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Kathan v. Autovest, LCC

United States District Court, D. Utah, Central Division

September 30, 2019

WAYLAND KATHAN, Plaintiff,
v.
AUTOVEST, LLC, Defendant.

          ORDER AND MEMORANDUM DECISION

          TENA CAMPBELL U.S. District Court Judge.

         Plaintiff 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).

         Mr. 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.)

         I. BACKGROUND

         On 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.)[1] 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.)

         Mr. 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.)

         II. ANALYSIS

         A. Federal Law Applies

         Mr. 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).

         Accordingly, the court applies federal law to determine whether Autovest has waived its right to enforce the arbitration agreement.

         B. The Right to Arbitrate Has Not Been Waived

         “It 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 ...


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