The URL can be used to link to this page

Home My WebLink About2010-368 Civil AMERICAN EXPRESS : IN THE COURT OF COMMON PLEAS OF CENTURION BANK, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff : : CIVIL ACTION – LAW vs. : NO. 10-368 CIVIL : GLADYS LEWIS, : Defendant : IN RE: PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT BEFORE HESS, P.J. AND MASLAND, J. OPINION AND ORDER In this case, the Plaintiff is American Express Centurion Bank, c/o Apothaker & Associates, P.C., located at 520 Fellowship Road C306, Mount Laurel, NJ 08054. (Plaintiff’s Complaint, filed Jan. 14, 2010, para. 1). Defendant is Gladys Lewis, an adult individual residing at 1809 Heishman Gardens, Carlisle, PA 17013. (Plaintiff’s Complaint, para. 2). Through a credit agreement Plaintiff extends credit to its customers in consideration of the customer’s promise to repay in full any outstanding balance plus interest incurred. (Plaintiff’s Complaint, Exhibit A). Plaintiff and Defendant entered into a credit agreement wherein Defendant was issued a credit card with an account number of 3737-426479-31001. (Plaintiff’s Complaint, para. 3). On January 14, 2010, Plaintiff filed a civil complaint against Defendant in which Plaintiff alleged that Defendant’s account was in default with an unpaid balance of $14,865.80. (Plaintiff’s Complaint, para. 5). On February 4, 2010, Defendant filed an Answer and New Matter with the Cumberland County Prothonotary’s Office. (Defendant’s Answer, filed Feb. 4, 2010). In Defendant’s Answer and New Matter, Defendant asserts an affirmative defense entitled “Agreement to Arbitrate” wherein she quotes a portion of the aforementioned credit NO. 10-368 CIVIL agreement between Plaintiff and Defendant. (Defendant’s Answer, para. 1). The credit card agreement contains a broad arbitral clause which reads, in pertinent parts, as follows: Arbitration Purpose: This Arbitration Provision sets forth the circumstances and procedures under which Claims (as defined below) may be arbitrated instead of litigated in court. Definitions: As used in this Arbitration Provision, the term “Claim” means any claim, dispute or controversy between you and us arising from or relating to your Account, this Agreement, the Electronic Funds Transfer Services Agreement, and any other related or prior agreement that you may have had with us, or the relationships resulting from any of the above agreements (“Agreements”), except for the validity, enforceability, or scope of this Arbitration Provision or the Agreements. . . . Initiation of Arbitration Proceeding/ Selection of Administrator: Any Claim shall be resolved, upon the election by you or by us, by arbitration pursuant to this Arbitration Provision and the code of procedures of the national arbitration organization to which the Claim is referred in effect at the time the Claim is filed (the “Code”), except to the extent the Code conflicts with this Agreement. Claims shall be referred to either JAMS or the American Arbitration Association (“AAA”), as selected by the party electing to use arbitration. If a selection by us of either of these organizations is unacceptable to you, you shall have the right within 30 days after you receive notice of our election to select the other organization listed to serve as arbitration administrator. For a copy of the procedures, to file a Claim or for other information about these organizations, contact them as follows:  JAMS at 1920 Main Street, Suite 300, Irvine, CA 92614; website: www.jamsadr.com.  AAA at 335 Madison Avenue, New York, NY 10017; website: www.adr.org. Arbitration Procedures: This Arbitration Provision is made pursuant to a transaction involving interstate commerce, and shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16, as it may be amended (the “FAA”). . . The arbitrator’s decision will be final and binding, except for any right of appeal provided by the FAA. . . . (Plaintiff’s Complaint, Exhibit A). Paragraph 2 of Defendant’s Answer contains a “Second Affirmative Defense” alleging the “account balance claimed by plaintiff is not accurate and the total amount that is owed, if any, is in dispute.” (Defendant’s Answer, para. 2). Defendant’s Answer contains a “Third 2 NO. 10-368 CIVIL Affirmative Defense” citing “Financial Hardship,” and alleges that she does not have sufficient funds to repay the full amount. (Defendant’s Answer, para. 3). Attached to Defendant’s Answer is a document entitled “Motion to Compel Arbitration.” (Defendant’s Answer, attachment 1). Contained within this attachment is Defendant’s request to compel arbitration citing the language of the broad arbitral clause quoted above. Id. Plaintiff American Express filed a Motion for Summary Judgment. (Plaintiff’s Motion for Summary Judgment, filed April 22, 2010). The case was listed for oral argument and arguments were heard. At oral argument, Plaintiff’s counsel suggested that as a result of the initiation of judicial proceedings, Defendant is now precluded from filing a motion to compel arbitration. The issue presented is whether the initiation of judicial proceedings precludes a party from thereafter asserting a contractual right to seek arbitration pursuant to a valid contractual agreement between the parties. For the reasons which follow, we are satisfied that the defendant is not precluded from seeking arbitration at this stage of the proceedings and consequently, summary judgment cannot be granted. Both federal and Pennsylvania law provide for the enforcement and validity of 1 agreements to arbitrate. See 9 U.S.C.A. § 2; 42 Pa. C.S.A. § 7303. The Federal Arbitration Act (FAA) governs arbitral clauses which involve interstate commerce. The United States Supreme Court has interpreted the FAA so as to preempt any state statutes which are designed to limit or A written agreement to subject any existing controversy to arbitration or a provision in a written agreement to submit 1 to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity relating to the validity, enforceability or revocation of any contract. 42 Pa.C.s.a,. § 7303. 3 NO. 10-368 CIVIL restrict arbitral clauses, preclude their use in certain types of contracts, or prohibit the enforcement of 9 U.S.C.A. § 2. Perry v. Thomas, 482 U.S. 483, 107 S.Ct. 2520 (1987); Southland v. Keating, 465 U.S. 1, 12, 104 S.Ct. 852, 858-59. It is well settled that the driving force behind the FAA is that arbitration is a matter of contract. Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772, 2776 (2010). Section 2 of the FAA provides as follows: A written provision in. . .a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract. . .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.A. § 2. Section 2 is a Congressional declaration of liberal federal policy favoring arbitration agreements, notwithstanding any substantive or procedural state policies to the contrary. See Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927 (1983). “The FAA thereby places arbitration agreements on an equal footing with other contracts. . .and requires courts to enforce them according to their terms.” Rent-A-Center, 130 S.Ct. at 2776 (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204 (2006); Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248 (1989)). Pennsylvania policy is entirely consistent with the United States Supreme Court rulings; our courts having held that agreements to arbitrate are to be equated with all other contracts and interpreted and enforced as such. McNulty v. H&R Block, Inc., 2004 Pa. Super. 45, ¶ 17, 843 A.2d 1267, 1271 (“The FAA merely placed arbitration agreements on equal footing with other contracts.”). In Pennsylvania, the arbitrability of an issue is a matter of law for the court to decide. McNulty, 2004 Pa. Super. 45, ¶ 18 (citing Huegel v. Mifflin Const. Co., Inc., 2002 Pa. Super. 94, 4 NO. 10-368 CIVIL ¶ 6, 796 A.2d 350, 354). “To determine whether the claim is subject to arbitration the court engages in a two-prong analysis. First, does a valid agreement exist and second is the dispute within the scope of the agreement.” Id., (citing Keystone Technology Group, Inc. v. Kerr Group, Inc., 2003 Pa. Super. 199, ¶ 10, 824 A.2d 1223, 1227). Furthermore, it is well settled that “[t]he scope of arbitration is determined by the intention of the parties as ascertained in accordance with the rules governing contracts generally.” Pittsburgh Logistics Systems, Inc. v. Professional Transp. and Logistics, Inc., 2002 Pa. Super. 227, ¶ 6, 803 A.2d 776, 779 (citations omitted). Importantly, the initiation of judicial proceedings by a plaintiff against a defendant to a civil suit does not preclude that defendant from seeking to assert a contractual right to arbitrate a dispute that is within the ambit of the arbitration agreement, and it does not necessarily act as a waiver of even a plaintiff’s right to seek dispute resolution through arbitration. Keystone Technology, 2003 Pa. Super. 199, ¶ 5. Indeed, the Superior Court has noted that, “[g]enerally it is the defendant who seeks to invoke and enforce an arbitration provision in a contract after having been hailed to the civil courts by the plaintiff.” Keystone Technology, 2003 Pa. Super. 199, ¶ 6 (emphasis added). It is, therefore, not unusual for a civil defendant to seek a motion to compel arbitration after having been called to court. Moreover, a waiver of a contractual right to arbitration is not one which should be easily determined by a court. “[A] waiver of a right to proceed to arbitration pursuant to the term of a contract providing for binding arbitration should not be lightly inferred and unless one's conduct has gained him an undue advantage or resulted in prejudice to another he should not be held to have relinquished the right.” Kwalick v. Bosacco, 329 Pa.Super. 235, 238, 478 A.2d 50, 52 (1984). This is because our courts our courts have long favored the settlement of disputes 5 NO. 10-368 CIVIL through arbitration when parties have previously so agreed by contract. Goral v. Fox Ridge, Inc., 453 Pa. Super. 316, 321, 683 A.2d 931, 933 (1996). Applying the foregoing principles to the case sub judice, it is clear first that a valid agreement does exist. Neither party attempts to deny the validity or enforceability of the credit agreement, and it is based on this very contract that Plaintiff seeks to obtain repayment of the balance of the credit card. Second, it is clear that this dispute is within the scope of the arbitration agreement. The arbitral clause contained within the credit agreement is broad; “Claim” is intended to cover “any claim, dispute or controversy between you and us arising from or relating to your Account, this Agreement. . . and any other related or prior agreement that you may have had with us, or the relationships resulting from any of the above agreements (“Agreements”), except for the validity, enforceability or scope of this Arbitration Provision or the Agreements.” (Plaintiff’s Complaint, Exhibit A) (emphasis added). The contract between the parties reveals a clear intention to arbitrate disputes arising out of the credit agreement. Thus, even if otherwise appropriate, the grant of summary judgment at this juncture would be improper. ORDER th AND NOW, this 12 day of August, 2010, the motion of the plaintiff for summary judgment is DENIED. BY THE COURT, _______________________________ Kevin A. Hess, P. J 6 AMERICAN EXPRESS : IN THE COURT OF COMMON PLEAS OF CENTURION BANK, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff : : CIVIL ACTION – LAW vs. : NO. 10-368 CIVIL : GLADYS LEWIS, : Defendant : IN RE: PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT BEFORE HESS, P.J. AND MASLAND, J. ORDER th AND NOW, this 12 day of August, 2010, the motion of the plaintiff for summary judgment is DENIED. BY THE COURT, _______________________________ Kevin A. Hess, P. J Benjamin J. Cavallaro, Esquire For the Plaintiff Gladys Lewis, Pro Se Defendant :rlm