NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3315-22
SPRING OAKS CAPITAL SPV, LLC, AS SUCCESSOR TO ORIGINAL CREDITOR BLUE RIDGE BANK (UPGRADE),
Plaintiff-Respondent,
v.
CURTIS BANTON,
Defendant-Appellant,
and
CURTIS BANTON, individually and on behalf of all others similarly situated,
Third-Party Plaintiff- Appellant,
SPRING OAKS CAPITAL SPV, LLC,
Defendant-Respondent, v.
SPRING OAKS CAPITAL, LLC, PAGAYA ACQUISITION TRUST I, and PAGAYA AI DEBT SELECTION GRANTOR TRUST 2020-3,
Third-Party Defendants- Respondents. ______________________________
Argued March 19, 2024 – Decided April 11, 2024
Before Judges Natali and Puglisi.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-0539-23.
Mark H. Jensen argued the cause for appellant Curtis Banton (Kim Law Firm LLC, attorneys; Yongmoon Kim and Mark H. Jensen, on the briefs).
Jeremy J. Zacharias and Joseph Michael DeFazio argued the cause for respondents (Marshall Dennehey Warner Coleman & Goggin, attorneys for respondents Spring Oaks Capital SPV, LLC, and Spring Oaks Capital, LLC; Troutman Pepper Hamilton Sanders, LLP, attorneys for respondents Pagaya Acquisition Trust I, and Pagaya AI Debt Selection Grantor Trust 2020-3; Walter F. Kawalec III, Jeremy J. Zacharias, and Joseph Michael DeFazio, on the joint brief).
PER CURIAM
A-3315-22 2 By leave granted, defendant/third-party plaintiff Curtis Banton appeals
from the Law Division's April 14, 2023 order granting the joint motion to
compel arbitration filed by plaintiff/third-party defendants Spring Oaks Capital
SPV, LLC and Spring Oaks Capital, LLC (the Spring Oaks entities), Pagaya
Acquisition Trust I and Pagaya AI Debt Selection Grantor Trust 2020-3 (the
Pagaya entities); and the June 13, 2023 order denying Banton's motion for
reconsideration.
On February 2, 2021, defendant signed a loan agreement for $6,720 with
Blue Ridge Bank. The loan agreement contained an arbitration agreement
requiring any dispute to be resolved exclusively through arbitration. The
arbitration agreement defined a dispute as any unresolved disagreement between
the parties that arose out of or related in any way to the agreement, the loan, or
the relationship between the parties, including Upgrade, Inc., which was the loan
servicer, or any assignee or holder of the loan. A dispute also included any
disagreement about whether the arbitration agreement was enforceable or valid,
the meaning of the arbitration agreement, and whether a disagreement is a
dispute subject to binding arbitration.
The arbitration agreement included an opt-out provision, which required
the borrower to send an arbitration opt-out notice to Blue Ridge Bank, care of
A-3315-22 3 Upgrade, Inc. The arbitration agreement also provided that its provisions were
to be governed exclusively by the Federal Arbitration Act (FAA), 9 U.S.C. §§
1-16.
According to the certification of counsel filed with the trial court, Blue
Ridge Bank sold, assigned and conveyed the loan to the Pagaya Trusts, but
Upgrade, Inc. remained the loan servicer. The Pagaya Trusts subsequently
assigned all rights, title and interest in the loan to Spring Oaks Capital, LLC,
which then conveyed the loan to its subsidiary, Spring Oaks Capital SPV, LLC.
On April 3, 2022, defendant defaulted on the loan.
On October 19, 2022, Spring Oaks SPV, LLC filed a complaint against
Banton in the Law Division, Special Civil Part, seeking to recover the defaulted
debt along with costs of suit. In addition to his answer and affirmative defenses,
Banton filed a class action counterclaim against Spring Oaks Capital SPV, LLC
and a third-party complaint against Spring Oaks Capital, LLC and the Pagaya
entities. In the counterclaim and third-party complaint, defendant alleged
Spring Oaks SPV, LLC failed to obtain a license under the New Jersey
Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to -89, and therefore the
assignment and any rights conveyed by it were void and unenforceable.
A-3315-22 4 Because Banton alleged a class action, the matter was transferred from the
Special Civil Part to the Law Division. The Pagaya and Spring Oaks entities
then filed a joint motion to compel arbitration. Banton conceded there was a
valid arbitration agreement but argued, as he does on appeal, that the Pagaya
and Spring Oaks entities were not legally assigned the ability to compel
arbitration, and even if they were, they waived the ability to compel arbitration
by their conduct in the litigation. We disagree and affirm.
We review a trial court's decision to compel arbitration de novo.
Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 131 (2020). Pursuant to Rule 2:2-
3(a), "[o]rders compelling arbitration are deemed final for purposes of appeal,"
and because they are a "legal determination," the decision is reviewed de novo.
Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). Our Supreme
Court held that "[i]n reviewing such orders, we are mindful of the strong
preference to enforce arbitration agreements, both at the state and federal level."
Ibid.
"Reconsideration is a matter within the sound discretion of the Court, to
be exercised in the interest of justice." Cummings v. Bahr, 295 N.J. Super. 374,
384 (App. Div. 1996). We review the trial court's denial of a motion for
A-3315-22 5 reconsideration under the abuse of discretion standard. Branch v. Cream-O-
Land Diary, 244 N.J. 567, 582 (2021).
As he did before the trial court, defendant alleges the Spring Oaks and
Pagaya entities failed to establish they were assigned the rights under the
agreement, including the right to compel arbitration. See New Century Fin.
Serv., Inc v. Oughla, 437 N.J. Super. 299, 314 (2014) ("plaintiffs must prove
that they own the . . . debts on which they sue, whether one characterizes it as
standing to sue or an essential element of proof on an assigned claim."); see also
Sullivan v. Visconti, 68 N.J.L. 548, 550 (1902) ("where the suit is brought by
the assignee in his own name he must aver and prove that the caus e of action
was, in fact, assigned to him."). The Pagaya and Spring Oaks entities argue they
did in fact demonstrate the assignments.
Defendant also claims, as he did in his complaint and motion for
reconsideration, the Spring Oaks and Pagaya entities were not licensed under
N.J.S.A. 17:11C-33(a)(b) and therefore the collection of the debt violates public
policy.1 See Accountemps Div. of Robert Half, Inc. v. Birch Tree Grp., Ltd.,
1 Banton relies on unpublished opinions from state and federal court throughout this point in his appellate brief. Unpublished decisions are not precedential and cannot be cited by this court, and counsel did not confirm compliance with the requirement that all contrary unpublished opinions known to counsel were also served on the court and opposing counsel. See Rule 1:36-3. A-3315-22 6 115 N.J. 614, 626 (1989) ("public policy precludes enforcement of a contract
entered into in violation of [a] licensing statute."). The Pagaya and Spring Oaks
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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3315-22
SPRING OAKS CAPITAL SPV, LLC, AS SUCCESSOR TO ORIGINAL CREDITOR BLUE RIDGE BANK (UPGRADE),
Plaintiff-Respondent,
v.
CURTIS BANTON,
Defendant-Appellant,
and
CURTIS BANTON, individually and on behalf of all others similarly situated,
Third-Party Plaintiff- Appellant,
SPRING OAKS CAPITAL SPV, LLC,
Defendant-Respondent, v.
SPRING OAKS CAPITAL, LLC, PAGAYA ACQUISITION TRUST I, and PAGAYA AI DEBT SELECTION GRANTOR TRUST 2020-3,
Third-Party Defendants- Respondents. ______________________________
Argued March 19, 2024 – Decided April 11, 2024
Before Judges Natali and Puglisi.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-0539-23.
Mark H. Jensen argued the cause for appellant Curtis Banton (Kim Law Firm LLC, attorneys; Yongmoon Kim and Mark H. Jensen, on the briefs).
Jeremy J. Zacharias and Joseph Michael DeFazio argued the cause for respondents (Marshall Dennehey Warner Coleman & Goggin, attorneys for respondents Spring Oaks Capital SPV, LLC, and Spring Oaks Capital, LLC; Troutman Pepper Hamilton Sanders, LLP, attorneys for respondents Pagaya Acquisition Trust I, and Pagaya AI Debt Selection Grantor Trust 2020-3; Walter F. Kawalec III, Jeremy J. Zacharias, and Joseph Michael DeFazio, on the joint brief).
PER CURIAM
A-3315-22 2 By leave granted, defendant/third-party plaintiff Curtis Banton appeals
from the Law Division's April 14, 2023 order granting the joint motion to
compel arbitration filed by plaintiff/third-party defendants Spring Oaks Capital
SPV, LLC and Spring Oaks Capital, LLC (the Spring Oaks entities), Pagaya
Acquisition Trust I and Pagaya AI Debt Selection Grantor Trust 2020-3 (the
Pagaya entities); and the June 13, 2023 order denying Banton's motion for
reconsideration.
On February 2, 2021, defendant signed a loan agreement for $6,720 with
Blue Ridge Bank. The loan agreement contained an arbitration agreement
requiring any dispute to be resolved exclusively through arbitration. The
arbitration agreement defined a dispute as any unresolved disagreement between
the parties that arose out of or related in any way to the agreement, the loan, or
the relationship between the parties, including Upgrade, Inc., which was the loan
servicer, or any assignee or holder of the loan. A dispute also included any
disagreement about whether the arbitration agreement was enforceable or valid,
the meaning of the arbitration agreement, and whether a disagreement is a
dispute subject to binding arbitration.
The arbitration agreement included an opt-out provision, which required
the borrower to send an arbitration opt-out notice to Blue Ridge Bank, care of
A-3315-22 3 Upgrade, Inc. The arbitration agreement also provided that its provisions were
to be governed exclusively by the Federal Arbitration Act (FAA), 9 U.S.C. §§
1-16.
According to the certification of counsel filed with the trial court, Blue
Ridge Bank sold, assigned and conveyed the loan to the Pagaya Trusts, but
Upgrade, Inc. remained the loan servicer. The Pagaya Trusts subsequently
assigned all rights, title and interest in the loan to Spring Oaks Capital, LLC,
which then conveyed the loan to its subsidiary, Spring Oaks Capital SPV, LLC.
On April 3, 2022, defendant defaulted on the loan.
On October 19, 2022, Spring Oaks SPV, LLC filed a complaint against
Banton in the Law Division, Special Civil Part, seeking to recover the defaulted
debt along with costs of suit. In addition to his answer and affirmative defenses,
Banton filed a class action counterclaim against Spring Oaks Capital SPV, LLC
and a third-party complaint against Spring Oaks Capital, LLC and the Pagaya
entities. In the counterclaim and third-party complaint, defendant alleged
Spring Oaks SPV, LLC failed to obtain a license under the New Jersey
Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to -89, and therefore the
assignment and any rights conveyed by it were void and unenforceable.
A-3315-22 4 Because Banton alleged a class action, the matter was transferred from the
Special Civil Part to the Law Division. The Pagaya and Spring Oaks entities
then filed a joint motion to compel arbitration. Banton conceded there was a
valid arbitration agreement but argued, as he does on appeal, that the Pagaya
and Spring Oaks entities were not legally assigned the ability to compel
arbitration, and even if they were, they waived the ability to compel arbitration
by their conduct in the litigation. We disagree and affirm.
We review a trial court's decision to compel arbitration de novo.
Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 131 (2020). Pursuant to Rule 2:2-
3(a), "[o]rders compelling arbitration are deemed final for purposes of appeal,"
and because they are a "legal determination," the decision is reviewed de novo.
Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). Our Supreme
Court held that "[i]n reviewing such orders, we are mindful of the strong
preference to enforce arbitration agreements, both at the state and federal level."
Ibid.
"Reconsideration is a matter within the sound discretion of the Court, to
be exercised in the interest of justice." Cummings v. Bahr, 295 N.J. Super. 374,
384 (App. Div. 1996). We review the trial court's denial of a motion for
A-3315-22 5 reconsideration under the abuse of discretion standard. Branch v. Cream-O-
Land Diary, 244 N.J. 567, 582 (2021).
As he did before the trial court, defendant alleges the Spring Oaks and
Pagaya entities failed to establish they were assigned the rights under the
agreement, including the right to compel arbitration. See New Century Fin.
Serv., Inc v. Oughla, 437 N.J. Super. 299, 314 (2014) ("plaintiffs must prove
that they own the . . . debts on which they sue, whether one characterizes it as
standing to sue or an essential element of proof on an assigned claim."); see also
Sullivan v. Visconti, 68 N.J.L. 548, 550 (1902) ("where the suit is brought by
the assignee in his own name he must aver and prove that the caus e of action
was, in fact, assigned to him."). The Pagaya and Spring Oaks entities argue they
did in fact demonstrate the assignments.
Defendant also claims, as he did in his complaint and motion for
reconsideration, the Spring Oaks and Pagaya entities were not licensed under
N.J.S.A. 17:11C-33(a)(b) and therefore the collection of the debt violates public
policy.1 See Accountemps Div. of Robert Half, Inc. v. Birch Tree Grp., Ltd.,
1 Banton relies on unpublished opinions from state and federal court throughout this point in his appellate brief. Unpublished decisions are not precedential and cannot be cited by this court, and counsel did not confirm compliance with the requirement that all contrary unpublished opinions known to counsel were also served on the court and opposing counsel. See Rule 1:36-3. A-3315-22 6 115 N.J. 614, 626 (1989) ("public policy precludes enforcement of a contract
entered into in violation of [a] licensing statute."). The Pagaya and Spring Oaks
entities contend they obtained the proper licenses.
We need not reach the merits of either of these issues because they are
both subject to arbitration under the agreement, and "a court may not decide an
arbitrability question that the parties have delegated to an arbitrator." Henry
Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 530 (2019); see also
Amalgamated Transit Union, Loc. 880 v. N.J. Transit Bus Operations, Inc. , 200
N.J. 105 (2009). Here, Banton challenged assignment of the loan and the ability
of the purported assignee to collect the debt, which is a dispute about the
"relationship between [the parties]" and "whether [the] arbitration agreement
. . . is enforceable," as defined in the arbitration agreement. Even if there is a
question whether either issue raised by Banton constitutes a "dispute" as defined
in the arbitration agreement, that issue is subject to arbitration under the
agreement as well.
Lastly, Banton reiterates the Spring Oaks entities waived their right to
invoke the arbitration clause. We are unpersuaded by this argument.
The Supreme Court in Morgan v. Sundance, Inc. held that "[t]o decide
whether a waiver has occurred, the court focuses on the actions of the person
A-3315-22 7 who held the right." 142 S. Ct. 1708, 1713 (2002). A "court assessing waiver
does not generally ask about prejudice. Waiver, we have said, 'is the intentional
relinquishment or abandonment of a known right.'" Ibid. (quoting U.S. v. Olano,
507 U.S. 725, 733 (1993)).
Here, Spring Oaks Capital SPV, LLC filed a complaint to collect the debt
in the Special Civil Part. Banton exercised his right to file an answer,
counterclaim and third-party claim, which was then transferred to the Law
Division. Because Banton disputed aspects of the allegations in the complaint,
Spring Oaks took no further action in the lawsuit and instead invoked its right
to arbitration. Nothing about Spring Oaks's actions prior to that constitute an
intentional relinquishment or abandonment of its right to arbitration, and
Banton's claims to the contrary are without merit.
First, Banton's interpretation of waiver suggests that a lending entity
would be barred from arbitration by filing a complaint. This is an absurd
conclusion, because a complaint could result in default or payment of the debt,
neither of which would necessitate the invocation of an arbitration clause. It is
only when a dispute arises, as demonstrated by Banton's actions in this matter,
that a lender must decide whether to invoke arbitration or waive arbitration and
litigate the matter. Moreover, a lending entity may need to preserve its ability
A-3315-22 8 to file a complaint within the applicable statute of limitations, notwithstanding
its right to arbitration. And lastly, the agreement here was subject to the FAA,
which provides at 9 U.S.C. § 3:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
Because the FAA refers to "any suit or proceeding be[ing] brought in any of the
courts," it encompasses the scenario here. To adopt Banton's argument would
render this language in the FAA superfluous, and we may not interpret the
statute in this manner. See Cupido v. Perez, 415 N.J. Super. 587, 595 (App.
Div. 2010) ("'Courts should construe a statute, if possible, so no term is rendered
superfluous or meaningless.'") (citing 1A Sutherland Statutory Construction,
163 (7th ed.)).
Because we agree with the trial court's decision to stay the matter and
compel arbitration, we find no abuse of discretion in its denial of the motion for
A-3315-22 9 Affirmed.
A-3315-22 10