971 F. Supp. 2d 1072
D. Colo.2013Background
- Motions to compel arbitration were filed by HSBC Mortgage Services, Inc. and by Assurant, Inc. and American Security Insurance Company regarding plaintiff Jack Weller's claims.
- Court granted HSBC’s motion to compel arbitration and granted Assurant’s motion to compel arbitration, but denied stay of the remaining proceedings pending arbitration.
- Arbitration clause in Weller’s mortgage agreement is broad and AAA-style; FAA governs enforceability, but initial validity is governed by state law.
- Weller argued Dodd-Frank Act amendments (15 U.S.C. § 1639c(e)(3)) eliminate arbitration for certain mortgage-related claims and/or render the clause unconscionable under Colorado law.
- Court analyzed retroactivity under Landgraf and concluded Dodd-Frank amendments do not operate retroactively to void the arbitration agreement; also rejected unconscionability as a basis to avoid arbitration.
- Court addressed equitable estoppel to bind non-signatory Assurant to arbitrate due to interdependence with the contract and alleged intertwined misconduct steering force-placed insurance with HSBC’s mortgage obligations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Dodd-Frank amendments retroactively void arbitration. | Weller argues §1639c(e)(3) bars arbitration. | HSBC/Assurant contend amendments not retroactive. | Amendments not retroactive; arbitration enforced. |
| Whether arbitration clause is unconscionable under Colorado law. | Weller contends procedural/substantive unconscionability. | Arbitration clause on standard terms not unconscionable. | Arbitration not unconscionable; enforceable. |
| Whether Assurant non-signatories can be bound by arbitration via equitable estoppel. | N/A in brief. | Equitable estoppel permits binding on non-signatories. | Equitable estoppel applies; Assurant compelled to arbitrate. |
| Whether remaining nonarbitrable claims should be stayed pending arbitration. | Stays would promote efficiency. | Stay requested. | Stay denied for the remainder; arbitration to proceed. |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (initial FAA/arbitration validity governed by state law; questions of enforceability)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985) (two-step inquiry: existence of agreement and arbitrability under law)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (arbitration agreements must be enforced according to their terms; equal footing)
- Landgraf v. USI Film Prod., 511 U.S. 244 (1994) (presumption against retroactivity; apply retroactivity analysis)
- Pezza v. Investors Capital Corp., 767 F. Supp. 2d 225 (2011) (debates retroactivity of Dodd-Frank amendments; some courts treat as thus retroactive)
- Wong v. CKX, Inc., 890 F. Supp. 2d 411 (2012) (some courts held Dodd-Frank amendments do not bar arbitration as to substantive rights)
- Henderson v. Masco Framing Corp., 2011 WL 3022535 (D. Nev. 2011) (retroactivity not favored; arbitration rights contractual)
- Blackwell v. Bank of America Corp., 2012 WL 1229675 (D.S.C. 2012) (advocates non-retroactive application of Dodd-Frank amendments to arbitration)