Even though he acknowledged that the language in an underlying contract could have been clearer, a State Court judge in Wisconsin has granted a defendant’s motion to compel arbitration in a Fair Debt Collection Practices Act case that was defended by Avanti Bakane of Gordon Rees.
The background: The case stemmed from a credit card account opened by the plaintiff with Synchrony Bank in July 2016. The cardholder agreement included an arbitration clause, which the plaintiff did not opt out of. After the plaintiff’s last payment in October 2019, the account charged off in May 2020 due to nonpayment.In June 2020, Synchrony Bank sold a portfolio of accounts, including the plaintiff’s, to the defendant, a debt collection agency. The sale was conducted through a “Forward Flow Accounts Purchase Agreement.”
- The plaintiff filed a lawsuit against the defendant under the Fair Debt Collection Practices Act (FDCPA) and the Wisconsin Consumer Act.
- The lawsuit was prompted by a letter sent by the defendant to the plaintiff in July 2022, stating that the account had been “transferred to our Litigation Department.”
- The plaintiff claimed this representation was a sham, alleging that no attorneys actually review individual consumer accounts within the defendant’s “Litigation Department.”
The ruling: The central issue in this case was whether the arbitration agreement between the plaintiff and Synchrony Bank was binding upon the plaintiff and the defendant after the account was acquired by the defendant. The judge focused on interpreting the language in the Forward Flow Accounts Purchase Agreement to determine what rights were transferred from Synchrony Bank to the defendant.
- The agreement stated that the seller would “sell and Buyer shall buy all right, title and interest in and to the Accounts.”
- While acknowledging that the contract language “could have been clearer,” the judge found that the transfer of “all right, title and interest” in the “accounts” was intended to transfer more than just an asset or receivable.
- The judge was particularly persuaded by the definition of “account agreement” in the contract, which included “the contractual terms and conditions that were specifically applicable to the Account.”
- The judge concluded that the document expressed an intent to transfer “all right” including the “contractual terms and conditions.”
- This interpretation led the judge to determine that the arbitration provision was indeed transferred along with the accounts. As a result, the judge granted the defendant’s Motion to Compel Arbitration and ordered the matter stayed pending completion of the arbitration
