Canady v. Bridgecrest Acceptance Corporation

• Court: District Court, D. Arizona
• Decided: April 23, 2020
• Docket: 2:19-cv-04738
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Tonya Canady, on behalf of herself and others No. CV-19-04738-PHX-DWL similarly situated, 10 ORDER Plaintiff, 11 v. 12 Bridgecrest Acceptance Corporation, 13 Defendant. 14 In this putative class action, Plaintiff Tonya Canady (“Canady”) alleges that 15 Defendant Bridgecrest Acceptance Corporation (“Bridgecrest”) violated the Telephone 16 Communications Protection Act, 47 U.S.C. § 227 et seq. (“TCPA”), by repeatedly calling 17 her via an automated dialing service and by continuing to make such calls after she 18 requested they stop. (Doc. 1.) Now pending before the Court is Bridgecrest’s motion to 19 compel arbitration. (Doc. 17.) Canady filed a response (Doc. 24) and Bridgecrest filed a 20 reply (Doc. 25).1 For the following reasons, the motion will be denied. 21 BACKGROUND 22 A. Underlying Facts 23 The facts set forth below are derived from the complaint and from the declarations 24 and other materials attached to Bridgecrest’s motion. 25 26 27 1 The reply is 14 pages long. Under LRCiv 7.2(e), “a reply including its supporting 28 memorandum may not exceed eleven (11) pages.” Counsel should, in the future, comply with the applicable page limits. 1 In November 2018, Canady’s husband (who is not a party in this action) purchased 2 a truck from Bridgecrest’s predecessor in interest. (Id. ¶ 7.) As part of that transaction, 3 Canady’s husband entered into two agreements: a “Retail Purchase Agreement – Florida” 4 (Doc. 18-1 at 2-3) and an arbitration agreement (“Arbitration Agreement”) (Doc. 18-1 at 5 10-14). He also provided, in his loan application, a phone number ending in 4483, which 6 he identified as his home phone number. (Doc. 18-1 at 6.) In fact, this was (and is) 7 Canady’s cell phone number. (Doc. 1 ¶ 5.) 8 On January 25, 2019, Canady called Bridgecrest (while using the 4438 number) in 9 an attempt to discuss her husband’s loan. (Doc. 18 ¶ 10; Doc. 18-1 at 16.) In response, 10 “she was informed that she needed to be added by [her husband] as an authorized third 11 party before Bridgecrest could speak with her regarding the Account.” (Id.) 12 On February 13, 2019, Canady’s husband called Bridgecrest (while using the 4438 13 number) to “add[] [Canady] as an authorized third party on the Account and [give] 14 Bridgecrest his verbal authorization to speak with [Canady] regarding the Account.” (Doc. 18 ¶ 11; Doc. 18-1 at 18.) 15 It is undisputed that, after February 13, 2019, Bridgecrest placed multiple phone 16 calls to Canady at the 4438 number. (Doc. 1 ¶¶ 10-14 [complaint]; Doc. 18 ¶ 11; Doc. 18- 17 1 at 20-21 [call logs].) Canady alleges that, during one such call on March 21, 2019, she 18 “instructed [Bridgecrest] to stop calling her, thereby revoking any alleged consent that 19 [Bridgecrest] could claim to have to call [her] cell phone number,” yet “[d]espite [this] 20 instruction to no longer call, [Bridgecrest] continued to call the 4438 number using an 21 automated telephone dialing system or pre-recorded messages on numerous occasions 22 thereafter.” (Doc. 1 ¶¶ 10, 12.) 23 B. The Arbitration Agreement 24 The Arbitration Agreement requires Canady’s husband and “any of [his] heirs or 25 personal representatives” to resolve any claims or disputes with Bridgecrest through 26 “BINDING ARBITRATION.” (Doc. 18-1 at 10.) Under the Arbitration Agreement, a 27 “Claim” is defined as “any claim, dispute or controversy between you and us arising from 28 or related to” various subjects, including “The Contract,” “The vehicle,” “The relationship 1 resulting from the Contract,” “Your credit application,” “The . . . servicing of the Contract,” 2 and “The collection of amounts you owe us.” (Id. at 11.) A “Claim” “has the broadest 3 possible meaning” and “includes claims of every kind and nature,” including “third-party 4 claims, statutory claims, contract claims, [and] negligence and tort claims (including claims 5 of fraud and other intentional torts).” (Id.) 6 The Arbitration Agreement further specifies that “a ‘Claim’ does not include a 7 dispute about the validity, enforceability, coverage or scope of [the Arbitration Agreement] 8 . . . ; any such dispute is for a court, and not an arbitrator to decide.” (Id.) The Arbitration 9 Agreement also explains that, “[b]ecause the Contract involves a transaction in interstate 10 commerce, the Federal Arbitration Act (‘FAA’) governs” to the extent applicable. (Id. at 11 13.) Finally, the Arbitration Agreement provides that “[t]he arbitrator shall apply the 12 applicable substantive law consistent with the FAA,” but it does not specify which state’s 13 substantive law is applicable. (Id.) 14 ANALYSIS Bridgecrest seeks to compel arbitration of Canady’s TCPA claim. First, Bridgecrest 15 argues that, although Canady did not sign the Arbitration Agreement, there are two 16 independent reasons why she should be deemed bound by it: (a) she qualifies as her 17 husband’s “personal representative,” and (b) she is seeking to exploit the underlying 18 contract and therefore should be equitably estopped from avoiding its burdens. (Doc. 17 19 at 8-13; Doc. 25 at 6-14.) Second, Bridgecrest argues that Canady’s TCPA claim falls 20 within the scope of the Arbitration Agreement because the Agreement encompasses all 21 claims, including “statutory claims,” “related to” the servicing of her husband’s truck loan 22 and the calls at issue were related to that subject. (Doc. 17 at 13-14; Doc. 25 at 2-6.)2 23 Canady responds that she does not qualify as a “personal representative,” equitable 24 estoppel is inapplicable, and her TCPA claim falls outside the scope of the Arbitration 25 Agreement. (Doc. 24.) 26

27 2 Bridgecrest also argues that the Arbitration Agreement is valid and that Canady must proceed individually in the arbitration while this action is stayed. (Doc. 17 at 6-8, 28 14-15.) Canady does not challenge those arguments in her response, instead focusing on the other arguments identified above. 1 As explained below, the Court agrees with Canady that she is not bound by the 2 Arbitration Agreement. Thus, there is no need to resolve whether her TCPA claim would 3 otherwise fall within the Agreement’s scope. 4 I. Whether Canady Is Bound By The Arbitration Agreement 5 Bridgecrest’s motion focuses on the liberal federal policy favoring arbitration. 6 (Doc. 17 at 7.) However, when addressing the antecedent question of “whether a particular 7 party is bound by [an] arbitration agreement . . . the liberal federal policy regarding the 8 scope of arbitrable issues is inapposite.” Rajagopalan v. NoteWorld, LLC, 718 F.3d 844, 9 847 (9th Cir. 2013) (quotation omitted). To resolve that question, courts must apply state 10 contract law. See, e.g., Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009) 11 (requiring courts to apply “state contract law” when determining whether “a written 12 arbitration provision is made enforceable against (or for the benefit of) a third party”); 13 Rajagopalan, 718 F.3d at 847 (“‘[T]raditional principles of state law’ determine whether a 14 contract [may] be enforced by or against nonparties to the contract through . . . third-party beneficiary theories . . . and estoppel.”) (quotation omitted). 15 A. Choice Of Law 16 Of course, “[b]efore a federal court may apply state-law principles . . . it must 17 determine which state’s laws to apply.” Pokorny v. Quixtar, Inc., 601 F.3d 987, 994 (9th 18 Cir. 2010). Here, neither party seriously grapples with the choice-of-law question. Canady 19 suggests that Arizona law applies but offers no reasoning in support of this suggestion 20 (beyond her observation, in a footnote, that Bridgecrest appears to believe Arizona law is 21 applicable). (Doc. 24 at 14 n.3.) Moreover, Bridgecrest rejects this assumption in its reply, 22 stating, also in a footnote, that “[d]espite Plaintiff’s contrary assertion, Bridgecrest does 23 not concede that Arizona law applies to this dispute. Rather, . . . federal common law 24 mandates the conclusion that Plaintiff should be compelled to arbitrate.” (Doc. 25 at 9 25 n.8.) 26 When, as here, a case is in federal court pursuant to federal question jurisdiction, 27 “federal common law choice-of-law rules apply.” Huynh v. Chase Manhattan Bank, 465 28 F.3d 992, 997 (9th Cir. 2006). See also Chan v. Soc’y Expeditions, Inc., 123 F.3d 1287, 1 1297 (9th Cir. 1997) (“Federal common law applies to choice-of-law determinations in 2 cases based on federal question jurisdiction . . . .”); Daugherty v. Experian Info. Solutions, 3 Inc., 847 F. Supp. 2d 1189, 1194 (N.D. Cal. 2012) (“Although the general rule is ‘that a 4 federal court sitting in diversity applies the conflict-of-law rules of the state in which it 5 sits,’ jurisdiction in this case is based on federal question, not diversity. Therefore, federal 6 common law applies to the choice-of-law rule determination.”) (citation omitted). “Federal 7 common law follows the approach outlined in the Restatement (Second) of Conflict of 8 Laws.” Huynh, 465 F.3d at 997.3 And the relevant provision of the Restatement is Section 9 188, which applies where, as here, the parties have not made an effective choice of law in 10 the underlying contract.4 Section 188 provides as follows: 11 (1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that 12 issue, has the most significant relationship to the transaction and the 13 parties under the principles stated in § 6.

14 (2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 15 to determine the law applicable to an issue include: (a) the place of 16 contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, 17 and (e) the domicile, residence, nationality, place of incorporation and 18 place of business of the parties. These contacts are to be evaluated according to their relative importance with respect to the particular 19 issue. 20 (3) If the place of negotiating the contract and the place of performance 21 are in the same state, the local law of this state will usually be applied, 22 except as otherwise provided in §§ 189-199 and 203. 23 Id. 24 3 Arizona also follows the Restatement (Second) of Conflict of Laws. See, e.g., 25 Cardon v. Cotton Lane Holdings, Inc., 841 P.2d 198, 202 (Ariz. 1992); In re W. United Nurseries, Inc., 2000 WL 34446155, *7 (D. Ariz. 2000). Thus, even if the Court had 26 applied the forum state’s choice-of-law rule instead of federal common law’s choice-of- law rule, the analysis would be the same. 27 4 As noted, although the Arbitration Agreement provides that “[t]he arbitrator shall 28 apply the applicable substantive law consistent with the FAA” (Doc. 18-1 at 13), it doesn’t specify that any particular state’s laws will serve as the applicable substantive law. 1 Here, the application of the factors identified in subsection (2) overwhelmingly 2 supports the conclusion that Florida law is applicable. Canady alleges in the complaint 3 that she is a citizen of Florida (Doc. 1 ¶ 3) and the materials submitted by Bridgecrest 4 suggest that Canady’s husband is a Florida resident (Doc. 18-1 at 6 [credit application, 5 reflecting Florida driver’s license]). Additionally, those materials suggest the truck 6 purchase took place at a dealership located in Orange Park, Florida (Doc. 18-1 at 2 7 [purchase agreement]), and the purchase agreement and Arbitration Agreement were each 8 signed by a representative of the dealership, which suggests they were negotiated and 9 executed in Florida (Doc. 18-1 at 3, 14). The only fleeting connection to Arizona is that 10 Bridgecrest, which is headquartered in Arizona (Doc. 1 ¶ 2, 4), happened to “receive[] the 11 loan by assignment from its affiliate” (i.e., the entity that operates the Florida dealership) 12 and thereafter placed phone calls to Canady (who was presumably in Florida) in an effort 13 to collect on the loan (Doc. 17 at 1). Thus, factors (a), (b), and (d) (place of contract 14 execution, place of contract negotiation, and location of subject matter of contract) all unambiguously support the application of Florida law, while factor (c) (place of 15 performance) likely supports the application of Florida law and is, at most, a mixed bag5 16 and factor (e) (location of parties) is likewise mixed. Florida law applies in this 17 circumstance. 18 B. “Personal Representative” 19 Bridgecrest contends that Canady is bound by the Arbitration Agreement because 20 she agreed to act as an authorized third party on her husband’s behalf. (Doc. 17 at 8-10.) 21 According to Bridgecrest, this means that Canady falls within “the term[] of the Agreement 22 which defines ‘You’ as Mr. Canady and/or any of his ‘heirs or personal representatives.’” 23 (Id. [citing Doc. 18-1 at 10].) 24 25 26 5 Ingenco Holdings, LLC v. Ace Am. Ins. Co., 921 F.3d 803, 810-11 (9th Cir. 2019) 27 (“[C]ourts applying Section 188 have concluded . . . that ‘[w]hen the contract is one of payment, the place of performance seems, in truth, of no particular consequence.’ Here, 28 the place of performance factor is neutral, as payment took place in Virginia but adjustment took place in Washington. In any event, this factor merits little weight.”) (citation omitted). 1 This argument lacks merit. “The ‘personal representative’ under Florida law is a 2 term of art . . . . In Florida, a ‘personal representative’ means the ‘fiduciary appointed by 3 the court to administer the estate and what has been known as an administrator . . . or 4 executor.’” Opis v. Mgmt. Resources, LLC v. Dudek, 2011 WL 6024092 (N.D. Fla. 2011) 5 (citations omitted). See also Hill v. Davis, 70 So.3d 572, 576 (Fla. 2011) (discussing 6 specific statutory requirements for personal representatives under Florida law). This term 7 is not, as Bridgecrest would have it, some sort of loose synonym for any person who is 8 authorized to help another person.6 9 Accordingly, the Court declines to find that Canady is bound by the Arbitration 10 Agreement because she qualifies as the “personal representative” of her husband, the 11 signatory. 12 C. Equitable Estoppel 13 Alternatively, Bridgecrest argues that Canady should be estopped from avoiding the 14 arbitration agreement because “a non-signatory may be compelled to arbitrate when, as here, the non-signatory ‘knowingly exploits’ the benefits of the agreement and receives 15 benefits flowing directly from the agreement.” (Doc. 17 at 10.) In support of this estoppel 16 theory, Bridgecrest cites Benson v. Case De Capri Enters. LLC, 2019 WL 3430159 (D. 17 Ariz. 2019), as well as several unpublished orders from other courts compelling non- 18 signatories to arbitrate TCPA claims. (Doc. 17 at 10-13.) 19 These arguments are unavailing. As an initial matter, none of the cases cited by 20 Bridgecrest involved the application of Florida law. And in Florida, “[t]hird persons who 21 are not parties to an arbitration agreement generally are not bound by the agreement.” 22 Mendez v. Hampton Ct. Nursing Center, LLC, 203 So.3d 146, 148 (Fla. 2016). True, 23 Florida does recognize some exceptions (id. at 148-51), but it appears to apply those 24 exceptions much more narrowly that the jurisdictions whose law was applied in 25 Bridgecrest’s cases. For example, in Florida, “the third-party beneficiary doctrine enables 26

27 6 See also Black’s Law Dictionary (11th ed. 2019) (“Personal representative. (18c) Someone who manages the legal affairs of another because of incapacity or death, such as 28 the executor of an estate. Technically, an executor is a personal representative named in a will, while an administrator is a personal representative not named in a will.”). 1 a non-contracting party to enforce a contract against a contracting party—not the other way 2 around. The third-party beneficiary doctrine does not permit two parties to bind a third— 3 without the third party’s agreement—merely by conferring a benefit on the third party.” 4 Id. at 149. Similarly, although Florida courts recognize that “principles of equitable 5 estoppel sometimes allow a non-signatory to compel arbitration against someone who had 6 signed an arbitration agreement,” Beck Auto Sales, Inc. v. Asbury Jax Ford, LLC, 249 So.3d 7 765, 767 (Fla. Ct. App. 2018), it does not appear that Florida courts apply this doctrine to 8 estop non-signatories—at a minimum, Bridgecrest has cited no Florida cases supporting 9 this outcome. 10 In a case virtually identical to this one, a federal district court in Florida refused to 11 require the wife of a man who had signed an arbitration agreement (as part of a mattress 12 lease agreement) to arbitrate her claim that the leasing company violated the TCPA by 13 placing robocalls to her cell phone in an effort to collect on her husband’s unpaid debt. 14 Ray v. NPRTO Florida, LLC, 322 F. Supp. 3d 1261 (M.D. Fla. 2017). Even though the wife had previously agreed—just as Canady agreed here—to speak with the leasing 15 company about her husband’s debt, the court concluded she could not be compelled to 16 arbitrate under Florida law. Id. at 1262-63. The Eleventh Circuit affirmed, noting along 17 the way that the defendant (just like Bridgecrest here) “did not cite any Florida cases to the 18 district court in its motion” to compel arbitration. Ray v. NPRTO Florida, LLC, 743 Fed. 19 App’x 955, 957 (11th Cir. 2018). 20 For these reasons, Bridgecrest’s heavy emphasis on Benson is misplaced. That case 21 turned on nuances of Arizona’s law of equitable and direct-benefits estoppel, see Benson, 22 2019 WL 3430159 at *4-5, but Florida law appears to differ from Arizona law with respect 23 to those doctrines. Additionally, the plaintiffs in Benson were clearly attempting to exploit 24 the benefits of the underlying contract (between a skilled nursing facility and insurance 25 company) that contained the arbitration clause—they were seeking to step into the shoes 26 of the nursing facility and collect insurance proceeds that arguably were owed to the 27 nursing facility under the terms of the contract. Id. at *5 (“[T]he type of garnishment claim 28 at issue here is in substance a claim . . . against the liability insurers for breaching their ! || obligations under the insurance policies.”) (quotation omitted). Here, in contrast, Canady’s 2|| TCPA claim is not somehow derivative of her husband’s rights under his contractual agreements with the car dealership. See also Ray, 322 F. Supp. 3d at 1263 (“Plaintiff’s claims for violation of the... TCPA are not claims to enforce the Lease, and therefore do not bind Plaintiff to the arbitration agreement in the Lease.”); Rahmany v. T-Mobile USA Jnc., 717 Fed.App’x. 752, 753 (9th Cir. 2018) (reversing district court’s order compelling non-signatory to arbitrate TCPA claims and emphasizing that “[e]quitable estoppel is 8 || inapplicable because Rahmany’s allegations reveal no claim of any violation of any duty, || obligation, term or condition imposed by the [contract containing the arbitration clause]’’) 10 || (quotation omitted)’ 11 Accordingly, IT IS ORDERED that Bridgecrest’s motion to compel arbitration 12 || (Doc. 17) is denied. 13 Dated this 23rd day of April, 2020. 14 15 pn 7 16 } CC —— Dominic W. Lanza 17 United States District Judge 18 —____....... . . 7 Because Canady is not seeking to exploit the benefits of her husband’s contract, it 20 || also follows that she cannot be bound to the Arbitration Agreement under traditional agency-law principles, As an initial matter, Bridgectest forfeited any agency-law argument by failing to develop it in any depth until its reply. (Compare Doc. 17 at 8-10 [discussing agency law only as it relates to why Canady should fall within the contractual definition of “personal representative”] with Doc. 25 at 7-8 & n.6 [seemingly raising agency law as standalone basis for relief].) The argument also fails on the merits. Cf. Oudani v. TF Final || Mile LLC, 876 F.3d 31, 37-38 (1st Cir. 2017) (non-signatory could not be compelled to arbitrate wage-and-hour claim, even though it acted as the “agent” of the signatory in certain other contexts, because the wage-and-hour claim was not derivative of the Signatory contractual nights). In Fi-Evergreen Woods, LLC y. Estate of Robinson, 172 25 || So.3d 493 (Fla. Ct. App. 015), a wife who was being admitted to a nursing home told the admissions director that “she wanted her husband to handle (review and sign) the 26 || documents,” which included an arbitration clause. Jd. at 495. Under those facts, the court held that the wife should be required to arbitrate her claims against the nursing home, even || though she hadn’t personally signed the arbitration agreement, because her husband was acting as her authorized agent when he signed it. /d. at 498. The same scenario isn’t 98 || present here—there is no claim that Canady actually bought the truck and simply authorized her husband to sign the paperwork on her behalf.

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