DAWN GUIDOTTI, on behalf of herself and all other class members similarly situated,
LEGAL HELPERS DEBT RESOLUTION, L.L.C., a/k/a The Law Firm of Macey, Aleman, Hyslip and Searns; ECLIPSE SERVICING, INC., f/k/a Eclipse Financial, Inc.; GLOBAL CLIENT SOLUTIONS, L.L.C.; LEGAL SERVICES SUPPORT GROUP, L.L.C.; JG DEBT SOLUTIONS, L.L.C.; ROCKY MOUNTAIN BANK AND TRUST OF COLORADO SPRINGS, COLORADO; LYNCH FINANCIAL SOLUTIONS, INC., trading as: Financial Solutions Legal Center, Financial Solutions Consumer Center, Financial Solutions Processing Center; JEM GROUP, INC.; CENTURY MITIGATIONS, L.P.; LEGAL HELPERS, P.C., trading as: The Law Firm of Macey and Aleman; THOMAS G. MACEY; JEFFREY J. ALEMAN; JASON E. SEARNS; JEFFREY HYSLIP; THOMAS M. NICELY; JOEL GAVALAS; AMBER N. DUNCAN; HARRY HEDAYA; DOUGLAS L. MCCLURE; MICHAEL HENDRIX; JOHN DOE(S) 1-100; JIM DOE(S) 1-1000; TOM DOE(S) 1-1000, the said names of John Doe(s), Jim Doe(s) and Tim Doe(s) being fictitious; STEPHEN CHAYA; RELIANT ACCOUNT MANAGEMENT, L.L.C. GLOBAL CLIENT SOLUTIONS, L.L.C.; ROCKY MOUNTAIN BANK AND TRUST OF COLORADO SPRINGS, COLORADO, Appellants
Argued March 5, 2013
On Appeal from the United States District Court for the District of New Jersey (D.C. No. 11-cv-1219) District Judge: Hon. Jerome B. Simandle.
Shaji M. Eapen Morgan Melhuish Abrutyn Richard W. Epstein Greenspoon Marder John H. Pelzer [ARGUED] Greenspoon Marder Counsel for Appellants.
Joseph M. Pinto [ARGUED] Polino and Pinto Counsel for Appellee.
Before: SCIRICA, JORDAN, and ROTH, Circuit Judges.
JORDAN, Circuit Judge.
Dawn Guidotti contracted with several parties to help her negotiate a settlement of her consumer debt. When no settlement materialized, she filed this putative class action against them, claiming that she, and people like her, had been defrauded. The United States District Court for the District of New Jersey granted a motion to compel arbitration as to the claims against most of the defendants, but it denied the motion as it pertained to Rocky Mountain Bank and Trust ("RMBT") and Global Client Solutions ("Global") (collectively, the "Appellants"). With respect to those two defendants, the Court held that the pleadings and certain evidence adduced by Guidotti were sufficient to demonstrate that there had been no meeting of the minds on an agreement to arbitrate and that Guidotti's claims against them were therefore not subject to arbitration.
Because we believe that the record before the District Court was insufficient to prove that there was no genuine dispute of material fact as to whether the Appellants and Guidotti agreed to arbitrate, we will vacate and remand the order denying arbitration. In explaining our reasoning, we hope to clarify the standards to be applied to motions to compel arbitration, identifying the circumstances under which district courts should apply the standard for a motion to dismiss, as provided by Rule 12(b)(6) of the Federal Rules of Civil Procedure, and those under which they should apply the summary judgment standard found in Rule 56.
Guidotti sued twenty-two defendants, alleging that they conspired to provide unlicensed debt adjustment services in violation of the New Jersey Debt Adjustment and Credit Counseling Act, 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, N.J. Stat. Ann. § 56:8-2, et seq., and various common law principles. In short, she alleges that she was deceived into contracting with various defendants who led her to believe that they would convince her unsecured creditors to settle her consumer debts without her having to declare bankruptcy. Instead, she says, the defendants participated in a conspiracy to fleece her of her remaining assets without negotiating with or protecting her from her creditors. This appeal involves only two of the defendants, RMBT and Global. Through them, Guidotti opened a special bank account into which she automatically deposited a monthly amount. Those funds were then supposedly to be used to pay the various defendants for their debt negotiation services, with the remaining funds to be used to pay a negotiated settlement. RMBT was the financial institution at which she opened the account, and Global was the processing agent that operated the automatic transfers into and out of the account.
To start at the beginning, however, Guidotti called defendant JG Debt Solutions in September 2009. She had accumulated approximately $19, 550 in unsecured consumer debt, including credit card debt, and she wanted help in reducing or negotiating a settlement of her debt, as she hoped to ward off bankruptcy. She spoke with defendant Joel Gavalas, who described a "debt reduction program" through which her "credit card debt could be cut in half and paid off within three years." (App. at 96.) Gavalas explained that defendant Eclipse Servicing, Inc. ("Eclipse"), a debt negotiation company, would evaluate her finances to determine whether she "qualified" for the program, and that, if she did, a payment program would be prepared for her. (Id.)
After the initial call, Gavalas called Guidotti back and informed her that "she had been accepted in the program" and that Eclipse proposed two alternative plans for her. (Id.) He informed her that under either plan she would make monthly payments into a special bank account, and that the funds deposited into the account would pay for the debt settlement negotiation services and would also be used to settle her debts with her creditors. Guidotti chose a three-year plan pursuant to which she would pay approximately $358 per month. Gavalas also informed her that she would be represented in the debt negotiation process by attorneys from defendant Legal Helpers Debt Resolution, LLC ("LHDR"), which calls itself a "national law firm" (id. at 333), and by Eclipse, the debt negotiation company with which LHDR works.
Later that same month, on September 29, 2009, Guidotti received an email from firstname.lastname@example.org, an email domain associated with LHDR and Eclipse. The subject line of the email read "Debt Settlement Service Agreement, " and it contained a link that led to various online documents maintained by a company called "DocuSign." (Id. at 332.) Included in the documents, Guidotti alleges, were two documents containing offers to form separate contracts: an attorney retainer agreement (the "ARA") and an application to open a Special Purpose Account with RMBT. The application for the Special Purpose Account was called, not surprisingly, the Special Purpose Account Application ("SPAA").
The ARA laid out the respective roles of LHDR and Eclipse in the debt settlement negotiation plan, stated the fee arrangements with LHDR and Eclipse, and limited the scope of the representation to be provided by LHDR to only "negotiat[ing] and attempt[ing] to enter into settlements with creditors of [Guidotti] in an effort to modify and/or restructure [Guidotti's] current unsecured debt." (Id. at 98.) The ARA also included an arbitration clause that provided, inter alia, that "[i]n the event of any claim or dispute between [Guidotti] 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." (Id. at 193.) Finally, the ARA contained a provision specifying that Guidotti agreed to establish an "authorized bank account" from which service fees, including legal fees, would automatically be withdrawn on a monthly basis, with the first payment to start on September 30, 2009, and out of which she would eventually pay her creditors following a negotiated settlement. (Id. at 191.)
In furtherance of that last provision of the ARA, the collection of documents also included the SPAA, which characterized itself as an "application" for that authorized bank account. (Id. at 195.) Once signed, the SPAA purported to memorialize Guidotti's agreement to permit RMBT, "through its agent Global, to initiate debit entries" from her primary checking account at TD Bank to the RMBT Special Purpose Account in the amount of $348.68 per month, "for the purpose of accumulating funds to repay [her] debts in connection with a debt management program … sponsored by [LHDR]." (Id.) The application also stated that Guidotti agreed that Global was authorized to "periodically disburse[ ] funds from the Account pursuant to instructions that [Guidotti] may give from time to time." (Id.) It also "authorize[d] payment from the Account of the fees and charges provided for in this Application and the Agreement." (Id.)
The SPAA included an acknowledgment and agreement that read:
I understand that the Account's features, terms, conditions and rules are further described in an Account Agreement and Disclosure Statement [the "Account Agreement"] that accompanies this Application … . I acknowledge that I have received a copy of the [Account Agreement]; that I have read and understand it; that the [Account Agreement] is fully incorporated into this Application [the SPAA] by reference; and that I am bound by all of its terms and conditions.
(Id. (emphasis in original).) According to the amended complaint, Guidotti signed and submitted the ARA and the ...