitted from the record.

         The arbitration agreement specifies that “[the parties] agree than any and all disputes, claims or controversies of any kind and nature between us arising out of or relating to the relationship between us will be resolved through mandatory, binding arbitration. . . . Both of us are waiving our rights to have disputes resolved in court by a judge or jury [except as otherwise provided in the agreement].” (DE 17-2 at 3).

         Based upon her experience as assistant branch manager for Green Cap and, later, branch manager for defendant, Byrd testifies that Green Cap and defendant regularly used form NC0001 in the course of business.[1] In her capacity as assistant branch manager for Green Cap, Byrd witnessed plaintiff sign the note. She attests that the version of NC0001 that plaintiff signed was the only version in use at that time, all of which plaintiff does not dispute.

         In or around July 2013, plaintiff wrote to Green Cap requesting that interest rate on his loan be reduced to six percent per annum pursuant to the Servicemembers Act. Green Cap denied the request on the ground that plaintiff was not deployed at the time of request. Following denial, defendant acquired Green Cap September 30, 2014, and succeeded to Green Cap's interest.

         Plaintiff wrote to defendant February 19, 2015, again requesting an interest rate reduction pursuant to the Servicemembers Act. Defendant denied the request. Finally, on March 18, 2015, plaintiff's counsel sent a formal written demand for relief under ...

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