Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
1-10-2006
In Re: Mintze
Precedential or Non-Precedential: Precedential
Docket No. 03-4745
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-4745
IN RE: ETHEL MARIE MINTZE,
Debtor
ETHEL MARIE MINTZE
v.
AMERICAN GENERAL FINANCIAL SERVICES, INC.,
f/k/a AMERICAN GENERAL FINANCE, INC.;
AMERICAN GENERAL CONSUMER DISCOUNT CO.,
collectively, "American General",
Appellants
EDWARD SPARKMAN, ESQ.;
FREDERIC J. BAKER, ESQ.,
Trustees
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 03-cv-02113 )
District Judge: Honorable Mary A. McLaughlin
Argued January 10, 2005
BEFORE: ROTH and CHERTOFF*, Circuit Judges, and
RESTANI**, Chief Judge
(Filed: January 10, 2006)
*This case was submitted to the panel of Judges Roth,
Chertoff and Restani. Judge Chertoff resigned after
submission, but before the filing of the opinion. The decision
is filed by a quorum of the panel. 28 U.S.C. § 46(d).
**Honorable Jane A. Restani, Chief Judge, United States
Court of International Trade, sitting by designation.
Henry F. Reichner, Esquire (Argued)
Charles L. Becker, Esquire
Reed Smith, LLP
2500 One Liberty Place
1650 Market Street
Philadelphia, PA 19103
Counsel for Appellants
Irv Ackelsberg, Esquire (Argued)
Community legal Services, Inc.
3638 N. Broad Street
Philadelphia, PA 19140
Paul Bland, Esquire
Trial Lawyers for Public Justice
1717 Massachusetts Avenue. NW
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Suite 800
Washington, D.C. 20036
Counsel for Appellee
OPINION OF THE COURT
ROTH, Circuit Judge
In this appeal, we are asked to determine whether the
Bankruptcy Court’s decision to deny enforcement of an
otherwise applicable arbitration clause was proper.
Ethel M. Mintze and American General Consumer
Discount Company entered into a loan agreement. Mintze
subsequently filed a voluntary Chapter 13 bankruptcy petition.
After American General filed a proof of claim, Mintze filed a
complaint in the Bankruptcy Court seeking, inter alia, to
enforce a pre-petition rescission of the loan agreement.
American General Consumer Discount Company and its
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parent company, American General Financial Services,
(collectively “AGF”) then filed a Motion to Compel
Arbitration, which the Bankruptcy Court denied. AGF claims
that the Bankruptcy Court did not have the discretion to deny
enforcement of the arbitration agreement.
Based on the provisions of the Federal Arbitration Act
of 1947, 9 U.S.C. § 1-14, (FAA) and Mintze’s failure to
establish that Congress intended to preclude waiver of judicial
remedies for her claims, we hold that the Bankruptcy Court
lacked the authority and discretion to deny enforcement of the
arbitration provision. We reverse the District Court Order
affirming the Bankruptcy Court’s decision, and we remand
the case to the District Court to remand it to the Bankruptcy
Court with instructions to order the parties to engage in
arbitration in accordance with the terms of the arbitration
provision.
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I.
Ethel M. Mintze is a retired and disabled homeowner.
She lives with her children in a row house in Philadelphia.
Late in the year 2000, she had to replace the heater in her
home. The cost of a new heater was $3800. Unfortunately,
Mintze could not afford it. A&M Heating, a heating
contractor, referred Mintze to AGF. On October 20, 2000,
Mintze and AGF entered a loan agreement, whereby AGF
loaned Mintze the money to purchase a new heater in
exchange for Mintze consolidating that loan and other debt,
including her mortgage, into a home equity loan with AGF.
The principle balance of this agreement was
$44,716.34, and consisted of her mortgage ($25,602.55); the
balance of her credit card debt ($10,463.51); the cost of the
new heater (about $3800); settlement charges ($2821); and
premiums for two life insurance policies ($1629 in a credit
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life insurance policy,1 and $400 in a term life insurance
policy). The terms of the loan agreement were payments of
$551.13 per month over fifteen years at an annual percentage
rate of 13.44%. The loan agreement also contained a demand
clause and an arbitration clause. The demand clause allowed
AGF to accelerate the loan after five years. The arbitration
clause stated that “all claims and disputes arising out of, in
connection with, or relating to [the] loan” must “be resolved
by binding arbitration.”
Mintze began to fall behind in her payments to AGF,
and on December 4, 2001, she voluntarily filed a Chapter 13
petition for bankruptcy. AGF filed a proof of claim against
Mintze’s estate. Mintze then filed a complaint against AGF
1
We note that Mintze was not in fact eligible for the
credit life insurance policy because of a pre-existing health
condition.
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in the Bankruptcy Court. In her complaint, Mintze alleged
that AGF induced her to enter an illegal and abusive home
equity loan that resulted in AGF holding a mortgage lien
against her home; she sought to enforce a pre-petition
rescission of the mortgage that she asserted under the Truth In
Lending Act, 15 U.S.C. §§ 1601-1667f (“TILA”); and she
asserted several other claims under federal and state consumer
protection laws.2
On May 20, 2002, AGF filed a Motion to Compel
Arbitration. During the motion hearing, the Bankruptcy
Judge sought to confirm two stipulations of the parties. First,
2
Mintze raised claims under the Home Owners Equity
Protection Act of 1994, 15 U.S.C. §§ 1601-15 (HOEPA); the
Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f
(ECOA); the Pennsylvania Home Improvement Finance Act, 73
P A . C ONS. S TAT. §§ 500-101–500-602 (HIFA); and the
Pennsylvania Unfair Trade Practices and Consumer Protection
Law, 73 P A. C ONS. S TAT. § 201-1--201-9.3 (UTPCPL).
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THE COURT: . . . [L]et me first
confirm that the parties have
agreed, at least for purposes of
this argument, that the matter
before me is a core proceeding.
[AGF’s Counsel]: Yes, Your
Honor.
[Mintze’s Counsel]: Yes, Your
Honor.
Second,
THE COURT: . . . [I]n
Zimmerman, as in this case, [the
proceeding] involved a core
matter. And the upshot of that
would mean that whether I choose
to grant the relief is within my
discretion. Both counsel agree
that in terms of the standard that
I’m applying?
[Mintze’s Counsel]: Yes, Your
Honor.
THE COURT: Okay. Now, I’ll
ask the same type of question on a
different issue, and I know I might
not get agreement on this one, but
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I’ll ask it anyway.
As is apparent, counsel for AGF made no response to the
question of the court concerning the court’s discretion to grant
AGF’s Motion to Compel Arbitration. Based on this
exchange, the Bankruptcy Court determined that the
proceeding before it was a core proceeding and that it had the
discretion to deny enforcement of the arbitration clause. The
Bankruptcy Court then decided that the matter was best
resolved in the bankruptcy court system because the outcome
of Mintze’s rescission claim would affect her bankruptcy plan
and the distribution of monies to her other creditors. See
Mintze v. Am. Gen. Fin., Inc. (In re Mintze), 288 B.R. 95
(Bankr. E.D. Pa. 2003) (Mintze I). On January 21, 2003, AGF
filed a timely appeal. Finding that the Bankruptcy Court
acted within its discretion, the District Court affirmed the
Bankruptcy Court Order. See In re Mintze, 2003 WL
-9-
22701020 (E.D. Pa. 2003) (Mintze II). On December 11,
2003, AGF filed a timely appeal.
On September 24, 2004, while the current case was
pending before us, the Bankruptcy Court issued an Order in
response to AGF’s Motion for Summary Judgment with
respect to several of Mintze’s claims. The Court granted
AGF’s motion with respect to Mintze’s TILA and HOEPA
claims. The Court also marked Mintze’s HIFA claim as
withdrawn.
II.
This appeal comes to us from the United States District
Court for the Eastern District of Pennsylvania. The case
originated in the Bankruptcy Court for that district. The
Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. §§
157(a) and 1334(b). The District Court had appellate
jurisdiction under 28 U.S.C. § 158(a)(1) and 9 U.S.C. §
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16(a)(1)(B) (providing appeal from an order denying
arbitration). We have appellate jurisdiction pursuant to 28
U.S.C. § 158(d) and 9 U.S.C. § 16(a)(1)(B).
We give plenary review to a decision of a district court
sitting as an appellate court in a bankruptcy proceeding. See
The Resolution Trust Corp. v. Swedeland Dev. Group, Inc. (In
re Swedeland Dev. Group, Inc.), 16 F.3d 552, 559 (3d Cir.
1994). Therefore, we review “the Bankruptcy Court’s
findings of fact under the clearly erroneous standard and
conclusions of law under a de novo standard.” Halper v.
Halper, 164 F.3d 830, 835 (3d Cir. 1999). We only review
the Bankruptcy Court’s decision for abuse of discretion if we
first determine, under plenary review, that it had the discretion
to exercise. See Hays & Co. v. Merrill Lynch Pierce, Fenner
& Smith, Inc., 885 F.2d 1149, 1156 (1989) (refusing to review
case for abuse of discretion because court “committed a more
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fundamental error in determining that it had discretion to
exercise”).
III.
AGF argues that the Bankruptcy Court lacked the
discretion to deny enforcement of the arbitration clause in the
mortgage agreement. The District Court held, and Mintze
contends, that the Bankruptcy Court had such discretion and
that it was within its bounds of discretion when it ruled
against AGF. The parties’ arguments stem from the two
stipulations that the parties made at the hearing on AGF’s
Motion to Compel. At the hearing, the parties allegedly
stipulated that the proceeding in question was a “core”
proceeding and that the Bankruptcy Court had the discretion
to deny enforcement of the arbitration clause in the loan
agreement. AGF claims that, despite its concession that the
proceeding was a “core” proceeding, the proceeding was a
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non-core proceeding and that, even if the proceeding is
deemed to be core, such a determination did not automatically
give the Bankruptcy Court the discretion to deny arbitration.
AGF claims that the Bankruptcy Court did not have discretion
to deny enforcement of the arbitration clause because the
standard set out in Shearson/Am. Exp., Inc. v. McMahon, 482
U.S. 220 (1987), was not satisfied.
Mintze claims that AGF is bound by its stipulations.
According to Mintze, the Bankruptcy Court had the discretion
to deny arbitration and our standard of review is for abuse of
that discretion, which Mintze claims was not abused. Mintze
also claims that we should dismiss AGF’s claims under the
doctrine of judicial estoppel and our rule against considering
new issues on appeal.
Before we can determine whether the Bankruptcy
Court abused its discretion, we must determine whether the
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Bankruptcy Court had any discretion to exercise. See Hays,
885 F.2d at 1156 (refusing to address the abuse of discretion
issue because the court “committed a more fundamental error
in determining that it had discretion to exercise”). We are not
bound by the parties’ stipulations concerning questions of
law. See Kraft Gen. Foods, Inc. v. Iowa Dep’t of Rev. & Fin.,
505 U.S. 71, 85 (1992). Whether a bankruptcy proceeding is
a core or non-core proceeding is a question of law. See
Halper, 164 F.2d at 836-37. See also U.S. Lines, Inc. v. Am.
S.S. Owners Mut. Prot. & Indemn. Ass’n, Inc. (In re U.S.
Lines, Inc.), 197 F.3d 631, 636 (2d Cir. 1999). Whether a
bankruptcy court has the discretion to deny enforcement of an
arbitration clause is also a question of law. See Hays, 885
F.2d at 1152. Therefore, the parties’ stipulations in this case
are not binding on us. We will address each stipulation and
its effect on whether the Bankruptcy Court had the discretion
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to deny enforcement of the arbitration agreement.
A.
Bankruptcy proceedings are divided into two
categories: core and non-core. See 28 U.S.C. § 157. The
distinction between the two categories is relevant because the
type of proceeding may determine the ultimate authority of
the bankruptcy court. In a core proceeding, a bankruptcy
court has “comprehensive power to hear, decide and enter
final orders and judgments.” Halper, 164 F.3d at 836 (citing
28 U.S.C. § 157(b)(1)). In addition, the bankruptcy court can
make findings of fact and conclusions of law. In contrast, the
bankruptcy court’s authority is significantly limited in non-
core proceedings. In a non-core proceeding, the bankruptcy
court is allowed only to make proposed findings of fact and
proposed conclusions of law, which it submits to the district
court. See 28 U.S.C. § 157(c)(1).
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The core/non-core distinction does not, however, affect
whether a bankruptcy court has the discretion to deny
enforcement of an arbitration agreement. See Ins. Co. of N.
Am. v. NGC Settlement Trust & Asbestos Claims Mgmt. Corp.
(In re Nat’l Gypsum), 118 F.3d 1056, 1068 (5th Cir. 1997)
(quoting In re Statewide Realty Co., 159 B.R. 719, 722
(Bankr. D.N.J. 1993)). It merely determines whether the
bankruptcy court has the jurisdiction to make a full
adjudication. Because this distinction does not affect whether
the Bankruptcy Court had the discretion to deny arbitration,
we will accept the parties’ stipulation that the proceeding was
a “core” proceeding for the purposes of deciding whether the
Bankruptcy Court had discretion.
B.
The FAA provides that arbitration agreements “shall
be valid, irrevocable, and enforceable, save upon such
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grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. A court has the power to stay a
proceeding if it determines that an issue falls under an
applicable arbitration clause. 9 U.S.C. § 3. If one of the
parties fails to comply with such an agreement, a court may
order “the parties to proceed to arbitration in accordance with
the terms of the agreement.” 9 U.S.C. § 4.
The FAA has established a strong policy in favor of
arbitration. See Moses H. Cone Mem. Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983). It requires rigorous
enforcement of arbitration agreements. See Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 220 (1985). By itself,
the FAA mandates enforcement of applicable arbitration
agreements even for federal statutory claims. See McMahon,
482 U.S. at 226.
The FAA’s mandate can, however, be overridden. If a
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party opposing arbitration can demonstrate that “Congress
intended to preclude a waiver of judicial remedies for the
statutory rights at issue,” the FAA will not compel courts to
enforce an otherwise applicable arbitration agreement.
McMahon, 482 U.S. at 227. To overcome enforcement of
arbitration, a party must establish congressional intent to
create an exception to the FAA’s mandate with respect to the
party’s statutory claims. Congressional intent can be discerned
in one of three ways: (1) the statute’s text, (2) the statute’s
legislative history, or (3) “an inherent conflict between
arbitration and the statute’s underlying purposes.” McMahon,
482 U.S. at 227 (citing Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 632-37 (1985)).
Shortly after the Supreme Court decided McMahon, we
applied its standard to a bankruptcy case that is similar to the
present case. See Hays, 885 F.2d 1149. In Hays, we held that
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where a party seeks to enforce a debtor-derivative pre-petition
contract claim, a court does not have the discretion to deny
enforcement of an otherwise applicable arbitration clause.
See 885 F.2d at 1161. Hays involved a trustee to the debtor’s
estate,3 bringing causes of action against a brokerage firm that
managed two corporate accounts for the debtor. The
complaints alleged federal and state securities violations, as
well as some statutory claims created by the Bankruptcy
Code. The Hays Court was presented with the question
whether the Bankruptcy Code conflicts with the FAA “in such
a way as to bestow upon a district court discretion to decline
to enforce an arbitration agreement” with respect to the
trustee’s claims. Applying the McMahon standard, we said
3
A trustee is the representative of the debtor’s estate. 11
U.S.C. § 323(a). The trustee has the capacity to sue and be sued
on behalf of the debtor’s estate. 11 U.S.C. § 323(b).
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that
the district court lacked the
authority and discretion to deny
enforcement of the arbitration
clause unless [the trustee] had met
its burden of showing that the
text, legislative history, or purpose
of the Bankruptcy Code conflicts
with the enforcement of an
arbitration clause in a case of this
kind, that is, a non-core
proceeding brought by a trustee to
enforce a claim of the estate in a
district court.
Hays, 885 F.2d at 1156-57 (emphasis added). We held that
whether the McMahon standard is met determines whether the
court has the discretion to deny enforcement of an otherwise
applicable arbitration clause. See Hays, 885 F.2d at 1156-57.
See also Nat’l Gypsum, 118 F.3d at 1067 (“The ‘discretion’ . .
. should exist only where a particular bankruptcy proceeding
meets the standard for nonenforcement of an arbitration
clause set forth in McMahon . . ..”). The starting point is
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McMahon. The Bankruptcy Court and District Court,
however, applied the McMahon standard after determining
that the Bankruptcy Court had the discretion to deny
arbitration. Those courts applied McMahon to determine
whether the Bankruptcy Court should have exercised its
discretion, rather than to determine whether it had the
discretion to exercise. This approach is not what is required
by McMahon and Hays.
Mintze contends, and the District Court held, that our
Hays decision primarily applies to non-core proceedings. See
In re Mintze, No. 03-2113, 2003 WL 22701020, at *2 (E.D.
Pa. Nov. 12, 2003) (Mintze II) (citing U.S. Lines, 197 F.3d at
640; Pardo v. Pacificare of Tex., Inc. (In re APF Co.), 264
B.R. 344, 361-62 (Bankr. D. Del. 2001); Weinstock v. Frank
(In re Weinstock), No. 96-31147DWS, 1999 Bankr. LEXIS
616, at *23 (Bankr. E.D. Pa. 1999); Sacred Heart Sacred
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Heart Hosp. v. Independence Blue Cross (In re Sacred Heart
Hosp.), 181 B.R. 195, 202 (Bankr. E.D. Pa. 1995); In re FRG,
115 B.R. 72, 74 (E.D. Pa. 1990)). This interpretation stems
from the emphasized clause of the above quoted passage: “a
non-core proceeding brought by a trustee to enforce a claim of
the estate in a district court.”
We disagree with this interpretation – that the
application of Hays is limited to non-core proceedings. First,
Hays applied the Supreme Court’s McMahon standard, which
applies to all statutory claims subject to applicable arbitration
clauses, not just to those claims arising in non-core
bankruptcy proceedings. Second, the Hays decision did not
seek to distinguish between core and non-core proceedings;
rather, it sought to distinguish between causes of action
derived from the debtor and bankruptcy actions that the
Bankruptcy Code created for the benefit of the creditors of the
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estate. See Nat’l Gypsum, 118 F.3d at 1068 (quoting In re
Statewide, 159 B.R. at 722) (holding that the relevant
distinction in Hays is that between debtor-derivative claims
and Bankruptcy Code established claims, and not the
distinction between core and non-core proceedings). Third,
the two cases that the District Court cited from other circuits
to support its holding that the Bankruptcy Court did not abuse
its discretion, actually support the contention that Hays
applies to core proceedings. The District Court cited United
States Lines and National Gypsum. Both of these cases
expressly state that a finding that a proceeding is a core
proceeding does not automatically give a bankruptcy court the
discretion to deny arbitration. Rather, those cases indicate
that the McMahon standard must still be satisfied before a
bankruptcy court has such discretion. See U.S. Lines, 197
F.3d at 640; Nat’l Gypsum, 118 F.3d at 1067.
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We find that the standard we articulated in Hays
applies equally to core and non-core proceedings. See Nat’l
Gypsum, 118 F.3d at 1067 (“[W]e believe that
nonenforcement of an otherwise applicable arbitration
provision turns on the underlying nature of the proceedings,
i.e., whether the proceeding derives exclusively from the
provisions of the Bankruptcy Code and, if so, whether the
arbitration proceeding would conflict with the purposes of the
Code.”). See also Pardo v. Pacificare of Tex., Inc. (In re
APF), 264 B.R. 344, 362 (Bankr. D. Del. 2001) (citing Nat’l
Gypsum, 118 F.3d at 1067; Selcke v. New England Ins. Co.,
995 F.2d 688, 691 (7th Cir. 1993)) (holding that in a core
proceeding, the McMahon standard must be satisfied before
the bankruptcy court has the discretion to deny arbitration).
Where an otherwise applicable arbitration clause exists, a
bankruptcy court lacks the authority and discretion to deny its
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enforcement, unless the party opposing arbitration can
establish congressional intent, under the McMahon standard,
to preclude waiver of judicial remedies for the statutory rights
at issue.
Our task then is to determine whether Mintze has
established congressional intent to preclude waiver of judicial
remedies for the statutory rights at issue. We find no
evidence of such intent in either the statutory text or the
legislative history of the Bankruptcy Code. We are, therefore,
left to determine whether there is an inherent conflict between
arbitration and the Bankruptcy Code.
The Bankruptcy Court concluded that the ultimate
decision on Mintze’s rescission claim will have an effect on
the rights of the other creditors to Mintze’s estate.
Determining that the potential effect on the order of priority
and the amount of distribution to Mintze’s other creditors was
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sufficient to create an inherent conflict between the
Bankruptcy Code’s underlying purposes and arbitration, the
Bankruptcy Court concluded that the proceeding was best left
in the Bankruptcy Court. The District Court affirmed the
Bankruptcy Court, stating that its decision was “within the
appropriate bounds of discretion . . ..”
We cannot agree with this conclusion. First, to
override the FAA’s mandate for enforcement of arbitration,
the McMahon standard requires congressional intent “to
preclude a waiver of judicial remedies for the statutory rights
at issue.” McMahon, 482 U.S. at 227 (emphasis added). The
statutory claims that Mintze has raised are based on TILA and
several federal and state consumer protection laws.4 Mintze
has failed to raise any statutory claims that were created by
4
See supra n.2.
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the Bankruptcy Code. With no bankruptcy issue to be
decided by the Bankruptcy Court, we cannot find an inherent
conflict between arbitration of Mintze’s federal and state
consumer protection issues and the underlying purposes of the
Bankruptcy Code.
Second, we find this case very similar to Hays. In
Hays, the trustee sought to enforce a claim it inherited from
the debtor in an adversarial proceeding in a district court. In
that case, “we perceiv[ed] no adverse effect on the underlying
purposes of the [Bankruptcy] Code from enforcing
arbitration–certainly no adverse effect of sufficient magnitude
to relieve a district court of its mandatory duty under the
Arbitration Act . . ..” Hays, 885 F.2d at 1161. Here, the
debtor herself seeks to enforce a claim in an adversary
proceeding in a bankruptcy court. If arbitration is enforced in
this case, we likewise cannot perceive of a sufficiently
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adverse effect on the underlying purposes of the Bankruptcy
Code. We conclude that the Bankruptcy Court erred when it
determined it had the discretion to deny enforcement of the
arbitration provision in the contract between Mintze and
AGF.
C.
Mintze also argues that AGF’s claims are barred by the
doctrine of judicial estoppel and this Court’s rule against
raising new issues on appeal. The doctrine of judicial
estoppel prevents a party from asserting inconsistent claims in
different legal proceedings. See New Hampshire v. Maine,
532 U.S. 742, 749 (2001) (quoting 18 J AMES W M. M OORE ET
AL., M OORE’ S F EDERAL P RACTICE § 134.30, p. 134-62 (3d ed.
2000)). Judicial estoppel is an equitable doctrine, within the
court’s discretion. See New Hampshire, 532 U.S. at 750. See
also Fleck v. KDI Sylvan Pools, Inc., 981 F.2d 107, 121 (3d
-28-
Cir. 1992) (judicial estoppel is designed to protect the courts
and not the litigants). The doctrine was designed to prevent
parties from “playing fast and loose with the courts.” Scarno
v. Cent. R.R. Co. of N.J., 203 F.2d 510, 513 (3d Cir. 1953).
Mintze claims that AGF should not be allowed to
assert at the Bankruptcy Court hearing that the Bankruptcy
Court had discretion and now to assert that the Bankruptcy
Court did not have discretion. We choose, however, not to
apply the doctrine of judicial estoppel here. As we have
already stated, the stipulations of the parties were stipulations
regarding questions of law. Because we are not bound by
these stipulations, there is no need for us to consider judicial
estoppel.
We also reject Mintze’s argument that AGF’s claim
that the Bankruptcy Court lacks the discretion to deny
arbitration should be dismissed because AGF is raising the
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issue for the first time on appeal. As a general rule, we do not
address issues that are raised for the first time on appeal. See
Cont’l Cas. Co. v. Dominick D’Andrea, Inc., 150 F.3d 245,
251 (3d Cir. 1998). When the resolution of an issue is of
public importance, however, we may exercise our discretion
and address issues raised for the first time on appeal. See The
Council of Alternative Political Parties v. Hooks, 179 F.3d
64, 69 (3d Cir. 1999); Loretangeli v. Critelli, 853 F.2d 186,
189 n.5 (3d Cir. 1988) (citing Dean Witter Reynolds, Inc. v.
Fernandez, 741 F.2d 355, 360-61 (11th Cir. 1984)). Because
of the strong federal policy in favor of arbitration and the
importance of clarifying how it operates in the bankruptcy
court system, we have determined that this case is an
appropriate situation for us to exercise our discretion and to
address the issue of a bankruptcy court’s discretion to deny
arbitration.
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IV.
We conclude that the Bankruptcy Court lacked the
authority and the discretion to deny enforcement of the
arbitration provision in the contract between Mintze and
AGF. The FAA mandates enforcement of arbitration when
applicable unless Congressional intent to the contrary is
established. Mintze has failed to demonstrate through
statutory text, legislative history, or the underlying purposes
of the Bankruptcy Code that Congress intended to preclude
waiver of judicial remedies for her claims. Therefore, we will
reverse the judgment of the District Court, affirming the
Bankruptcy Court’s denial of AGF’s Motion to Compel
Arbitration, and we will remand this case to the District Court
for remand to the Bankruptcy Court with instructions to
compel the parties to engage in arbitration in accordance with
the terms of the arbitration agreement. Further, we note that
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at oral argument AGF conceded that if we were to find in its
favor, all of Mintze’s claims, including her TILA, HOEPA
and HIFA claims, were subject to arbitration. Therefore, we
instruct the Bankruptcy Court on remand to vacate its
September 24, 2004, Order insofar as it granted summary
judgment to AGF on Mintze’s TILA and HOPA claims and to
confer with the parties concerning the status of the HIFA
claim and whether it should be reinstated since it was
withdrawn after the motion to arbitrate was filed.
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In Re: Mintze
Combined Opinion