United States District Court, E.D. Pennsylvania
JEANINE D. GIBSON-REID, Plaintiff,
LENDMARK FINANCIAL SERVICES, LLC, Defendant.
D. WOLSON, J.
Lendmark Financial Services, LLC (“Lendmark”)
seeks to compel arbitration of this action pursuant to an
arbitration agreement between it and Plaintiff Jeanine
Gibson-Reid (“Gibson-Reid”). The arbitration
agreement appears valid, and this dispute falls within its
scope. The Court will therefore grant Lendmark's Motion
to compel arbitration and stay this case pending resolution
of arbitration proceedings.
April 5, 2019, Gibson-Reid obtained a loan from Lendmark in
the amount of $1, 723.73. (ECF No. 1-5 ¶ 9.) Gibson-Reid
signed a copy of the Combination Note, Security Agreement and
Federal Disclosure Statement (the “Loan
Agreement”), which contained the written terms and
conditions governing the loan. (Id. at ¶ 13
& Ex. A.) The same day, the Parties also entered into an
Arbitration Agreement. (ECF No. 5-4.)
Arbitration Agreement defines a “Claim” broadly,
to include “any pre-existing, present, or future claim,
dispute, or controversy of any kind or nature between you and
us, including but not limited to … any claim, dispute,
or controversy arising out of or relating to any agreement or
relationship with us of any kind … claims based upon
any theory of law, contract, tort, fraud, statute,
regulation, common law … [or] claims relating to the
origination, handling, billing, servicing, collection, or
termination or acceleration of any loan or other extension of
credit ….” (Id.) The Arbitration
Agreement provides that either party “may bring an
action, including a summary or expedited motion, to compel
arbitration of a Claim subject to arbitration …. Such
action may be brought at any time, even if any the [sic]
claim is part of a lawsuit.” (Id.)
filed suit in the Delaware County Court of Common Claims
under the Consumer Discount Company Act (“CDCA”),
Pennsylvania's Unfair Trade Practices and Consumer
Protection Law (“CPL”), Pennsylvania's Loan
Interest and Protection Law (“LIPL”), and common
law claims for breach of contract, common fraud, and
negligent misrepresentation. Lendmark removed the action to
this Court and now moves to compel arbitration per the
Parties' Arbitration Agreement.
ruling on a motion to compel arbitration, a district court
must determine whether the defense of arbitrability is
apparent on the face of a complaint or whether the resolution
of the motion requires the Court to consider facts outside
the complaint. In the former scenario, the Court should apply
a standard for a motion to dismiss under Fed.R.Civ.P.
12(b)(6), whereas in the latter scenario, the Court should
apply the standard for a motion for summary judgment under
Fed.R.Civ.P. 56. See Guidotti v. Legal Helpers Debt
Resolution, LLC, 716 F.3d 764, 773-74 (3d Cir. 2013).
Here, the Complaint does not reference the Arbitration
Agreement, and Lendmark has placed it before the Court as an
exhibit to a declaration. Therefore, the Court considers the
motion under the summary judgment standard.
Rule of Civil Procedure 56(a) permits a party to seek, and a
court to enter, summary judgment “if the movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). “[T]he plain language of Rule
56[(a)] mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party
who fails to make a showing sufficient to establish the
existence of an element essential to that party's case,
and on which that party will bear the burden of proof at
trial.” Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986) (quotations omitted). In ruling on a summary
judgment motion, a court must “view the facts and draw
reasonable inferences ‘in the light most favorable to
the party opposing the [summary judgment] motion.'”
Scott v. Harris, 550 U.S. 372, 378 (2007) (quotation
omitted). However, “[t]he non-moving party may not
merely deny the allegations in the moving party's
pleadings; instead he must show where in the record there
exists a genuine dispute over a material fact.” Doe
v. Abington Friends Sch., 480 F.3d 252, 256 (3d Cir.
2007) (citation omitted). The movant is entitled to judgment
as a matter of law when the non-moving party fails to make
such a showing. Dodson v. Coatesville Hosp. Corp.,
No. 18-3065, __ Fed. App'x __, 2019 WL 2338461, *2 n.6
(3d Cir. June 3, 2019) (quotation omitted).
Federal Arbitration Act (FAA) renders arbitration agreements
“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. § 2. The Act's
principal purpose “is to ensure that private
arbitration agreements are enforced according to their
terms.” AT&T Mobility LLC v. Concepcion,
563 U.S. 333, 344, 131 S.Ct. 1740, 1748, 179 L.Ed.2d 742
(2011) (internal quotations omitted). Supreme Court precedent
compels district courts to “rigorously enforce
agreements to arbitrate[.]” Green Tree Fin. Corp.
v. Bazzle, 539 U.S. 444, 458 (2003); Epic Sys. Corp.
v. Lewis, --- U.S. ---, 138 S.Ct. 1612, 1621 (2018). The
FAA specifically requires that courts, upon motion by a
party, stay any proceeding that involves an issue subject to
arbitration under a written arbitration provision. 9 U.S.C.
§ 3. Once a court concludes that a valid arbitration
agreement exists, and that the dispute falls within the scope
that agreement, the court must order the parties to arbitrate
without reviewing the merits of the case. See, e.g.,
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 626-28 (1985); Gay v.
CreditInform, 511 F.3d 369, 386 (3d Cir. 2007)
(“the district court is not to consider the merits of
the claims giving rise to the controversy, but is only to
determine … whether there is a valid agreement to
arbitrate.”) (quoting Great W. Mortgage Corp. v.
Peacock, 110 F.3d 222, 228 (3d Cir.1997)). Courts may
only invalidate arbitration agreements based upon generally
applicable contract defenses. 9 U.S.C. § 2;
Doctor's Assocs. v. Casarotto, 517 U.S. 681, 687
(1996). Gibson-Reid, as the party resisting arbitration,
bears the burden of proving that the claims at issue are
unsuitable for arbitration. Green Tree Financial
Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000).
the evidence demonstrates that Gibson-Reid and Lendmark
entered into a valid agreement to arbitrate. In addition,
this dispute falls within the scope of the Arbitration
Agreement. The Agreement applies broadly to “any
pre-existing, present, or future claim, dispute, or
controversy of any kind or nature between you and us
….” (ECF No. 5-4.) Certainly, this case is a
dispute between Gibson-Reid and Lendmark. Moreover, the
Arbitration Agreement specifies that its broad language
reached any “claim, dispute, or controversy arising out
of or relating to any agreement or relationship with us of
any kind” including “claims based upon any theory
of law, contract, tort, fraud, statute, regulation, common
law … .” (Id.) Gibson-Reid's claims
arise out of her Loan Agreement and assert the very types of
claims that the Arbitration Agreement specifies. Finally, the
Arbitration Agreement extends to any “claims relating
to the origination, handling, billing, servicing, collection,
or termination or acceleration of any loan or other extension
of credit ….” (Id.) Gibson-Reid's
claims arise from the formation and attempted cancellation of
the Loan Agreement, which constitute the origination,
handling, servicing, and termination of a loan or extension
of credit. They therefore fall within the scope of the
does not dispute that she signed the Arbitration Agreement or
that her claims fall within its scope. Moreover, the
arguments that she does make do not save her from her
agreement to arbitrate. First, she argues that Lendmark did
not provide five days' notice before petitioning a court
to order that arbitration proceed, as she says the FAA
requires. While the FAA does provide that “[f]ive
days' notice in writing of such application shall be
served upon the party in default” (9 U.S.C. § 4),
courts in this District have held that Section 4 of the FAA
is not applicable where, as here, the plaintiff has already
brought an action in court. See, e.g., Weinstein v.
Equitable Life Assurance Soc'y of U.S., No. CIV. A.
96-CV-3614, 1996 WL 557321, at *3 (E.D. Pa. Sept. 26, 1996).
Rather, Section 4 applies only when a party brings an
independent action “whose sole purpose is to compel
arbitration.” Zosky v. Boyer, 856 F.2d 554,
556 (3d Cir. 1988), cert. denied, 488 U.S. 1042
(1989). Here, because Gibson-Reid has already initiated a
proceeding in this Court, Section 3 of the FAA controls.
Id. Section 3 does not contain a notice requirement.
Gibson-Reid's argument therefore fails.
Gibson-Reid argues that under Section 4 of the FAA, Lendmark
must demonstrate that Gibson-Reid has defaulted on an
agreement to arbitrate. However, because Section 4 does not
apply here, this argument is of no moment. In any event, by
filing this lawsuit, Gibson-Reid has demonstrated that she
refuses to arbitrate the dispute. See PaineWebber Inc. v.
Faragalli, 61 F.3d 1063, 1066 (3d Cir. 1995); First
Family Fin. Servs. v. Fairley, 173 F.Supp.2d 565, 572
(S.D.Miss. 2001) (“The Court cannot conceive of a more
explicit refusal to arbitrate than the bringing of an