United States District Court, W.D. Texas, San Antonio Division
RODRIGUEZ, UNITED STATES DISTRICT JUDGE.
date, the Court considered the status of the above-captioned
case. After careful consideration, the Court hereby GRANTS
Defendant's Motion to Compel Arbitration and to Stay
Proceedings. Docket no. 6.
February 22, 2018, Plaintiff David Williams filed his
Original Petition in the 37th Judicial District Court of
Bexar County, Texas. Docket no. 1-1. Plaintiff alleges that
Defendant Wellshire Financial Services, LLC d/b/a Loanstar
Title Loans (“Wellshire”) breached a settlement
agreement related to a debt that Plaintiff owed Defendant by
refusing to accept Plaintiff's initial payment.
Id. On March 5, 2018, Defendant removed this action
to this Court, alleging that this Court has federal question
jurisdiction over Plaintiff's Fair Debt Collections
Practices Act (“FDCPA”) claim and supplemental
jurisdiction over Plaintiff's state law claims. Docket
January 2018, the parties allegedly entered into a settlement
agreement, under which Plaintiff agreed to pay $625.00 for
four months, with payments to begin in February 2018. Docket
no. 1-1 at 3. Plaintiff alleges that Defendant agreed to a
discharge of Plaintiff's payoff debt of $6, 327.73, which
is secured by Plaintiff's vehicle. Id. Plaintiff
alleges, however, that Defendant “refused to accept
Plaintiff's initial payment under the guise of no
settlement exists.” Id. at 4. Defendant
allegedly seeks to repossess Plaintiff's vehicle.
Id. Plaintiff further alleges that, although he
communicated to Defendant that he was represented by counsel
with respect to the alleged debt, Defendant “continued
to communicate and harass Plaintiff by repeatedly calling him
and texting him about the alleged debt.” Id.
brings claims for breach of contract, violation of the Texas
Debt Collection Act (“TDCA”), violation of the
FDCPA, and violation of the Texas Deceptive Trade Practices
Act (“DTPA”). Id. at 4-5. Plaintiff also
seeks a declaratory judgment “specifying
Plaintiff's and Defendant's rights and duties in
connection with the vehicle and the alleged underlying
debt.” Id. at 4.
April 4, 2018, Defendant filed a Motion to Compel Arbitration
and to Stay Proceedings. Docket no. 6. According to
Defendant, Plaintiff's debt stems from prior loan
agreements between the parties, and Plaintiff's disputes
are subject to a final and binding arbitration clause
contained within the loan agreements. The Credit Services
Agreement (“CSO”) states: “Either you or we
may elect to arbitrate a Claim by giving the other party
written notice of the intent to arbitrate the Claim or by
filing a motion to compel arbitration of the Claim.”
Docket no. 6-1 at 6. The CSO defines a “Claim”
“any claim, dispute or controversy between you and us,
whether preexisting, present or future, that in any way
arises from or relates to the CSO Agreement, any prior
agreements or loans you obtained from us, the events leading
up to the CSO Agreement (for example, any disclosures,
advertisements, promotions or oral or written statements made
by us), or any product or service provided by us or third
parties in connection with the CSO Agreement.
“Claim” has the broadest possible meaning, and
includes initial claims, counterclaims, cross-claims and
third-party claims and federal, state, local and
administrative claims and claims which arose before the
effective date of this Arbitration Agreement. It includes
disputes based upon contract, tort, consumer rights, fraud
and other intentional torts, constitution, statute,
regulation, ordinance, common law and equity and claims for
money damages and injunctive or declaratory relief.”
Id. Plaintiff does not dispute that he entered into
arbitration agreements for his May 2017 and November 2017
loans, but he disputes that these arbitration clauses cover
the settlement agreement that the parties later reached.
Docket no. 7.
Federal Arbitration Act (“FAA”) provides that
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.” 9 U.S.C.
§ 2. The Act “mandates that district courts
shall direct the parties to proceed to arbitration
on issues as to which an arbitration agreement has been
signed.” Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213, 218 (1985) (emphasis in original). It is for
the court, not the arbitrator, to decide whether the parties
have agreed to arbitrate the disputes in question.
AT&T Tech., Inc. v. Commc'ns Workers of Am.,
475 U.S. 643, 651 (1986).
whether to compel Plaintiff's claims to arbitration
requires the application of a two-pronged test. Fleetwood
Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.
2002), opinion supplemented on denial of reh'g,
303 F.3d 570 (5th Cir. 2002). The first prong is aimed at
determining whether the parties agreed to arbitrate the
dispute in question. Klein v. Nabors Drilling USA
L.P., 710 F.3d 234, 236 (5th Cir. 2013). In particular,
this prong involves two sub-inquiries: (1) whether a valid
agreement to arbitrate exists between the parties, and (2)
whether the agreement covers the dispute in question.
Id. The second prong requires a determination of
“whether legal constraints external to the parties'
agreement foreclosed the arbitration” of the relevant
claims. Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985).
the Court must determine whether the parties agreed to
arbitrate the dispute over the alleged settlement agreement
related to Plaintiff's remaining debt. As an initial
matter, the parties agree that there is a valid agreement to
arbitrate. Defendant states that Plaintiff signed a Loan
Agreement, Promissory Note, and Security Agreement, and
Plaintiff accepted “the obligation to submit all
loan-related disputes to binding arbitration, rather than
pursue them in court.” Docket no. 6 at 5. Defendant
states that, “after having conferred with opposing
counsel, the Plaintiff admits that he was aware of his
agreement to arbitrate.” Id. Plaintiff signed
the CSO that included the arbitration clause, and Plaintiff
does not claim that he had no opportunity to read it. Under
Texas law, an individual “who has the opportunity to
read an arbitration agreement and signs it, knows its
contents.” EZ Pawn Corp. v. Mancias, 934
S.W.2d 87, 90 (Tex. 1996). Defendant states that the
parties' agreements “are amply supported by
consideration” because the “provisions obligate
both Williams and Wellshire to arbitrate all loan related
disputes.” Docket no. 6 at 5. Finally, Plaintiff
“does not dispute that he entered into two arbitration