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After determining that the validity of an assignment of a contract containing an arbitration agreement was a non-arbitrable matter properly before a court, the Eighth Circuit Court of Appeals held that a continuing obligation to arbitrate disputes arising out of a contract can serve as an assignable present interest even if there are no other remaining obligations under the contract.
In Koch v. Compucredit Corp., No. 07-1948, 2008 WL 4305903 (8th Cir. Sept. 23, 2008), Koch entered into a credit card contract with First Bank. She allegedly settled her debt on the account in 2003. In 2005, First Bank assigned all rights, title, and interest in Koch’s alleged debt to Compucredit. Despite the alleged settlement, Compucredit continued to send collection notices.
Koch sued Compucredit for alleged violations of the Fair Debt Collection Practices Act and the Arkansas Deceptive Trade Practices Act. In response, Compucredit moved to compel arbitration pursuant to an arbitration agreement in Koch’s original contract with First Bank. The district court denied the motion, accepting as true Koch’s assertion that the debt had been settled and holding that, as such, First Bank had no interest to assign which would allow Compucredit to compel arbitration.
As an initial matter, the Court agreed with Koch that the issue of assignability was properly before the district court. Specifically, the Court reasoned that its resolution of the assignability question would be consistent with Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), because the question raised an issue as to whether a contract between the parties even existed.
Nevertheless, the Court ultimately held that Koch’s duty to arbitrate was not terminated by any expiration of the underlying contract because the terms of the agreement did not terminate the duty to arbitrate. In fact, according to the Court, the continuing duty to arbitrate functioned as a "present interest" in the contract even after Koch allegedly settled the debt in 2003. Because that present interest still existed in 2005, the Court found First Bank’s assignment to Compucredit was valid, effective, and warranted an order compelling arbitration of the present dispute.
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