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Richards v. Gibson

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

March 4, 2015

KIMBERLY RICHARDS, Plaintiff,
v.
MARK GIBSON; HL & C JACKSON, LLC; and TOWER LOAN OF MISSISSIPPI, LLC, Defendants.

ORDER DENYING PLAINTIFF'S MOTION TO ALTER AND AMEND ORDER AND FOR RECONSIDERATION

LOUIS GUIROLA, Jr., Chief District Judge.

BEFORE THE COURT is the [22] Motion to Alter and Amend Order and For Reconsideration filed by Plaintiff Kimberly Richards. Defendant Tower Loan of Mississippi, LLC, filed a Response in Opposition to the Motion, and Richards filed a Reply. Having considered the parties' submissions and the applicable law, the Court is of the opinion that the Motion should be denied. Richards must submit her claims against Tower to arbitration.

The facts of this case were set out in the Court's Order entered in this action on February 4, 2015. (ECF No. 18). By Order dated January 29, 2015, the Court denied Tower's Motion to Compel Arbitration and Stay Proceedings Pending Arbitration. The next day, Tower filed a Motion to Alter or Amend the Court's Order, arguing that the controlling provision of the Dodd-Frank Act did not go into effect until 2013 - after the date of the subject loan - and, thus, does not apply to prohibit arbitration in this action.

On February 2, 2015, the Court entered a Text Only Order requiring Richards to respond to Tower's Motion to Alter or Amend on or before February 9, 2015. Richards filed a Response in Opposition to the Motion on February 3, 2015. After reviewing the submissions of the parties and the law, the Court granted the Motion to Alter or Amend and ordered that Richards must submit her claims against Tower to arbitration. Richards now asks the Court to reconsider that Order.

DISCUSSION

Although Richards requests that the Court give "her the opportunity to brief issues belatedly raised by Tower[, ]" (Mot. 1 (¶4), ECF No. 22), the Court already did so when it ordered Richards to respond to Tower's Motion. Richards' argument that she was prevented from briefing the issue of the effective date of the Dodd-Frank Act is unpursuasive. Even so, Richards has extensively briefed the issues for which she seeks Court review. ( See Pl.'s Mem., ECF No. 23). The Court has also exhaustively reviewed the law in this area and is of the opinion that no additional briefing or oral argument is necessary.

Richards has never disputed that there is a 2012 agreement between she and Tower to arbitrate the claims against Tower in this action. ( See Order 5-6, ECF No. 18); Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004). She makes three arguments in the present Motion: (1) that 15 U.S.C. § 1639c(e) was effective in 2010, not 2013; (2) that § 1639c(e) should be applied retroactively to the 2012 agreement in any event; and (3) that the arbitration agreement between she and Tower is unconscionable. The Court addresses each argument in turn below.

(1) Effective Date of Title XIV of the Dodd-Frank Act

15 U.S.C. § 1639c(e), part of Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, states that "[n]o residential mortgage loan... secured by the principal dwelling of the consumer may include terms which require arbitration... as the method for resolving any controversy or settling any claims arising out of the transaction." There has never been any dispute that the arbitration agreement at issue is part of a residential mortgage loan. The parties dispute whether § 1639c(e) was effective in 2010 - thus rendering the 2012 agreement between the parties unenforceable - or 2013.[1]

The Dodd-Frank Act was enacted in 2010, but certain provisions of the Act did not take effect until the "date on which the final regulations implementing such... provision" took effect. 124 Stat. at 2136. Richards argues that § 1639c(e) took effect in 2010, not 2013, because the later effective date "only applies to those portions of Title XIV that require administrative regulations to be implemented[, ]" and § 1639c(e) "does not require any regulations to be promulgated." (Pl.'s Mem. 3, ECF No. 23). The Court thoroughly researched this very issue prior to entering its February 4 Order, and is persuaded by the express mandate of the Consumer Financial Protection Bureau (CFPB), the federal agency in charge of implementing Title XIV:

The provisions on mandatory arbitration and waiver are contained in the Dodd-Frank Act. Absent action by the Bureau, they would take effect on January 21, 2013. The Bureau believes that it is necessary and appropriate to provide implementing language to facilitate compliance with the statute. At the same time, the Bureau recognizes the point made by several commenters regarding the importance of these consumer protections. The fact that the Bureau is implementing the provisions by regulation does not require the Bureau to delay the provisions' effective date for an extended period, as the commenters may have assumed. Instead, the Bureau is providing an effective date of June 1, 2013.

78 Fed. Reg. 11280, 11387 (emphasis added). Richards claims that 78 Fed. Reg. 11280 is inapplicable because it "does not even mention a designated transfer date' for Title XIV." (Pl's. Mem. 4, ECF No. 23). But it did not have to, since the CFPB was explicit on when the prohibition on mandatory arbitration found in § 1639c(e) became effective - in 2013, after the 2012 mortgage loan at issue in this action.

Finally, the Court is unpersuaded by Richards' argument that Tower improperly relied on 75 Fed. Reg. 57252, which Richards claims does not apply to Title XIV. 78 Fed. Reg. 11280, the Federal Register section on which the Court relied ...


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