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Thomas v. Progressive Leasing

United States District Court, D. Maryland

October 25, 2017

MICHAEL THOMAS, Plaintiff,
v.
PROGRESSIVE LEASING Defendant.

          MEMORANDUM OPINION

          Richard D. Bennett, United States District Judge.

         Plaintiff Michael Thomas (“Plaintiff” or “Thomas”) brings this action against Defendant Progressive Leasing (“Defendant” or “Progressive”), alleging a single cause of action under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. (Compl., ECF No. 1.) Currently pending before this Court is Defendant's Motion to Compel Arbitration and to Dismiss or Stay the Litigation. (ECF No. 9.) The parties' submissions have been reviewed, and no hearing is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons stated herein, Progressive's Motion to Compel Arbitration and to Dismiss or Stay the Litigation (ECF No. 9) is GRANTED and this case is DISMISSED.

         BACKGROUND

         From September 2015 to February 2017, the Plaintiff Thomas sought financing from the Defendant Progressive in order to lease jewelry. (Thatcher Decl., ECF No. 9-3 at ¶¶ 5-6.) Specifically, Thomas applied six times for financing. (Id. at ¶ 5.) For various reasons, however, Progressive denied Thomas's applications. (Id. at ¶ 6.) On November 28, 2015, Plaintiff's wife, Joann Carter, successfully applied for and entered into a lease with Progressive to lease diamond earrings and a watch (“the Lease”). (ECF No. 11-1 at 1.) The Lease contains an arbitration provision requiring arbitration of any “claim, dispute or controversy between [Carter] and [Progressive] (including any Related Party) that arises from or relates in any way to this Lease or the Property.” (Def. Exh. 1, ECF No. 9-4 at ¶ 13.) In addition, the Lease expressly permits Progressive to call Carter at any number that she provides to Progressive. (Id. at ¶ 9.)

         On December 31, 2015, a Progressive representative called Carter on her cell phone because a payment on the Lease had not been received. (Def. Exh. 2, ECF No. 9-5.) Since Carter was driving when she received the call, she handed her phone to her husband, the Plaintiff Thomas, who was also in the car. (Id. at 2.) When Progressive told Thomas that a payment had not gone through, Thomas told the Progressive representative that Progressive could contact him to collect the debt and told the representative to write Thomas's phone number down. (Id. at 2-3.) In addition, Thomas told the representative to remove his wife's credit card number from the account and to “transfer [the account] over” to his credit card number. (Id.)

         Soon after giving Progressive his phone number and credit card number, Thomas began receiving calls from Progressive. (ECF No. 1 at ¶ 12.) Like the initial call to Carter, the calls were made to collect the account balance owed under the Lease. (Id. at ¶ 15.) In his Complaint, Plaintiff claims that Progressive made the calls using an automatic telephone dialing system, automated message, and/or prerecorded voices. (Id. at ¶¶ 12, 13.) In addition, Plaintiff claims that he spoke with additional Progressive representatives and told them to stop calling. (Id. at ¶ 16.) Despite these requests, Progressive kept calling Thomas, sometimes multiple times per day. (Id. at ¶ 18.) Plaintiff filed this action on May 5, 2017, alleging that the Defendant Progressive repeatedly called his cell phone using a telephone dialing system, in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227. (ECF No. 1.) Shortly thereafter, Progressive filed a Motion to Compel Arbitration and to Dismiss or Stay the Litigation based on the arbitration agreement in the Lease between Progressive and Thomas's wife. (ECF No. 9.)

         STANDARD OF REVIEW

         Defendant has filed the pending Motion to Compel Arbitration (ECF No. 9) pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq. The standard of review on a Motion to Compel Arbitration pursuant to the FAA is “‘akin to the burden on summary judgment.'”[1] Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 85 (4th Cir. 2016) (quoting Chorley Enterprises, Inc. v. Dickey's Barbecue Restaurants, Inc., 807 F.3d 553, 564 (4th Cir. 2015)). Therefore, motions to compel arbitration “shall [be] grant[ed] … 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); Rose v. New Day Financial, LLC, 816 F.Supp.2d 245, 251-52 (D. Md. 2011).

         A party seeking to apply the FAA must demonstrate four elements: “‘(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.'” Galloway, 819 F.3d at 84 (quoting Rota- McLarty v. Santander Consumer USA, Inc., 700 F.3d 690, 696 n.6 (4th Cir. 2012)). Therefore, “although arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate.'” Adkins v. Labor Ready, Inc., 303 F.3d 496, 501 (4th Cir. 2002) (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997)). The Supreme Court has directed courts to “apply ordinary state-law principles that govern the formation of contracts” and “federal substantive law of arbitratbility.” Hill v. Peoplesoft USA, Inc., 412 F.3d 540, 543 (4th Cir. 2005); see also Heller v. TriEnergy, Inc., 877 F.Supp.2d 414, 423-24 (N.D.W.V. 2012) (explaining that the “one important caveat to the reach of the FAA” is that state law governs the formation of the contract (citing Hill, 412 F.3d at 543)).

         ANALYSIS

         The Plaintiff Thomas does not dispute that there is a valid arbitration agreement contained in the Lease between Progressive and his wife. Rather, he argues that because he is neither a signatory nor a beneficiary to the Lease, the arbitration agreement is not enforceable against him. Progressive asserts that although Thomas is a nonsignatory to the Lease, he can be compelled to arbitrate under the theory of equitable estoppel.

         Whether Thomas is equitably estopped from denying that he is bound to arbitrate is governed by the Federal Arbitration Act (“FAA”). See R.J. Griffin & Co. v. Beach Club II Homeowners Ass'n, Inc., 384 F.3d 157, 160 n.1 (4th Cir. 2004) (explaining that determining whether a nonsignatory is bound by a contract containing an arbitration provision does not present a state law question of contract formation or validity and therefore courts look to the FAA to determine whether the non-signatory can be compelled to arbitrate under the contract); see also Int'l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 417 n.4 (4th Cir. 2000) (“Because the determination of whether [the plaintiff], a nonsignatory, is bound by the … contract presents no state law question of contract formation or validity, we look to the “federal substantive law of arbitrability” to resolve this question.”).

         “Equitable estoppel precludes a party from asserting rights ‘he otherwise would have had against another' when his own conduct renders assertion of those rights contrary to equity.” Int'l Paper Co., 206 F.3d at 417-18 (citations omitted). In the arbitration context, the theory of equitable estoppel recognizes that “it is clear that under some circumstances . . . ‘a party can agree to submit to arbitration by means other than personally signing a contract containing an arbitration clause.'” Osborne v. Marina Inn at Grande Dunes, LLC, No. 4:08-cv-0490, 2009 WL 3152044, at *9 (D.S.C. Sept. 23, 2009) (quoting Int'l Paper Co., 206 F.3d at 416).

         When the signatory to an arbitration agreement seeks to compel a nonsignatory to arbitrate, the Fourth Circuit applies the “direct benefit” test. Int'l Paper Co., 206 F.3d; R.J. Griffin, 384 F.3d.[2] Under this test, “‘[a] nonsignatory is estopped from refusing to comply with an arbitration clause when it [is seeking or] receives a direct benefit from a contract containing an arbitration clause.'” R.J. Griffin, 384 F.3d at 161 (quoting Int'l Paper Co., 206 F.3d at 418). This test “recognizes that a nonsignatory should be estopped from denying that it is bound by an arbitration clause when its claims against the signatory ‘arise from' the contract containing the arbitration clause.” Am. Bankers Ins. Group, Inc. v. Long,453 F.3d 623, 628 (4th Cir. 2006) (citing R.J. Griffin, 384 F.3d at 162); see also Int'l Paper Co., 206 F.3d at 418 (“[A] party may be estopped from ...


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