Moses v. Cashcall, Inc.

Moses v. Cashcall, Inc., 2015 U.S. App. LEXIS 4098 (4th Cir. 2015)
Affirmed in part, reversed in part, and remanded with instructions by per curiam opinion: "This bankruptcy appeal presents the issue of whether two claims, one for declaratory relief and one for money damages, asserted by debtor Oteria Moses in an adversary proceeding, are subject to arbitration. The bankruptcy court retained jurisdiction over the first claim and denied the motion of CashCall, Inc. to compel arbitration. With respect to the second claim, it made recommended findings of fact and conclusions of law, likewise to retain jurisdiction over the claim and deny the motion to compel arbitration. On appeal from the bankruptcy court, the district court affirmed the bankruptcy court's denial of the motion to compel arbitration as to the first claim and, itself, denied the motion to compel arbitration with respect to the second claim. On appeal, we hold, for the reasons given by Judge Niemeyer in Parts I, II.A, and III of his opinion, in which Judge Gregory joined, that the district court did not err in affirming the bankruptcy court's exercise of discretion to retain in bankruptcy Moses' first claim for declaratory relief. We also hold, however, that the district court erred in retaining in bankruptcy Moses' claim for damages under the North Carolina Debt Collection Act and denying CashCall's motion to compel arbitration of that claim. Judge Gregory and Judge Davis wrote separate opinions concurring in that judgment. Judge Niemeyer wrote a separate opinion on that issue, dissenting." Accordingly, the judgment of the district court is affirmed in part and reversed in part, and this matter is remanded to the district court with instructions to grant CashCall's motion to compel arbitration on Moses' second claim for damages.
Procedural context:
Appeal from the U.S. District Court for the Eastern District of North Carolina, at Greenville. Terrence W. Boyle, District Judge (4:13-cv-00223-BO). Amici Supporting Appellee Moses were the National Association of Chapter 13 Trustees and the National Association of Consumer Bankruptcy Attorneys.
Debtor Moses executed a Western Sky Consumer Loan Agreement promising to pay Western Sky $ 1,500 plus 149% interest in violation of North Carolina law. Western Sky operates from a post office box in South Dakota and is not licensed in North Carolina. The Loan contained a dispute resolution clause specifying AAA or JAMS as administrator of the arbitration process. Subsequently Western Sky assigned servicing rights to Appellant CashCall. The Debtor filed a Chapter 13 reorganization after making one payment on the loan. CashCall's proof of claim was challenged as invalid under North Carolina law due to both the high rate and failure to license the lender. Debtor filed an adversarial proceeding to declare the debt as "void ab initio" and sought damages from CashCall under the North Carolina Debt Collection Act. The bankruptcy court retained jurisdiction over the declaratory matter and denied CashCall's motion to compel arbitration. On appeal, the District Court affirmed the bankruptcy Court's denial of the motion to compel arbitration as to the first issue (validity of Western Sky obligation) and denied Cashcall's motion to compel arbitration on the issue of violations of the North Carolina Acts. The Court of Appeals affirmed the district court in granting the declaratory relief sought by the Debtor. However the district court erred by retaining control over the issue of the Debtor's claim for damages under the state law violations and denying the arbitration of that non-core issue. The issues were important to CashCall as any precedent would effect multiple other filings in which its proofs of claim were based on similar rates and agreements. CashCall initially sought to withdraw its POC, which was denied.
Before: Circuit Judges Paul v. Niemeyer and Roger L. Gregory, and Senior Circuit Judge Andre M. Davis

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!

About us in numbers

3044 in the system

2938 Summarized

2 Being Processed