United States District Court, D. Maryland
LETICIA T. CASTELLANOS Plaintiff
MARINER FINANCE, LLC Defendant
MEMORANDUM & ORDER RE: ARBITRATION
J. GARBIS UNITED STATES DISTRICT JUDGE.
Court has before it Defendant's Motion to Compel
Arbitration and to Stay Action [ECF No. 7] and the materials
related thereto. The Court has reviewed the materials
provided by the parties and finds that a hearing is not
detailed herein, Defendant, Mariner Finance, LLC
(“Mariner Finance”) sued Plaintiff on a loan in
small claims court, an action that was excluded from the
parties' arbitration agreement. Plaintiff sued Mariner
Finance in state circuit court alleging claims that are
within the scope of the arbitration agreement. Defendant is
entitled to enforce the arbitration agreement with regard to
Plaintiff's claims and is not required to arbitrate the
separate dispute pending in the small claims court.
instant case relates to a loan made by Mariner Finance to
Plaintiff Leticia T. Castellanos (“Castellanos”)
pursuant to a Note, Security Agreement & Arbitration
Agreement (“the Agreement”). According to Mariner
Finance's records, Castellanos failed to make the
required monthly payments on the loan. In July 2017, Mariner
Finance sought to recover the debt plus interest and late
fees by asserting a collection action against Castellanos in
the District Court of Maryland for Baltimore
City. Thereafter, Castellanos notified the small
claims court of her intention to defend, stating that she
would be filing a separate lawsuit involving other issues
against Mariner Finance in state circuit court.
October 10, 2017, Castellanos brought the instant action
against Mariner Finance in the Circuit Court for Baltimore
City, claiming common law fraud and violations of: the
Maryland Credit Grantor Closed End Credit Provisions, Md.
Code Ann., Com. Law § 12-1001 et seq.;
Maryland's Consumer Debt Collection Practices Act, Md.
Code Ann., Com. Law § 14-201 et seq.;
Maryland's Consumer Protection Act, Md. Code Ann., Com.
Law § 13-101 et seq.; usury statute at Md. Code
Ann., Com. Law § 12-1003(a); and Truth in Lending Act,
15 U.S.C. § 1601 et seq. and Regulation Z.
See Compl., ECF No. 2.
Finance timely removed the case to this Court, and by the
instant motion, seeks the Court to compel Castellanos to
arbitrate her claims pursuant to the Agreement.
Federal Arbitration Act (“FAA”) reflects a strong
federal policy favoring arbitration. AT&T Mobility
LLC v. Concepcion, 563 U.S. 333, 339 (2011).
“[C]ourts must place arbitration agreements on an equal
footing with other contracts, and enforce them according to
their terms.” Id. (citations omitted).
However, this liberal policy does not operate to compel
arbitration of issues that do not fall within the scope of
the parties' arbitration agreement.
compelling an unwilling party to arbitration, a court must
“engage in a limited review to ensure that the dispute
is arbitrable-i.e., that a valid agreement to arbitrate
exists between the parties and that the specific dispute
falls within the substantive scope of that agreement.”
Murray v. United Food and Commercial Workers Int'l
Union, 289 F.3d 297, 302 (4th Cir. 2002). A court must
compel arbitration if “(i) the parties have entered
into a valid agreement to arbitrate, and (ii) the dispute in
question falls within the scope of the arbitration
agreement.” Chorley Enters., Inc. v. Dickey's
Barbecue Rests., Inc., 807 F.3d 553, 563 (4th Cir.
2015), cert. denied, 136 S.Ct. 1656 (2016).
party seeking to arbitrate must establish only two facts:
“(1) [t]he making of the agreement and (2) the breach
of the agreement to arbitrate.” Mercury Constr.
Corp. v. Moses H. Cone Mem'l Hosp., 656 F.2d 933,
939 (4th Cir. 1981). The Court must particularly “avoid
reaching the merits of arbitrable issues.” Id.
(citing Drivers, Chauffeurs, etc. v. Akers Motor
Lines, 582 F.2d 1336, 1342 (4th Cir. 1978)).
does not dispute that there is a valid arbitration agreement
or that her claims are within the scope of the
Agreement's covered claims. By filing the instant lawsuit
against Mariner Finance, Castellanos has breached the
arbitration agreement. However, Castellanos contends that
Mariner Finance waived its right to arbitrate by choosing to
prosecute its collection action against Castellanos in the
District Court of Maryland for Baltimore City.
Circuit precedent has consistently applied the FAA's
“default” doctrine to cases involving potential
waivers of arbitration agreements. See, e.g.,
Rota-McLarty v. Santander Consumer USA, Inc., 700
F.3d 690, 702 (4th Cir. 2012)(finding that the district court
erred by not applying the FAA when the transaction including
the arbitration agreement related to interstate commerce);
Forrester v. Penn Lyon Homes, Inc., 553 F.3d 340,
342 (4th Cir. 2009)(“Under section 3 of the FAA, a
party loses its right to a stay of court ...