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Atlantic Credit & Finance v. Courtney Stacy

Atlantic Credit & Finance v. Courtney Stacy

Case No. 
Opinion Date: 
Opinion Author: 
Memorandum Opinion
Reverse in Part

Petitioner, Atlantic Credit & Finance, is a debt purchasing firm.  In this case, Petitioner purchased a $720 debt allegedly owed by Respondent, Courtney Stacy, to Synchrony Bank.  Petitioner sued Respondent in magistrate court in Wyoming County.  Respondent removed the case to circuit court, then filed an answer and counterclaim.  In the counterclaim, Respondent alleged on a classwide basis that Petitioner had engaged in violations of West Virginia’s consumer laws.  Specifically, Respondent alleged that Petitioner had failed to provide information regarding the underlying debt as required by W.Va. Code 50-4-1.  The parties then engaged in substantial discovery and motion practice.  Nearly seven months into the litigation, Petitioner filed a motion to compel arbitration.

Petitioner produced what it alleged to be Respondent’s application for a credit card account with Synchrony and a credit card agreement that was mailed to Respondent’s address.  The agreement required arbitration of disputes and also contained language barring any classwide arbitration.  The trial court, however, found that the application was dated later than the alleged charges on the account and did not contain any signatures, electronic or otherwise.  In addition, the court found insufficient proof that the arbitration agreement was actually mailed to Respondent or had ever been seen or approved by Respondent.  Therefore, a valid, enforceable arbitration agreement did not exist.

The trial court made two alternative findings.  First, the trial court ruled that the agreement was both procedurally and substantively unconscionable.  Second, the court found that Petitioner’s conduct operated as a waiver of its right to arbitrate.  In this regard, the court noted that  Petitioner itself filed the initial lawsuit and that Petitioner had actively engaged in class action litigation for the better part of the year.


Was a valid, enforceable arbitration agreement entered into by the parties?  If so, did the litigation conduct of the party seeking arbitration amount to a waiver of the right to arbitrate?


Recognizing “the strong and liberal public policy favoring arbitration under the Federal Arbitration Act,” the Supreme Court found that the arbitration agreement was enforceable.  As a practical matter, the Supreme Court’s analysis will make it harder to challenge arbitration in future cases.

Respondent argued that Petitioner failed to meet its summary judgment burden under Rule 56.  Petitioner filed an affidavit from Jodi Anderson, who was identified as a “litigation analyst” with Synchrony Bank.  Respondent suggested that Anderson was not, in fact, a “custodian” for purposes of the rule.  The Supreme Court rejected this argument, finding that “a foundational witness need only be someone with knowledge of the procedure governing the creation and maintenance of the records sought to be admitted.” 

Respondent also questioned Anderson’s credibility, pointing out that dates appearing in the affidavit did not precisely match up with dates in the file.  Again, however, the Supreme Court was not persuaded, referring to Respondent’s criticism of the affidavit as “nothing more than speculation.”

Next, Respondent argued that a binding arbitration agreement did not exist because Petitioner could not produce a signed writing.  The Supreme Court quoted language from the agreement stating that by merely “opening or using” the account, the holder agreed to all of the terms in the agreement.  Thus, Respondent’s acceptance of the agreement, including the arbitration language, “was effectuated by his admitted use of the credit account.”

The final issues were intertwined, i.e., choice of law and waiver.  According to the agreement, Utah law applied.  However, under a long line of cases, the law of another state will not be applied if it does not have a substantial relationship to the transaction.  The trial court did not fully address the choice of law issue.  Therefore, a remand was necessary.  After determining whether Utah law or West Virginia law applies, the trial court was also directed to determine (1) whether Petitioner actually purchased contract rights, including arbitration rights, from Synchrony Bank, and (2) if so, whether Petitioner engaged in any conduct that effectively waived its right to arbitrate. 


This case illustrates the difficulty of contesting arbitration in today’s pro-business climate.  The Supreme Court gave no credence to Respondent’s efforts to attack the Anderson affidavit.  In fact, the Court specifically noted the lack of “any evidence from [Respondent], such as an affidavit denying that he applied for the credit account, or denying that he received a copy of the credit agreement in the mail.”  The takeaway for me is that the Court is looking for evidence that directly contradicts the facts in a creditor’s affidavit, and likely will not be persuaded by attacks against the affidavit itself.

I also found the Court’s analysis of whether a writing was required to be disheartening.  In this case, there was no proof that Respondent was the one who actually opened the account or used the credit card.  But that did not matter.  Because the account was opened, and because the card was used, the Court appeared willing to presume that the party named in the suit was, in fact, the one responsible for doing so—at least in the absence of contrary proof.

If there is a bright spot, it comes in the form of the Court’s uncertainty whether Petitioner actually acquired the arbitration rights when it purchased Respondent’s debt.  The paperwork from the original transaction suggests that Petitioner acquired “receivables,” but did not necessarily acquire an assignment of contract rights.  It will be worth watching this case, and others like it, to see if the Court articulates a rule for determining when a debt collector has acquired contract rights in addition to the debt. 


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