Asset Acceptance, LLC v. Newby
2014 Ark. 280
| Ark. | 2014Background
- Asset Acceptance sued Newby in Pulaski County Circuit Court seeking unpaid credit-card debt and fees; Newby denied owing the debt and filed class-action counterclaims under FDCPA and state law.
- Asset moved to compel arbitration, attaching an undated, unsigned Chase Cardholder Agreement, a bill of sale, and account statements; Newby denied she ever had or used the card.
- Newby opposed arbitration, arguing Asset waived arbitration by invoking the court and failed to show Newby ever assented to the Cardholder Agreement; she also moved for Rule 11 sanctions.
- The circuit court orally indicated waiver but entered a written order simply denying Asset’s motion to compel arbitration and denying Newby’s Rule 11 motion without stating findings.
- Asset appealed the denial of arbitration; Newby cross‑appealed the denial of Rule 11 sanctions.
- The Arkansas Supreme Court affirmed the denial of the motion to compel arbitration and dismissed Newby’s cross‑appeal for lack of interlocutory jurisdiction.
Issues
| Issue | Plaintiff's Argument (Asset) | Defendant's Argument (Newby) | Held |
|---|---|---|---|
| Existence of a valid arbitration agreement / mutual assent | The attached Cardholder Agreement (and account documents) shows Newby agreed to arbitrate disputes; FAA/Delaware law governs | No specific evidence the Cardholder Agreement was communicated to or accepted by Newby; she denies having the card | Asset failed to prove the agreement or notice/assent; denial of motion to compel arbitration affirmed |
| Waiver of arbitration by filing suit | Court could decide waiver only after finding an agreement; the court implicitly found an agreement when addressing waiver | Asset waived arbitration by invoking court jurisdiction and pursuing litigation machinery | Court reviewed but concluded Asset never made the threshold showing of an agreement, so arbitration was inappropriate; outcome affirmed |
| Applicability of FAA / choice‑of‑law (Delaware) | Arbitration clause states it’s governed by the FAA and Delaware law, so federal/Delaware standards apply | Threshold question is whether parties agreed; state precedent requiring proof of notice/assent controls the analysis | Court held FAA inapplicable where movant failed to show a written agreement to arbitrate existed; court evaluates assent first |
| Reviewability of denial of Rule 11 sanctions on interlocutory appeal | N/A (cross‑appellant seeks review) | Denial of Rule 11 sanctions is not an appealable interlocutory order | Cross‑appeal dismissed for lack of jurisdiction |
Key Cases Cited
- Alltel Corp. v. Sumner, 360 Ark. 573, 203 S.W.3d 77 (Ark. 2005) (movant must present specific evidence that terms, including an arbitration clause, were communicated so assent can be inferred)
- Bank of the Ozarks, Inc. v. Walker, 434 S.W.3d 357 (Ark. 2014) (trial court must resolve threshold issue of contract formation before deciding defenses to arbitration)
- Tyson Foods, Inc. v. Archer, 356 Ark. 136, 147 S.W.3d 681 (Ark. 2004) (appellate standard of review for denial of motion to compel arbitration is de novo)
- Danner v. MBNA Am. Bank, N.A., 369 Ark. 435, 255 S.W.3d 863 (Ark. 2007) (FAA enforces arbitration agreements only upon proof a written agreement to arbitrate exists)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (arbitration is a matter of contract; courts decide arbitrability absent clear delegation)