United States District Court, W.D. Texas, Austin Division
PITMAN UNITED STATES DISTRICT JUDGE
the Court is Defendant Regions Bank's Motion to Compel
Arbitration. (Dkt. 16). For the reasons that follow, the
Court finds that the motion should be granted.
purchased a personal automobile from a dealership in Austin,
Texas. The retail installment sales contract that Plaintiff
signed gave the dealership a security interest in the
vehicle. It also included an arbitration clause providing
that “[a]ny claim or dispute . . . which arises out of
or relates to [Plaintiff's] credit application, purchase
or condition of th[e] vehicle, this contract or any resulting
transaction or relationship . . . shall, at your or our
election be resolved by neutral, binding arbitration . . .
.” (Sales Contract, Dkt. 16-1, at 3). The contract also
stated that the dealership “may transfer th[e] contract
to another person” and that the transferee “will
then have all [the dealer's] rights, privileges, and
remedies.” (Id. at 2).
dealership assigned the contract to Defendant Regions Bank
(“Regions”). It appears that Plaintiff later fell
behind in his payments, which led to his making payment
arrangements with Regions. According to Plaintiff, Regions
promised not to repossess his vehicle if he followed through
with the agreed payments. Plaintiff alleges that he fulfilled
their agreement, but that Regions repossessed the vehicle
alleges that Regions issued a notice of sale of
Plaintiff's vehicle, but mailed it to the wrong address.
Plaintiff also asserts that Regions wrongfully failed to
inform him that Plaintiff's personal property had been
left in the vehicle or how and when he could collect it.
Plaintiff asserts a variety of state and federal claims
against both Regions and Defendant Ronald Thomas Ashby, who
collected Plaintiff's vehicle pursuant to Regions'
now moves to compel arbitration pursuant to the sales
Federal Arbitration Act (“FAA”) provides that
pre-dispute arbitration agreements ‘shall be valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any
contract.'” Carter v. Countrywide Credit
Indus., Inc., 362 F.3d 294, 297 (5th Cir. 2004) (quoting
9 U.S.C. § 2). The FAA's purpose is “to
reverse the longstanding judicial hostility to arbitration
agreement . . . and to place arbitration agreements on the
same footing as other contracts.” Green Tree Fin.
Corp.-Ala. v. Randolph, 531 U.S. 79, 89 (2000).The FAA
permits an aggrieved party to file a motion to compel
arbitration based on “the alleged failure, neglect, or
refusal of another to arbitrate under a written agreement for
arbitration.” 9 U.S.C. § 4. When considering a
motion to compel arbitration, the Court must determine
whether the parties agreed to arbitrate the dispute in
question. Webb v. Investacorp, Inc., 89
F.3d 252, 258 (5th Cir. 1996). This determination involves
two considerations: (1) whether a valid agreement to
arbitrate exists between the parties, and (2) whether the
dispute at issue falls within the scope of that agreement.
Id. If, however, “the making of the
arbitration agreement . . . be in issue, the court shall
proceed summarily to the trial thereof.” 9 U.S.C.
there is a strong federal policy favoring arbitration, this
policy “does not apply to the determination of whether
there is a valid agreement to arbitrate between the
parties.” Will-Drill Res., Inc. v. Samson Res.
Co., 352 F.3d 211, 214 (5th Cir. 2003) (internal
quotations omitted). Instead, courts apply ordinary state
contract law principles to the question of whether the
parties formed a valid agreement to arbitrate. JP Morgan
Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596,
598 (5th Cir. 2007). The policy favoring arbitration does,
however, apply to the determination of whether a particular
dispute falls within the scope of an arbitration agreement.
Jones v. Halliburton Co., 583 F.3d 228, 242 (5th
present dispute relates to the sales contract and thus
appears to fall within the scope of the arbitration
agreement. However, Plaintiff opposes Regions' motion to
compel arbitration on three grounds. First, he argues that
the contract produced by Regions cannot be considered because
it is unauthenticated and constitutes hearsay. Second,
Plaintiff asserts that Regions, as a non-signatory to the
contract, lacks standing to enforce the arbitration
agreement. Finally, Plaintiff argues that the arbitration
agreement is unconscionable because it gives Regions
unilateral veto power over the selection of the arbitrator.
The Court finds each argument unconvincing.
the Court may properly consider the sales contract. Regions
provided an affidavit from its custodian of records
adequately authenticating the contract. (Dkt. 23).
Additionally, “[a] contract is not hearsay because it
has independent legal significance.” Crompton
Greaves, Ltd. v. Shippers Stevedoring Co., 776 F.Supp.2d
375, 386 (S.D. Tex. 2011) (citing Kepner-Tregoe, Inc. v.
Leadership Software, Inc., 12 F.3d 527, 540 (5th Cir.
1994)). Plaintiff's objection to the consideration of the
contract is therefore overruled.
Regions has standing to enforce the arbitration agreement.
The right to invoke the arbitration agreement was initially
enjoyed by Plaintiff and the automobile dealership, but
Plaintiff acknowledges that the sales contract was assigned
to Regions. (Compl. ¶ 1, Dkt. 1). The contract Plaintiff
signed provided that an assignee would receive all rights,
privileges, and remedies in the contract. (Dkt. 16-1, at 3).
And indeed, under Texas law, an assignee stands in the shoes
of the assignor. Sw. Bell Tel. Co. v. Mktg. ...