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Dora Smith, On Behalf of Herself and Others Similarly Situated v. Legal Helpers Debt Resolution LLC

June 11, 2012


The opinion of the court was delivered by: Pisano, District Judge.


This is putative class action brought by Dora Smith ("Plaintiff") against defendants Legal Helpers Debt Resolution LLC ("Legal Helpers") a/k/a Macey, Aleman Hyslip and Searns, and Global Client Solutions, LLC ("Global") (collectively "Defendants") that arises in connection with Plaintiff's engagement of Defendants for debt settlement services. Presently before the Court is Defendants' motion to compel arbitration. The Court decides the motion without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons below, Defendants' motion is granted.


In March 2010, Plaintiff retained Legal Helpers (which, according to the agreement between the parties, is "also known as the law firm of Macey, Aleman, Hyslip & Searns") to "review [Plaintiff's] current unsecured debt burden and thereafter negotiate and attempt to enter into settlements with creditors of [Plaintiff] in an effort to modify and/or restructure [Plaintiff's] unsecured debt." Compl., Ex. 1 at 1. In connection with the engagement, the parties executed, among other things, an Attorney Retainer Agreement (the "ARA") on March 17, 2010. According to the ARA, in consideration for Legal Helpers' services, Plaintiff agreed to pay an initial flat fee retainer, a monthly maintenance fee, and a contingency fee based upon the amount of debt reduction Legal Helpers would be able to achieve. As relevant to the instant motion, the ARA contained the following provision:

XVII. Arbitration: In the event of any claim or dispute between Client and LHDR related to the Agreement or related to any performance of any services related to this Agreement, such claim or dispute shall be submitted to binding arbitration upon the request of either party upon the service of that request. The parties shall initially agree on a single arbitrator to resolve the dispute. The matter may be arbitrated either by the Judicial Arbitration Mediation Service or American Arbitration Association, as mutually agreed upon by the parties or selected by the party filing the claim. The arbitration shall be conducted in either the county in which the Client resides, or the closest metropolitan county. Any decision of the arbitrator shall be final and may be entered into any judgment in any court of competent jurisdiction. The conduct of the arbitration shall be subject to the then current rules of the arbitration service. The costs of arbitration, excluding legal fees, will be split equally or born by the losing party, as determined by the arbitrator. The parties shall bear their own legal fees.

Compl., Ex. 1 at 4.

As part of her debt settlement program with Legal Helpers, Plaintiff established a special purpose bank account through Global "for the purpose of accumulating funds to repay [her] debts." See Special Purpose Account Application, attached as part of Ex. 1 to Certification of Rebecca Bratter ("Bratter Cert."). Plaintiff began making monthly deposits of $807.09 into her special purpose account on April 19, 2010, from which various fees were deducted, and these deposits and deductions continued until January 2011. See Account Activity Statement, attached as Ex. C to Bratter Cert.

The application for the special purpose bank account, signed by Plaintiff March 17, 2010, incorporates by reference an Account Agreement and Disclosure Statement ("AADS") with the following language:

I understand that the Special Purpose Account's features, terms conditions and rules are further described in an Account Agreement and Disclosure Statement that accompanies this Application (the "Agreement") . I acknowledge that I have received a copy of the Agreement; that I have read and understand it; that the Agreement is fully incorporated into this Application by reference; and that I am bound by all of its terms and conditions.

Id. (emphasis in original). The AADS contains an arbitration provision as follows:

Arbitration and Application of Law: In the event of a dispute or claim relating in any way to this Agreement or our services, you agree that such dispute shall be resolved by binding arbitration in Tulsa Oklahoma utilizing a qualified independent arbitrator of Global's choosing. The decision of the arbitrator will be final and subject to enforcement in a court of competent jurisdiction.

Account Agreement and Disclosure Statement, attached as part of Ex. 1 to Bratter Cert.

On August 2, 2011, Plaintiff commenced the instant lawsuit in the Superior Court of the State of New Jersey. Defendants subsequently removed the matter to this Court. Although the complaint in this matter contains five designated "counts," the Court can discern only three of the five that purport to contain any cause of action.*fn1 In Count II, Plaintiff alleges that Defendants failed to "comply with debt relief agency restrictions of the United States Bankruptcy Code" because Defendants allegedly provided bankruptcy advice to Plaintiff absent a timely retainer agreement. Count III alleges that Defendants engaged in deception and unconscionable business practices that violated New Jersey's Consumer Fraud Act, 56:8-1 et seq. Finally, Count IV alleges various violations of New Jersey's Debt Adjuster Act, N.J.S.A. 17:16G-1, et seq.

Based on the arbitration provisions in the agreements described above, all of the Defendants have ...

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