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Delgado v. Ally Financial Inc.

United States District Court, S.D. California

May 8, 2018

MAURICE DELGADO, Plaintiff,
v.
ALLY FINANCIAL, INC., CASHCALL, INC., NAVY FEDERAL CREDIT UNION, ONEMAIN FINANCIAL SERVICES, INC. f/k/a SPRINGLEAF FINANCIAL SERVICES, INC, CELLCO PARTNERSHIP, INC. d/b/a VERIZON WIRELESS, INC, EXPERIAN INFORMATION SOLUTIONS, INC, and EQUIFAX INFORMATION SERVICES LLC, Defendants.

          ORDER GRANTING DEFENDANT CASHCALL, INC.'S MOTION TO COMPEL ARBITRATION AND TO DISMISS ACTION

          HON.ROGER T. BENITEZ UNITED STATES DISTRICT JUDGE

         Before this Court is a Motion to Compel Arbitration and to Dismiss or Stay Action, filed by Defendant CashCall, Inc. ("CashCall"). (Doc. No. 8.) Defendant asserts that this dispute is subject to a binding arbitration clause, and asks this Court to grant the Motion to compel arbitration and dismiss or stay. For the reasons stated below, the Motion to Compel is GRANTED, and the action is DISMISSED.

         BACKGROUND

         The facts relevant to CashCall's Motion to compel arbitration are as follows. On November 30, 2012, Plaintiff Maurice Delgado ("Delgado") submitted an online application to CashCall for a $2, 600 loan. (Doc. No. 8-1 at 1-2.) After the loan was approved, CashCall provided Delgado with a document titled CashCall, Inc. Promissory Note and Disclosure Statement dated November 30, 2012. ("Note") (Id.) Before CashCall would execute the Note and disperse the funds, Delgado was required to review and check several boxes as part of the online loan application process.[1] (Id.) The first box that Delgado checked represented confirmation of the following:

YOU CERTIFY THAT YOU HAVE READ AND UNDERSTAND THIS ARBITRATION PROVISION AND AGREE TO BE BOUND TO ITS TERMS.

(Id.)

         Under the heading "ARBITRATION PROVISION, " the Note sets out the agreement to arbitrate all disputes. (Id.) According to the Note, the term "Dispute" is "given the broadest possible meaning" and includes "all claims, disputes or controversies arising from or relating directly or indirectly to . .. any claim or attempt to set aside this Arbitration Provision, " "all federal or state law claims, disputes or controversies, arising from or relating directly or indirectly to the Loan Agreement, " "all claims based upon a violation of any state or federal constitution, statute or regulation, " and "all claims asserted by you individually against us." (Id.)

         The Note specifies that Delgado acknowledges and agrees that by entering into the arbitration provision:

(a) YOU ARE GIVING UP YOUR RIGHT TO HAVE A TRIAL BY JURY TO RESOLVE ANY DISPUTE ALLEGED AGAINST U.S. OR RELATED THIRD PARTIES;
(b) YOU ARE GIVING UP YOUR RIGHT TO HAVE A COURT, OTHER THAN A SMALL CLAIMS TRIBUNAL, RESOLVE ANY DISPUTE ALLEGED AGAINST U.S. OR RELATED THIRD PARTIES; and
(c) YOU ARE GIVING UP YOUR RIGHT TO SERVE AS A REPRESENTATIVE, AS A PRIVATE ATTORNEY GENERAL, OR IN ANY OTHER REPRESENTATIVE CAPACITY, AND/OR TO PARTICIPATE AS A MEMBER OF A CLASS OF CLAIMANTS, IN ANY LAWSUIT FILED AGAINST U.S. AND/OR RELATED THIRD PARTIES.

(Id. at 3.)

         The Note provides that the "Arbitration Provision continues in full force and effect, even if your obligations have been paid or discharged through bankruptcy" and CashCall will pay the filing fee and any costs or fees charged by the arbitrator. (Id.) Moreover, the Note provided Delgado with the right to opt out of the arbitration agreement by simply notifying CashCall within 60 days of the date of execution (in writing) of his intentions to do so.[2] (Id.)

         After Delgado executed the Note by way of his electronic signature, CashCall dispersed the funds in accordance with the terms of the Note. (Id.) CashCall commenced collection activities against Delgado after he defaulted on the loan. (Id.)

         On March 14, 2014, Delgado filed for Chapter 13 bankruptcy in the United States Bankruptcy Court for the Middle District of Pennsylvania (Wilkes-Barre).[3] CashCall received notice of the filing and was included as a creditor in the Bankruptcy proceedings. CashCall did not seek to have the debt ordered "nondischargeable" or request relief from the "automatic stay" while the Bankruptcy was pending. (Compl. ¶¶ 89-93.) Delgado immediately commenced making monthly payments to the Bankruptcy Trustee as required by the Chapter 13 Bankruptcy Wage Earner Repayment Plan ("Plan").[4]

         On April 11, 2017, the Bankruptcy Trustee filed a "Notice to Debtor" in the bankruptcy court reflecting Delgado made all 36 payments required by the Plan. Accordingly, Delgado's Bankruptcy was successfully discharged on April 18, 2017. (Id. ¶¶ 101, 110-11.) CashCall received notice of the discharged debt on April 20, 2017.[5](Id.¶112.)

         Despite receiving notice of the bankruptcy discharge, CashCall "classified and reported" or "caused to be reported" on an Equifax report, the prior CashCall debt as "Status: Charge-Off; Scheduled Payment Amount: $388, " instead of discharged via bankruptcy. (Id. ¶¶ 5, 152.) In effect, CashCall was erroneously representing to potential creditors that Delgado was actively delinquent with respect to a debt when in actuality, the debt was no longer owed. (Id.)

         Upon discovering the misleading and inaccurate account information, Delgado disputed the inaccurate tradelines with CashCall and Equifax. (Id. ¶ 151.) He alleges that CashCall failed to conduct a reasonable investigation and continued to report the false information. His repeated attempts to have the inaccurate and misleading information corrected went unheeded. (Id. ΒΆ 153.) Due to ...


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