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Gillette v. Service Intelligence LLC

United States District Court, E.D. Wisconsin

October 17, 2019

JASMINE GILLETTE, Plaintiff,
v.
SERVICE INTELLIGENCE LLC and CREDIT ACCEPTANCE CORPORATION, Defendants.

          ORDER GRANTING MOTION TO COMPEL ARBITRATION

          William C. Griesbach, Chief Judge.

         When deciding whether to compel arbitration, federal law requires courts to review, but not revise, the scope of arbitration provisions. To avoid arbitration, Plaintiff Jasmine Gillette asks the court to find that the arbitration clause contained in her auto finance contract excludes the present repossession dispute amongst the parties. Gillette purchased a vehicle by financing it with a retail installment sales contract, which contained a binding arbitration clause. She missed payments due under the contract and Defendants repossessed her car. Gillette now alleges that the repossession violates the Fair Debt Collection Practices Act (FDCPA), the Wisconsin Consumer Act (WCA), and amounts to the common law tort of conversion. Defendant Credit Acceptance Corporation, joined by Defendant Service Intelligence LLC, moved to compel arbitration. Dkt. Nos. 13, 19. For the reasons explained below, the motion to compel arbitration is granted.

         BACKGROUND

         Gillette obtained financing to purchase a 2016 Mazda sedan from a car dealership in Appleton, Wisconsin, on or about June 2, 2017. She executed a retail installment sales contract (the Contract) providing for 66 payments with an interest rate of 22.99%. The dealership assigned the Contract, together with the security interest in the vehicle, to Defendant Credit Acceptance Corporation (Credit Acceptance). Gillette subsequently missed payments due under the Contract and Credit Acceptance engaged Defendant Service Intelligence LLC to repossess Gillette's vehicle on or about February 15, 2019.

         Gillette alleges that Defendant Service Intelligence LLC violated the FDCPA by repossessing Plaintiff's vehicle without the legal authority to do so. See 15 U.S.C. § 1692 et seq. Gillette further claims that Credit Acceptance violated the WCA by involuntarily repossessing Gillette's car without first mailing a written notice. See Wis. Stat. § 425.205 et seq. Gillette also brings a tort claim against Defendants for conversion of Gillette's car, contending it was obtained improperly through repossession.

         The Contract contained an arbitration clause pursuant to which Defendants have moved to compel arbitration. The arbitration clause filled the entire final page of the five-page Contract Gillette executed to finance her vehicle. Dkt. No. 15-1. The first page of the Contract contained a box (outlined in black) specifically flagging that the agreement contained an arbitration clause whereby the parties “may elect to resolve any dispute by arbitration and not by court action” and directing the reader to page five of the Contract for the entire arbitration clause. Id. at 1. Gillette placed her initials at the bottom of this box, confirming that she read, understood, and agreed to the terms and conditions of the arbitration clause. Id. The parties disagree over the scope and coverage of the operative language of the arbitration clause. At issue is the definition of “Dispute” as used in the arbitration clause, which says:

A “Dispute” is any controversy or claim between You and Us arising out of or in any way related to this Contract, including, but not limited to, any default under this Contract, the collection of amounts due under this Contract, the purchase, sale, delivery, set-up, quality of the Vehicle, advertising for the Vehicle or its financing, or any product or service included in this Contract. “Dispute” shall have the broadest meaning possible, and includes contract claims, and claims based on tort, violations of laws, statutes, ordinances or regulations or any other legal or equitable theories. Notwithstanding the foregoing, “Dispute” does not include any individual action brought by You in small claims court or Your state's equivalent court, unless such action is transferred, removed or appealed to a different court. “Dispute” does not include any repossession of the Vehicle upon Your default and any exercise of the power of sale of the Vehicle under this Contract or any individual action by You to prevent Us from using any such remedy, so long as such individual action does not involve a request for monetary relief of any kind. In addition, “dispute” does not include disputes about the validity, enforceability, coverage or scope of this Arbitration Clause or any part thereof (including, without limitation, the Class Action Waiver described in the sixth paragraph of this Arbitration Clause, the last sentence of the seventh paragraph of this Arbitration Clause and/or this sentence); all such disputes are for a court and not an arbitrator to decide. However, any dispute or argument that concerns the validity or enforceability of the Contract as a whole is for the arbitrator, not a court, to decide.

Id. at 5.

         LEGAL STANDARDS

         The Federal Arbitration Act (FAA) governs the arbitration of contracts involving interstate commerce. Commonwealth Edison Co. v. Gulf Oil Corp., 541 F.2d 1263, 1271-72 (7th Cir. 1976). A motion to compel arbitration pursuant to § 4 of the FAA presents a question of federal law. See Id. Per the FAA, an arbitration clause within a contract “shall be 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.

         In order to compel arbitration under the FAA, a party must identify: “(1) an agreement to arbitrate, (2) a dispute within the scope of the arbitration agreement, and (3) a refusal by the opposing party to proceed to arbitration.” Druco Rests., Inc. v. Steak N Shake Enters., Inc., 765 F.3d 776, 781 (7th Cir. 2014) (citing Zurich American Ins. Co. v. Watts Indus., Inc., 466 F.3d 577, 580 (7th Cir. 2006)). There exists a presumption in favor of arbitration when the arbitration clause is broad by its own terms. See United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union v. TriMas Corp., 531 F.3d 531, 536 (7th Cir. 2008) (citing AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986)). Arbitration clauses are to be interpreted “according to their plain meaning” and the text construed “for a commonsense result.” Id. (citing Air Line Pilots Ass'n, Int'l v. Midwest Exp. Airlines, Inc., 279 F.3d 553, 556 (7th Cir. 2002)). To the extent unclear, “ambiguities as to the scope of the arbitration clause itself [are] resolved in favor of arbitration.” Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 476 (1989).

         ANALYSIS

         To oppose the motion compelling arbitration, Gillette first asks the court to narrowly interpret the Contract's definition of “Dispute.” As an initial matter, Gillette argues that her claims do not “arise out of” the Contract, but stem from a “single statutory violation, the failure of Credit Acceptance to comply with the pre-repossession right to cure requirements of the WCA.” Dkt. No. 16 at 5. Gillette theorizes that because “Dispute” is defined as a claim “arising out of or in any way related to this Contract, ” its scope should not include statutory claims. Id. This does not comport with the plain reading of the text, however. The Contract provides that “Dispute” has “the broadest meaning possible, and includes contract claims, and claims based on tort, violations of laws, statutes, ordinances or regulations or any other legal or equitable theories.” Dkt. No. 15-1 at 5. Claims based on statute and tort are explicitly mentioned, in addition to those “in any way related” to the Contract. Further, it is unclear how Gillette's claims-statutory or otherwise-do not “arise” from the Contract; absent the Contract she would have no car to be repossessed nor evidence of ownership to challenge Defendants' actions. The court will not isolate sentence segments out of context and avoid the plain meaning of the text to fit Gillette's desired result.

         To establish that statutory actions are precluded from arbitration under the Contract, Gillette points to a Wisconsin Court of Appeals decision where Credit Acceptance's arbitration policy was also at issue. Kirk v. Credit Acceptance Corp., 2013 WI.App. 32, ¶ 1, 346 Wis.2d 635, 639, 829 N.W.2d 522, 524. However, Gillette concedes that the arbitration clause in Kirk omitted the very language at issue here-that the arbitration clause's scope should cover claims based on “tort, violations of laws, statutes, ordinances or regulations or any other legal or equitable theories.” Dkt. No. 16 at 6. The parallel language in Kirk addressed only “contract claims, and ...


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