United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
matter is before the court on Defendant Debt Assistance
Network, LLC’s (“DAN”) Motion to Dismiss
and Compel Arbitration or, in the Alternative, to Stay
Proceeding pending Arbitration, (Doc. 8), pursuant to Rules
12(b)(1), 12(b)(3), and 12(b)(6) of the Federal Rules of
Civil Procedure and the Federal Arbitration Act (the
“FAA”), 9 U.S.C. § 1 et seq. Because there
is an applicable arbitration clause present that covers
Plaintiff’s claims, Defendant’s motion to compel
arbitration will be granted and the case will be stayed
Michael Hunt entered into a contract (the “DAN
Contract”) with Defendant for Defendant’s
services in April 2017, (Complaint (“Compl.”)
(Doc. 4) ¶ 6); namely, negotiating with
Plaintiff’s creditors “for the purposes of
consolidating payments and hopefully reducing the payments to
creditors over time.” (Id. ¶ 11.)
Pursuant to this agreement, Plaintiff made a down payment of
$800 to Defendant, followed by monthly payments of $649.20.
(Id. ¶ 12.) Plaintiff’s contract with
Defendant did not contain an arbitration provision.
contracted with a third-party payment processor, Secure
Account Service, LLC (“SAS”), which would process
the payments from Plaintiff to Defendant. (Id.
¶ 14.) Plaintiff’s contract with SAS contained an
explicit arbitration clause. (Motion to Dismiss and Compel
Arbitration (“Def.’s Mot.”) (Doc. 8) Ex. B,
Account Agreement and Disclosure Statement (“ACH
Agreement”) (Doc. 8-3) ¶ 6.)
contract with Plaintiff contained a clause stating that
“[a]ll sums paid according to the terms shown on the
ACH AGREEMENT, which is included as part of this
AGREEMENT.” (Def.’s Mot. (Doc. 8) Ex. A, Consumer
Tender of Offer and Debt Assumption Agreement (“DAN
Contract”) (Doc. 8-2) ¶ C.) Defendant alleges that
“ACH AGREEMENT” refers to the contract between
Plaintiff and SAS, entitled “Account Agreement and
Disclosure Statement” (“ACH Agreement”),
(Def.’s Mot. (Doc. 8), Declaration of Lee Sands (Doc.
8-1) ¶ 7), and Plaintiff does not dispute this.
Defendant allegedly allowed various of Plaintiff’s
accounts with creditors to go into default, Plaintiff
terminated Defendant’s services and SAS’s
services, (Paige Kurtz Affidavit (“Kurtz Aff.”)
(Doc. 13) at 7, 9), and brought this case in Durham County
Superior Court, (Petition for Removal (“Pet. For
Removal”) (Doc. 1) Ex. A, State Court Summons and
Complaint (Doc. 1-1)), alleging claims of breach of contract,
fraud, negligent misrepresentation, and unfair and deceptive
trade practices on Defendant’s part. Defendant properly
removed the case to this court pursuant to 28 U.S.C.
§§ 1332(a) and 1441(a) and (b). (Pet. for Removal
(Doc. 1) at 5.) Defendant moved pursuant to Rules 12(b)(1),
12(b)(3), and 12(b)(6) of the Federal Rules of Civil
Procedure, and the Federal Arbitration Act (the
“FAA”), 9 U.S.C. § 1 et seq., for an order
compelling Plaintiff to arbitrate all claims and to dismiss
or, in the alternative, to stay proceedings, (Def.’s
Mot. (Doc. 8) at 1). Defendant filed a memorandum in support
of that motion, (Memorandum in Support of Defendant’s
Motion to Dismiss and Compel Arbitration (“Def.’s
Br.”) (Doc. 9)). Plaintiff responded to
Defendant’s motion, (Response in Opposition to Motion
to Dismiss and Compel Arbitration (“Pl.’s
Resp.”) (Doc. 14), to which Defendant replied, (Doc.
moves pursuant to the FAA and Federal Rules of Civil
Procedure 12(b)(1), 12(b)(3) and 12(b)(6) for an order
compelling Plaintiff to arbitrate his claims and either
dismiss those claims or, in the alternative, stays this case
pending completion of the arbitration. (Def.’s Mot.
(Doc. 8) at 1).
The Federal Arbitration Act
policy strongly favors arbitration, and the FAA represents
“a liberal federal policy favoring arbitration
agreements” and applies “to any arbitration
agreement within the coverage of the [FAA].” Moses
H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983). Under the FAA, 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.
FAA Section 4 Framework
order for federal district courts to compel parties to
arbitrate under 9 U.S.C. § 4, four elements must be
(1) the existence of a dispute between the parties, (2) a
written agreement that includes an arbitration provision
which purports to cover the dispute, (3) the relationship of
the transaction, which is evidenced by the agreement, to
interstate or foreign commerce, and (4) the failure, neglect
or refusal of [a party] to arbitrate the dispute.
Galloway v. Santander Consumer USA, Inc., 819 F.3d
79, 84 (4th Cir. 2016) (quoting Rota-McLarty v. Santander
Consumer USA, Inc., 700 F.3d 690, 696 n.6 (4th Cir.
2012)). The parties must have entered into a valid agreement
to arbitrate, and the dispute in question must fall within
the scope of the arbitration agreement. Chorley Enters.,
Inc. v. Dickey’s Barbecue Rests., Inc., 807 F.3d
553, 563 (4th Cir. 2015).
parties agree that elements one, three, and four of the FAA
Section 4 analysis are satisfied here. (Compare Pl.’s
Resp. (Doc. 14) at 10, with Def.’s Br. (Doc. 9) at 7,
10–12.) There is clearly a dispute between the parties,
the parties’ transaction is related to interstate
commerce (sending money to entities in different
states), and Plaintiff has refused to arbitrate.
The only issue is whether there is a written arbitration
agreement that covers the dispute.
Existence of a Written Arbitration Agreement that ...