Sued By Midland - How's This Look?

[pmccravitz]

Hello:

Here is another case that I'm in the middle of and wanted to hear thoughts on my motions.

I've gone through the first round with my answer to their complaint. I'm going to go the arb route and below is what I'm going to submit as my motion to dismiss or stay pending arb:

DEFENDANT'S MOTION TO DISMISS THE PLAINTIFF'S COMPLAINT, OR, ALTERNATIVELY, MOTION TO STAY PENDING ARBITRATION

Now comes the Defendant in the above-captioned proceeding submitting, pursuant to Rule 12( of the Ohio Rules of Civil Procedure, this Motion to Dismiss the Plaintiff's Complaint with prejudice due to lack of subject matter jurisdiction.

Or, in the alternative, the Defendant moves, pursuant to Section 2711.02( of the Ohio Revised Code, to stay these proceedings pending arbitration.

A brief in support is attached hereto and made a part hereof.

[pmccravitz]

Brief in Support

I. Introduction

The Plaintiff in this case purports to be an assignee of a GE Money Bank credit card account allegedly held by the Defendant. The GE Money Bank credit card account in question is governed by the GE Money Bank cardmember agreement. This cardmember agreement contains a mandatory arbitration clause which bars litigation in court. The applicable excerpt of the agreement is attached hereto as Exhibit A.

II. This Court lacks jurisdiction in the presence of this arbitration clause

The arbitration clause in the cardmember agreement states, “...any past, present or future legal dispute or claim of any kind...will be resolved by binding arbitration if either you or we elect to arbitrate...". The cardmember agreement also states that upon demand, “...If a claim goes to arbitration, neither you nor we will have the right to: (1) have a court or a jury decide the claim...”

Ohio Revised Code Section 2711.01(A) states that "A provision in any written contract . . . to settle by arbitration a controversy that subsequently arises out of the contract, or out of the refusal to perform

the whole or any part of the contract . . . shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or equity for the revocation of any contract."

Ohio public policy favors the enforcement of private arbitration agreements. Kelm v. Kelm (1993), 68 Ohio St.3d 26, 623 N.E.2d 39. See also, N. Ohio Sewer Contrs., Inc. v. Bradley Dev. Co. (2005), 159

Ohio App.3d 794, 2005-Ohio-1014, 825 N.E.2d 650; Junkins v. Spinnaker Bay Condominium a$$'n., Ottawa App. No. OT-01-007, 2002-Ohio-872. Any uncertainty that exists with regard to the applicability of an arbitration clause should be resolved in favor of coverage. Id. An arbitration clause should not be denied effect unless it can be determined to a high degree of certainty that the clause does not cover the asserted dispute. Owens Flooring Co. v. Hummel Constr. Co. (2000), 140 Ohio App.3d 825, 749 N.E.2d 782.

See also Willis v. Linnen, Summit App. No. 20775, 2002-Ohio-2000. The law favors and encourages arbitration. Brennan v. Brennan (1955), 164 Ohio St. 29, 128 N.E.2d 89.

Given the crystal-clear provision in the cardmember agreement mandating arbitration, and the strong presumption in Ohio law in favor of arbitration, it is beyond dispute that the proper forum for resolving the Plaintiff's claim is not this Court, but rather is in arbitration in accordance with the cardmember agreement. The Plaintiff should have initiated arbitration in the manner set forth in the agreement. If the Plaintiff were to receive an award in arbitration, then the next step would be, pursuant to Section 2711.09 of the Revised Code, to file an application in the court of common pleas for an order confirming the award. Ohio law vests jurisdiction for confirming arbitration awards in the courts of common pleas, not in municipal courts. FIA Card Services, N.A. v. Kitchen, 181 Ohio App.3d 557, 2009-Ohio-1295; FIA Card Services, N.A. v. Young, 5th Dist. No. 08 CA 22 (April 27, 2009). There is simply no role under Ohio law for municipal courts in confirming, vacating, or modifying arbitration awards. See Revised Code Sections 2711.09, 2711.10, 2711.11, 2711.13, 2711.14, and 2711.16.

It is clear that the proper remedy here is to dismiss this case for want of subject matter jurisdiction.

III. In the alternative, this Court should stay these proceedings pending arbitration

If this Court chooses not to dismiss this case, then, in the alternative, the Defendant asks that this case be stayed pending arbitration. Ohio Revised Code Section 2711.02( states: "If any action is brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which the action is pending, upon being satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration, shall on application of one of the parties stay the trial of the action until the arbitration of the issue has been had in accordance with the agreement . . ." (Emphasis added.)

If the Plaintiff will not initiate arbitration in accordance with the cardmember agreement, then the Defendant intends to do so. See the attached letter (Exhibit from the Defendant to Plaintiff's counsel, which fulfills the provision in the cardmember agreement of the alleged account that says, “…If you or We elect to arbitrate, the other party must be notified…” It further states that, “…Notice can be given after a lawsuit has been filed…”. The Defendant is hereby applying to this court for a stay, pursuant to Revised Code Section 2711.02(, pending the completion of arbitration of the dispute between the Plaintiff and Defendant in this case.

There is no sense in wasting the resources of this Court when the cardmember agreement mandates an alternative form of dispute resolution and when Ohio law mandates a stay pending arbitration.

[pmccravitz]

21. ARBITRATION PROVISION. Please read this arbitration provision carefully. IT PROVIDES THAT ANY PAST, PRESENT OR FUTURE LEGAL DISPUTE OR CLAIM OF ANY KIND, INCLUDING STATUTORY AND COMMON LAW CLAIMS AND CLAIMS FOR EQUITABLE RELIEF, THAT RELATES IN ANY WAY TO YOUR ACCOUNT, CARD OR YOUR RELATIONSHIP WITH US (“CLAIM”) WILL BE RESOLVED BY BINDING ARBITRATION IF EITHER YOU OR WE ELECT TO ARBITRATE.

Right to Reject Arbitration: You may reject this arbitration provision, in which event neither you nor We will have the right to require arbitration. Rejection will not affect any other aspect of these terms. To reject the arbitration provision, you must send Us a notice within 60 days after you open your Account. The notice must include your name, address, and Account number and be mailed to P.O. Box 981439, El Paso, TX 79998-1439. This is the only method you can use to reject the arbitration provision. As used in this provision: “We,” “Us,” and “Our” mean (1) GE Money Bank and all of its respective parents, subsidiaries, affiliates, predecessors, successors, assigns, employees, officers and directors (collectively, the “Bank”), and (2) Retailer/Merchant/Dealer and all of its respective parents, subsidiaries, affiliates, predecessors, successors, assigns, employees, officers and directors.

This arbitration provision covers all Claims, except that We will not elect to arbitrate an individual Claim brought by you in small claims court or its equivalent, unless that Claim is transferred, removed, or appealed to a different court. This provision replaces any existing arbitration provision between you and Us.

With respect to any arbitration:

• Notice: If you or We elect to arbitrate, the other party must be notified. Your notice must be sent to GE Money Bank, Legal Operation, 950 Forrer Boulevard, Kettering, OH 45420. Notice can be given after a lawsuit has been filed, in which case it can be made in papers in the lawsuit.

• Administrator: The person who starts the arbitration proceeding must choose an administrator, which can be either JAMS, 620 Eighth Avenue, 34th Floor, New York, NY 10018, JAMS Arbitration, Mediation, and ADR Services, (800) 352-5267; or the American Arbitration Association, 1633 Broadway, 10th Floor, New York, NY 10019, American Arbitration Association, (800) 778-7879. The actual arbitrator will be selected under the administrator’s rules, and must be a lawyer with at least ten years of experience.

• Applicable Law: These terms involve interstate commerce and this arbitration provision is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (the “FAA”). Utah law shall apply to the extent state law is relevant under Section 2 of the FAA in determining the validity of this provision. The arbitrator has to follow: (1) the substantive law, consistent with the FAA, that would apply if the matter had been brought in court, (2) this arbitration provision, and (3) the administrator’s rules. The arbitrator is authorized to award remedies that would apply if the individual action were in a court (including, without limitation, punitive damages, which shall be governed by the constitutional standards employed by the U.S. Supreme Court). The arbitrator has no authority to conduct an arbitration on a class action basis or to make an award to, on behalf of, or against, any person who is not a named party to the arbitration.

• Location/Fees: The arbitration will take place in a location reasonably convenient to you. If you ask Us, We will pay all filing, administrative, hearing and/or other fees the administrator or arbitrator charges up to $2,500. If the cost is higher, you can ask Us to pay more and We will consider your request in good faith. Under all circumstances We will pay all amounts We are required to pay under applicable law.

• Judgment/Appeals: Any court having jurisdiction may enter judgment upon the arbitrator’s award. The arbitrator’s decision will be final and binding except for: (1) any appeal right under the FAA; and (2) any party may appeal decisions relating to Claims of more than $100,000 to a three-arbitrator panel appointed by the administrator, which will reconsider all over again any aspect of the appealed award. If you appeal, We will consider in good faith a request that We pay any additional fees of the administrator or arbitrator.

IMPORTANT LIMITATIONS AND RESTRICTIONS: IF A CLAIM GOES TO ARBITRATION, NEITHER YOU NOR WE WILL HAVE THE RIGHT TO: (1) HAVE A COURT OR A JURY DECIDE THE CLAIM; (2) ENGAGE IN DISCOVERY (I.E., THE RIGHT TO OBTAIN INFORMATION FROM THE OTHER PARTY) TO THE SAME EXTENT THAT YOU OR WE COULD IN COURT; (3) PARTICIPATE IN A CLASS ACTION IN COURT OR IN ARBITRATION, EITHER AS A CLASS REPRESENTATIVE OR A CLASS MEMBER; (4) ACT AS A PRIVATE ATTORNEY GENERAL IN COURT OR IN ARBITRATION; OR (5) JOIN OR CONSOLIDATE CLAIMS(S) WITH CLAIMS OF ANY OTHER PERSON. THE RIGHT TO APPEAL IS MORE LIMITED IN ARBITRATION THAN IN COURT. OTHER RIGHTS THAT YOU OR WE WOULD HAVE IF YOU OR WE WENT TO COURT MAY ALSO NOT BE AVAILABLE IN ARBITRATION. ONLY A COURT MAY DETERMINE THE VALIDITY AND EFFECT OF PARTS 3, 4 AND 5 OF THIS PARAGRAPH. IF A COURT SHOULD HOLD SUCH PART(S) TO BE INVALID, THEN THE ENTIRE ARBITRATION PROVISION SHALL BE NULL AND VOID. HOWEVER, THIS WILL NOT LIMIT THE RIGHT TO APPEAL SUCH HOLDING. IF A COURT SHOULD HOLD ANY OTHER PART(S) OF THIS ARBITRATION PROVISION TO BE INVALID, THE REMAINING PARTS SHALL BE ENFORCEABLE. IN NO EVENT SHALL THE INVALIDATION OF ANY PART OF THIS ARBITRATION PROVISION HAVE THE EFFECT OF AUTHORIZING AN ARBITRATOR TO MAKE AN AWARD TO, ON BEHALF OF, OR AGAINST, ANY PERSON WHO IS NOT A NAMED PARTY TO THE ARBITRATION.

This arbitration provision will survive the termination of your Account and the Card and will remain in force no matter what happens to you or your Account. In case of any conflict or inconsistency, this Agreement controls over any rules and procedures of the arbitration administrator.

[Coltfan1972]

You've got a nice set of case law and arguments and they flow very well. However, you have one HUGE problem.

Given the crystal-clear provision in the card member agreement mandating arbitration,

This is not true.

There is no sense in wasting the resources of this Court when the card member agreement mandates an alternative form of dispute resolution

And neither is this.

the Defendant intends to do so

So you are asking the court to dismiss the case with prejudice, in essence with double jeopardy attached, because you "intend" to do something.

[BV80]

I think what Colt is saying is that you can't tell the court you INTEND to initiate arbitration. You have to go ahead and do it.

[Coltfan1972]

I think what Colt is saying is that you can't tell the court you INTEND to initiate arbitration. You have to go ahead and do it.

That, and the fact the clause says nothing about mandatory arbitration for any claims.

[pmccravitz]

Sounds good. I'll send a letter today notifying the plaintiff that I'll initiate arbitration. How's this look?

ARBITRATION ELECTION

NOTE: This letter is not acknowledgment of Liability for debts.

This letter is to reiterate my election of arbitration, as set forth in the cardmember “agreement” for the alleged GE Money account, sent to you on April 2nd, 2012. As referred to the GE Money Bank cardholder agreement, I have elected arbitration via JAMS to resolve all of our disputes.

As per the agreement of the alleged account, the parties in dispute have a right to litigate claims through a court before a judge or jury, but will not have that right if either party elects arbitration, “...If a claim goes to arbitration, neither you nor we will have the right to: (1) have a court or a jury decide the claim...” Hence, by my electing arbitration, your rights to litigate claims through a court have been waived.

Since you have not been willing to initiate the arbitration process, I will initiate the arbitration process with JAMS. However, for consumer-initiated matters, JAMS requires a $400.00 filing fee:

http://www.jamsadr.com/files/Uploads/Documents/JAMS_Arbitration_Demand.pdf

Since the arbitration clause in the cardmember “agreement” for the alleged account requires you to pay any fees in arbitration “...If you ask Us, We will pay all filing, administrative, hearing and/or other fees the administrator or arbitrator charges up to $2,500...”. I hereby request that you advance to me the sum of $400.00 so I may initiate arbitration.

I believe arbitration is the most efficient means by which to resolve your claim against me and my claims against Portfolio Recovery Associates for multiple violations of the Fair Debt Collection Practices Act.

Sincerely,

[pmccravitz]

Here are the amendments to my brief:

Given the crystal-clear provision in the cardmember agreement regarding arbitration,

There is no sense in wasting the resources of this Court when the cardmember agreement directs an alternative form of dispute resolution

The arbitration clause in the cardmember agreement states, “...any past, present or future legal dispute or claim of any kind...will be resolved by binding arbitration if either you or we elect to arbitrate..." See the attached letter (Exhibit from the Defendant to Plaintiff's counsel, which fulfills this provision in the cardmember agreement of the alleged account. The cardmember agreement also states that upon demand, “...If a claim goes to arbitration, neither you nor we will have the right to: (1) have a court or a jury decide the claim...”

[BV80]

Sounds good. I'll send a letter today notifying the plaintiff that I'll initiate arbitration. How's this look?

ARBITRATION ELECTION

NOTE: This letter is not acknowledgment of Liability for debts.

This letter is to reiterate my election of arbitration, as set forth in the cardmember “agreement” for the alleged GE Money account, sent to you on April 2nd, 2012. As referred to the GE Money Bank cardholder agreement, I have elected arbitration via JAMS to resolve all of our disputes.

As per the agreement of the alleged account, the parties in dispute have a right to litigate claims through a court before a judge or jury, but will not have that right if either party elects arbitration, “...If a claim goes to arbitration, neither you nor we will have the right to: (1) have a court or a jury decide the claim...” Hence, by my electing arbitration, your rights to litigate claims through a court have been waived.

Since you have not been willing to initiate the arbitration process, I will initiate the arbitration process with JAMS. However, for consumer-initiated matters, JAMS requires a $400.00 filing fee:

http://www.jamsadr.com/files/Uploads/Documents/JAMS_Arbitration_Demand.pdf

Since the arbitration clause in the cardmember “agreement” for the alleged account requires you to pay any fees in arbitration “...If you ask Us, We will pay all filing, administrative, hearing and/or other fees the administrator or arbitrator charges up to $2,500...”. I hereby request that you advance to me the sum of $400.00 so I may initiate arbitration.

I believe arbitration is the most efficient means by which to resolve your claim against me and my claims against Portfolio Recovery Associates for multiple violations of the Fair Debt Collection Practices Act.

Sincerely,

Linda7 and Bad98roadster are the arbitration experts. They can tell you everything you need to know.

[Coltfan1972]

Linda7 and Bad98roadster are the arbitration experts. They can tell you everything you need to know.

Agree, but I do know you have to strictly comply with the way the arbitration agreement lays out electing arbitration and then initiating arbitration.

Not saying you have not, just that they will look for a loophole.

[nobk4me]

The JAMS filing fee for consumer arbitrations is $250, not $400.