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Eugene C. Pasquale v. Citibank (South Dakota)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION


November 16, 2011

EUGENE C. PASQUALE,
PLAINTIFF,
v.
CITIBANK (SOUTH DAKOTA), N.A., A CORPORATION; HUNT & HENRIQUES, A GENERAL PARTNERSHIP;
MICHAEL SCOTT HUNT, JANALIE ANN HENRIQUES, DONALD
SHERRILL, INDIVIDUALLY AND IN THEIR OFFICIAL CAPACITY,
DEFENDANTS.

The opinion of the court was delivered by: Paul S. Grewal United States Magistrate Judge United States District Court

United States District Court For the Northern District of California

ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (Re: Docket No. 16)

On August 30, 2011, Plaintiff Euguene Pasquale ("Pasquale") filed a complaint for an order to compel arbitration with Defendants Citibank (South Dakota), Hunt & Henriques, Michael Hunt, Janalie Henriques, and Donald Sherrill ("Defendants"). Before the court is Defendants' motion for 21 summary judgment. Defendants argue that this action is moot because they have initiated the 22 private arbitration process sought by Pasquale. Pasquale opposes the motion for summary 23 judgment. On November 8, 2011, the parties appeared for oral argument. For the reasons set forth 24 herein, the court GRANTS Defendants' motion for summary judgment.

I. BACKGROUND

Pasquale frames this lawsuit in the alternative -- first as an action to compel JAMS private 28 arbitration, and second, as an action for damages under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA") and the Rosenthal Fair Debt Collection Act, Cal. Civ. Code 1 1788 et seq. ("RFDCA").*fn1

Pasquale is alleged to have incurred a financial obligation, within the meaning of "debt" as defined by 15 U.S.C. § 1692a(5) and "consumer debt" as defined by Cal. Civ. 4 Code § 1788.2(f), in two Citibank (South Dakota) N.A. ("Citibank") consumer credit accounts.*fn2

According to Pasquale, the terms and conditions of the debt are governed by the Citibank 6 Cardmember Agreement ("the Agreement") attached to the Complaint.*fn3 The Agreement provides 7 that either the cardholder or Citibank, "without the other's consent, may elect mandatory, binding 8 9 arbitration" for any claim or dispute between the cardholder and Citibank.*fn4 The Agreement identifies two resources for arbitration under the Agreement: the American Arbitration Association and JAMS.*fn5 Defendants disagree that the Agreement relied on by Pasquale was the operative cardmember agreement governing the accounts at issue.*fn6

At some point after Pasquale allegedly accrued debt on the accounts, Citibank referred the 14 accounts to the Hunt & Henriques law firm ("the firm") for collection. In June 2010, Pasquale 15 received collection letters from the firm regarding both accounts.*fn7 On July 8, 2010, Pasquale 16 17 responded to the first collection solicitation, seeking validation of the debts, demanding Defendants to cease telephone communications, and exercising his right to demand arbitration under the Agreement. Pasquale sent additional letters on August 4 and August 5, 2010.*fn8 On August 16, 2010, 1 2 the firm filed suit on behalf of Citibank against Pasquale in Santa Clara County Superior Court.*fn9 In response, Pasquale filed a motion to compel private arbitration in the state court. He also initiated a 4 demand for arbitration before JAMS.*fn10 Defendants opposed Pasquale's motion, stating that they 5 did not object to arbitration but that Pasquale had failed to properly initiate the arbitration 6 process.*fn11 On November 2, 2010, the state court denied Pasquale's motion.*fn12

The JAMS arbitration initiated by Pasquale did not proceed at that time. On August 30, 2011, as described above, Pasquale filed a complaint in this court to compel arbitration, or in the alternative, for damages under federal and state consumer protection laws. On September 15, 2011, Defendants' law firm in this action entered into contact with JAMS seeking to reopen the arbitration proceedings before JAMS, stating that they are willing to apply Pasquale's version of 13 the Agreement to the dispute, and acknowledging responsibility to pay the case-management fees 14 for reopening the cases.*fn13 Defendants paid JAMS the required fees and received correspondence 15 from JAMS indicating commencement of the arbitration and the need to begin the arbitrator 16 selection process.*fn14 17 18

Because Defendants have agreed to proceed with private arbitration before JAMS and have 19 been advised by JAMS that an arbitration proceeding has commenced between all parties, Defendants argue that there is no longer any controversy for the court to adjudicate. Pasquale 1 2 disputes that summary judgment is appropriate at this time based on existing questions of material fact and the danger that Defendants' voluntary consent to proceed with arbitration is not binding 4 and may allow them to back out after disposition of this case on summary judgment. 5

II. LEGAL STANDARD

Summary judgment is proper if there is "no genuine dispute as to any material fact and the 7 movant is entitled to judgment as a matter of law."*fn15 The moving party bears the initial burden of 8 9 identifying those portions of the pleadings, discovery and affidavits which demonstrate the absence of a triable issue of material fact.*fn16 If the moving party meets its initial burden, then the non- moving party must set forth specific facts showing that there is a genuine issue for trial.*fn17 A genuine issue for trial exists if there is sufficient evidence for a reasonable jury, viewing the 13 evidence in the light most favorable to the non-moving party, to return a verdict for the nonmoving 14 party.*fn18 If the nonmoving party fails to make the requisite showing, "the moving party is entitled to 15 judgment as a matter of law."*fn19

III. DISCUSSION

The sole issue before the court is whether Defendants have demonstrated the absence of any 19 triable issue of material fact, and if so, whether Pasquale has met his burden to counter that 20 showing. Defendants offer an attorney affidavit and evidence of correspondence with JAMS as 21 proof of their recent commitment to proceed with arbitration before JAMS on all matters arising 22 23 from the dispute over Pasquale's accounts with Citibank.*fn20 Defendants equate their consent to 1 2 proceed with arbitration as the equivalent of consenting to Pasquale's petition in his complaint.

Because Pasquale's claims under the FDCPA and RFDCA are plead "strictly in the alternative," Defendants contend that their consent to arbitrate before JAMS disposes of any case or controversy 5 before the court. The end result, Defendants argue, is that the court lacks subject matter jurisdiction 6 and has no basis to maintain the action. 7

8 9 delay tactics by defendants in actually engaging in the arbitration process" and would leave Pasquale without a remedy to compel the process. Pasquale cites Defendants' previous election to sue in state court rather than respond to Pasquale's letter demand for arbitration, as well as Defendants' rejection of Pasquale's initial attempt at arbitration during the state court lawsuit, to 13 underscore Pasquale's concern that Defendants' tardy consent to arbitrate is insufficient to ensure 14 that they will proceed in accordance with their representations. In addition, Pasquale argues that the 15 dispute over the applicable cardmember agreement -- and whether JAMS is an appropriate 16 17 arbitration forum given that dispute -- creates a material issue of fact at summary judgment.

Pasquale contends that Defendants might attempt to use disposition on summary judgment as 19 collateral estoppel for an "inherent factual finding" that the Agreement is not operative for the 20 purpose of arbitration. 21

22 securing Defendants' consent to arbitrate. But in opposition to the motion for summary judgment, 23 Pasquale offers only speculation as to Defendants' insincerity in proceeding with JAMS at this 24 25 time. The court is not persuaded that Defendants' earlier repudiation of Pasquale's attempts to initiate arbitration undermines evidence of Defendants' more recent actions. Pasquale has not met 27 Pasquale responds that disposition on summary judgment would "open the door to further Pasquale's concerns are not unfounded, in light of the difficulties that he has encountered his burden to demonstrate a genuine issue regarding Defendants' commitment to proceed with the 1 2 arbitration that is -- at this stage -- well underway.

Likewise, Defendants' consent to proceed under the Agreement referenced by Pasquale in his complaint renders moot the disagreement regarding which cardholder agreement governed 5 Pasquale's accounts. The court need not reach that dispute, and makes no determination on the 6 merits, regarding the operative agreement that should dictate the selection of a forum for 7 arbitration. Pasquale seeks relief from this court in the form of an order compelling Defendants to 8 9 arbitrate before JAMS per Pasquale's previous initiations, as well as a declaration that Defendants violated the FAA and an award of costs and reasonable attorney's fees.*fn21 Because Defendants are already in arbitration before JAMS per Pasquale's previous initiation, there is no active case or controversy for the court to adjudicate. The court is thus without subject matter jurisdiction to 13 adjudicate Pasquale's claims.*fn22 14 15 recourse. The FAA provides that "a party aggrieved by the alleged failure, neglect, or refusal of 16 17 another to arbitrate under a written agreement for arbitration may petition" the court in a civil action "for an order directing that such arbitration proceed."*fn23 The undersigned makes no 19 determination on the merits of Pasquale's petition to compel summary judgment or on Defendants' 20 arguments regarding which cardmember agreement should apply. By granting summary judgment 1 2 in favor of Defendants, the court finds only that it lacks subject matter jurisdiction to adjudicate Pasquale's claims at this time, based on the fact that the relief sought -- private arbitration with 4 Defendants before JAMS -- has already been obtained.

IV. CONCLUSION

Pasquale's petition to compel arbitration has been rendered moot by the successful 7 initiation of private arbitration before JAMS. The court therefore GRANTS summary judgment in 8 9 favor of Defendants on all claims.


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