McCants v. Citifinancial Servicing, LLC, CIVIL ACTION NO. 16-00283-WS-C

ROSE McCANTS, Plaintiff, v. CITIFINANCIAL SERVICING, LLC, et al., Defendants.

CIVIL ACTION NO. 16-00283-WS-C

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

February 23, 2017

REPORT AND RECOMMENDATION

This cause is before the Magistrate Judge for issuance of a report and recommendation, pursuant to 28 U.S.C. § 636(b) and S.D. Ala. Gen. L.R. 72(a)(2)(S), on Defendants CitiFinancial Servicing LLC's ("CitiFinancial"); CitiMortgage, Inc.'s ("CitiMortgage"); and Citibank, N.A.'s ("Citibank"), motion to compel arbitration, (Doc. 12), filed on July 18, 2016, and Plaintiff Rose McCants's motion to strike, (Doc. 17), filed on August 10, 2016. Defendants argue that Plaintiff signed an arbitration agreement in conjunction with her residential mortgage loan from Associates Financial Services Company of Alabama, Inc. ("Associates Financial"), and asks this Court to compel Plaintiff to arbitrate her claims in this pending action. Plaintiff's position in her motion is that the declaration of Lani Dodson ("Dodson"), upon which the Defendants base their claim that Plaintiff should be compelled to arbitrate her claims, does not contain competent and admissible evidence in support of their motion to compel.

I. FACTUAL BACKGROUND

On or October 25, 1999, Plaintiff obtained a residential mortgage loan (the "Loan"), which was originated by Associates Financial. (See Declaration of Lani A. Dodson, Doc 12-1, at 5).¹ In connection with the Loan, Plaintiff signed a Real Estate Mortgage (the "Mortgage") in favor of Associates Financial, and, in accordance with the policies and procedures of Associates Financial, was required to sign a "separate Arbitration Agreement" (the "Arbitration Agreement" or the "Agreement") in order to obtain the Loan. (Doc 12-1, at 7).²

The Mortgage Plaintiff executed includes a clause that states "[t]he parties have on this date entered into a separate Arbitration Agreement, the terms of which are incorporated herein and made a part hereof by reference." (Doc. 12-1, at 7). Specifically, the Arbitration Agreement provides, in pertinent part, as follows:

In consideration of the mutual promises made in this agreement, you and we agree to arbitrate, under the following terms, all claims and disputes between you and us, except as provided otherwise in this agreement.

ARBITRATION: Arbitration is a method of resolving disputes between parties without filing a lawsuit in court. By signing this agreement, you and we are both agreeing that if there are any disputes between you and us, you and we must submit them to an arbitrator. The arbitrator's decision is final and binding on you and us. The arbitrator does not have to give any written reasons for the decision. You and we are giving up the right to bring a lawsuit in court, including the right to a jury trial.

DISPUTES COVERED: This agreement applies to all claims and disputes between you and us. This includes, without limitation, all claims and disputes arising out of, in connection with, or relating to:

• your loan from us today;

• any previous loan from us and any previous retail installment sales contract or loan assigned to us;

• all the documents relating to this or any previous loan or retail installment sales contract;

• any insurance purchased in connection with this or any previous loan or retail installment sales contract;

• whether the claim or disputes must be arbitrated;

• the validity of this arbitration agreement;

• any negotiations between you and us;

• any claim or dispute based on an allegation of fraud or misrepresentation;

• any claim or dispute based on a federal or state statute; and

• any claim or dispute based on an alleged tort.

This agreement also applies to any claim or dispute, including all the kinds of disputes listed above, between you and any of our employees or agents, any of our affiliate corporations, and any of their employees or agents. Affiliates corporations are our parent corporations, subsidiary corporations, and sister corporations. Some of our affiliates are Associates First Capital Corporation, Associates Corporation of North America, Associates Financial Life Insurance Company, Associates Insurance Company, and Associates Financial Services Company, Inc.

. . .

ARBITRATION RULES: The arbitration will be conducted under the "Commercial Arbitration Rules" of the American Arbitration Association that are in effect at the time arbitration is started and under the rules set forth in this agreement. If there is any conflict between what the Commercial Arbitration Rules say and what this agreement says, what this agreement says will govern.

. . .

OTHER IMPORTANT AGREEMENTS:

1. This agreement does not affect the applicability of any statute of limitations.

2. The loan and insurance transactions between you and us are transactions involving interstate commerce, using fundscoming from outside the state. The Federal Arbitration Act applies to and governs this agreement.

3. If either you or we should need to file a lawsuit to enforce this agreement, the suit may be brought in any court with jurisdiction.

4. You and we agree that this agreement applies to all of your, and all of our, assigns and heirs.

. . .

READ THIS ARBITRATION AGREEMENT CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO BRING A COURT ACTION.

(Doc. 12-1, at 8-9).

A signed copy of the Arbitration Agreement executed by the parties as part of the loan process for Plaintiff's loan has been lost or destroyed. The copy that has been produced by the Defendants is the only version of an arbitration agreement that Associates Financial used in mortgage loans extended in Alabama in 1999, when Plaintiff obtained the subject mortgage loan. (Doc. 12-1, ¶¶ 8-10). Therefore, according to Dodson, this is the arbitration agreement that would have been executed prior to the approval for a loan to the Plaintiff. (Doc. 12-1, ¶¶ 9-10).

Plaintiff filed the instant action with the Circuit Court of Mobile County, Alabama on May 15, 2016, claiming negligence, wantonness, unjust enrichment, wrongful foreclosure, slander of title, breach of contract, fraud, placement in a false light, defamation, libel, slander, violations of Truth in Lending Act, violations of Real Estate Settlement Procedures Act, violations of the Fair Credit Reporting Act, violations of the Fair Debt Collection Practices Act, and declaratory relief. (Doc. 1-1, at 1-20). Defendants then filed a notice of removal to the United States District Court for the Southern District of Alabama, Southern Division, invoking diversity and federal question jurisdiction. (Doc. 1, at 1-12).

II. DISCUSSION

A. Plaintiff's Motion to Strike the Dodson Declaration

Central to resolving these motions is the consideration of Plaintiff's motion to strike because Plaintiff contests the propriety of the declaration of Dodson, upon which Defendants rest their contention that Plaintiff is bound to arbitrate her claims. The motion was specifically filed pursuant to Rule 56(e), Federal Rules Civil Procedure ("FRCP"). (Doc. 17, at 1) ("COMES NOW Rose McCants, pursuant to Rule 56(e) of the Federal Rules of Civil Procedure and moves the court to strike the declaration testimony of Lani Dodson and all exhibits attached thereto or reference (sic) therein . . . ."). Upon review of the record and after listening to oral arguments, this motion should be denied for the following reasons.

First, this motion to strike is deemed procedurally improper. A motion to strike may only be used to strike pleadings, not a declaration filed in support of a motion to compel arbitration. See FED. R. CIV. P. 12(f) ("The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter."). Dodson's declaration is clearly not a pleading. See McNair v. Monsanto Co., 279 F. Supp. 2d 1290, 1298 (M.D. Ga. 2003); FED. R. CIV. P. 7(a). "The purpose of a motion to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matter. A court will not exercise its discretion under the rule to strike a pleading unless the matter sought to be omitted has no possible relationship to the controversy, may confuse the issues, or otherwise prejudice a party." Price v. Dunn, CA 14-0472-KD-C, 2015 WL 6962854, at *5, n.14 (S.D. Ala. Oct. 20, 2015) (citations omitted). In addition, motions to strike are considered "drastic,disfavored remed[ies]," Odom v. Southeast Supply Header, LLC, No. 09-0147-WS-N, 2009 WL 1658961, at *1 (S.D. Ala. June 11, 2009), and have been found to be nothing more than "time wasters" in many cases. McNair v. Monsanto Co., 279 F. Supp. 2d at 1298 (citations omitted). "In this circuit, the use of a [R]ule 12(f) motion for the advancement of objections to a[ declaration] filed in support of a motion is generally considered improper." Id.

Second, Plaintiff relies on FRCP 56 to provide authority for striking the declaration in question. However, Plaintiff provides no authority for applying FRCP 56(c) to declarations filed in support of motions to compel arbitration. Instead, Defendants have found that when faced with similar motions, some courts have rejected such attacks. See Rosen v. Serv. Corp. Int'l, No. 11-62547-CIV, 2012 WL 370298, at *3 (S.D. Fla. Feb. 3, 2012) (denying motion to strike declaration submitted in support of motion to compel arbitration for failure to comply with FRCP 56(c)(4), noting, "Although the determination of whether a trial is warranted on the existence of arbitration agreement is akin to a summary-judgment proceeding, it does not actually involve a motion for summary judgment, to which FRCP 56(c)(4) specifically applies."); McNair v. Monsanto Co., 279 F. Supp. 2d at 1298 (denying motions to strike affidavits and exhibits filed in support of motion to transfer under 28 U.S.C. § 1404 for failure to comply with FRCP 56, noting that "the substantive motion before the Court is not a summary judgment motion," and "Section 1404(a)...