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Joining its former companion in the Eleventh Circuit, the Fifth Circuit Court of Appeals has held that a non-signatory may compel arbitration of a statutory debt collection claim where the terms of the signatories’ agreement expressly encompass all claims by parties with a "relationship" to the agreement.
In Sherer v. Green Tree Servicing LLC, No. 07-60567, 2008 WL 4838702 (5th Cir. Nov. 10, 2008), Sherer and Conseco Bank entered into a contract for financing a manufactured home. The contract contained an arbitration agreement providing that all disputes arising out of the contract or relationships resulting from the contract would be settled by arbitration. The resulting loan was later serviced by Green Tree, a non-signatory to the contract and agreement.
After Sherer paid off the loan early, Green Tree sought a contractual prepayment penalty from Sherer. Sherer refused, and Green Tree turned the alleged debt over to collections and reported it to various credit reporting agencies. Sherer then filed suit against Green Tree for alleged violations of the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). Green Tree moved to compel arbitration of the claims, but the district court denied the motion, holding that Green Tree could not compel arbitration as a non-signatory to the agreement.
On appeal, the Court reversed, holding that the express terms of the arbitration agreement required Sherer to arbitrate his claims against Green Tree. According to the Court, the agreement expressly allowed Green Treen to compel arbitration by including language stating that the agreement covered claims "arising from or related to… the relationships which result from" the contract. The Court found that this provision allowed Green Tree, as a non-signatory, to compel arbitration because if it were not for the loan contract, Green Tree would have no relationship with Sherer as the loan servicer.
The district court had applied equitable estoppel theory in denying the motion to compel, but the Court found that analysis unnecessary to resolve the question. Because the express terms of the agreement allowed Green Tree to demand arbitration based on its relationship to the signatory parties, reaching the issue of equitable estoppel was unnecessary. See also Blinco v. Green Tree Servicing LLC, 400 F.3d 1308 (11th Cir. 2005) (interpreting the same arbitration agreement and allowing the non-signatory loan servicer to compel arbitration of statutory debt collection claims).
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