LaneBlane

Attacking a JDB’s Standing | Need to Respond to Interrogatories, RPD, RA

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Here is the affirmative defense I'm working on to be added to my original response:

This court lacks jurisdiction due to the presence of a mandatory, binding arbitration clause and a small claims court clause in the loan agreement dated __________________.

The arbitration section of the agreement says that a party who fails to submit to arbitration after a proper demand is made will bear the costs and expenses, including attorneys' fees, incurred by the party who compels arbitration.   It also says that I have the ability to choose the federal judicial district where any physical arbitration hearing is held.  Also, no matter which party initiates the arbitration, the lender will advance or reimburse filing fees and other costs of arbitration.  Each party will initially be responsible for their own fees involving attorneys, experts, and witnesses.

Because the Plaintiff filed in civil court, and I've had to incur attorney's fees at a result, can and should I file a motion to have the Plaintiff cover these fees?

Thanks for the ongoing help!

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OK, sounds like they filed a complaint the minute they found out you had a lawyer. They figured out that you were not fooled by the pocket docket setup. Still unusual but then again, most people on this board using an attorney is unusual.

As for moving he case to small claims once they figure out your strategy will likely backfire on them. You could argue that you have an order from a judge demanding that they go to arb. You could also argue that they chose their path and now must follow it. Not only that, but it will likely piss off a judge with an overloaded case load to have the case brought back like that after they got it off their docket. These people file cases by the 1000s and the last thing they need is a judge pissed off with them who might hold them to the absolute letter of the law when they get a chance.

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On 9/17/2017 at 6:35 AM, WhoCares1000 said:

OK, sounds like they filed a complaint the minute they found out you had a lawyer. They figured out that you were not fooled by the pocket docket setup. Still unusual but then again, most people on this board using an attorney is unusual.

As for moving he case to small claims once they figure out your strategy will likely backfire on them. You could argue that you have an order from a judge demanding that they go to arb. You could also argue that they chose their path and now must follow it. Not only that, but it will likely piss off a judge with an overloaded case load to have the case brought back like that after they got it off their docket. These people file cases by the 1000s and the last thing they need is a judge pissed off with them who might hold them to the absolute letter of the law when they get a chance.

Believe me.  I didn't want to have to hire an attorney.  I was up against a deadline and choked.

From my understanding, these JDB attorneys want to receive discovery before they decide whether or not something is worth pursuing.  With small claims and arbitration, there is no discovery.  (The contract specifically says neither party is entitled to discovery in arbitration.)  I've never heard of discovery being allowed in small claims.   I think they can subpoena documents, though.

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Small claims is kinda like Judge Judy without the attitude from the judge. They give their side, you give your side, the judge might ask some questions, and then the judge gives their decision. There is no formal discovery because the process is streamlined. You either have your evidence on the trial date or you don't and that is that. That is why it is so easy to get a trial de novo in civil court after a small claims verdict.

My argument against them moving to small claims if a motion to compel arb is approved is that the plaintiff, knowing the contract, made the choice to go the civil court route and should not now be allowed to change their mind because they chose the wrong forum initially. Otherwise, they will be allowed to forum shop which the courts should frown upon.

As for receiving discovery from you, they want to know if a case will be an easy win for them before they spend the money on court fees. That is why the use the pocket docket process. In arb, they have to spend tons of money without any chance of receiving that back. In small claims, there is the risk of losing after paying the court fees. They can do that in Minnesota but you also have the right to request they use the process outlined in the contract.

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1 hour ago, WhoCares1000 said:

Small claims is kinda like Judge Judy without the attitude from the judge. They give their side, you give your side, the judge might ask some questions, and then the judge gives their decision. There is no formal discovery because the process is streamlined. You either have your evidence on the trial date or you don't and that is that. That is why it is so easy to get a trial de novo in civil court after a small claims verdict.

My argument against them moving to small claims if a motion to compel arb is approved is that the plaintiff, knowing the contract, made the choice to go the civil court route and should not now be allowed to change their mind because they chose the wrong forum initially. Otherwise, they will be allowed to forum shop which the courts should frown upon.

As for receiving discovery from you, they want to know if a case will be an easy win for them before they spend the money on court fees. That is why the use the pocket docket process. In arb, they have to spend tons of money without any chance of receiving that back. In small claims, there is the risk of losing after paying the court fees. They can do that in Minnesota but you also have the right to request they use the process outlined in the contract.

Thanks for all the information.

If a plaintiff chooses civil court, despite the presence of a mandatory binding arbitration clause and a small claims clause, is a court likely to award me my attorney's fees?

Were it not for the fact that the plaintiff breached the agreement by filing in civil court, it wouldn't have been necessary for me to hire an attorney to respond to their complaint.

 

 

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4 hours ago, LaneBlane said:

Thanks for all the information.

If a plaintiff chooses civil court, despite the presence of a mandatory binding arbitration clause and a small claims clause, is a court likely to award me my attorney's fees?

Were it not for the fact that the plaintiff breached the agreement by filing in civil court, it wouldn't have been necessary for me to hire an attorney to respond to their complaint.

 

 

What exactly, word for word, does the arbitration provision state?

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Here are the arbitration sections:

Agreement to Arbitrate Claims. Except as otherwise stated below, any Claim (as defined below) will be resolved by binding arbitration pursuant to (a) this Arbitration Provision and (b) the code of procedure of the national arbitration organization to which the Claim is referred (as in effect when the Claim is filed). Claims will be referred to either Judicial Arbitration and Mediation Services (“JAMS”) or the American Arbitration Association (“AAA”), as selected by the party electing to use arbitration. Streamlined arbitration procedures will be used if available. If a selection by us of one of these organizations is unacceptable to you, you have the right, within 30 days after you receive notice of our election, to select the other organization listed to serve as arbitration administrator. For purposes of this Arbitration Provision, “Claim” means any claim, dispute or controversy (whether in contract, tort, or otherwise) past, present or future, (collectively, "Claims") as further described below. (If for any reason a selected organization cannot, will not or ceases to serve as an arbitration administrator, you or we may substitute another arbitrator or arbitration organization that uses a similar code of procedure and is mutually acceptable to both parties, in accordance with Section 5 of the Federal Arbitration Act. If both parties cannot agree on an arbitration organization, then either party may ask a court of competent jurisdiction to appoint a qualified arbitration organization.) An arbitration proceeding can decide only your or our Claims. You cannot join other parties (or consolidate Claims). Neither you nor we will be permitted to arbitrate claims on a class-wide (that is, on other than an individual) basis.

SIGNIFICANCE OF ARBITRATION; LIMITATIONS AND RESTRICTIONS. IN ARBITRATION, NEITHER YOU NOR WE WILL HAVE THE RIGHT TO (i) HAVE A COURT OR JURY DECIDE THE CLAIM BEING ARBITRATED, (ii) ENGAGE IN PRE-ARBITRATION DISCOVERY (THAT IS, THE RIGHT TO OBTAIN INFORMATION FROM THE OTHER PARTY) TO THE SAME EXTENT THAT YOU OR WE COULD IN COURT, (iii) PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS IN A CLASS ACTION, IN COURT OR IN ARBITRATION, RELATING TO ANY CLAIM SUBJECT TO ARBITRATION OR (iv) JOIN OR CONSOLIDATE CLAIMS OTHER THAN YOUR OWN OR OUR OWN. OTHER RIGHTS AVAILABLE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION. Except as set forth below, the arbitrator’s decision will be final and binding. Only a court may decide the validity of items (iii) and (iv) above. If a court holds that items (iii) or (iv) are limited, invalid or unenforceable, then this entire Arbitration Provision will be null and void. You or we can appeal any such holding. If a court holds that any other part(s) of this Arbitration Provision (other than items (iii) and (iv)) are invalid, then the remaining parts of this Arbitration Provision will remain in force. An arbitrator will decide all other issues pertaining to arbitrability, validity, interpretation and enforceability of this Arbitration Provision. The decision of an arbitrator is as enforceable as any court order and may be subject to very limited review by a court. An arbitrator may decide any Claim upon the submission of documents alone. A party may request a telephonic hearing if permitted by applicable rules. The exchange of non-privileged information relevant to any Claim, between the parties, is permitted and encouraged. Either party may submit relevant information, documents or exhibits to the arbitrator for consideration in deciding any Claim.

Arbitration Procedure and Costs. For a copy of relevant codes of procedure, to file a Claim or for other information about JAMS and AAA, write them, visit their web site or call them at: (i) for JAMS, 1920 Main Street, Suite 300, Irvine, CA 92614, info@jamsadr.com, http://www.jamsadr.com, or 1-800-352-5267; or (ii) for AAA, 1633 Broadway, 10th Floor, New York, NY 10019, websitemail@adr.org, http://www.adr.org, or 1-800-778-7879. If either party fails to submit to arbitration following a proper demand to do so, that party will bear the costs and expenses, including reasonable attorneys’ fees, incurred by the party compelling arbitration. Any physical arbitration hearing will be held in the federal judicial district selected by Merchant. No matter which party initiates the arbitration, we will advance or reimburse filing fees and other costs or fees of arbitration. Each party will initially be responsible for its own attorneys’, experts’ and witness fees and related costs and expenses. Unless prohibited by law, the arbitrator may, applying applicable law, award fees, costs and reasonable attorneys’ fees and expenses to the party who substantially prevails in the arbitration. The allocation of fees and costs relating to an appeal in arbitration will be handled in the same manner. For an explanation and schedule of the fees that may apply to an arbitration proceeding, please contact the organizations at the addresses above. The appropriate fee schedule in effect from time to time is hereby incorporated by reference into this Arbitration Provision. The cost of arbitration may be higher or lower than the cost of bringing a Claim in court, depending upon the nature of the Claim and how the arbitration proceeds. Having more than one Claim and holding a physical arbitration hearing can increase the cost of arbitration.

Governing Law for Arbitration. This Arbitration Provision is made pursuant to a transaction involving interstate commerce, and will be governed by the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq., as amended, notwithstanding any other governing law provision in this Agreement. The arbitrator will apply applicable substantive law consistent with the FAA and applicable statutes of limitations and will honor claims of privilege recognized at law. Judgment upon any arbitration award may be entered and enforced in any court having jurisdiction. The arbitrator’s decision will be final and binding, except for any right of appeal provided by the FAA, in which case any party can appeal the award to a three-arbitrator panel administered by the selected arbitration administrator. The panel will reconsider de novo (that is, without deference to the ruling of the original arbitration) any aspect of the initial award requested by the appealing part

Continued Effect of Arbitration Provision. This Arbitration Provision will continue to govern any Claims that may arise without regard to any termination or cancellation of this Agreement. If any portion of this Arbitration Provision (other than the provisions prohibiting class-wide arbitration, joinder or consolidation) is deemed invalid or unenforceable under the FAA, it will not invalidate the remaining portions of this Arbitration Provision. If a conflict or inconsistency arises between the code of procedures of the selected arbitration administrator and this Arbitration Provision, this Arbitration Provision will control.

 

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It's my understanding that i need to file a motion for leave to amend my answer and affirmative defense within 20-days from the date my answer to the plaintiff's complaint was filed.  This leaves me with just a few days.

I've had a very hard time finding examples to pull from online.  From what I have found, I'll pieced the following together.  Would you please take a look and let me know if this is acceptable?

Because this is a motion to add an Affirmative Defense, do I also need to file a motion to dismiss?  If so, can and how would I combine both into one document?

 

DEFENDANTS’ MOTION FOR LEAVE TO


AMEND THEIR ANSWER AND ADD AFFIRMATIVE DEFENSE

 

Defendant, [name], hereby moves the Court for leave to amend their Answer and add an Affirmative Defense.  In support of this motion, Defendant states:

  1. The court should grant Defendant's motion pursuant to Rule 15 of the Federal Rules of Civil Procedure and in the interests of justice.
  2. Defendant's proposed amendment includes the addition of the following affirmative defense.
     

AFFIRMATIVE DEFENSE

This court lacks jurisdiction due to the presence of a mandatory, binding arbitration clause and a small claims court clause in the loan agreements.

 

WHEREFORE, Defendant requests that the Court grant Defendant's Motion for Leave to Amend Their Answer and Add Affirmative Defense, attached hereto as Exhibit A.

[Exhibit A will be a copy of my original Answer revised to include the new Affirmative Defense.]

 

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6 minutes ago, BV80 said:

@LaneBlane

Where is the small claims section?  I thought it would be in the arbitration provision.

Small Claims Court Option. All parties, including related third parties, shall retain the right to seek adjudication of an individual (and not class or representative) Claim in a small claims tribunal in the county of your residence for disputes within the scope of such tribunal’s jurisdiction. Any dispute, which cannot be adjudicated within the jurisdiction of a small claims tribunal (including claims transferred by the small claims tribunal to another court) shall be resolved by binding arbitration. Any appeal of a judgment from a small claims tribunal shall be resolved by binding arbitration.

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39 minutes ago, LaneBlane said:

Small Claims Court Option. All parties, including related third parties, shall retain the right to seek adjudication of an individual (and not class or representative) Claim in a small claims tribunal in the county of your residence for disputes within the scope of such tribunal’s jurisdiction. Any dispute, which cannot be adjudicated within the jurisdiction of a small claims tribunal (including claims transferred by the small claims tribunal to another court) shall be resolved by binding arbitration. Any appeal of a judgment from a small claims tribunal shall be resolved by binding arbitration.

 I agree with you. They either had to file in small claims or in arbitration. 

You might possibly have an FDCPA claim against the plaintiff depending upon certain circumstances.

 

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1 hour ago, BV80 said:

 I agree with you. They either had to file in small claims or in arbitration. 

You might possibly have an FDCPA claim against the plaintiff depending upon certain circumstances.

 

I'm hoping adding the arbitration and small claims clauses as an affirmative defense will stop them in their tracks.  There's no guarantee of this.   I would feel much better when this is out of civil court so I don't need to respond to their interrogatories, request for production of documents, and request for admissions.

Right now time is of the essence for me to file my motion for leave to amend my answer and add an affirmative defense.  Are you able to help me with this?  I posted a draft version (a few posts above) that I've put together so far.   I may start a new forum topic that mentions what I need in the subject field.

Thank again for your help.  You've been very generous with your time.

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1 hour ago, LaneBlane said:

I'm hoping adding the arbitration and small claims clauses as an affirmative defense will stop them in their tracks.  There's no guarantee of this.   I would feel much better when this is out of civil court so I don't need to respond to their interrogatories, request for production of documents, and request for admissions.

Right now time is of the essence for me to file my motion for leave to amend my answer and add an affirmative defense.  Are you able to help me with this?  I posted a draft version (a few posts above) that I've put together so far.   I may start a new forum topic that mentions what I need in the subject field.

Thank again for your help.  You've been very generous with your time.

I don't know your rules of civil procedure, but @WhoCares1000 is from your state and is very knowledgeable. 

Do you mind revealing the name of the JDB?

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11 hours ago, BV80 said:

I don't know your rules of civil procedure, but @WhoCares1000 is from your state and is very knowledgeable. 

Do you mind revealing the name of the JDB?

I looked up the rules of civil procedure and finally have a handle on this now.

When someone is asking for leave of the court to amend their answer and add an affirmative defense, do they need to give a reason why the affirmative defense wasn't added in the initial answer?   It appears leave will freely be given as long as justice so requires. 

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You are thinking this too much. You do not need to amend the answer. What you need to do is file a motion to compel arbitration with the court. You attach the agreement with the clause outlines and state that this case does not belong in civil court, it belongs in arbitration.

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@LaneBlane

In the MTC arbitration, if it were me, I'd be sure to include that the contract specifically states that actions outside of small claims must be arbitrated.

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9 minutes ago, WhoCares1000 said:

You are thinking this too much. You do not need to amend the answer. What you need to do is file a motion to compel arbitration with the court. You attach the agreement with the clause outlines and state that this case does not belong in civil court, it belongs in arbitration.

Thanks for pointing me in the right direction!

Does it make any difference that I've already been served with the Plaintiff's first set of interrogatories, request for production of documents, etc.?  Also, when you file a motion to compel arbitration, what is the court's typical action?  Do they dismiss without prejudice and tell the Plaintiff the case cannot be brought in civil court?

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8 minutes ago, BV80 said:

@LaneBlane

In the MTC arbitration, if it were me, I'd be sure to include that the contract specifically states that actions outside of small claims must be arbitrated.

Thank you.  I will definitely do that.  I'll also include the fact that actions cannot be transferred to a different court. 

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There are 10 different agreements, all of which have the same arbitration and small claims clauses.  Do I need to list each agreement on the MTCA separately, as well as provide a copy of each agreement as an exhibit?

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Did they not send you an agreement with discovery? If not, then your argument for the MTC arbitration is tighter because you can state that you had to look for the information yourself.

What will probably happen is that the case will be either stayed pending arbitration or dismissed without prejudice, In your case, you might want to ask that the case be stayed pending arbitration as that would then prevent them from going into small claims.

Also, while doing this, please get your discovery answered ready just in case the MTC is denied (can happen) and get a JAMS form started and ready to go it the MTC is issued as you will probably have a limited amount of time to start arb is approved.

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As for the agreement, just include the one you think closest fits your situation. It will usually be the last one you think was in force before you defaulted.

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48 minutes ago, WhoCares1000 said:

Did they not send you an agreement with discovery? If not, then your argument for the MTC arbitration is tighter because you can state that you had to look for the information yourself.

What will probably happen is that the case will be either stayed pending arbitration or dismissed without prejudice, In your case, you might want to ask that the case be stayed pending arbitration as that would then prevent them from going into small claims.

Also, while doing this, please get your discovery answered ready just in case the MTC is denied (can happen) and get a JAMS form started and ready to go it the MTC is issued as you will probably have a limited amount of time to start arb is approved.

These are line of credit loans.  There are 10 of them.  Each has the same arbitration/small claims clauses.   When the plaintiff's attorney recently sent their first set of interrogatories, request for production of documents, and request for admissions. these were attached as exhibits.

I have my MTC prepared.  The last paragraph reads, " WHEREFORE, Defendant moves this Honorable Court to compel arbitration pursuant to the Loan Agreement and to dismiss Plaintiff's complaint due to Lack of Subject Matter Jurisdiction or in the alternative, to stay proceedings pending contractual arbitration. "

I've also stated the following:

  • The parties are bound by the Loan Agreement.  This Agreement includes an Agreement to Arbitrate Claims and a Small Claims Court Option that states among other things:
    • Any dispute, which cannot be adjudicated within the jurisdiction of a small claims tribuinal (including claims transferred by the small claims tribunal to another court) shall be resolved by binding arbitration.
    • Any claim resolved by binding arbitration will be pursuant to (a) the Arbitration Provision and (b) the code of procedure of the national arbitration organization to which the claims is referred.
    • A Claim is defined as any dispute or controversy (whether in contract, tort, or otherwise) past, present, or future.
    • The Arbitration Provision is made pursuant to a transaction involving interstate commerce, and will be governed by the Federal Arbitration Act ("FAA") 9 U.S.C. 1 et seq., as amended, notwithstanding any other governing law provision in this Agreement.
       
  • The Federal Arbitration Act (FAA) 9 USC, Section 2 - " A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract"
     
  • The Supreme Court Ruling, decided April 27, 2011, AT&T MOBILITY LLC v. CONCEPCION ET U, states that courts must enforce arbitration agreements according to their terms. If there is an arbitration clause in the contract, that clause must be honored.

    "We have described this provision as reflecting both a “liberal federal policy favoring arbitration,” Moses H. Cone , supra, at 24, and the “fundamental principle that arbitration is a matter of contract,” Rent-A-Center, West, Inc. v. Jackson , 561 U. S. ____, ____ (2010) (slip op., at 3). In line with these principles, courts must place arbitration agreements on an equal footing with other contracts, Buckeye Check Cashing, Inc. v. Cardegna , 546 U. S. 440, 443 (2006) , and enforce them according to their terms, Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ. , 489 U. S. 468, 478 (1989) ."

    Furthermore, "The “principal purpose” of the FAA is to “ensur[e] that private arbitration agreements are enforced according to their terms.” Volt , 489 U. S., at 478; see also Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp. , 559 U. S. ___, ___ (2010) (slip op., at 17). This purpose is readily apparent from the FAA’s text. Section 2 makes arbitration agreements “valid, irrevocable, and enforceable” as written (subject, of course, to the saving clause); §3 requires courts to stay litigation of arbitral claims pending arbitration of those claims “in accordance with the terms of the agreement”; and §4 requires courts to compel arbitration “in accordance with the terms of the agreement” upon the motion of either party to the agreement . . . "

 

If/when the MTC is granted, will I need to actually file with JAMS?   I thought I could leave it in the JDB's hands - whether or not to file in arbitration. 

 

 

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1 hour ago, WhoCares1000 said:
 

As for the agreement, just include the one you think closest fits your situation. It will usually be the last one you think was in force before you defaulted.

Because there are 10 agreements, I was afraid they could say my motion was insufficient because I only included a copy of one of the agreements.

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