Ashley Botello v. Navient Solutions LLC

• Court: Court of Appeals for the Third Circuit
• Decided: July 9, 2024
• Docket: 23-1744
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _______________

No. 23-1744 _______________

ASHLEY BOTELLO, individually, and on behalf of other similarly situated consumers

v.

NAVIENT SOLUTIONS, LLC, Appellant _______________

On Appeal from the United States District Court for the District of New Jersey (D.C. No. 2:22-cv-05601) District Judge: Honorable John M. Vazquez _______________

Argued: April 19, 2024

Before: KRAUSE, BIBAS, and ROTH, Circuit Judges

(Filed: July 9, 2024)

Stacy Blank [ARGUED] HOLLAND & KNIGHT 100 N. Tampa Street, Suite 4100 P.O. Box 1288 Tampa, FL 33601

Jonathan M. Marmo HOLLAND & KNIGHT 1650 Market Street One Liberty Place, Suite 3300 Philadelphia, PA 19103 Counsel for Appellant Nicholas J. Linker [ARGUED] Daniel Zemel ZEMEL LAW 400 Sylvan Avenue, Suite 200 Englewood Cliffs, NJ 07632 Counsel for Appellees _______________

OPINION* _______________

BIBAS, Circuit Judge.

Broad arbitration clauses apply broadly. Ashley Botello took out two loans and agreed

to arbitrate claims that related to the second one in any way. When her loan servicer alleg-

edly misapplied a payment intended for the first loan, she sued. Because her complaint

refers to the second loan, though, her loan servicer can make her arbitrate. We will thus

reverse the District Court’s order denying Navient’s motion to compel arbitration and

remand.

Almost twenty years ago, Ashley Botello took out the student loans. The first was at a

higher interest rate than the second. In 2017, her loan-servicing company, Navient, sent her

a statement listing how much it would cost to pay off her first loan: $26,792. She sent in a

check for the exact amount.

Navient did not use the check to pay off the first loan. Rather, it spread the payment

across both loans, keeping both active and accruing interest. Aggrieved, she brought this

class action against Navient in New Jersey state court. She charges that Navient should

* This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding precedent.

2 have discharged the first loan but did not because it wanted to keep making money on the

higher-interest loan.

After removing this case to federal court, Navient moved to compel arbitration. It relied

on an arbitration clause in Botello’s second loan agreement in which she agreed to arbitrate

“any claim, dispute or controversy between [Navient] and [herself] that arises from or relates

in any way to the [second loan].” JA 176 (emphasis added). She also agreed not to bring a

class action through arbitration. Navient argued that the clause’s broad language reaches

this dispute.

The District Court disagreed. It concluded that the dispute related only to the first loan,

which has no arbitration clause. It reasoned that though the terms of the second loan are

“relevant,” they “are not germane” to the dispute. JA 14 n.6. Thus, it denied Navient’s

motion to compel arbitration. Navient now appeals.

The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367(a). We have

jurisdiction under the Federal Arbitration Act, which authorizes interlocutory appeals from

orders that deny motions to compel arbitration. 9 U.S.C. § 16(a)(1)(B); In re Remicade

(Direct Purchaser) Antitrust Litig., 938 F.3d 515, 519 n.3 (3d Cir. 2019). We review the

arbitration agreement’s applicability and scope de novo. Remicade, 938 F.3d at 519 n.3.

Because the claim’s arbitrability is not “apparent on the face of [the] complaint,” the

District Court applied the standard used for motions for summary judgment. Robert D.

Mabe, Inc. v. OptumRX, 43 F.4th 307, 324–25 (3d Cir. 2022) (internal quotation marks

omitted). We do too, “giv[ing] the benefit of all reasonable doubts and inferences” to

Botello. Zirpoli v. Midland Funding, LLC, 48 F.4th 136, 140 n.6 (3d Cir. 2022).

3 To interpret the arbitration agreement’s scope, we apply Utah law. “We first look to the

four corners of the agreement to determine the intentions of the parties.” Cent. Fla. Invs.,

Inc. v. Parkwest Assocs., 40 P.3d 599, 605 (Utah 2002) (brackets and internal quotation

marks omitted). Utah courts start with the words’ ordinary meaning. HITORQ, LLC v. TCC

Veterinary Servs., Inc., 502 P.3d 281, 286 (Utah 2021).

The arbitration clause reaches disputes that relate to the second loan in any way. In

Utah, a dispute is related to a contract if it has “some logical or causal connection to the

agreement.” Willow Creek Assocs. of Grantsville LLC v. Hy Barr Inc., 501 P.3d 1179, 1186

(Utah Ct. App. 2021) (quoting Remicade, 938 F.3d at 524). This nexus may rest either on

the dispute’s legal claims or its factual allegations.

Here, we need look no further than Botello’s own complaint. She alleges that Navient

“chose to apply [her] payment to different accounts with lower interest rates in order to

profit.” JA 39. That “different account[ ]” is the second loan. Id. If that loan had not had a

lower interest rate, Navient’s alleged misallocation would not have hurt her. The second

loan is not just logically connected to Botello’s allegations; its lower interest rate is one of

her allegations. This dispute “cannot be adjudicated without reference to, and reliance

upon,” the second loan. Remicade, 938 F.3d at 524 (internal quotation marks omitted).

Because her complaint describes the second loan (and indeed depends on it), its arbitration

clause applies.

*****

Botello’s complaint relates to the second loan because it alleges one of the loan’s

terms—its lower interest rate. That reference draws this dispute into the second loan’s

4 arbitration clause. Because Navient may compel arbitration, we will reverse the District

Court’s order and remand for further proceedings.