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Lomax v. Weinstock, Friedman & Friedman, P.A.

United States District Court, Fourth Circuit

January 17, 2014

KEANNA LOMAX, on behalf of herself and others similarly situated


Catherine C. Blake United States District Judge

Plaintiff Keanna Lomax filed this action against Weinstock, Friedman & Friedman, P.A. (“Weinstock”), alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), the Maryland Consumer Debt Collection Act (“MCDCA”), and the Maryland Consumer Protection Act (“MCPA”). Weinstock has filed a motion to dismiss or, in the alternative, to stay the action and compel arbitration.[1] The parties have fully briefed the issues, and no hearing is necessary. See Local Rule 105.6. For the reasons set forth below, the motion will be granted.


Lomax financed the purchase of a car with a loan obtained through a retail installment contract (“the RISC”) with Credit Acceptance Corporation (“CAC”). (Am. Compl. ¶ 22, ECF No. 10). The terms of the RISC are governed by Maryland’s Credit Grantor Closed End Credit Provisions (“the CLEC”), Md. Code Ann., Comm. Law § 12-1001 et seq. (Am. Compl. ¶ 23). To secure the loan, Lomax gave CAC a security interest in the car. (Am. Compl. ¶ 24). When she fell behind on her payments, CAC repossessed the car in December 2010, and sold it at auction for $300 through the Manheim auction company. (Am. Compl. ¶¶ 25, 26). CAC then sought a deficiency judgment against Lomax for the remaining amount due on the loan, retaining Weinstock, a law firm, to file suit on its behalf. (Am. Compl. ¶¶ 3, 36). Weinstock filed suit against Lomax in the Maryland District Court for Baltimore City on October 13, 2011. (Am. Compl. ¶ 36).

Lomax claims Weinstock violated the FDCPA, the MCDCA, and the MCPA by maintaining suit against her for a deficiency judgment when CAC had not provided the requisite notice of the sale under the CLEC.[2] (Am. Compl. ¶¶ 29, 39-40, 86, 93, 98). Lomax purports to bring suit on behalf of herself and all persons similarly situated. (Am. Compl. ¶ 80).

The RISC, between Lomax and CAC, included an agreement to arbitrate various disputes between the two parties. Weinstock claims the arbitration agreement covers the dispute in this case and on those grounds moves to dismiss for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), and failure to state a claim, pursuant to Rule 12(b)(6), or, in the alternative, to stay the action and compel arbitration. Under the Federal Arbitration Act (“FAA”), a court must, upon motion by a party, stay any proceeding that involves an issue subject to arbitration under a written arbitration agreement.[3] 9 U.S.C. § 3. If all issues are arbitrable, dismissal may be a proper remedy as well.[4] See Aggarao v. MOL Ship Mgmt. Co., Ltd., 675 F.3d 355, 376 n.18 (4th Cir. 2012) (noting there is some disagreement over whether dismissal is a proper remedy where all claims are subject to arbitration, but not resolving the issue); Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-710 (4th Cir. 2001) (noting that dismissal is a proper remedy when all issues are arbitrable); Davidson v. Becker, 256 F.Supp.2d 377, 384 (D. Md. 2003) (same). Accordingly, a party may properly invoke the FAA through a motion to dismiss. See id.


When ruling on a motion under Rule 12(b)(6), the court must “accept the well-pled allegations of the complaint as true, ” and “construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). “Even though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). To survive a motion to dismiss, the factual allegations of a complaint “must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and alterations omitted). “[W]hile a plaintiff does not need to demonstrate in a complaint that the right to relief is ‘probable, ’ the complaint must advance the plaintiff’s claim ‘across the line from conceivable to plausible.’” Id. (quoting Twombly, 550 U.S. at 570).

A motion pursuant to Federal Rule of Civil Procedure 12(b)(1) should be granted “only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); see also United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347–48 (4th Cir. 2009). The plaintiff bears the burden of proving that subject matter jurisdiction exists. Piney Run Preservation Ass’n v. Cnty. Comm’rs of Carroll Cnty., Md., 523 F.3d 453, 459 (4th Cir. 2008). Moreover, “[w]hen a defendant challenges subject matter jurisdiction via a Rule 12(b)(1) motion to dismiss, the district court may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings . . . .” Blitz v. Napolitano, 700 F.3d 733, 736 n.3 (4th Cir. 2012) (quoting Velasco v. Gov’t of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004)).

Courts have found it proper to dismiss claims subject to arbitration agreements under both Rule 12(b)(1) and Rule 12(b)(6). Compare Jensen v. Klayman, 115 F. App’x 634, 634 (4th Cir. 2004) (affirming the district court’s finding that dismissal pursuant to Rule 12(b)(1) would be appropriate because of an arbitration agreement between the parties), [5] and Muigai v. IMC Constr., Inc., 2011 WL 1743287, at *2-5 (D. Md. 2011) (dismissing under Rule 12(b)(1)), with Cheraghi v. MedImmune, LLC, 2011 WL 6047059, at *2 (D. Md. 2011) (treating a motion to dismiss because the claims were subject to arbitration as a motion under Rule 12(b)(6)), and Davidson, 256 F.Supp.2d at 378 (same). This court has previously dismissed a suit under Rule 12(b)(1) where the claims were subject to arbitration. Iraq Middle Mkt. Dev. Found. v. Al Harmoosh, 769 F.Supp.2d 838, 840, 843 (D. Md. 2011). The court does not need to decide under which rule Weinstock’s motion is more appropriately considered because dismissal is proper under either here.


Parties must submit claims to arbitration where they have a valid arbitration agreement and it covers the issues in dispute. See Aggarao, 675 F.3d at 375. “Agreements to arbitrate are construed according to the ordinary rules of contract interpretation, as augmented by a federal policy requiring that all ambiguities be resolved in favor of arbitration.” Choice Hotels, 252 F.3d at 710; see also Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983) (“[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.”). “[C]ourts must ‘rigorously enforce’ arbitration agreements according to their terms . . . including terms that ‘specify with whom [the parties] choose to arbitrate.’” Am. Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304, 2309 (2013) (alteration in original) (citations omitted).

Lomax does not appear to dispute the validity of the RISC or the arbitration agreement within it. (Am. Compl. ΒΆ 43). Instead, she argues that Weinstock, as a nonsignatory to the RISC, cannot invoke the arbitration clause, and, even if it could, that her claims would not fall within the range of issues covered by it. Her arguments are without ...

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