The California Court of Appeals has dismissed an appeal filed by a plaintiff who sued a creditor that purchased a debt, its attorney, and the law firm that was used to collect on the debt claiming that they violated state and federal laws because the right to compel arbitration was not transferred to those entities by the original creditor. The lower court’s order to compel arbitration is a non-appealable order, the Appeals Court ruled.
The Background: The plaintiff was sued for an unpaid debt by the creditor that purchased the debt from the original lender. The plaintiff filed a cross-complaint, alleging that the creditor did not attach a copy of the contract as required under California state law. The cross-complaint also accuses the defendants of violating the Fair Debt Collection Practices Act and the Rosenthal Fair Debt Collection Practices Act by making false representations and for attempting to collect on a debt that was barred by federal and state statutes of limitations.
- A lower court judge sided with the defendants and granted their motion to compel arbitration. The evidence indicated the plaintiff agreed to the underlying contract that contained the arbitration provision, the court ruled.
The Ruling: The plaintiff acknowledged that a motion to compel arbitration is not normally appealable, but argued that the “death knell” doctrine applied because the arbitrator would not be allowed to consider cross-claims. But, the Appeals Court pointed out, the “no death knell has yet sounded” for the claims made by the plaintiff.
- The plaintiff “may in the future litigate her class claims in the superior court action if the arbitrator comes to agree with her that the arbitration clause may not be enforced here in light of the ‘assignment chain’ issues,” the Appeals Court wrote.
