Ike Carter v. Payback Repo, Inc.

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IKE CARTER, JR., Plaintiff, v. PAYBACK REPO, INC., AMERICAN RECOVERY SERVICES and SANTANDER CONSUMER USA, N.A., Defendants.

No. CV 22-5083 (JMA)(ARL)

United States District Court, E.D. New York

August 25, 2023

REPORT AND RECOMMENDATION

ARLENE R. LINDSAY, MAGISTRATE JUDGE

Plaintiff Ike Carter, Jr. brings this action pursuant to the Fair Debt Collection Practices Act (the “FDCPA”) seeking to recover for injuries he sustained in connection with efforts to repossess his car. Before the Court, on referral from District Judge Azrack, is the motion by defendants Payback Repo, Inc. (“Payback”) and American Recovery Services (“ARS”) (collectively “Defendants”) to compel arbitration. For the reasons set forth below, the undersigned respectfully recommends that the motion be denied.

BACKGROUND

I. Procedural History

Plaintiff originally filed the complaint in this action against ARS Payback and Santander Consumer USA (“Santander”) on August 26, 2022. ECF No. 1. An Amended Complaint was filed on August 26, 2022. ECF No. 5. On October 4, 2022, Plaintiff voluntarily withdrew his claim against Santander. ECF No. 13. Following a conference before Judge Azrack on December 14, 2022, at which settlement was discussed and a briefing schedule set, Defendants ultimately moved to compel arbitration of this matter on February 15, 2023. ECF No. 18.

Plaintiff opposes the motion. ECF No. 19. By order dated June 13, 2023, Judge Azrack referred the motion to compel arbitration to the undersigned to issue a report and recommendation.

II. Factual Background

Plaintiff Ike Carter, Jr. is a resident of West Hempstead, New York and is a “consumer” as defined by 15 U.S.C. §1692(a)(3). Am. Compl. ¶ 5. Defendant Payback, is a repossession company, with its principal place of business in Lynbrook, New York. Id. at ¶ 6. Payback is a “debt collector,” as defined under the FDCPA under 15 U.S.C. § 1692a(6). Id. at ¶ 8. Defendant ARS, a wholly owned subsidiary of the Patrick K. Willis Company, Inc., is a corporation that specializes in nationwide recovery management, skip tracing and impound services on behalf of lenders and creditors, with its headquarters in Sacramento, California. Id. at ¶ 9. ARS is a “debt collector,” as defined under the FDCPA under 15 U.S.C. § 1692a(6). Id. at ¶ 11. In the Amended Complaint, Plaintiff alleges that Santander contracted with ARS to repossess Plaintiff's vehicle following a default and ARS then contracted with Payback to do the same. Id. at ¶¶ 18-20.

Plaintiff owns a 2015 Toyota Corolla, which was financed with a loan through Santander. Id. at ¶ 14. The Santander loan is a ‘debt' as defined by 15 U.S.C. § 1692a(5). Id. at ¶ 16. The loan agreement was executed in August 2014 between Plaintiff and Audi of Jacksonville (the “Agreement”). See Ex. A, Defendants' Mem.^[1] The Agreement was assigned to Santander. Id., Ex. A at 5. The Agreement includes an Arbitration Provision that expressly provides as follows:

ARBITRATION PROVISION

PLEASE REVIEW - IMPORTANT - AFFECTS YOUR LEGAL RIGHTS

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN U.S. DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST U.S. INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. If federal law provides that a claim or dispute is not subject to binding arbitration, this Arbitration Provision shall not apply to such claim or dispute.

Id., Ex. A, at 5. The Agreement also expressly provides that it shall be governed by the law of the state of our address shown above” in this case, Florida. Id., Ex. A, at 1.

Sometime prior to October 20, 2021, the Plaintiff fell behind on his obligations to Santander. Am. Compl. ¶ 17. As a result, Santander contracted with ARS to repossess the Plaintiff's vehicle. Id. at ¶ 18. ARS in turn contracted with Payback to do the same. Id. at ¶ 19. At approximately 3:30 a.m. on October 20, 2021, Plaintiff was inside his vehicle in the parking lot of a McDonald's located on Peninsula Boulevard in Hempstead when Payback arrived to the scene, seeking to repossess his vehicle. Id. at ¶ 21. While in his vehicle, Plaintiff felt an impact as something hit his vehicle in the rear. Id. at ¶ 22. Plaintiff was then thrown forward as his vehicle was lifted up from the rear while he was still inside the vehicle, causing him to strike the inside of his vehicle with great force. Id. at ¶ 23. The police were called and Plaintiff was forced to exit the vehicle to allow Payback to proceed with the repossession. Id. at ¶ 24-29.

Plaintiff here has asserted two claims arising out of this conduct. Defendants Payback and ARS are charged with a violation of the FDCA, Count I, and all Defendants are charged with unlawful repossession under NY UCC Section 9-609, Count II.

DISCUSSION

I. Applicable Legal Standard

The Federal Arbitration Act (the "FAA") provides that "[a] written provision in . . . a contract . . . to settle by arbitration a controversy thereafter arising out of [the] contract . . . shall be valid, irrevocable, and enforceable." 9 U.S.C. § 2. This statutory provision "reflect[s] both a 'liberal federal policy favoring arbitration' and the 'fundamental principle that arbitration is a matter of contract.'" AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). "[T]his policy is founded on a desire to preserve the parties' ability to agree to arbitrate, rather than litigate, disputes." Schnabel v. Trilegiant Corp., 697 F.3d 110, 118 (2d Cir. 2012). But the FAA "does not require parties to arbitrate when they have not agreed to do so." Id. (quoting Volt Information Sciences v. Board of Trustees, 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989)).

Thus, “[w]hen resolving a motion to compel arbitration, a court must first determine whether there is a valid agreement to arbitrate between the parties.” Mineola Garden City Co., Ltd. Bank of Am., No. 13-CV-05615, 2014 WL 2930467, at *2 (E.D.N.Y. June 26, 2014) (citing 9 U.S.C. § 4); see also Zachman v. Hudson Valley Fed. Credit Union, 49 F.4th 95, 101 (2d Cir. 2022) (“[t]he district court must first determine whether an agreement to arbitrate exists between the parties”). “The preliminary inquiry of whether the Arbitration Agreement is valid and enforceable is a matter for the Court to decide.” Kassim v. CVS Albany, LLC, No. 21-CV-2927, 2022 U.S. Dist. LEXIS 169730, at *7, 2022 WL 4357456, (E.D.N.Y. Sept. 20, 2022).

Once that is determined, “questions of arbitrability, that is ‘whether the parties are bound by a given arbitration clause' and ‘whether an arbitration clause in a concededly binding contract applies to a particular type of controversy' can be delegated to the arbitrator if the parties clearly and unmistakably express their intent to do so. Id. (quoting Kai Peng v. Uber Techs., Inc., 237 F.Supp.3d 36, 45 (E.D.N.Y. 2017)).

“Courts deciding motions to compel arbitration ‘apply a ‘standard similar to that applicable for a motion for summary judgment.'” Zachman, 49 F.4th at 101 (citing Nicosia, 834 F.3d at 229). Specifically, “‘[i]f the undisputed facts in the record require the matter of arbitrability to be decided against one side or the other as a matter of law, [the Court] may rule on the basis of that legal issue and avoid the need for further court proceedings.'” Id. (citing Meyer v. Uber Techs., Inc., 868 F.3d 66, 74 (2d Cir. 2017)). “If, however, there is an issue of fact as to the making of the agreement for arbitration, . . . a trial is necessary.” Id. at 101.

As noted above, “[t]he threshold question in any arbitration dispute is ‘whether an arbitration agreement exists at all.'” Gonzalez v. Cheesecake Factory Restaurants, Inc., No. 21CV5017PKCSIL, 2023 WL 2477697, at *1 (E.D.N.Y. Mar. 13, 2023) (citing Abdullayeva v. Attending Homecare Servs. LLC, 928 F.3d 218, 223 (2d Cir. 2019)). "Whether the parties agreed to arbitrate . . . is determined by state law." Biggs v. Midland Credit Mgmt. Inc., No. 17 Civ. 340 (TB) (ARL), 2018 U.S. Dist. LEXIS 41146, 2018 WL 1225539, at *5 (E.D.N.Y. Mar. 9, 2018) (citing Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002)). Pursuant to the agreement's choice-of-law provision, Florida law governs the agreement in this action and any disputes between the parties. See Def. Mem., Ex. A at 1; see also Wojcik v. Midland Funding, LLC, No. 18 CV 3628 (MKB)(RML), 2019 U.S. Dist. LEXIS 93549, at *6 n.1 (E.D.N.Y. June 3, 2019). Plaintiff does not dispute that the Agreement he signed contained a valid agreement to arbitrate, however, Plaintiff challenges whether Defendants, as non-signatories to the Agreement can compel arbitration.

II. Analysis

Defendants have moved to compel the arbitration of Plaintiff's claims against them. Defendants argue that the threshold issue of arbitrability must be determined by the...