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Dawn Guidotti On Behalf of v. Legal Helpers Debt Resolution

August 7, 2012

DAWN GUIDOTTI ON BEHALF OF HERSELF AND OTHER CLASS MEMBERS SIMILARLY SITUATED PLAINTIFF,
v.
LEGAL HELPERS DEBT RESOLUTION, L.L.C., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Jerome B. Simandle

OPINION

SIMANDLE, Chief Judge:

I. INTRODUCTION

This action is before the Court on the motion of Defendants J.G. Debt Solutions, L.L.C. and Joel Gavals ("J.G." or "moving Defendants") to compel arbitration of Plaintiff's claims against them. [Docket Item 105.] Plaintiff brings a putative class action alleging a conspiracy to commit unlicensed debt adjustment services in violation of the New Jersey Debt Adjustment and Credit Counseling Act ("NJDACCA"), N.J. Stat. Ann. § 17:16G-1, et seq., the New Jersey RICO statute, N.J. Stat. Ann. § 2C:41-1, et seq., the New Jersey Consumer Fraud Act ("NJCFA"), N.J. Stat.

Ann. § 56:8-2, et seq., and various other common law causes of action. Plaintiff's Amended Complaint names twenty-two Defendants and charges all defendants collectively with eight different causes of action.

The instant motion to compel arbitration is the second time the Court has addressed motions to compel arbitration filed by Defendants in this action, the Court having previously considered two simultaneously filed motions to compel filed by other parties in its December 20, 2011 Opinion. Guidotti v. Legal Helpers Debt Resolution, L.L.C., --- F. Supp. 2d ---, 2011 WL 6720936 (D.N.J. Dec. 20, 2011) [Docket Item 102]. In that Opinion, the Court granted one motion to compel and denied the other. The Court granted the motion filed by Defendants related to the law firm of Legal Helpers Debt Resolution, L.L.C. (hereinafter referred to as Defendant LHDR, collectively referred to as the "Law Firm Defendants"), but denied the motion to compel filed by Defendants related to the Defendant financial institutions Rocky Mountain Bank & Trust and Global Client Solutions (the "Bank Defendants").

In the instant motion, the moving Defendants seek to compel Plaintiff to arbitrate her claims against them pursuant to the arbitration clause contained in the Attorney Retainer Agreement signed by Plaintiff and Defendant LHDR. In the Court's December 20 Opinion, the Court concluded that this arbitration agreement was enforceable as to Plaintiff's claims against the Law Firm Defendants. J.G. now argues that Plaintiff should be compelled to arbitrate her claims against the J.G. Defendants as well, despite the fact that the moving Defendants were not parties to the agreement containing the enforceable arbitration agreement, known as the Attorney Retainer Agreement (the "ARA").

The principal issue to be decided is therefore whether the Court should compel Plaintiff to arbitrate her claims against the J.G. Defendants pursuant to the ARA, either under the terms of the agreement itself or under a theory of equitable estoppel. As explained below, the Court concludes that equitable estoppel applies in this case to compel Plaintiff to arbitrate her claims against Defendants J.G. and Joel Gavalas. Accordingly, the Court will grant Defenants' motion to compel.

II. BACKGROUND

The Court incorporates the extensive factual background contained in the December 20, 2011 Opinion, and expands upon it here only to focus on Plaintiff's allegations regarding and claims against Defendants J.G. and Joel Gavalas. Unless otherwise noted, the following facts are those alleged in the Amended Complaint or included in indisputably authentic documents, the existence of which Plaintiff alleges in her Amended Complaint.

Plaintiff alleges that in September of 2009, she called Defendant J.G. Debt Solutions, seeking help to reduce or negotiate a settlement of some of her debt rather than file for bankruptcy, and spoke on the telephone with Defendant Joel Gavalas. Am. Compl. ¶ 21. Gavalas described a "debt reduction program" in which he suggested that Plaintiff's "credit card debt could be cut in half and paid off within three years." Id. Gavalas explained that Defendant Eclipse*fn1 would evaluate her financial situation to determine whether she "qualified" for the program, and that if she did, a payment program would be prepared for her. Id.

Some time after this initial call, Gavalas called Plaintiff back and informed her that "she had been accepted in the program" and that Eclipse had proposed two alternate plans for participation in its program. Id. ¶ 22. She was offered a three-year plan in which she would pay approximately $358 per month or a five-year plan in which she would pay approximately $200 per month. Plaintiff chose the three-year plan. Id.

In this conversation, Plaintiff was also informed that she would be represented in the debt negotiation process by attorneys from LHDR. Gavalas then "asked a series of questions to which Plaintiff had to respond" which was recorded. Id. Plaintiff alleges that this was her final contact with J.G.; she alleges that it was J.G.'s practice to tell customers such as Plaintiff at this point "not to call J.G. again, rather any future contacts were to be through LHDR and Eclipse who were in the same office in Florida." Id. at ¶ 70.

Plaintiff further alleges that J.G. had contracted with Eclipse to provide marketing and to feed potential clients (such as Plaintiff) to LHDR and ...


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