United States District Court, D. Minnesota
REPORT AND RECOMMENDATION
Katherine Menendez United States Magistrate Judge.
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. [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.
Relevant Factual Background
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.]
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.]
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].
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.]
The Contract and Arbitration Agreement
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.]
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.]
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.]
Plaintiff's Consolidated Response
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).
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.]
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
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
[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.
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 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 ...