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Burnip v. Credit Acceptance Corp.

United States District Court, D. Minnesota

January 15, 2019

Latira Ann Burnip, Plaintiff,
v.
Credit Acceptance Corporation, and Metro Motor Sales Inc., Defendants.

          REPORT AND RECOMMENDATION

          Katherine Menendez United States Magistrate Judge.

         This matter is before the Court on Defendant Credit Acceptance Corporation's (“CAC”) Motion to Compel Arbitration and to Dismiss, or in the Alternative, Stay All Proceedings in this Action.[1] [ECF No. 4.] For the reasons that follow, the Court recommends that CAC's motion to compel arbitration be granted and that this matter be stayed pending resolution of arbitration proceedings.

         I. Relevant Factual Background

         The record relevant to the motion to compel arbitration includes the allegations in Latira Ann Burnip's pleadings and other submissions, the evidentiary materials filed by the Defendants, and the testimony and exhibits from an evidentiary hearing held on December 12, 2018. [Compl., ECF No. 1-1; Am. Compl., ECF No. 13; Pl.'s Consolidated Resp., ECF No. 12; Lewis Aff., ECF No. 6; Retail Installment Contract, ECF No. 6-1; Ex. List, ECF No. 29.]

         A. Plaintiff's Allegations

         Ms. Burnip originally brought this case in Hennepin County District Court. [Compl., ECF No. 1-1.] In her original Complaint, she asserts various claims related to the purchase of a vehicle and the alleged repossession of the vehicle. Specifically, Ms. Burnip seeks to recover and maintain possession of a 2005 Porsche Cayenne she bought from MMS in February 2018. [Compl. at 5 ¶ 1.] She also claims that Defendants are unlawfully refusing to release a lien on that vehicle and violated certain private securities laws. [Id. at 5 ¶ 1, 7 ¶ b.g.] Ms. Burnip seeks both injunctive relief and “compensatory, punitive, and special Damages against the Defendant(s) for the sum certain amount of $17, 500.00.” [Id. at 10, Prayer for Relief ¶¶ A-E.] CAC removed the case to federal court on July 2, 2018. [Notice of Removal, ECF No. 1.]

         Ms. Burnip later filed an Amended Complaint, which is similar in many respects to the original and asserts claims arising out of the same transaction to purchase the 2005 Porsche. She again includes allegations regarding the Defendants' efforts at repossession, her desire to have a lien on the vehicle released, and violations of private securities laws. [Id. ¶¶ 1, 3; id. at 4, ¶ b.g.] She also alleges that CAC and MMS have made reports to consumer credit reporting entities that have harmed her creditworthiness and cause her other damages. [Id. at 4, ¶ f.7.] Ms. Burnip continues to seek injunctive relief and damages [Id. at 7-8, Prayer for Relief].

         In Exhibit B to Ms. Burnip's Amended Complaint, she asserts that she owes nothing on the vehicle despite the Defendants' assertion that she defaulted on a loan. [Am. Compl., Ex. B.] Ms. Burnip also states that she “contacted a specialist ... and SEC investigators” who indicated that “the contract - if any existed - had been securitized possibly for CUSIP and STRIPS registrations.” [Id.] She claims that securitization required Defendants to file SEC registration documentation, which in turn would mean that all parties' obligations had been satisfied on any contract. Thus, she believes any allegation of default by the Defendants is improper. [See id.] Finally, she asserts that “[a]ny signatures exhibited are not mine and any forgeries are not consensual....” [Id. at 3.]

         B. The Contract and Arbitration Agreement

         On July 9, 2018, CAC moved to compel arbitration, a motion later joined by MMS. [ECF Nos. 4, 19.] In support of its motion, CAC presented evidence showing that Ms. Burnip entered a contract containing an arbitration clause. Specifically, CAC's evidence shows that on February 9, 2018, Ms. Burnip entered a Retail Installment Contract with MMS for the purchase of a 2005 Porsche Cayenne. [ECF No. 6-1.] In exchange for credit Ms. Burnip received to purchase the vehicle, the contract provided that Ms. Burnip would make 45 monthly payments beginning on March 9, 2018. [Id. at 1.] Ms. Burnip and a representative of MMS electronically signed the agreement. [Id. at 2.] MMS assigned all of its rights under the contract to CAC, giving CAC “full power ... to take all actions which [MMS] could have taken under” the contract. [Id. at 4.]

         The contract's arbitration clause specified that Ms. Burnip and MMS agreed to resolve any dispute relating to their agreement by arbitration instead of court action. [ECF No. 6-1 at 1, 5.] Ms. Burnip acknowledged that she read, understood, and agreed to the terms and conditions of the arbitration clause. [Id. at 1.] The arbitration clause states that either party to the contract “may require any Dispute to be arbitrated and may do so before or after a lawsuit has been started over the Dispute....” [Id. at 5.] A “Dispute” is defined in the contract as:

any controversy or claim between You and Us arising out of or in any way related to this Contract, including, but not limited to, any default under this Contract, the collection of amounts due under this Contract, the purchase, sale, delivery, set-up, quality of the Vehicle, advertising for the Vehicle or its financing, or any product or service included in this Contract.

[Id. at 5.] The contract defines the terms “we” and “us” as including MMS and, “without limitation, Credit Acceptance Corporation....” [Id. at 5.]

         The arbitration clause also includes a right-to-reject clause. [ECF No. 6-1 at 5.] Under that clause, Ms. Burnip had 30 days after the date the contract was executed to inform MMS that she was rejecting the arbitration clause. [Id. at 5.] The clause also provides that if Ms. Burnip does not reject the arbitration clause, it will be effective as of the date of the contract. [Id.] CAC has not received any notification that Ms. Burnip rejected the arbitration agreement. [Lewis Aff. ¶ 5, ECF No. 6.]

         C. Plaintiff's Consolidated Response

         Ms. Burnip filed a “Consolidated Response” to the motion in which she clarified that she seeks to enjoin any sale of the vehicle forced by the Defnedants, to obtain a release of any liens and encumbrances on title, to be declared the owner of the vehicle, and for damages. [Consolidated Resp. at 2, ECF No. 12.] Ms. Burnip reiterated her claim that documents relating to the purchase of the vehicle that have been provided by the Defendants are “clever forgeries, ” and complained that the Defendants cannot produce an original contract. [Id. at 3; see also Id. at 10 (alleging that the attorneys representing the Defendants do not have and have not produced original contracts).

         Ms. Burnip also asks the Court to remand this case back to Hennepin County, where she filed her original Complaint. [Consolidated Resp. at 2.] She contends that the Defendants' removal of the case on grounds of diversity was improper because the lawyers representing the Defendants “are implied Defendants in the suit.” [Id. at 5.] Because the Defendants' lawyers are in Minnesota, she asserts that the case should not have been removed to federal court due to the forum-defendant rule. [Id. at 7-8.]

         D. Evidentiary Hearing

         On November 19, 2018, after reviewing the parties' submissions, the Court issued an Order scheduling an evidentiary hearing to resolve the factual dispute concerning the validity of the contract. [ECF No. 25.] The Court explained:

Specifically, CAC has alleged that Ms. Burnip signed a Retail Installment Contract that contains an arbitration agreement. [See Aff. of Sharron Lewis ¶ 4, Ex. A (Retail Installment Contract), ECF No. 6-1.] In several filings, Ms. Burnip has asserted that any signatures provided by the Defendants are not hers or are forgeries. [See Compl. at 11 ¶ 5 (“Any signatures exhibited are not mine....”), ECF No. 1-1; Am. Compl. at 14 ¶ 5 (same), ECF No. 13; see also Consolidated Resp. at 3 (referring to “clever forgeries” held by the Defendants).]

[ECF No. 25 at 1-2.] The Court ordered the parties to appear for the evidentiary hearing “to resolve the limited factual dispute concerning whether Ms. Burnip signed the Retail Installment Contract at issue.” [Id. at 2 (citing Nebraska Machinery Co. v. Cargotec Solutions, LLC, 762 F.3d 737, 743-44 (8th Cir. 2014).][2]

         The hearing in this matter was held on December 12, 2018. MMS presented the testimony of Alicia Blanchard, an owner-operator of the business. MMS also offered eleven exhibits, which were admitted into evidence over Ms. Burnip's objections. Ms. Blanchard testified that she specifically recalled the transaction with Ms. Burnip for the 2005 Porsche. Ms. Blanchard explained that on February 9, 2018, an individual named James Campbell[3] came in to test drive the Porsche. While Mr. Campbell was driving the vehicle, Ms. Blanchard received a credit application to purchase the Porsche from Ms. Burnip through MMS's ...


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