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Richards v. Gibson

United States District Court, S.D. Mississippi, Southern Division

February 4, 2015



LOUIS GUIROLA, Jr., Chief District Judge.

BEFORE THE COURT is the [14] Motion to Alter or Amend Order Denying Motion to Compel Arbitration and Stay Proceedings filed by Defendant Tower Loan of Mississippi, LLC. Having considered the Motion and the applicable law, the Court is of the opinion that the Motion should be granted. As set forth herein, the Court is of the opinion that Richards must submit her claims against Tower to arbitration.


Plaintiff Richards originally sued Defendants Tower, Mark Gibson, and HL & C Jackson, LLC, in the Circuit Court of Jackson County, Mississippi. After Richards amended her Complaint to state federal claims against the defendants, Tower, with the consent of the co-defendants, removed the action to this Court. After doing so, Tower filed the present Motion. On November 17, 2008, Tower made a residential loan to Richards secured by a mortgage on Richards' home. ( See Am. Compl. 2 (¶¶ 8-9), ECF No. 3-2). According to the allegations of her First Amended Complaint, Richards refinanced the loan with Tower several times, which refinances were secured by the original home mortgage and also by other property. ( See id. at 3 (¶¶ 10-12)). The final refinance agreement, which is the subject of this action, was in the amount of $96, 600.00 and took place on January 9, 2012. ( See id. (¶12)).

Richards alleges that when it became hard for her to continue making her monthly payments to Tower, she contacted Tower about a loan modification, which Tower refused. ( See id. at 5 (¶29)). She claims that Tower told her that it "was going to foreclose on her home[, ]" and that this was "seemingly in retaliation for merely asking about a loan modification...." ( See id. (¶30)). She contends that a Tower employee then referred her to Gibson, [1] who "told Richards he could help." 1 ( See id. at 5-6 (¶¶ 35-43)). Richards states that Gibson told her "that in order to avoid the foreclosure [she] would have to sign an assumption warranty deed whereby [Gibson] obtained title to Richards' home." ( See id. at 6 (¶48)). She also states that Gibson "assured her that he did not want her home[, but] stated he only wanted the money he paid to Tower Loan for her mortgage." ( See id. ). Richards thus transferred title to her home to Gibson and/or HL & C and began making monthly payments to Gibson at his request. However, Tower foreclosed a few months later and purchased Richards' home at the foreclosure sale. ( See id. at 7 (¶¶ 49-55)).

Richards contends that the January 2012 loan from Tower violates provisions of the Truth in Lending Act (TILA) and Home Ownership and Equity Protection Act (HOEPA) and that the defendants induced her "into a foreclosure rescue scam." ( See id. (¶57)). She includes the following Counts against the defendants in her First Amended Complaint: accounting, equitable mortgage, fraud, tortious breach of contract, breach of fiduciary duty, usury, violations of TILA/HOEPA, and negligence. Tower has moved to compel arbitration of all claims based on the Arbitration Agreement provision contained in Richards' January 2012 refinance of her mortgage loan with Tower.

On January 29, 2015, the Court denied a Motion to Compel Arbitration and Stay Proceedings Pending Arbitration filed by Defendant Tower Loan of Mississippi, LLC. The next day, Tower Loan filed the subject Motion, arguing (1) that the Court denied it an opportunity to file a reply, and (2) that the controlling provisions of the Dodd-Frank Act did not go into effect until 2013 - after the date of the subject loan - and, thus, does not prohibit arbitration in this action.


"[A]ny order... that adjudicates fewer than all the claims... may be revised at any time before the entry of a judgment adjudicating all the claims...." Fed.R.Civ.P. 54(b). When the Court "rules on an interlocutory order, it is free to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or any intervening change in or clarification of the substantive law. Saqui v. Pride Cent. Am., LLC, 595 F.3d 206, 210 (5th Cir. 2010) (citation and quotation marks omitted). Thus, the Court may revise a decision on a ground raised for the first time in a reconsideration motion with respect to an interlocutory order. See In re Elevating Boats LLC, 286 F.App'x 118, 122 (5th Cir. 2008). The Court's decision to do so is reviewed for abuse of discretion only. See Calpetco 1981 v. Marshall Exploration, Inc., 989 F.2d 1408, 1414-15 (5th Cir. 1993).

The Federal Arbitration Act (FAA) provides that arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The Fifth Circuit has adopted a two-step inquiry for determining whether a party should be compelled to arbitrate a dispute. See Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004). First, the Court must determine whether the parties agreed to arbitrate the dispute. See id. This step has two components: (1) whether there is a valid agreement to arbitrate between the parties and (2) whether the dispute between the parties falls within the scope of the arbitration agreement." See id.

"If both questions [of the first step] are answered in the affirmative, [the] Court then asks whether any federal statute or policy renders the claims nonarbitrable." Jones v. Halliburton Co., 583 F.3d 228, 234 (5th Cir. 2009) (citation and quotation marks omitted). The United States Supreme Court has made clear that "[l]ike any statutory directive, the [FAA]'s mandate may be overridden by a contrary congressional command." Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 226 (1987). "If Congress did intend to limit or prohibit waiver of a judicial forum for a particular claim, such an intent will be deducible from the statute's text or legislative history, or from an inherent conflict between arbitration and the statute's underlying purposes." Id. at 227 (citation, quotation marks, and brackets omitted). "The relevant inquiry remains whether Congress precluded arbitration or other nonjudicial resolution of claims.'" D.R. Horton, Inc. v. N.L.R.B., 737 F.3d 344, 360 (5th Cir. 2013) (citation, brackets, and ellipses omitted).

"When considering whether a contrary congressional command is present, courts must remember that questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.'" Id. (citation omitted). "The party opposing arbitration bears the burden of showing whether a congressional command exists." Id. "Any doubts are resolved in favor or arbitration." Id.

(1) Did Richards and Tower Agree to Arbitrate?

The Court had no reason to address this step in its previous Order. However it is undisputed that the loan documents contain an Arbitration Agreement, which both Richards and Tower attached to their filings with this Court. By its terms, the Arbitration Agreement covers all claims and disputes between Richards and Tower, including both contractual and tort claims, all claims or disputes based on federal or state laws or regulations, disputes arising out of or relating to foreclosure, and all claims and disputes arising out of, in connection with, or relating to the subject loan. Thus, the language of the Agreement does appear to cover the claims against Tower in this action. Moreover, Richards has never argued that she did not agree to arbitrate the dispute or that the claims at issue are not covered by the language of the Agreement. The Court is ...

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