United States District Court, D. Utah, Central Division
ORDER AND MEMORANDUM DECISION
CAMPBELL U.S. District Court Judge.
Wayland Kathan filed this lawsuit against Defendant Autovest,
LLC, in state court, asserting that Autovest had violated the
Fair Debt Collection Practices Act (FDCPA) when it sued Mr.
Kathan in an earlier action without being licensed as a debt
collector. Autovest removed this action to federal court (ECF
No. 2), and now moves to compel arbitration of Mr.
Kathan’s claim (ECF No. 13).
Kathan does not dispute the existence of an enforceable
arbitration agreement between the parties. Rather, his sole
argument is that Autovest has waived its right to compel
arbitration. (See ECF No. 17 at 3.)
October 6, 2015, Mr. Kathan entered into a Motor Vehicle
Retail Installment Contract to purchase a car. (Declaration
of Don Griffin (Griffin Decl.) ¶ 5.) This contract
includes as enforceable arbitration clause. (Griff Decl.
¶ 5, Ex. 1 at 5.) After Mr. Kathan began missing car
payments, the right to enforce the contract was assigned to
Autovest, and Autovest filed an action in state court to
collect the unpaid debt. (Griffin Decl. ¶ 9; Request for
Judicial Notice (RJN) Ex. A.) Autovest prevailed on its motion
for summary judgment, and judgment was entered against Mr.
Kathan in the amount of $13, 002.20. (RJN Exs. C-D.)
Kathan filed this action in state court on June 11, 2019.
(ECF No. 2 at 1.) In the complaint, Mr. Kathan asserts that
Utah requires all debt collectors to be licensed
(see Utah Code Ann. § 12-1-1), and that by
failing to have such a license at the time of the first
lawsuit, Autovest violated the FDCPA. (ECF No. 2 at 4-6.)
Federal Law Applies
Kathan argues that Utah law, rather than federal law, should
be used to determine whether Autovest has waived its right to
enforce the arbitration clause. But Mr. Kathan identifies no
case in which state waiver law, rather than federal law, was
applied to an arbitration clause governed by the Federal
Arbitration Act. On the contrary, federal courts have
consistently held that federal law is used to determine
whether the right to arbitrate has been waived. See
Blanco v. Sterling Jewelers Inc., Civil Action No.
09-cv-01330-CMA-KLM, 2010 WL 466760, at *4 (D. Colo. Feb. 9,
2010) (“Whether waiver has occurred is a question of
federal law”) (collecting cases); Funderburke v.
Midland Funding, LLC, No. 12-2221-JAR/DJW, 2013 WL
394198 at *6 (D. Kan. Feb. 1, 2013) (applying federal law to
resolve waiver argument).
the court applies federal law to determine whether Autovest
has waived its right to enforce the arbitration agreement.
The Right to Arbitrate Has Not Been Waived
is axiomatic that ‘the right to arbitration, like any
other contract right, can be waived.’” Healy
v. Cox Comm’s, Inc., 790 F.3d 1112, 1115 (10th
Cir. 2015) (quoting Reid Burton Constr., Inc. v.
Carpenters Dist. Council of S. Colo., 614 F.2d 698, 702
(10th Cir. 1980)). The Tenth Circuit requires the court to
consider the following six factors when determining whether a
party has waived its right to compel arbitration:
(1) whether the party’s actions are inconsistent with
the right to arbitrate; (2) whether the litigation machinery
has been substantially invoked and the parties were well into
preparation of a lawsuit before the party notified the
opposing party of an intent to arbitrate; (3) whether a party
either requested arbitration enforcement close to the trial
date or delayed for a long period before seeking a stay; (4)
whether a defendant seeking arbitration filed a counterclaim
without asking for a stay of the proceedings; (5) whether
important intervening steps [e.g., taking advantage of
judicial discovery procedures not available in arbitration]
had taken place; and (6) whether the delay affected, misled,
or prejudiced the opposing party.
Id. at 1116. Rather than applying the factors in a
“mechanical process, ” the court should use them