Vitrano v. N.A.R., Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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JULIE VITRANO, individually and on

behalf of all others similarly

situated,

MEMORANDUM & ORDER

Plaintiff,

18-CV-06754(KAM)(RLM)

-against-

N.A.R., INC.,

Defendant.

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MATSUMOTO, United States District Judge:

Pending before the court is defendant’s motion to

compel arbitration and strike plaintiff’s class action.

Plaintiff Julie Ann Vitrano (“plaintiff”) brings this class

action against defendant N.A.R., Inc. (“defendant” or “NAR”)

alleging a violation of the Fair Debt Collection Practices Act,

(“FDCPA”), 15 U.S.C. § 1692, et seq. (ECF No. 1, Complaint

(“Compl.”).) NAR moves for summary judgment to compel

arbitration and stay proceedings in this court. Plaintiff is

the debtor under a consumer finance contract. That contract,

which contains an arbitration clause, was purportedly assigned

to NAR for the purpose of collecting plaintiff’s debt. At its

core, this dispute turns on whether the assignment of rights to

NAR also included the right to compel arbitration of plaintiff’s

claim. For the reasons set forth below, the court finds that

NAR was assigned the right to compel arbitration of plaintiff’s

FDCPA claim, and accordingly, defendant’s motion to compel

arbitration, and strike plaintiff’s class action claims, is

granted, and this case is hereby stayed.

BACKGROUND

The pertinent facts, which by and large are not

disputed, are set forth below.

I. The Lease

On or about October 13, 2016, plaintiff executed a

Rental Purchase Agreement (“Lease”) with Crest Financial

Services, LLC (“Crest”). (ECF No. 16-2, Lease.) Plaintiff, as

lessee, rented certain articles of furniture from Crest, subject

to a fixed schedule of payments, with an option to purchase the

furniture contingent on full compliance with the Lease’s terms.

(Lease § 2.)

The Lease conspicuously alerts the plaintiff-lessee to

an arbitration provision:

THIS LEASE CONTAINS AN ARBITRATION PROVISION (SEE

§15). UNLESS YOU PROMPTLY REJECT THE ARBITRATION

PROVISION (SEE §15(a)), THE ARBITRATION PROVISION WILL

HAVE A SUBSTANTIAL EFFECT ON YOUR RIGHTS IN THE EVENT

OF A DISPUTE, INCLUDING YOUR RIGHT TO BRING OR

PARTICIPATE IN A CLASS ACTION PROCEEDING.

(Id. at ECF p. 2 of 9.) Directly below, the Lease defines

certain key pronouns used throughout the agreement:

In this Lease, “you” and “your” mean the person(s)

signing this Lease as Lessee, and “we,” “our,” and

“us” mean [Crest] and its successors and assigns.

(Id. (emphasis added).) The Lease further provides that, by

signing the contract, plaintiff “agree[s] to all its terms,

including the . . . ARBTIRATION PROVISION (§ 15).” (Id.)

This dispute centers on section 15 of the Lease, the

arbitration clause (“Arbitration Clause”). The Arbitration

Clause provides that, barring plaintiff’s rejection or a

conflict with applicable law, “you and we agree that either

party may elect to arbitrate or require arbitration of any Claim

under the Arbitration [Clause].” (Id. § 15(a)(i).) The Lease

afforded plaintiff a 30-day window in which to reject the

Arbitration Clause. (Id. § 15(a)(ii).) Plaintiff did not

reject the Arbitration Clause.

The Arbitration Clause incorporates a more expansive

definition of “we,” “us,” and “our” than elsewhere in the Lease.

Specifically, the terms “we,” “us,” and “our” include “Related

Parties,” which encompasses Crest’s corporate parents,

subsidiaries, and affiliates, as well as “third parties that you

bring a Claim against at the same time you bring a Claim against

us or any other Related Party . . . .” (Id. § 15(b)(i).) Claim

is also broadly defined as:

any claim, dispute or controversy between you and us

(including any Related Party) that arises from or

relates in any way to this Lease or the Property

(including any amendment, modification or extension of

this Lease); any prior lease between you end [sic] us,

and/or the property subject to such prior lease; any

of our marketing, advertising, solicitations and

conduct relating to this Lease, the Property and/or a

prior lease and related property; our collection of

any amounts you owe; or our disclosure of or failure

to protect any information about you.

(Id. § 15(b)(ii).) The Lease makes clear that “‘Claim’ is to be

given the broadest reasonable meaning and includes claims of

every kind and nature,” and “includes disputes that seek relief

of any type . . . .” (Id.)

Finally, the Lease explicitly states in capital

letters that either party’s election of arbitration nullifies

plaintiff’s right to seek classwide relief in court or in

arbitration:

(f) No Class Actions or Similar Proceedings; Special

Features of Arbitration. IF YOU OR WE ELECT TO

ARBITRATE A CLAIM, NEITHER YOU NOR WE WILL HAVE THE

RIGHT TO: (i) HAVE A COURT OR JURY DECIDE THE CLAIM; .

. . (iii) PARTICIPATE IN A CLASS ACTION IN COURT OR IN

ARBRITRATION, EITHER AS A CLASS REPRESENTATIVE, CLASS

MEMBER OR CLASS OPPONENT . . . .

(Id. § 15(f).) The Arbitration Clause also included a

stipulation that the Lease involves interstate commerce and that

the Arbitration Clause is governed by the Federal Arbitration

Act (“FAA”), 9 U.S.C. § 1, et seq. (Id. § 15(i).)

II. Assignment Agreement

On or about January 18, 2017, Crest entered into an

agreement with NAR to assign past due accounts to NAR for

collection (“Assignment Agreement”). (ECF No 16-1, Declaration

of Jameson Murray (“Murray Decl. (1st)”) ¶ 5.)1 The Assignment

Agreement does not effect a specific assignment of plaintiff’s

account to NAR. Functionally, the Assignment Agreement is a

master agreement governing the terms of prospective, periodic

assignments of accounts by Crest to NAR for debt collection

purposes. For any such assignment, Crest agreed to:

transfer[], assign[] and set[] over to NAR, [Crest’s]

claims and demands against all debtors assigned

together with all of [Crest’s] rights, title and

interest therein, and the demands represented thereby,

and all rights of action accrued or to accrue.

(Assignment Agreement § 1.) Crest also granted NAR, subject to

limitations specified elsewhere in the agreement, “full power to

collect, compromise, reassign, or in any other manner enforce

the collection” of Crest’s claims. (Id.)

The Assignment Agreement described the mechanics for

prospective assignments:

Assignments shall be made by forwarding collection

accounts to NAR. Each time NAR receives accounts from

[Crest], NAR will send [Crest] an Acknowledgment

Report. Appearance of an account on the Acknowledgment

Report or appearance of the account on a Statement or

Status Report shall evidence that the account has been

validly assigned (“Assigned Account”) pursuant to the

terms of this Agreement.

1 The date of the Assignment Agreement is unclear from the document’s

face. The handwritten words “Crest Financial” appear on the line reserved

for the document’s execution date. (See Assignment Agreement, Recital.) The

Murray Declaration, however, attests under oath that the Assignment Agreement

was entered into between Crest and NAR on January 18, 2017, (Murray Decl. ¶

5), a fact plaintiff does not dispute, and which date the court accepts.

(Id. § 2.) The Assignment Agreement “covers every Assigned

Account regardless of when the account was assigned.” (Id. §

15.)

III. Assignment of Plaintiff’s Account

On December 19, 2018, three weeks after plaintiff

filed this lawsuit, Crest’s Director of Collections, Lester

Rueda, signed an “Evidence of Assignment of Debt” relating to

plaintiff’s account with Crest (“NAR Assignment”).2 (ECF No. 16-

4, NAR Assignment.) The NAR Assignment states that Crest

assigned plaintiff’s debt to NAR on January 17, 2018, along with

“full power to sue, . . . or in any other legal manner enforce

collection thereof.” (Id.; see also ECF No 16-1, Declaration of

Jameson Murray (“Murray Decl.”) ¶ 7 (“As of January 17, 2018,

Crest assigned Plaintiff Julie Ann Vitrano’s [] account with

Crest [] to N.A.R. in accordance with the Evidence of Assignment

of Debt.”).)3 On January 26, 2018, plaintiff received a letter

from NAR alerting her that the debt she owed to Crest had been

“placed with N.A.R., Inc. for collections.” (Compl., Exhibit A

2 The NAR Assignment refers to “Julie Ann Vitrane,” which appears to be a

misspelling of plaintiff’s name. Plaintiff does not raise an argument of

mistaken identity, so the court assumes the NAR Assignment references the

relevant debt at issue, without regard to its validity.

3 NAR’s Operations Department Manager, Jameson Murray, attests that Crest

only provided NAR with copies of the Lease “and other documents regarding

Plaintiff’s account” when NAR requested the documents after this case

commenced. (Murray Decl. ¶ 10.)

(“Collection Letter”).) The Collection Letter reflects a total

outstanding balance of $3,054.12. (Id.)

After the instant motion was fully-briefed, NAR also

filed a copy of its Acknowledgement Report to Crest. (ECF No.

28-1.) The Acknowledgement Report is redacted to protect third-

party debtor information, but page 119 of the report refers to a

debt owed by “Vitrane, J.” in an amount of $2,904.12, assigned

January 17, 2018. (Id. 119.)4 The outstanding debt amount

stated in the Acknowledgement Report matches the principal

outstanding in the Collection Letter, and like the Collection

Letter and NAR Assignment, refers to plaintiff as “Julie Ann

Vitrane.” (Compare id. with NAR Assignment, and Collection

Letter.)

IV. The Motion

Plaintiff initiated this action on November 28, 2018.

The complaint alleges NAR’s Collection Letter to plaintiff

violated the FDCPA by stating she owed $150 in fees without

indicating either the nature of the fees or whether they will

continue to accrue, and by displaying total interest of “0.00,”

despite plaintiff’s belief that the total outstanding debt of

$3,054.12 already incorporates accrued interest. (Compl. ¶¶ 20-

23.) Plaintiff also alleges that the Collection Letter violates

4 As with the Collection Letter, this appears to be a misspelling of

plaintiff’s name.

the FDCPA by failing to clarify who the current creditor is

under plaintiff’s account. (Id. ¶ 34.) Plaintiff asserts that

a class action under Federal Rule of Civil Procedure 23 is

appropriate because the Collection Letter was part of a mass-

mailing of similar debt collection letters to similarly-situated

individuals that raise common questions of fact and law. (Id. ¶

36.)

NAR moves to compel arbitration pursuant to the

Lease’s Arbitration Clause. (ECF No. 16, Defendant N.A.R.,

Inc.’s Memorandum of Law in Support of its Motion to Compel

Arbitration and to Strike Plaintiff’s Class-Action Claims

(“Mot.”).) Defendant’s argument is straightforward: plaintiff

agreed to forego individual and class action litigation and

agreed to arbitrate any claims related to her account under the

Lease’s Arbitration Clause; plaintiff’s FDCPA claim relates to

her account under the Lease; Crest transferred to NAR by valid

assignment all its rights under the Lease, including the right

to compel arbitration; therefore, NAR is entitled to compel

arbitration of plaintiff’s FDCPA claim under the FAA, and the

class action claims must be stricken. (See generally Mot.)

Plaintiff opposes arbitration.5 (See ECF No. 17,

Response in Opposition to Motion to Compel Arbitration

(“Opp.”).) Although she acknowledges the Lease includes an

5 As noted below, plaintiff musters only perfunctory opposition to the

motion to strike class claims.

otherwise valid Arbitration Clause, she does not accept that

NAR, as a non-signatory to the Lease, may invoke the Arbitration

Clause. (Opp. 1.) Plaintiff contends that the Arbitration

Clause specifically carves out third parties like NAR from

invoking its remedies because the term “Related Party” does not

explicitly encompass Crest’s assigns. (Id. 3.) She argues that

where the Lease contemplates a third party’s right to pursue

arbitration, it is only in circumstances where a plaintiff is

bringing a claim against the third party at the same time she is

pursuing a claim against Crest or the Crest corporate

enterprise. (Id. 3-4.) Plaintiff also contests NAR’s status as

an assignee. According to plaintiff, Crest merely gave NAR “the

ability to try to help them collect the debt for a fee,” and the

Assignment Agreement does not transfer the Lease or the

Arbitration Clause, or even reference arbitration. (Id. 5-6

(emphasis in original).) Finally, plaintiff asserts the Lease’s

definition of “we,” “our,” and “us,” which includes assigns, is

superseded by Arbitration Clause’s “more specific” definition of

those terms. (Id. 7-9.) Thus, assigns like NAR are not among

the parties with standing to utilize the Arbitration Clause’s

remedies. (Id.)

LEGAL STANDARD

The Lease is governed by the FAA, which creates a

“body of federal substantive law of arbitrability, applicable to

any arbitration agreement within the coverage of the Act.”

Moses H. Cone Mem’l Hosp. v. Mercury Corp., 460 U.S. 1, 24

(1983). Under the FAA, an arbitration provision in a contract

involving a commercial transaction “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; see

also In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d 113, 127

(2d Cir. 2011). The FAA “embod[ies] [a] national policy

favoring arbitration and a liberal federal policy favoring

arbitration agreements.” AT&T Mobility LLC v. Concepcion, 563

U.S. 333, 346 (2011) (quotation marks and citations omitted;

second modification in original).

Consistent with these principles, a court must resolve

four inquiries to determine whether an action should be ordered

to arbitration:

[F]irst, it must determine whether the parties

agreed to arbitrate; second, it must determine

the scope of that agreement; third, if federal

statutory claims are asserted, it must consider

whether Congress intended those claims to be

nonarbitrable; and fourth, if the court concludes

that some, but not all, of the claims in the case

are arbitrable, it must then decide whether to

stay the balance of the proceedings pending

arbitration.

JLM Indus. v. Stolt-Nielsen SA, 387 F.3d 163, 172 (2d Cir. 2004)

(citing Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 75-76 (2d

Cir. 1998)). Only the first three inquiries pertain here

because the complaint alleges a single claim.

The FAA does not prioritize agreements to arbitrate

over other binding agreements. Brecher v. Midland Credit Mgmt.,

Inc., No. 18CV3142ERKJO, 2019 WL 1171476, at *2 (E.D.N.Y. Mar.

13, 2019) (citing Prima Paint Corp. v. Floo & Conklin Mfg. Co.,

388 U.S. 395, 404 n.12 (1967)). The statute places “arbitration

agreements on equal footing with other contracts, but it does

not require parties to arbitrate when they have not agreed to do

so.” EEOC v. Waffle House, Inc., 534 U.S. 279, 293 (2002)

(quotation marks omitted). A district court considering the

arbitrability of a dispute must preliminarily decide whether an

arbitration agreement exists. See BG Grp., PLC v. Republic of

Argentina, 134 S. Ct. 1198, 1206 (2014); see also John Hancock

Life Ins. Co. v. Wilson, 254 F.3d 48, 53 (2d Cir. 2001) (“Unless

the parties clearly and unmistakably provide otherwise, the

question of whether the parties agreed to arbitrate is to be

decided by the court, not the arbitrator.”) (quotation marks and

citations omitted). This question turns on state contract law.

See Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002).

Here, New York law controls.6

6 Because plaintiff was a New York resident at the time the Lease was

executed, New York law governs interpretation of the Arbitration Clause.

(See Lease § 15(i).) Neither party disputes that New York substantive law

governs the issue of contract interpretation. See Golden Pac. Bancorp v.

FDIC, 273 F.3d 509, 514 n.4 (2d Cir. 2001) (“[S]uch implied consent is . . .

When the question of arbitrability arises in the

context of a motion to compel arbitration, courts apply a

standard roughly equivalent to summary judgment. Meyer v. Uber

Techs., Inc., 868 F.3d 66, 74 (2d Cir. 2017). All relevant,

admissible evidence submitted by the parties is considered and

all reasonable inferences are drawn in favor of the non-moving

party. Id.; see also Nicosia v. Amazon.com, Inc., 834 F.3d 220,

229 (2d Cir. 2016). “If there is an issue of fact as to the

making of the agreement for arbitration, then a trial is

necessary.” Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir.

2003); see also 9 U.S.C. § 4. If, however, “the undisputed

facts in the record require the matter of arbitrability to be

decided against one side or the other as a matter of law, [the

court] may rule on the basis of that legal issue and avoid the

need for further proceedings.” Wachovia Bank, Nat. Ass’n v. VCG

Special Opportunities Master Fund, Ltd., 661 F.3d 164, 172 (2d

Cir. 2011) (internal quotations omitted.)

DISCUSSION

I. Agreement to Arbitrate

Plaintiff does not dispute that she signed the Lease

and that the Lease includes an Arbitration Clause, from which

she did not opt out. (See Opp. 3 (“The arbitration clause upon

sufficient to establish the applicable choice of law.”).

which the Defendant is attempting to rely was an agreement made

between the Plaintiff Julie Ann Vitrano and Crest Financial.”)

(emphasis removed).) Although the Lease provided plaintiff with

a 30-day window to reject the Arbitration Clause (see Lease §

15(a)(ii)), plaintiff does not contend that she rejected the

provision or otherwise challenged its validity. Accordingly,

the court finds that plaintiff agreed to arbitration with Crest.

II. Scope of Arbitration Clause

To determine whether plaintiff’s FDCPA claim falls

within the scope of the Arbitration Clause, the court must

“classify the particular clause as either broad or narrow.”

Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc.,

252 F.3d 218, 224 (2d Cir. 2001). If an arbitration clause is

broad, “there arises a presumption of arbitrability and

arbitration of even a collateral matter will be ordered if the

claim alleged implicates issues of contract construction or the

parties rights and obligations under it.” Id. (internal

quotations omitted.) This presumption may be overcome only if

“the arbitration clause is not susceptible of an interpretation

that covers the asserted dispute.” WorldCrisa Corp. v.

Armstrong, 129 F.3d 71, 74 (2d Cir. 1997) (citations omitted).

Here, the Arbitration Clause is clearly broad in

scope, as it permits either party to arbitrate any “Claim,” and

defines Claim to include any “dispute or controversy between you

and us . . . that arise from or relates in any way to this Lease

or the Property.” (Lease §§ 15(a)(i), (b)(ii).) The Lease

affords Claim “the broadest possible meaning and includes claims

of every kind and nature,” including those “based on . . .

statute” and relating to “collection of any amounts you owe.”

(Id. § 15(b)(ii).)

The Arbitration Clause’s reference to “any dispute” is

“the paradigm of a broad clause,” Collins v. Aikman Prods. Co.

v. Bldg. Sys., Inc., 58 F.3d 16, 20 (2d Cir. 2005), and the

Second Circuit has consistently held that arbitration provisions

applicable to “any claim” or “any dispute” should be considered

“broad.” See, e.g., JLM Indus., 387 F.3d at 172 (finding an

arbitration clause encompassing “[a]ny and all differences and

disputes of whatsoever nature arising out of this Charter” broad

in scope); Paramedics Electromedicina Comercial, Ltda v. GE Med.

Sys. Info. Tech., Inc., 369 F.3d 645, 649 (2d Cir. 2004) (“any

controversy, claim or dispute between the Parties arising out of

or relating in any way to this Agreement”). Plaintiff does not

dispute her FDCPA claim is arbitrable. Nor could she. A

statutory cause of action arising from the attempted collection

of plaintiff’s debt is encompassed generally and specifically

under the Lease (“collection of any amounts you owe”), and falls

squarely within the scope of the Arbitration Clause. (See

generally Compl.)

III. Arbitrability of FDCPA Claims

Generally, federal statutory claims are arbitrable

unless Congress clearly communicates otherwise. See CompuCredit

Corp. v. Greenwood, 565 U.S. 95, 103 (2012) (finding that when

Congress restricts the use of arbitration, it does so with

clarity); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20,

26 (1991) (“It is by now clear that statutory claims may be the

subject of an arbitration agreement, enforceable pursuant to the

FAA.”). The party opposing arbitration bears the burden to

establish that Congress “intended to preclude arbitration of the

statutory claims at issue.” Green Tree Fin. Corp.-Alabama v.

Randolph, 531 U.S. 79, 92 (2000). Plaintiff makes no such

assertions, and there is no indication that Congress intended

FDCPA claims to be nonarbitrable. See, e.g., Shetiwy v. Midland

Credit Mgmt., 959 F. Supp. 2d 469, 475 (S.D.N.Y. 2013) (finding

“nothing in . . . FDCPA indicates a clear congressional intent

to promote class recovery” or any statutory rights that would

preclude individual arbitration).

IV. Assignment of Debt

There is no dispute that the Arbitration Clause is

valid and applicable. The only remaining, dispositive question

is whether NAR can enforce it. This question is itself two-

pronged: first, can the Arbitration Clause in question be

enforced by assignees; second, did Crest, in fact, assign to NAR

the right to arbitrate claims relating to plaintiff’s account?

As explained below, the court answers both questions in the

affirmative.

A. The Arbitration Clause is Assignable

“Under New York law, an arbitration clause is

generally held to apply to the assignee of a contract.” See

Variblend Dual Dispensing Sys., LLC v. Seidel GmbH & Co., KG,

970 F. Supp. 2d 157, 166 (S.D.N.Y. 2013) (citing Lipman v.

Haeuser Shellac Co., Inc., 43 N.E.2d 817 (N.Y. 1942)); see also

Jugometal v. Samincorp, Inc., 78 F.R.D. 504, 507 (S.D.N.Y. 1978)

(“An assignee has the same standing to enforce an arbitration

award in this Court as its assignor would have . . . .”). It

follows that assignees generally have standing to enforce an

arbitration clause to the same extent as their assignors.

Brecher v. Midland Credit Mgmt., Inc., No. 18CV3142ERKJO, 2019

WL 1171476, at *6 (E.D.N.Y. Mar. 13, 2019) (“Arbitration

contracts may be enforced not only by the original parties but

also by assignees.”) (internal quotation marks and citations

omitted). To do so, the assignee must prove assignment of a

contract by a preponderance of the evidence. Zambrana v.

Pressler & Pressler, LLP, No. 16-CV-2907 (VEC), 2016 WL 7046820,

at *5 (S.D.N.Y. Dec. 2, 2016); see Solar & Envtl. Techs. Corp.

v. Zelinger, 726 F. Supp. 2d 135, 143, 148 (D. Conn. 2009)

(holding that under New York law, party seeking to enforce

arbitration agreement must prove agreement by preponderance of

the evidence) (citing Progressive Cas. Ins. Co. v. C.A.

Reaseguradora Nacional de Venezuela, 991 F.2d 42, 46 (2d Cir.

1993)).

It is beyond dispute that the Lease, and the

Arbitration Clause in particular, may be enforced by Crest’s

assignees. The Lease defines the terms “we,” “our,” and “us” to

include “Crest Financial Services, LLC, and its successors and

assigns.” (Lease at ECF p. 2 of 9 (emphasis added).) The

Arbitration Clause, which states that “‘you’ and ‘we’ agree that

either party may elect to arbitrate or require arbitration of

any Claim,” (id. § 15(a)(i) (emphasis added)), plainly

authorizes Crest’s assignees to elect arbitration of claims

arising under the Lease.

Plaintiff nonetheless resists such a straightforward

interpretation of the Arbitration Clause. She concedes that

assignees fall under the Lease’s general definition on “we,”

“our,” and “us,” but asserts that the underlying contract

“specifically excluded” assignees from enforcing the Arbitration

Clause. (Opp. 3, 8.) Plaintiff argues that the Arbitration

Clause is governed by its own, unique set of definitions that

overrides the Lease’s general terms. (Id. 8.) Indeed, the

Arbitration Clause modifies the default meaning of “we,” “us,”

and “our” to:

include our "Related Parties" - all our parent

companies, subsidiaries and affiliates, and our and

their employees, directors, officers, shareholders,

governors, managers and members.

(Lease § 15(b)(i) (emphasis added).) The term “Related Parties”

further:

include[s] third parties that you bring a Claim

against at the same time you bring a Claim against us

or any other Related Party, including, without

limitation, the merchant who sold us the Property we

then leased to you.

(Id.)

Plaintiff confuses the modification of a term with its

wholesale substitution. It is well-settled that, in

interpreting a contract’s terms, courts must give effect to the

plain meaning of its words. Consumer Fin. Prot. Bureau v. RD

Legal Funding, LLC, 332 F. Supp. 3d 729, 754 (S.D.N.Y. 2018).

The word “include” is defined by Black’s Law Dictionary as “to

contain as a part of something.” INCLUDE, Black's Law

Dictionary (11th ed. 2019). As used in the Arbitration Clause,

“include” merely adds Related Parties to the parties encompassed

by “we,” “us,” and “our,” which encompasses assignees, and

plainly expands the category of parties that may elect

arbitration. Although the parties spill ink over whether NAR is

a “Related Party,” the court need not wade into that dispute at

all. The language of the Arbitration Clause is clear,

unequivocal, and unambiguous: Crest’s assignees may enforce the

Arbitration Clause regardless of whether they are Related

Parties.

Plaintiff also urges the court to construe the

Arbitration Clause as protecting plaintiff, Crest, and Crest’s

related corporate entities, but not “third parties” such as NAR,

unless Crest is also sued. The court agrees that “third

parties” may only elect arbitration in the event that Crest is

sued as well, but that has no practical impact on NAR’s capacity

to arbitrate. NAR is an assignee of Crest and stands in its

shoes; thus, NAR is a party to the Lease, not a third party. See

THIRD PARTY, Black's Law Dictionary (11th ed. 2019)(defining

third party as “[s]omeone who is not a party to a lawsuit,

agreement, or other transaction but who is somehow implicated in

it; someone other than the principal parties.”); Richard T.

Blake & Assocs., Inc. v. Aetna Cas. & Sur. Co., 255 A.D.2d 569

(N.Y. App. Div. 2d Dep't 1998) (“It is well established that an

assignee stands in the shoes of the assignor . . . .”); cf.

United States v. Paccione, 101 F.3d 687 (2d Cir. 1996)

(distinguishing between third parties and assignees to written

agreement).

Furthermore, plaintiff’s reasoning, that the

Arbitration Clause’s modification of “we,” “us,” and “our”

precludes Crest’s assignees from electing arbitration, would, if

carried to its logical conclusion, deprive Crest itself of the

right to elect arbitration. The plaintiff argues that the

Arbitration Clause “re-defines” the Lease’s default definitions

for “we,” “us,” and “our,” effectively substituting “assignees”

with “Related Parties.” (Opp. 8.) Plaintiff’s strained

interpretation would also write Crest out of the Arbitration

Clause, because the relevant text overtly refers to Crest’s

parent companies, subsidiaries, and affiliates, but does not

expressly reference Crest itself, just as it does not expressly

reference Crest’s assigns. The notion that Crest intentionally

forfeited the right to elect arbitration when it executed the

Lease and agreed to the Arbitration Clause is, of course,

nonsensical, and discredits the plaintiff’s proposed reading of

the Arbitration Clause. See Luver Plumbing & Heating, Inc. v.

Mo's Plumbing & Heating, 144 A.D.3d 587, 588 (N.Y. App. Div. 1st

Dep’t 2016) (“[A] contract should not be interpreted to produce

a result that is absurd, commercially unreasonable or contrary

to the reasonable expectations of the parties[.]”) (citation

omitted).

The Arbitration Clause is thus assignable, and may be

enforced by Crest’s assignees. The final issue is whether Crest

assigned the Arbitration Clause to NAR.

B. NAR May Enforce the Arbitration Clause

Crest validly assigned its rights under the Lease to

NAR on January 17, 2018. These rights included the ability to

elect arbitration of any disputes with plaintiff arising under

the Lease. To support the assignment’s validity, NAR offers two

affidavits by Jameson Murray. (Murray Decl. (1st); ECF No. 28-

2, Second Declaration of Jameson Murray (“Murray Decl. (2nd)”).)

Murray’s affidavits and the attached exhibits are admissible

under Federal Rule of Evidence 803(6).7 Murray states that, as

NAR’s Operations Department Manager since November 5, 2015, and

a NAR employee since 2011, his declaration is based on “personal

knowledge gained through [his] employment” and upon his review

of NAR’s business records. (Murray Decl. (1st) ¶¶ 2, 4; Murray

Decl. (2nd) ¶¶ 3, 6.) Murray further explains that the records

appended to his declarations were “made by, or from information

transmitted by, a person with knowledge” of the events pertinent

to defendant’s motion, and “are kept in the ordinary course of

the regularly conducted business activity of such person and

[NAR].” (Murray Decl. (1st) ¶ 4; Murray Decl. (2nd) ¶ 6.)

Murray further adds that it is NAR’s “regular practice . . . to

make or maintain such records,” which he routinely relies on in

performing his employee responsibilities. (Murray Decl. (1st) ¶

4; Murray Decl. (2nd) ¶ 6.) As required to lay a proper

7 Rule 803(6) permits the admission of a record that would otherwise

qualify as hearsay, if it “was made at or near the time by . . . someone with

knowledge[,] . . . was kept in the course of a regularly conducted activity

of a business, . . . [and] making the record was a regular practice of that

activity.” Fed. R. Evid. 803(6). These conditions must be “shown by the

testimony of the custodian or another qualified witness.” Id.

foundation for the admission of a business record under FRE

803(6), Murray has demonstrated that he is a qualified witness,

that the statements are based on personal knowledge or his

review of NAR’s business records, and that the documents were

kept in the ordinary course of business. See United States v.

Komasa, 767 F.3d 151, 156 (2d Cir. 2014).

Crest assigned plaintiff’s debt to NAR on January 17,

2018. Pursuant to the NAR Assignment, Crest assigned to NAR

“full power to sue, . . . or in another legal manner enforce

collection” of plaintiff’s past due debt under the Lease. (See

NAR Assignment; Murray Decl. (1st) ¶ 7.) The assignment of

plaintiff’s account was also registered in NAR’s Acknowledgement

Report. The NAR Assignment and Acknowledgement Report are

contemplated in the procedure for account assignments set forth

by the Assignment Agreement. Specifically, the Assignment

Agreement provided that “[a]ssignments shall be made by

forwarding collection accounts from [Crest],” and after each

such assignment, “NAR will send [Crest] an Acknowledgment

Report” to serve as “evidence that the account has been validly

assigned [] pursuant to the terms of this Agreement.”

(Assignment Agreement § 2.) Crest agreed that each assignment

of an account to NAR would constitute the transfer to NAR of

Crest’s “claims and demands against” the assigned account, and

that the transfer included an assignment to NAR of “all of

[Crest’s] rights, title and interest therein, . . . and all

rights of action accrued or to accrue.” (Id. § 1.)

Plaintiff disregards the broad language of the

Assignment Agreement and argues that the net effect of the

Assignment Agreement was merely “to give the Defendant N.A.R.

access to Crest’s accounts for a temporary period for the

purposes of collection . . . ,” but did not assign NAR the

ability to arbitrate assigned accounts. (Opp. 6 (emphasis in

original).) She reasons that because the Assignment Agreement

did not expressly assign the Arbitration Clause, the parties

must have intended to exclude the provision from the scope of

Crest’s assignment. (Id. 5.) Plaintiff cites no legal

authority to support her contention, which is unsurprising,

because it runs headlong into New York law’s presumption that

“an arbitration clause is generally held to apply to the

assignee of a contract.” Variblend, 970 F. Supp. 2d at 166; see

Lipman, 43 N.E.2d at 819 (“[T]he arbitration clause is an

integral part of the contract and may be availed of, not only by

the original parties but also by assignees.”); Tanbro Fabrics

Corp. v. Deering Milliken, Inc., 35 A.D.2d 469, 471 (N.Y. App.

Div. 1st Dep’t 1971) (“[T]he assignee of a contract acquires the

assignor’s rights therein and assumes its obligations including

an agreement to arbitrate.”); Blum’s, Inc. v. Ferro Union Corp.,

36 A.D.2d 584, 585 (N.Y. App. Div. 1st Dep’t 1971), aff'd, 274

N.E.2d 751 (N.Y. 1971) (“An assignee who has taken over the

rights of an assignor is bound to an arbitration clause in the

assigned contract.”); In Re Lowenthal, 199 A.D. 39, 44 (N.Y.

App. Div. 1st Dep’t 1921) (“It seems to us that, where a

contract is assignable, the arbitration clause is an integral

part thereof, and may be availed of by either party to the

contract or by his legal representatives or assigns . . . . If

the arbitration clause of an assignable contract of sale is not

available, except as to the parties to such a contract, it would

then be a simple matter, if either party sought to escape the

effect of such a clause, to assign the contract to a third

party.”). The court finds no reason to deviate from that long-

standing rule here.

Plaintiff’s other challenges to NAR’s assignment

likewise fail. Plaintiff notes that the Assignment Agreement

does not grant NAR full rights to collect debts owed to Crest

under the Lease. It is true that, under the Assignment

Agreement, Crest retains the right to approve settlements

between NAR and Crest’s debtors, halt NAR’s efforts to collect

an account, and recall an assigned account under certain

circumstances. (Assignment Agreement §§ 8, 9, 10.) All this

proves, however, is that where Crest and NAR intended to limit

the scope of NAR’s assignment, they stated so expressly. They

did no such thing with respect to the Arbitration Clause.

Instead, Crest and NAR intended that Crest assign its

arbitration rights to NAR. Plaintiff also argues, in a

footnote, that the NAR Assignment, dated December 19, 2018, was

“created after this lawsuit began,” and therefore, is irrelevant

to the Assignment Agreement in place when defendant’s alleged

FDCPA violation occurred in January 2018. (Opp. 7 (emphasis in

original).) The NAR Assignment, however, is clearly relevant to

the question of whether NAR was indeed the assignee of

plaintiff’s account, and plaintiff does not otherwise challenge

the trustworthiness of the NAR Assignment, or its admissibility

as a business record under FRE 803(6).8 Moreover, plaintiff’s

account is among those listed in the Acknowledgement Report,

which the Assignment Agreement states is evidence of a valid

assignment.

NAR has thus established by a preponderance of the

evidence that it is the valid assignee of plaintiff’s account,

and Crest’s rights thereunder, including the right to elect

arbitration for any claims arising under the Lease. For all

plaintiff’s protestations, she has not come forward with any

document to refute defendant’s submissions, produced an

affidavit that refutes defendant’s evidence, or even suggested

8 To the extent plaintiff does question the NAR Assignment’s

authenticity, “even inadmissible evidence may properly be considered on

summary judgment if it may reasonably be reduced to admissible form at

trial.” Parks v. Blanchette, 144 F. Supp. 3d 282, 293 (D. Conn. 2015)

(quotation marks and citations omitted).

there are documents that will be produced in discovery that

refute defendant’s showing. Accordingly, there is no genuine

dispute of material fact that NAR may elect to arbitrate

plaintiff’s FDCPA claim, and that plaintiff’s claim is within

the Arbitration Clause of the Lease.

V. Class Action Waiver

Defendant's motion also requests that this court

strike the complaint’s class allegations based on the Lease’s

class action waiver. Plaintiff does not meaningfully oppose this

request. Nor could she. The Arbitration Clause is clear: if

either party elects arbitration, plaintiff will lose her right

to “participate in a class action in court or in arbitration,

either as a class representative, class member or class

opponent.” (Lease § 15(f).) Class action waivers, like the one

in the Lease, are valid and enforceable. Shetiwy, 959 F. Supp.

2d at 474-75 (“[A] generalized congressional intent to vindicate

statutory rights [such as those in the FDCPA] cannot override

the FAA’s mandate that courts enforce arbitration clauses,

including those with class action waivers, as written.”) (citing

Am. Express Co. v. Italian Colors Restaurant, 570 U.S. 232-33

(2013)); see also Tsadilas v. Providian Nat'l Bank, 786 N.Y.S.2d

478, 480 (N.Y. App. Div. 1st Dep’t 2004) (“The arbitration

provision is enforceable even though it waives plaintiff’s right

to bring a class action.”). Accordingly, defendant’s motion to

strike plaintiff’s class action claims is granted.

CONCLUSION

For the foregoing reasons, defendant’s motion to

compel arbitration and strike plaintiff’s class action claims is

GRANTED. The FAA “mandate[s] a stay of proceedings when all of

the claims in an action have been referred to arbitration.” See

Katz v. Cellco P’ship, 794 F.3d 341, 345-47 (2d Cir. 2015); see

also 9 U.S.C. § 3 (“[T]he court . . . shall . . . stay the trial

of the action until such arbitration has been held . . . .”).

Thus, a stay of these proceedings is appropriate. The Clerk of

Court is respectfully requested to mark this case as STAYED

pending arbitration of plaintiff’s claim. The parties are

directed to jointly update the court within five days after

receiving a decision in the arbitration, or otherwise resolving

this matter.

SO ORDERED.

Dated: March 27, 2020

Brooklyn, New York

/s/

KIYO A. MATSUMOTO

United States District Judge

Eastern District of New York