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CACH LLC v. Potter

Supreme Court of Rhode Island

March 3, 2017

CACH, LLC
v.
Brandon Potter.

         Kent County Superior Court No. KC 13-780 Allen P. Rubine Associate Justice.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

          OPINION

          William P. Robinson III Associate Justice.

         The defendant, Brandon Potter, appeals from a grant of summary judgment in favor of the plaintiff, CACH, LLC (CACH), in this credit card debt collection action. He contends on appeal that the hearing justice erred in granting CACH's motion for summary judgment. He further posits that the hearing justice committed error in denying his motion to compel arbitration and his motion to amend his answer. This case came before the Supreme Court for oral argument on January 25, 2017 pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. After a close review of the record and careful consideration of the parties' arguments (both written and oral), we are satisfied that cause has not been shown and that this appeal may be decided at this time.

         For the reasons set forth below, we affirm the judgment of the Superior Court.

         I Facts and Travel

         The defendant is in debt in the amount of $10, 288.04, plus statutory interest and costs, under a credit card account which he opened and maintained with Bank of America, N.A. At some point, Bank of America assigned the right to collect the debt to CACH. On July 22, 2013, CACH filed a complaint in Superior Court whereby it sought to recover the above-referenced amount. On May 7, 2014, Mr. Potter eventually filed an answer to the complaint.[1] Notably, that answer did not include a demand for arbitration.

         Well over a year later, on September 28, 2015, CACH filed a motion for summary judgment. Thereafter, on December 8, 2015, Mr. Potter filed an objection to CACH's motion as well as a motion to compel arbitration and to dismiss the case (or, in the alternative, stay proceedings) pursuant to the arbitration provision of the Cardholder Agreement entered into between Mr. Potter and Bank of America.[2] On January 11, 2016, a hearing was held on CACH's motion for summary judgment. At that hearing, the hearing justice denied Mr. Potter's motion to compel arbitration because he had failed to raise a right to arbitrate as an affirmative defense in his answer. Then, after denying Mr. Potter's request for a continuance, the hearing justice proceeded to consider CACH's summary judgment motion and Mr. Potter's objection thereto. At the conclusion of the hearing, the justice granted CACH's motion for summary judgment.

         On January 14, 2016, Mr. Potter filed a motion to amend his answer so as to include a demand for arbitration as an affirmative defense, and he also filed a motion to reconsider and vacate the Superior Court's grant of CACH's motion for summary judgment. On January 25, 2016, following another hearing, the hearing justice denied Mr. Potter's motions. Orders granting plaintiff's motion for summary judgment and directing the entry of judgment in plaintiff's favor entered the same day. Thereafter, Mr. Potter filed a notice of appeal.

         II Analysis

         A Mr. Potter's Motion to Compel Arbitration

         Mr. Potter contends that the hearing justice erred in denying his motion to compel arbitration and dismiss the case. He posits that the Superior Court lacked subject matter jurisdiction over the action as a result of the arbitration provision in the Cardholder Agreement. As evidence of his intent to arbitrate the dispute, he directs this Court's attention to the fact that he did not "participate in any discovery, file a counterclaim, submit interrogatives [sic], or challenge the plaintiff's standing at any point prior to filing for arbitration * * * ." He adds that he is seeking to enforce the arbitration clause in the Cardholder Agreement in order to obtain relief for violations of the federal Fair Debt Collection Practices Act and the federal Fair Credit Reporting Act.

         In denying Mr. Potter's motion to compel arbitration, the hearing justice stated that an assertion that a dispute is subject to arbitration must be affirmatively pled in an answer or a defendant would run the risk of having it deemed waived; he held that Mr. Potter had failed to raise a demand for arbitration in his answer and that such a demand had, accordingly, been waived. After a thorough review of the record and Mr. Potter's arguments on appeal, we are in complete agreement with the hearing justice.

         Initially, we note that our review of a trial court's denial of a motion to compel arbitration is conducted de novo. DeFontes v. ...


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