154 A.3d 939
R.I.2017Background
- Potter opened a Bank of America credit-card account; Bank assigned the debt to CACH for collection after default; CACH sued in Superior Court seeking $10,288.04 plus interest and costs.
- Potter filed a timely answer (May 7, 2014) but did not plead arbitration as an affirmative defense.
- Over a year later CACH moved for summary judgment (Sept. 28, 2015); Potter then moved to compel arbitration and to dismiss/stay based on the Cardholder Agreement’s arbitration clause (Dec. 8, 2015).
- At the Jan. 11, 2016 hearing, the trial justice denied Potter’s motion to compel arbitration as waived for failure to plead it, then (after denying a continuance) granted CACH’s summary-judgment motion.
- Potter moved to amend his answer to add arbitration and to vacate judgment; the trial justice denied both motions. Potter appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in denying Potter’s motion to compel arbitration | Arbitration defense was waived because Potter did not plead it; CACH entitled to litigate in court | Arbitration clause in Cardholder Agreement divests court of subject-matter jurisdiction and Potter sought to enforce it | Denial affirmed: arbitration is an affirmative defense that must be pleaded; failure to plead waives it (Rule 8(c)) |
| Whether the court abused its discretion by denying Potter leave to amend to add arbitration | Allowing amendment would prejudice CACH and undermine rule that arbitration must be pleaded | Amendment should be freely permitted under Rule 15; delay not alone a basis to deny | Denial affirmed: long delay and substantial prejudice to plaintiff; allowing amendment would circumvent waiver rule |
| Whether summary judgment for CACH was improper (standing / admissibility of records) | CACH submitted affidavit and account statements establishing assignment and debt; no genuine issue of material fact | Potter argued standing/admissibility issues but produced no opposing evidence (and did not formally litigate these points pre-arbitration motion) | Grant affirmed: viewing evidence in plaintiff’s favor, no material factual dispute; defendant failed to present evidence opposing summary judgment |
Key Cases Cited
- DeFontes v. Dell, Inc., 984 A.2d 1061 (R.I. 2009) (standard of review for denial of motion to compel arbitration is de novo)
- Soprano v. American Hardware Mut. Ins. Co., 491 A.2d 1008 (R.I. 1985) (arbitration is an affirmative defense that must be pleaded)
- Associated Bonded Constr. Co. v. Griffin Corp., 438 A.2d 1088 (R.I. 1981) (failure to plead an affirmative defense waives it; cannot later use it to dismiss)
- Ferris Ave. Realty, LLC v. Huhtamaki, Inc., 110 A.3d 267 (R.I. 2015) (de novo review of summary judgment)
- Urena v. Theta Prods., Inc., 899 A.2d 449 (R.I. 2006) (nonmoving party must produce evidence showing genuine issue of material fact)