Plaintiff Meghan Stone filed suit in the Circuit Court for Baltimore City against defendant Wells Fargo Bank, N.A. ("Wells Fargo," or the "Bank"). ECF 1-3 (the "Complaint"). She alleges, inter alia , that defendant improperly took funds from her account, in violation of the terms of the service agreement (ECF 5-2, the "Agreement") for her account. ECF 1-3. Wells Fargo removed the case to this Court, based on diversity jurisdiction under
The Complaint contains ten claims: "Unjust Enrichment" (Count I); "Conversion" (Count II); "Breach of Fiduciary Duty" (Count III); "Accounting" (Count IV); "Aiding and Abetting" (Count V); "Civil Conspiracy" (Count VI.A); "Breach of Contract" (Count VI.B); "Negligence" (Count VII); "Respondeat Superior" (Count VIII); and "Malicious Prosecution" (Count IX).
Wells Fargo has filed a "Motion to Compel Arbitration and Dismiss Action," pursuant to Fed. R. Civ. P. 12(b)(1). ECF 5. It is supported by a memorandum of law (ECF 5-1) (collectively, the "Motion") and an exhibit. ECF 5-2. According to Wells Fargo, the Agreement's arbitration provision requires arbitration of plaintiff's claims, and therefore the Complaint should be dismissed. ECF 5-1 at 3.
Stone filed an opposition to the Motion (ECF 8) (the "Opposition"), along with exhibits.
The Motion is fully briefed, and no hearing is necessary to resolve it. See Local Rule 105.6. For the reasons set forth above, I shall grant Wells Fargo's Motion.
I. Factual Background
In 2014, Stone was a Wells Fargo customer with two checking accounts (accounts 1984747996 and 5549168515), a savings account (account 5549491651), and a secure line of credit (account 6031400929) with the Bank. ECF 1-3, ¶ 9. The Agreement governed her use of these Wells Fargo accounts. Among other things, the Agreement included an expansive arbitration provision, stating that any "dispute" that cannot be resolved informally "will be resolved through the arbitration process as set forth in this part." ECF 5-2 at 8.
The Agreement defines a " 'dispute' " as "any unresolved disagreement" between the parties.
The Agreement also incorporates the American Arbitration Association ("AAA") Rules,
Each arbitration, including the selection of the arbitrator(s) shall be administered by the American Arbitration Association (AAA), or such other administrator as you and the Bank may mutually agree to (the AAA or such other mutually agreeable administrator to be referred to hereinafter as the "Arbitration Administrator"), according to the Commercial Arbitration Rules and the Supplemental Procedures for Consumer Related Disputes ("AAA Rules").
By extension, the Agreement incorporates AAA Rule R-7(a). See ECF 9-1 (AAA Rules) at 14. It provides: "The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim."
Stone alleges that "[s]ometime after December 17, 2014," Wells Fargo removed approximately $ 45,000 from her accounts without her knowledge or consent.
Stone contends that Wells Fargo employees were "improperly taking/converting money" from her accounts and "otherwise improperly using" her accounts and personal information "for improper purposes." ECF 1-3, ¶ 32. She also alleges that a Bank employee "improperly accept[ed]
According to Stone, Wells Fargo knew that she "had not committed any crime," but nonetheless caused Anne Arundel County Police Department to investigate her. ECF 1-3, ¶¶ 14, 61. The investigation, she maintains, resulted in the police wrongfully charging her with fifteen felony counts and two misdemeanor counts relating to theft, fraud, and identity theft.
Wells Fargo tells a different story. It claims that Stone entered a "Wells Fargo branch in Severna Park, Maryland, in April of 2014 and met with a bank employee." ECF 9 at 2. During this meeting, plaintiff falsely presented herself as a Wells Fargo customer from California, who was also named Meghan Stone. Plaintiff allegedly told the Wells Fargo employee that she had just moved from California to Maryland and needed help changing the basic information on her California accounts.
Plaintiff contests defendant's recitation of these events, claiming that a Wells Fargo employee negligently initiated the changes and she engaged in no wrongdoing. ECF 1-3, ¶¶ 31-32, 44-45. Nevertheless, as Wells Fargo correctly notes, "[i]t is not necessary for the Court to resolve any part of this dispute in order to rule on the pending Motion to Compel Arbitration." ECF 9 at 2 n.1.
Additional facts are included in the Discussion.
II. Legal Standards
A. The Federal Arbitration Act
Under the Federal Arbitration Act ("FAA"),
In Adkins v. Labor Ready, Inc. ,
In the Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate "(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute."
In Adkins , the Court also said,
Nevertheless, there must be an "independent jurisdictional basis" for suit in federal court. Hall St. Assocs., LLC v. Mattel, Inc. ,
Section 3 of the FAA is also relevant. It provides,
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
The Fourth Circuit has explained: "The FAA requires a court to stay 'any suit or proceeding' pending arbitration of 'any issue referable to arbitration under an agreement in writing for such arbitration.' This stay-of-litigation provision is mandatory." Adkins ,
Notwithstanding the terms of
"Whether a party has agreed to arbitrate an issue is a matter of contract interpretation: '[A] party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.' " Levin v. Alms and Assoc., Inc. ,
The FAA reserves for trial the question of whether an arbitration agreement has been made, provided that a question of fact as to that issue is properly generated. See
B. Rule 12(b)(3)
The Supreme Court has observed that an arbitration clause is "a specialized kind of forum-selection clause that posits not only the situs of suit but also the procedure to be used in resolving the dispute." Scherk v. Alberto-Culver Co. ,
In Sucampo Pharmaceuticals, Inc. v. Astellas Pharm., Inc. v. Astellas Pharma, Inc. ,
[T]reating a motion to dismiss on the basis of a forum-selection clause under Rule 12(b)(1) presents practical difficulties that undercut the benefits gained from enforcement of the clauses. For example, the court must raise the issue of subject-matter jurisdiction sua sponte , if necessary. See Fed. R. Civ. P. 12(h)(3). Thus, in cases involving forum-selection clauses, both district and circuit courts would be under an obligation to confirm that the clause was not applicable before reaching the merits of the action.... More importantly a motion to dismiss under Rule 12(b)(1) is non-waivable and may be brought at any time-even on appeal-regardless of whether a litigant raised the issue in an initial pleading. Litigants, therefore, could hold back forum-selection clause objections, until after discovery-or even an adverse verdict.
Moreover, the Fourth Circuit recognized that "Supreme Court precedent suggests that [ Rule] 12(b)(6) is not the appropriate motion for enforcing a forum-selection clause." Sucampo ,
Since Sucampo , the Fourth Circuit has reiterated that a challenge based on a forum-selection clause, including an arbitration clause, should be addressed by way of a motion to dismiss for improper venue under Rule 12(b)(3). See
In light of the Fourth Circuit's guidance in Sucampo , I shall construe defendant's motion to dismiss as one brought under Rule 12(b)(3). See, e.g. , Am. Ins. Mktg. Corp. v. 5 Star Life Ins. Co. , DKC-13-0560,
A defendant may challenge the sufficiency of plaintiff's choice of venue by way of a motion under Rule 12(b)(3). In the Fourth Circuit, when a challenge to venue is raised, the plaintiff bears the burden of demonstrating that venue is appropriate. Bartholomew v. Virginia Chiropractors Ass'n ,
Because " 'it is possible for venue to be proper in more than one judicial district,' the question is not whether a given district is the best venue, but whether the events or omissions that occurred there are 'sufficiently substantial.' " Carefirst ,
As indicated, a motion to dismiss for improper venue, filed under Rule 12(b)(3), "allows the court to freely consider evidence outside the pleadings ...." Sucampo ,
III. Discussion
As noted, in deciding a motion to compel arbitration or to dismiss, courts must first "engage in a limited review to ensure that the dispute is arbitrable-i.e. , that a valid agreement exists between the parties and that the specific dispute falls within the substantive scope of that agreement." Murray ,
As noted, Stone concedes that Counts I through VI.B "deal with allegations and claims governed" by the Agreement's arbitration provision. ECF 8, ¶ 2. However, she maintains that Counts VII through IX "do not relate or have anything to do with Plaintiff's accounts with Defendant." Id. ¶ 3. Rather, they relate to her allegations that a Wells Fargo employee "acted improperly" and "negligently, recklessly, and/or intentionally caused [her] to be wrongly charged with a crime she did not commit." Id. ¶ 5. Thus, her allegations pertain to accounts for which "Plaintiff never entered into any Account Agreement." Id. ¶ 8. Further, Stone claims that the "Complaint and the legal documents generated in connection with the criminal charges against the Plaintiff makes [sic] clear the criminal activity the Plaintiff was accused of engaging in by the Defendant and its Agents[ ] had nothing to do with and was wholly unrelated to the Account Agreement[.]"Id. ¶ 6. (citing ECF 8-3 at 2 (Arrest Warrant); ECF 8-3 at 3-5 (Statement of Charges); ECF 8-4 (Application for Statement of Charges)).
Under plaintiff's theory, because these three counts "do not relate or have anything to do with Plaintiff's accounts with Defendant," they are not controlled by the Agreement. Id. ¶ 3. Wells Fargo argues that plaintiff's argument must be decided not by the Court, but by the arbitrator. But, if the Court rejects this argument, Wells Fargo maintains that the Court should hold plaintiff's three counts arbitrable.
A. Principles of Contract Construction
In general, a contract is defined as "a promise or set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty." Richard A. Lord, 1 Williston on Contracts § 1:1, at 2-3 (4th ed. 1990) ; accord Restatement (Second) Contracts § 1, at 5 (1981) ; see also Maslow v. Vanguri ,
In determining whether there is an enforceable contract, courts begin the analysis "by discussing the essential prerequisite of mutual assent to the formation of a contract ...." Falls Garden Condo. Ass'n, Inc. v. Falls Homeowners Ass'n, Inc. ,
A contract may be oral or written, as well as express or implied. " 'An express contract has been defined as an actual agreement of the parties, the terms of which are openly uttered or declared at the time of making it, being stated in distinct and explicit language, either orally or in writing.' " Maryland Cas. Co. v. Blackstone Int'l Ltd. ,
Under Maryland law, the interpretation of a contract is "ordinarily a question of law for the court." Grimes v. Gouldmann ,
" 'The cardinal rule of contract interpretation is to give effect to the parties' intentions.' " Dumbarton Imp. Ass'n. Inc. v. Druid Ridge Cemetery Co. ,
"Maryland courts interpreting written contracts have long abided by the law of objective contract interpretation, which specifies that 'clear and unambiguous language' in an agreement 'will not give way to what the parties thought the agreement meant or was intended to mean.' " Urban Growth Prop. Ltd. P'ship v. One W. Balt. St. Assocs. LLC , No. 882, Sept. Term, 2015,
As indicated, to determine the parties' intention, courts first look to the written language of the contract. See Walton ,
Moreover, a court will not "add or delete words to achieve a meaning not otherwise evident from a fair reading of the language used." Brendsel v. Winchester Constr. Co. ,
B. The Determination of Arbitrability
To resolve this arbitrability dispute, the Court must first "determine who decides whether a particular dispute is arbitrable: the arbitrator or the court. Second, if [the Court] conclude[s] that the court is the proper forum in which to adjudicate arbitrability, [the Court] then decide[s] whether the dispute is, in fact, arbitrable."
Although the Fourth Circuit has "adopted a 'general policy-based, federal presumption in favor of arbitration,' that presumption is not applied 'to resolve questions of the arbitrability of arbitrability issues themselves.' "
"The 'clear and unmistakable' standard is exacting, and the presence of an expansive arbitration clause, without more, will not suffice." Peabody ,
The Fourth Circuit recently concluded that "when ... two sophisticated parties expressly incorporate into a contract JAMS Rules that delegate questions of arbitrability to an arbitrator, then that incorporation constitutes the parties' clear and unmistakable intent to let an arbitrator determine the scope of arbitrability." Simply Wireless ,
Of relevance here, the Fourth Circuit twice stated in Simply Wireless that its holding applied to agreements between sophisticated actors . See
Notably, "[n]early every circuit to have addressed the issue ... 'addressed the question in the context of arbitration agreements entered into by organizations, not unsophisticated individuals.' " Richardson v. Coverall N. Am., Inc. , No. CV-18-532-MAS-TJB,
Like Simply Wireless , the Ninth Circuit addressed the question in a case involving sophisticated parties. See Brennan ,
Indeed, district courts in the Ninth Circuit have split over whether to apply the reasoning in Brennan to agreements that involve unsophisticated parties. Taylor v. Shutterfly, Inc. , No. 18-CV-00266-BLF,
The question also remains open in the Third Circuit, where at least two district courts have concluded that a "cross-reference to a set of arbitration rules containing a provision that vests an arbitrator with the authority to determine his or her own jurisdiction does not automatically constitute clear and unmistakable evidence that the parties intended" to arbitrate arbitrability. Allstate ,
The First Circuit also expressed doubts that a cross-reference to the AAA Rules constituted clear and unmistaken evidence of intent when an unsophisticated party is involved. Awuah v. Coverall N. Am., Inc. ,
However, to my knowledge, the matter is unresolved in the Fourth Circuit. And, I am not persuaded that a single cross-reference to the AAA Rules provides "clear and unmistakable" evidence of plaintiff's intent to arbitrate arbitrability. In a dispute centered on a restaurant's employment contract, one court in this Circuit aptly expressed the concern:
Incorporation by reference of an obscure body of rules to show a clear and unmistakable intent to adhere to one rule specifically is preposterous. It is so unlikely as to be bordering on the absurd that an unsophisticated party, such as an employee of a fast food restaurant, would know what the AAA is, much less the contents of its governing rules. The intent of the agreement is undoubtedly clear and unmistakable to the authors, most likely employers, but the intent is obfuscated, possibly intentionally, for the employee unless the employee happens to know the AAA rules, a ridiculous assumption, or takes the time to read the rules and specifically notices, among all the other rules, the rule permitting the arbitrator to determine gateway issues. How this could be considered clear and unmistakable can only be explained if the true meanings of "clear" and "unmistakable" are ignored.
Ashworth v. Five Guys Operations, LLC , No. CV 3:16-06646,
Despite its sound reasoning, the court nevertheless concluded that the delegation provision was clear and unmistakable evidence of the parties' intent "in light of the unanimity of opinion among federal courts."
Here, the Agreement is between a Fortune 500 company and a consumer. It strains credulity to believe that the consumer knew-much less intended-that the cross-reference directed an arbitrator to decide arbitrability. To treat the Agreement as evidencing clear and unmistakable evidence of plaintiff's intent "would be to take 'a good joke too far.' " Allstate ,
C. The Arbitrability of Plaintiff's Claims
" 'Whether a party has agreed to arbitrate an issue is a matter of contract
Courts have distinguished between "narrow" and "broad" arbitration clauses. Here, the Agreement's arbitration provision applies to any "disagreement relating in any way to services, accounts or matters; to [Stone's] use of any of the Bank's banking locations or facilities; or to any means [she] may use to access [her] accounts." ECF 5-2 at 8 (emphasis added). The Supreme Court and Fourth Circuit have given a "broad" reading to similar language. See, e.g. , Prima Paint Corp. v. Flood & Conklin Mfg. Co. ,
Unlike narrow arbitration clauses that require "only the arbitration of claims arising under the contract," broad arbitration clauses " 'embrace every dispute between the parties having a significant relationship to the contract regardless of the label attached to the dispute.' " Am. Recovery ,
Here, the Court must consider the arbitrability of Counts VII ("Negligence"), VIII ("Respondeat Superior"), and IX ("Malicious Prosecution"). The Agreement's arbitration provision covers any "disagreement relating in any way to services, accounts or matters; to [Stone's] use of any of the Bank's banking locations or facilities; or to any means [she] may use to access [her] accounts. " ECF 5-2 at 8 (emphases added). Plaintiff contends that Counts VII, VIII, and IX do not relate to the Agreement. Rather, they relate to her claim that Wells Fargo caused her "to be wrongfully charged with a crime she did not commit." ECF 8, ¶ 5. These criminal charges, she contends, are "wholly unrelated
In Count VII, Stone contends that Wells Fargo negligently hired and supervised its employee. ECF 1, ¶¶ 42-47. Stone alleges that Wells Fargo, id. ¶ 45:
"knew or should have known its Agents would, or had a propensity to, improperly change the Plaintiff's banking information and Accounts, improperly accept and receive debit cards approved for the Plaintiff and improperly approve large cash withdrawals, improperly investigation allegations of wrongdoing against the Plaintiff related to Plaintiff[']s relationship with the Defendant and Plaintiff's Accounts and improperly accuse the Plaintiff of illegal and/or fraudulent activity and otherwise fail to follow standard practices[.]"
Count VII lies within the ambit of the Agreement's arbitration provision. The alleged negligence of the Wells Fargo employee amounts to a dispute concerning Wells Fargo's services and is therefore arbitrable. Similarly, the dispute as to the employee changing the banking information and accounts is closely related to Stone's means of accessing her Bank accounts and services of the Bank.
In Count VIII, Stone alleges "respondeat superior," claiming that defendant is liable for the acts and omissions of its employees as described in Count VII. ECF 1, ¶¶ 48-53. Therefore, Count VIII turns on the same allegations underlying Count VII and is arbitrable for the same reasons.
Plaintiff alleges in Count IX that Wells Fargo is liable for "malicious prosecution." ECF 1, ¶¶ 54-62. Stone maintains that "an investigation and claims by Defendant's agent, Margaret 'Peggy' Stanton and statements by Defendant's Agent Joshua Kahn, caused Anne Arundel County Police-Criminal Investigation Division to file an application for statement of charges on December 17, 2014," against plaintiff. Id. ¶ 55. As a consequence, an arrest warrant was issued for Stone, who turned herself into custody and was released pending prosecution. Id. ¶¶ 56-57. The Complaint alleges that "Defendant and/or its Agents acted with malice and without any probable cause in causing the warrant to be issued and the Plaintiff to be prosecuted" even though they "knew the Plaintiff had not committed any crime." Id. ¶¶ 60-61.
Count IX is also subject to arbitration. There is a significant relationship between the events that allegedly underlie Stone's malicious prosecution claim and her use of Wells Fargo banking services and accounts. See ECF 8-4. For example, the Anne Arundel Police Department's Statement of Charges relies heavily on plaintiff's use of Wells Fargo's banking locations and the services she received there. Indeed, the Department's interview of Kahn pertained almost exclusively to events occurring at a Wells Fargo location and services provided by a Wells Fargo employee. Id. at 9-11. As a consequence, Count IX is arbitrable.
D. The Remedy
There is "tension" within the Fourth Circuit regarding whether dismissal or a stay is appropriate when granting a motion to compel arbitration. Aggarao ,
As Judge Chasnow noted in Taylor v. Santander Consumer USA, Inc. , DKC-15-0442,
Each one of the Complaint's ten counts fall within the scope of the Agreement's arbitration clause. Accordingly, the Court shall dismiss plaintiff's suit.
IV. Conclusion
For the reasons set forth above, I shall grant Wells Fargo's Motion.
An Order follows.
ORDER
For the reasons set forth in the accompanying Memorandum, it is this 17th day of January, 2019, by the United States District Court for the District of Maryland, ORDERED :
1) Wells Fargo, N.A.'s Motion to Compel Arbitration and Dismiss Action (ECF 5) is GRANTED ; and
2) The Clerk is DIRECTED to close this case.
Notes
Suit was filed on December 22, 2017. However, service of process was not made until July 19, 2018. ECF 1 at ¶ 2; see also ECF 1-4 at 2. The case was removed on August 17, 2018. ECF 1.
Plaintiff listed the "Civil Conspiracy" claim and the "Breach of Contract" claim separately but labeled them both Count VI. ECF 1-3 at 8. Accordingly, I have renumbered them as Count VI.A and Count VI.B, respectively.