Opinion
No. 1:02-cv-311.
January 24, 2005
MEMORANDUM AND ORDER
I. Introduction
On July 9, 2003, this Court entered an order which reserved ruling on the motions [Court File No. 3 13] of defendants, Countrywide Home Loans, Inc. ("Countrywide"), Full Spectrum Lending, Inc. ("Full Spectrum"), and America's Wholesale Lender ("AWL") to compel arbitration pending a jury trial on the question of forgery. [Court File No. 16]. The July 9, 2003 order also stayed those claims of plaintiff, Sharon D. Johnson ("Johnson") which fell outside of the alleged arbitration agreement. [Court File No. 16].
On Tuesday, January 11, 2005 following a two-day trial on the issue of forgery, a jury found that the signature on the alleged Arbitration Agreement between the parties was that of plaintiff Johnson. [Court File No. 56]. Plaintiff Johnson had alleged that signature on the arbitration agreement was not her signature, that it was a forgery. Based on the jury's verdict, the Court finds that Johnson did sign the Arbitration Agreement; and, that the Arbitration Agreement is a valid agreement to arbitrate between the parties to this action.
II. The defendants' motion to compel arbitration [Court File No. 21].
Defendants, Countrywide, Full Spectrum and AWL, have moved to compel arbitration pursuant to the terms of the Arbitration Agreement under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 2, et seq. [Court File No. 3 13].
The arbitration agreement between the parties states in pertinent part:
Agreement to Arbitrate Claims. Upon written request by either party that is submitted according to the applicable rules for arbitration, any Claim, except the Excluded Claims specified below in this Agreement shall be resolved by binding arbitration in accordance with (i) the Federal Arbitration Act; (ii) the Code of Procedure ("Code") of the National Arbitration Forum ("Administrator" or "NAF") and (iii) this Agreement, unless all parties agree in writing to forego arbitration. In the event of any Claim subject to his Agreement, both You and We further agree to arbitrate any claims ("third party claims") by or against any other person or entity, such as investors, brokers, appraisers, sellers, closing agents, and real estate agents, connected in any way with the Credit Transaction, if such other person or entity agrees, either before or after notification of the third party claim, to submit such third party claim to binding arbitration in accordance with the terms of this Agreement. The terms of this Agreement shall control any inconsistency between the rules of the Administrator and this Agreement . . . Any party to this Agreement may bring an action to compel arbitration of any Claim and/or to say the litigation of any Claims (except Excluded Claims) pending arbitration, in any court having jurisdiction. Such motion may be brought at any time, even if a Claim is part of lawsuit, up until the entry of a final judgment. Examples of Claims that are governed by this Agreement include, without limitation, those involving:
• The Truth in Lending Act and Regulation Z;
• The Equal Credit Opportunity Act and Regulation B;
• The Real Estate Settlement Procedures Act and Regulation X;
• State insurance, usury, and lending laws; fraud or misrepresentation, including claims for failing to disclose material facts;
• Any other federal or state consumer protection statute or regulation;
• Any party's execution of this Agreement and/or willingness to be bound by its terms and Agreements or
• Any dispute about making, closing, servicing, collecting, or enforcing the Credit Transaction.
Judgment. Judgment upon any arbitration award may be entered in any court having jurisdiction.
Claims Excluded from Arbitration. The following types of matters ("Excluded Claims") are excluded from arbitration. This means that neither one of us can require the other to arbitrate:
• Any action to effect a judicial or nonjudicial foreclosure or to establish a deficiency judgment;
• Any unlawful detainer or other summary proceeding to secure possession of real property securing the Credit Transaction;
• Bankruptcy proceedings other than adversary proceedings;
• Any action for interpleader; or
• Any action brought in small claims court where all parties seek monetary damages in the aggregate of $5,000.00 or less in total damages (compensatory and punitive), costs, and fees.
[Court File No. 10, Exhibit 8]. The arbitration agreement further states that:
"Claim" means any case, controversy, dispute, lawsuit, or claim now or hereafter existing between You and Us. A Claim includes, without limitation, anything arising out of or relating to:
• This Agreement;
• The Credit Transaction;
• Any insurance, service, or product that is offered by Us in connection with the Credit Transaction, and any associated fees or charges;
• Any documents or instruments that contain information about the Credit Transaction, or any associated insurance, service, or product;
• Any act or omission concerning servicing, collecting, or enforcing the Credit Transaction; or
• Any act or omission concerning any Claim. . . . Participating in a lawsuit or seeking enforcement of this section by a court shall not waive the right to arbitrate any other Claim.Id. 9 U.S.C. § 2, the FAA provides:
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.
Title 9 U.S.C. § 2.
The FAA's purpose is "to ensure the enforceability, according to their terms, of private agreements to arbitrate." Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57, 115 S. Ct. 1212 (1995). However:
Arbitration under the [FAA] is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit. Just as they may limit by contract the issues which they will arbitrate, so too may they specify by contract the rules under which that arbitration will be conducted.Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479, 109 S. Ct. 1246, 1248 (1989) (internal citations omitted)). The proarbitration policy of the FAA "does not operate without regard to the wishes of the contracting parties." Mastrobuono, 514 U.S. at 57. In interpreting an arbitration agreement, the "[c]ourts should generally apply `ordinary state-law principles' in deciding whether the parties agreed to submit certain issues to arbitration." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920 (1995) (citing Mastrobuono, 514 U.S. at 62-63). The cardinal rule of contract interpretation in Tennessee is "to ascertain the intention of the parties and to give effect to that intention, consistent with legal principles." Brown v. Balaton Power, Inc., 2003 WL 23099678, at *5) (quoting Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn. 1975)). The intention of the parties is determined "by fair construction of the terms and provisions of the contract, by the subject matter to which it has reference, by the circumstances of the particular transaction giving rise to the question, and by the construction placed on the agreement by the parties in carrying out its terms." Brown, 2003 WL 23099678 at *5 (quoting Penske Truck Leasing Co. v. Huddleston, 795 S.W.2d 669, 671 (Tenn. 1990)).
Finally, before this Court compels an unwilling party to arbitrate it must "engage in a limited review to determine whether the dispute is arbitrable; meaning that a valid agreement to arbitrate exists between the parties and that the specific dispute falls within the substantial scope of that agreement." Bratt Enterprises, Inc. v. Noble Intern, Ltd., 338 F.3d 609, 612 (6th Cir. 2003) (quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003)).
Here, the Court has considered the issue and finds, based upon the jury's verdict, that a valid agreement to arbitrate does exist between the Johnson and the defendants.
The Court has reviewed the claims set forth in Johnson's Amended Verified Complaint. [Court File No. 8]. Based upon its review of the claims, the Court finds that all of Johnson's claims are subject to the Arbitration Agreement except for the claim set forth in Count XVII of the Amended Verified Complaint — that defendants engaged in a pattern of racketeering activities in violation of the Federal Racketeering Influence and Corruption Act ("RICO"), 18 U.S.C. § 1862, et seq.
Title 9 U.S.C. § 3 provides that:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . .
However, when all of the issues in an action are subject to arbitration, dismissal of the action is permissible. Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992). See also Reynolds v. Halliburton Co., 217 F. Supp. 2d 756, 758 (E.D. Tex. 2002) ("When all issues raised in an action a 9 U.S.C. § 3. re arbitrable and must be arbitrated, retaining jurisdiction and staying an action will serve no purpose.").
Here, all of the plaintiff's claims but one are arbitrable. Accordingly:
(1) The motions of defendants, Countrywide, Full Spectrum and AWL to compel arbitration pursuant to the Arbitration Agreement [Court File No. 3 13] is GRANTED;
(2) As promptly as possible, but in any event no later than thirty (30) days after the entry of this order, all parties to this action shall commence the process of arbitration as it is set forth in the relevant paragraphs Arbitration Agreement on all claims of plaintiff except for the RICO claim set forth in Count XVII of the Amended Verified Complaint; and
(3) Action on Johnson's RICO claim which is set forth in Count XVII of the Amendment Verified Complaint [Court File No. 8] is STAYED pending the outcome of the arbitration to be held in this matter.
SO ORDERED.