|
A collections law firm doing work for a bank tried to invoke an arbitration agreement between the bank and a debtor, but a federal court in Virginia held that the law firm could not invoke the agreement unless the bank were also sued.
In Karnette v. Wolpoff & Abramson, L.L.P., No. 3:06cv44, 2006 WL 2222673 (E.D. Va. Aug. 2, 2006), Karnette filed a putative class action lawsuit against Wolpoff & Abramson (W&A), a collections law firm, alleging several illegal collections practices. W&A filed a motion to compel arbitration pursuant to an arbitration agreement between Karnette and MBNA, the bank and creditor. In opposing the motion, Karnette argued that her claims against W&A were not subject to arbitration because the arbitration agreement did not require arbitration of claims against debt collectors unless the bank were also sued.
The arbitration agreement required Karnette to arbitrate any claims against MBNA and its agents or assigns. It also required Karnette to arbitrate claims against debt collectors, “if, and only if, such a third party [were] named . . . as a codefendant in any Claim” against MBNA.
W&A argued that it was an agent for MBNA and thus entitled to invoke the arbitration agreement. However, as the Court noted that, specific language in a contract controls over general language. Citing this rule of construction, the Court treated W&A as a debt collector rather than an agent, and since MBNA was not a codefendant, the Court denied W&A’s motion to compel arbitration.
Subscribe to a free weekly update on ADR case law and
legislation
|