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HomeStar Property Solutions v. VRM Mortgage Services, Inc.

United States District Court, District of Minnesota

March 16, 2015

HOMESTAR PROPERTY SOLUTIONS, f/k/a ENERGY REO SOLUTIONS, Plaintiff,
v.
VRM MORTGAGE SERVICES, INC., Defendant.

Benjamin D. Eastburn, Daniel Oberdorfer, and Donald T. Campbell, Stinson Leonard Street LLP, Counsel for Plaintiff.

Margaret Ann Santos and Russell S. Ponessa, Hinshaw & Culbertson LLP, Counsel for Defendant.

MEMORANDUM OF LAW & ORDER

Michael J. Davis Chief Judge

I. INTRODUCTION

This matter is before the Court on Defendant’s Motion to Compel Arbitration and Dismiss Litigation. [Docket No. 12] The Court heard oral argument on Friday, December 12, 2014.

II. BACKGROUND

A. Factual Background

1. The Parties

Plaintiff HomeStar Property Solutions (“HomeStar”) is a limited liability company with a principal place of business in Maple Grove, Minnesota. ([Docket No. 5] Am. Compl. ¶ 1.) HomeStar provides repair and preservation services on residential properties throughout the United States. (Id. ¶ 7.)

Defendant VRM Mortgage Services (“VRM”) is a corporation with a principal place of business in Carrollton, Texas. (Id. ¶ 2.) VRM provides real estate management, asset disposition, loan servicing, and loan sale preparation services to real estate-owned (“REO”) properties that are owned by the United States Veterans Administration (“the VA”). (Id. ¶ 6.) Some of these properties are located in Minnesota. (Id. ¶ 5.)

2. The 2012 Master Property Services Agreement

In 2012, VRM sought HomeStar’s expertise in providing preservation and maintenance services to REO properties on which the VA had foreclosed mortgages. (Id. ¶ 8.) To that end, on or about September 29, 2012, VRM entered into a Master Property Services Agreement (“the 2012 MSA”) with HomeStar. (Id. ¶ 9; [Docket No. 15] Kirkham Aff., Ex. 2, 2012 MSA.) Under the 2012 MSA, HomeStar was required to remove debris, cover-up graffiti, kill pests, trim shrubs, and repair roofing to VA properties, amongst other obligations. (See generally, 2012 MSA, Ex. A “Services to be Performed” at pp. 4-7.)

a) 2012 MSA: Arbitration Clause

Section 28 of the 2012 MSA is entitled “ARBITRATION” and provides:

28.01 Binding Arbitration. Unless specifically addressed elsewhere in the Agreement, the parties agree that any controversy or claim between or among the parties hereto shall be determined by binding arbitration in accordance with the Federal Arbitration Act (or if not applicable, the applicable state law), the Rules of Practice and Procedure for the Arbitration of Commercial Disputes of the American Arbitration Association (“AAA”).

(2012 MSA § 28.)

3. The 2013 Master Services Agreement

On or about November 13, 2013, VRM entered into another agreement with HomeStar to perform preservation and maintenance services on certain REO properties on which the VA had foreclosed mortgages. (Am. Compl. ¶ 10; Kirkham Aff., Ex. 2, Master Services Agreement: Property Preservation Services (“2013 MSA”).)

a) Arbitration Clause

Unlike the 2012 MSA, the 2013 MSA requires arbitration for only “NonGovernment Related Claims.” More specifically, ...


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