United States District Court, D. Hawaii
ORDER GRANTING DEFENDANTS' MOTION TO COMPEL
ARBITRATION AND DISMISS CLAIMS, DISMISSING DEFENDANTS'
COUNTERCLAIM, AND DENYING PLAINTIFF'S MOTION TO DISMISS
FOR LACK OF JURISDICTION DEFENDANTS' COUNTERCLAIM AS
C. KAY SR. UNITED STATES DISTRICT JUDGE.
reasons set forth below, the Court GRANTS
Defendants' Motion to Compel Arbitration and
Dismiss Claims, ECF No. 19, and DENIES Plaintiff's Motion
to Dismiss for Lack of Jurisdiction Defendants'
Counterclaim, ECF No. 21, as moot. The Court dismisses the
Complaint as well as the Counterclaim, as both must be
submitted to arbitration.
action relates to Defendants and Counterclaimants CACH
LLC's (“CACH”) and Mandarich Law Group,
LLP's (“Mandarich”) (collectively,
“Defendants”) efforts to collect a credit card
debt from Plaintiff and Counter-defendant Maria Snyder
(“Snyder” or “Plaintiff”).
alleges that she obtained a copy of her credit report dated
June 23, 2015, which showed that Bank of America N.A.
(“BANA”) had been communicating information to
the credit reporting agency related to her debt owed. Compl.
¶¶ 14-15, ECF No. 1. BANA reported that
Plaintiff's account had been “charged-off with a
‘Date of First Delinquency'” of April 2009.
Id. ¶ 15. BANA reported that the balance of
Plaintiff's account at the time of charge-off was $6,
835. Id. ¶ 16.
2, 2015, Mandarich sent Plaintiff a letter informing her that
her BANA account had been sold and assigned to
Mandarich's client, CACH. Id. ¶ 19. The
letter stated that Plaintiff had a current balance of $8,
765.10 on a BANA account number ending in 5522. Id.
around June 16, 2015, Mandarich sent Plaintiff another letter
attempting to collect the debt. Id. ¶ 22. The
account summary page attached to the letter provided that the
BANA account ending in 5522 was placed for collection with
CACH on November 19, 2009 with an account balance of $6,
835.10. Id. ¶ 25. Plaintiff alleges that
Defendants did not have records of the underlying account,
but that they “blindly assert[ed]” that the debt
was owed by Plaintiff and that Defendants “illegally
add[ed] interest to the account.” Id.
¶¶ 26-27. Plaintiff further alleges that the time
period to collect the debt had expired at the time the
collection letter was sent. Id. ¶ 33-34.
around February 24, 2016, Plaintiff called Mandarich to
discuss her account. Id. ¶ 35. At this time,
Mandarich informed her that she owed CACH $8, 765.10 on her
BANA account number ending in 5522. Id. ¶ 37.
claims that BANA charged off the alleged debt in October 2009
in the amount of $6, 835 and that this was the amount of the
debt when BANA sold it on November 19, 2009. Id.
¶ 41. Charge-off “means that the credit card
receivable is no longer carried on a bank's books as an
asset.” Id. ¶ 40. Plaintiff maintains
that BANA did not charge interest after the charge-off and
that CACH was accordingly not “entitled to demand
payment of any amount of interest they added to the account
after [BANA] charged off the account.” Id.
¶¶ 39, 43.
to Plaintiff, BANA waived the right to add interest after
charge-off and CACH acquired the debt subject to said waiver.
Id. ¶ 51. Plaintiff also claims that Defendants
“demand odd amounts from” her, noting that the
balance stayed the same, at $6, 835 between October 2009 and
November 19, 2009 (with 0% interest); “mysteriously
increases” to $8, 765.10 between November 19, 2009 and
May 2, 2015 (with an interest rate of 4.665%); and then stays
the same at $8, 765.10 through February 24, 2016 (with 0%
interest). Id. ¶¶ 57-58.
claim that on or around October 24, 2003, Plaintiff opened an
account with BANA to obtain an extension of credit.
Counterclaim ¶ 1, ECF No. 11. On October 31, 2009,
because of a lack of payment, BANA charged off the account
with a balance owed of $6, 835.10. Id. ¶ 3. On
November 17, 2009, the account and underlying agreement were
sold and transferred to CACH “with fully [sic]
authority to do and perform all acts necessary for the
collection, settlement, adjustment, compromise or
satisfaction of the Account.” Id. ¶ 4.
According to Defendants, the account records provided to them
demonstrate an applicable interest rate at the time of charge
off of 10.24%. Id. ¶ 7. Defendants allege that
CACH is entitled to at least $8, 765.10 pursuant to the
account agreement. Id. ¶¶ 19-20.
Background Relevant to Motion to Compel Arbitration
support of their Motion to Compel Arbitration, Defendants
submitted a Declaration by Yekaterina Livits, custodian of
records for CACH. Livits Decl., ECF No. 19-4. Livits states that on or
around October 24, 2003, Plaintiff opened a credit card
account with BANA/FIA Card Services. Id. ¶ 7.
According to Livits, at the time Plaintiff opened the
account, she also received a Bank of America Credit Card
Account Agreement. Id.
“Cardholder Agreement, ” (the
“Agreement”) which according to Livits was sent
to Plaintiff, id. ¶ 12, provides in relevant
part as follows:
7.18: Governing Law. THIS AGREEMENT IS GOVERNED BY APPLICABLE
ARIZONA AND FEDERAL LAW.
7.19: Arbitration. Any dispute, claim, or controversy
(“Claim”) by or between you and us (including
each other's employees, agents or assigns) arising out of
or relating to this Agreement, your Account, or the validity
or scope of any provision of this Agreement including this
arbitration clause shall, upon election by either you or us,
be resolved by binding arbitration.
This arbitration section of the Agreement shall be governed
by the Federal Arbitration Act, 9 U.S.C. §1-16. Judgment
upon arbitration may be entered in any court having
jurisdiction. Arbitration shall be conducted in the federal
judicial district in which your billing address is located at
the time the claim is filed.
YOU UNDERSTAND AND AGREE THAT IF EITHER YOU OR WE ELECT TO
ARBITRATE A CLAIM, THIS ARBITRATION SECTION PRECLUDES YOU AND
U.S. FROM HAVING A RIGHT OR OPPORTUNITY TO LITIGATE CLAIMS
THROUGH COURT, OR TO PARTICIPATE OR BE REPRESENTED IN
LITIGATION FILED IN COURT BY OTHERS. EXCEPT AS OTHERWISE
PROVIDED ABOVE, ALL CLAIMS MUST BE RESOLVED THROUGH
ARBITRATION IF YOU OR WE ELECT TO ARBITRATE.
Id., Ex. 2 §§ 7.18-7.19.
around November 12, 2009, BANA/FIA assigned Plaintiff's
debt to CACH to collect the outstanding debt of $6, 835.10.
Id. ¶ 8. CACH entered into a written Loan Sale
Agreement wherein it purchased “all rights, title and
interest” in several credit card accounts, including
Plaintiff's credit card account number ending in
“5522.” Id. ¶ 9. CACH also received
information and records pertaining to Plaintiff's account
that were “incorporated into the business records of
CACH” and that were “relied upon by CACH in the
ordinary course of business.” Id. ¶ 10.
March 7, 2016, Plaintiff filed the instant lawsuit seeking
declaratory and injunctive relief, as well as actual and
statutory damages for Defendants' alleged violations of
the Fair Debt Collection Practices Act (“FDCPA”),
Hawaii Revised Statutes (“HRS”) Sections 443B-18,
19, and 20 (regulating collection agencies) and Hawaii's
Unfair or Deceptive Acts or Practices law, HRS Chapter 480.
Compl. ¶¶ 62-133. Plaintiff alleges that Defendants
made false, misleading, and deceptive representations in
connection to the interest rate used and the amount owed; and
that Defendants employed unfair practices in attempting to
collect the debt. Id.
April 22, 2016, Defendants filed a Counterclaim seeking to
collect the underlying debt from Plaintiff. Counterclaim
¶¶ 1-4, 19-20.
5, 2016, Defendants filed a Motion to Consolidate the instant
action with Snyder v. CACH, LLC et al., Civ. No.
16-00174 HG-KSC. ECF No. 18. On June 29, 2016, Magistrate
Judge Kenneth Mansfield denied the Motion to Consolidate. ECF
6, 2016, Defendants filed a Motion to Compel Arbitration and
Dismiss Claims (“Motion to Compel Arbitration”).
On May 13, 2016, Plaintiff filed a Motion to Dismiss for Lack
of Jurisdiction Defendant's Counterclaim (“Motion
to Dismiss the Counterclaim”). Defendants filed their
Opposition to Plaintiff's Motion to Dismiss the
Counterclaim on September 9, 2016. ECF No. 38. Plaintiff
filed her Opposition to Defendants' Motion to Compel
Arbitration on September 12, 2016. ECF No. 39. Plaintiff
filed her Reply on September 16, 2016 and Defendants filed
their Reply on September 19, 2016. ECF Nos. 40, 41.
Court held a hearing on Defendants' Motion to Compel
Arbitration and Plaintiff's Motion to Dismiss the
Counterclaim on October 25, 2016 at 11:00 a.m.
Motion to Compel Arbitration
provided in the Federal Arbitration Act (“FAA”),
written arbitration agreements “evidencing a
transaction involving commerce . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or equity for the revocation of any contract.” 9
U.S.C. § 2. “The FAA embodies a clear federal
policy in favor of arbitration” and “[a]ny doubts
concerning the scope of arbitrable issues should be resolved
in favor of arbitration.” Simula, Inc. v. Autoliv,
Inc., 175 F.3d 716, 719 (9th Cir. 1999) (citation
omitted). As noted by the Ninth Circuit, “[t]he
standard for demonstrating arbitrability is not high”
and arbitration agreements “are to be rigorously
deciding whether to compel arbitration, the court may not
review the merits of the dispute. Rather, “the court
must determine ‘(1) whether a valid agreement to
arbitrate exists and, if it does, (2) whether the agreement
encompasses the dispute at issue.'” Lowden v.
T-Mobile USA, Inc., 512 F.3d 1213, 1217 (9th Cir. 2008)
(quoting Chiron Corp. v. Ortho Diagnostic Sys.,
Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). The Court
should also consider whether there exists “a defense
that would be available to a party seeking to avoid the
enforcement of any contract.” Brown v.
Dillard's, Inc., 430 F.3d 1004, 1010 (9th Cir.
2005); see also Williams v. 24 Hour Fitness, USA,
Inc., No. CIV. 14-00560 DKW, 2015 WL 4139227, at *3 (D.
Haw. July 8, 2015) (same).
motion to compel arbitration, the court “may properly
consider documents outside of the pleadings.”
Xinhua Holdings Ltd. v. Elec. Recyclers Int'l,
Inc., No. 1:13-CV-1409 AWI SKO, 2013 WL 6844270, at *5
(E.D. Cal. Dec. 26, 2013), aff'd sub nom. Clean Tech
Partners, LLC v. Elec. Recyclers Int'l, Inc., 627 F.
App'x 621 (9th Cir. 2015).
Motion to Dismiss for Lack of Subject Matter
to Federal Rule of Civil Procedure (“Rule”)
12(b)(1), a party may move to dismiss based on a lack of
subject matter jurisdiction. “[T]he party asserting
subject matter jurisdiction has the burden of proving its
existence.” Robinson v. United States, 586
F.3d 683, 685 (9th Cir. 2009) (citation omitted). Pursuant to
Rule 12(h)(3), “[i]f the court determines at any time
that it lacks subject-matter jurisdiction, the court must
dismiss the action.”
Defendants' Motion to Compel Arbitration and Dismiss
Court notes at the outset that Defendants' Motion to
Compel Arbitration applies to two different credit card
accounts, while only one account is relevant to the instant
case. As acknowledged by Defendants in their Reply, the
Motion to Compel Arbitration was drafted to encompass the
claims under both the instant case and Civ. No. 16-00174
HG-KSC. Defendants' Reply, at 2, ECF No. 41. However, as
the two cases were not consolidated, the account described as
“Account 1” in Defendants' Motion, i.e.,
Plaintiff's account number ending in 5522, is the only
account relevant to this case and the motions at issue.
Id. at 2, 9; see also Livits Decl. ¶ 9
(referring to account number ending in 5522); Compl.
¶¶ 17, 23, 25, 37 (same).
forth below, the Court finds that a valid arbitration
agreement exists and that the agreement encompasses the
dispute at issue. See Lowden, 512 F.3d at 1217. The
Court additionally concludes that Plaintiff has failed to
raise a meritorious defense to arbitration. Accordingly, the
Court directs the parties to proceed to
The Livits ...