IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2017 Term FILED
October 6, 2017
released at 3:00 p.m.
No. 16-0793 RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
BLUESTEM BRANDS, INC. d/b/a Fingerhut,
Third-Party Defendant Below, Petitioner
v.
DARLENE SHADE,
Third-Party Plaintiff Below, Respondent
Appeal from the Circuit Court of Berkeley County, West Virginia
The Honorable Gray Silver, III, Judge
Civil Action No. 15-C-370
REVERSED AND REMANDED WITH DIRECTIONS
Submitted: September 19, 2017
Filed: October 6, 2017
M. David Griffith, Jr., Esq. Jonathan R. Marshall, Esq.
Joseph K. Merical, Esq. Bailey & Glasser, LLP
Thomas Combs & Spann, PLLC Charleston, West Virginia
Charleston, West Virginia and
and Andrew C. Skinner, Esq.
Aaron D. Van Oort, Esq. Skinner Law Firm
Erin L. Hoffman, Esq. Charles Town, West Virginia
Jeffrey P. Justman, Esq. Attorneys for Respondent
Faegre Baker Daniels LLP
Minneapolis, Minnesota
Pro Hac Vice
Attorneys for Petitioner
JUSTICE WORKMAN delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. “When an appeal from an order denying a motion to dismiss and to
compel arbitration is properly before this Court, our review is de novo.” Syl. Pt. 1, W.
Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W.Va. 465, 796 S.E.2d 574
(2017).
2. “When a trial court is required to rule upon a motion to compel
arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1–307 (2006), the
authority of the trial court is limited to determining the threshold issues of (1) whether a
valid arbitration agreement exists between the parties; and (2) whether the claims averred
by the plaintiff fall within the substantive scope of that arbitration agreement.” Syl. Pt. 2,
State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293 (2010).
3. “A meeting of the minds of the parties is a sine qua non of all
contracts.” Syl. Pt. 1, Martin v. Ewing, 112 W.Va. 332, 164 S.E. 859 (1932).
4. A non-signatory to a written agreement requiring arbitration may
utilize the estoppel theory to compel arbitration against an unwilling signatory when the
signatory’s claims make reference to, presume the existence of, or otherwise rely on the
written agreement. Such claims sufficiently arise out of and relate to the written
agreement as to require arbitration.
i
WORKMAN, Justice:
This is an appeal from the July 21, 2016, order of the Circuit Court of
Berkeley County denying the motion of petitioner Bluestem Brands, Inc. d/b/a Fingerhut
(hereinafter “Bluestem”) to compel arbitration and dismiss the third-party complaint.
The circuit court found that the arbitration agreement was not binding on respondent
Darlene Shade (hereinafter “Ms. Shade”), in part, because 1) Ms. Shade did not assent to
arbitration given that she did not receive a copy of the most recent credit card agreement
containing arbitration language; and 2) Bluestem’s credit partners—and not Bluestem—
were party to any potentially applicable credit agreement requiring arbitration.
Upon careful review of the briefs, the appendix record, the arguments of the
parties, and the applicable legal authority, we conclude that, although the most recent
amendments to the credit agreement lack mutual assent and therefore cannot be utilized
to compel arbitration of this matter, the 2010 version of the credit agreement contains a
properly formed agreement to arbitration and encompasses the claims asserted by Ms.
Shade. We find further that Bluestem, as a non-signatory to the agreement, may utilize
the theory of equitable estoppel to compel arbitration under the agreement. Therefore,
the circuit court erred in denying Bluestem’s motion to compel arbitration.
I. FACTS AND PROCEDURAL HISTORY
Bluestem, doing business as “Fingerhut,” is a retailer of a variety of
consumer goods by way of catalog and internet shopping channels; Bluestem partners
1
with various banks to offer credit to its customers for “Fingerhut” purchases. Ms. Shade
made her first “Fingerhut” purchase in 2006. She made this purchase utilizing the credit
offered to customers through Bluestem’s then-credit partner, CIT Bank. Ms. Shade
applied for and was approved this credit by phone. Thereafter, Ms. Shade was sent a
welcome packet which included a written credit agreement entitled “CIT Bank Fingerhut
Credit Account Agreement.” The agreement contained no arbitration provision, but did
have a “change-of-terms” provision allowing for future amendments. In 2007, the credit
agreement was amended to include an arbitration agreement, along with an “opt-out”
provision. This agreement was sent to her with her monthly statement and she admits
receiving it. She did not opt out of the arbitration agreement and continued to use the
account to make additional purchases.
In 2010, Bluestem switched credit partners to MetaBank. Ms. Shade was
sent a notification of the change, along with a new credit agreement, which contained
essentially the same arbitration agreement and opt-out provision. Ms. Shade likewise
admits receiving this agreement. The new agreement indicated it would become effective
“from the first time a transaction is posted to your account.” She thereafter made thirty-
four purchases.
In 2012, Bluestem changed credit partners again and sent Ms. Shade a
notification that its credit partner had switched to WebBank; the notice contained an 800
number to call if she had any questions about her “Account.” The notice made no
2
mention of a new credit agreement and no new agreement was included with this notice.1
Ms. Shade claims that she never thereafter received a new agreement, nor does Bluestem
provide any evidence that she was ever provided with this agreement. The 2012 credit
agreement was purportedly amended one additional time in 2013 and notice of the
amended agreement, which made no changes to the arbitration provision, was sent to Ms.
Shade. Ms. Shade likewise denies receiving this agreement in full and, like the 2012
agreement, Bluestem provides no proof that it was sent to her. Ms. Shade made her final
purchase, purportedly subject to the 2013 agreement, on March 20, 2013.
Shortly thereafter, Ms. Shade’s account allegedly went delinquent in the
amount of $3,351.52; collection efforts were initiated by a debt collector, which filed the
instant action against her. Ms. Shade then brought a third-party complaint against
Bluestem, but none of the credit partners, alleging that the finance charges and interest
rate charged for her purchases were in violation of the West Virginia Consumer Credit
and Protection Act, West Virginia Code §§ 46A-1-101 et seq. Ms. Shade further alleges
that Bluestem—and not any of the various credit partners—is actually the entity
1
The Notice is entitled “Important Information for Valued Customers” and states
that as of July 1, 2012, Bluestem had partnered with a new credit issuer, WebBank, and
that the customer’s account had been transferred to WebBank. It advises that the account
number will remain the same, and will not affect the customer’s existing balance, future
purchases or “how you use your account.” It references the continuing operation of any
account protection plans and notes that statements will begin to reference WebBank as of
July 1. It concludes by inviting the customer to “[c]ontact us at 1-800-208-2500 if you
have questions regarding your Account.”
3
extending credit and is therefore participating in a “rent-a-bank scheme” whereby it
evades licensure and regulation in the State.
Bluestem moved to compel arbitration and dismiss the third-party
complaint, which motion was denied by the circuit court. The circuit court found that 1)
Ms. Shade never received the 2012 or 2013 credit card agreement and therefore could not
be compelled to arbitrate pursuant to it; and 2) Bluestem was not a party to any of the
prior arbitration agreements; therefore, there was no arbitration agreement with Bluestem
to be enforced.2 This appeal followed.
II. STANDARD OF REVIEW
This Court has held that “[w]hen an appeal from an order denying a motion
to dismiss and to compel arbitration is properly before this Court, our review is de novo.”
Syl. Pt. 1, W. Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W.Va. 465, 796
S.E.2d 574 (2017). With this standard in mind, we proceed to the parties’ arguments.
2
The circuit court further addressed at length Bluestem’s purported contention
that the catalogs received by Ms. Shade were pertinent to the formation of a valid
arbitration agreement. Bluestem apparently abandons its argument regarding the
catalogs, to the extent it was advanced before the circuit court. The circuit court also
engaged in a discussion regarding “browsewrap” agreements. “A browsewrap agreement
is a contract arising in the context of Internet commerce that is formed when one accepts
it merely by browsing a website.” Citizens Telecomms. Co. of W. Va. v. Sheridan, 239
W. Va. 67, ___, 799 S.E.2d 144, 149 (2017). However, this Court can discern no
“browsewrap” agreements relevant to the instant proceeding.
4
III. DISCUSSION
Unlike most arbitration cases recently considered by this Court, neither the
circuit court nor the parties raise issues of unconscionability. Rather, the challenge to the
instant arbitration agreement rests on general contract formation principles. The circuit
court found, and Ms. Shade argues, that she never received the 2012 or 2013 agreements;
therefore, she did not assent to arbitration and cannot be compelled to do so under those
agreements. The circuit court further found, and Ms. Shade argues, that whatever prior
agreement(s) may have been formed was entered into with the credit partners and not
Bluestem. Therefore, Ms. Shade argues that she cannot be compelled to arbitrate her
claims in this matter, which were filed exclusively against Bluestem, pursuant to those
agreements.
Generally, with respect to a trial court’s consideration of a motion to
compel arbitration, this Court has held:
When a trial court is required to rule upon a motion to
compel arbitration pursuant to the Federal Arbitration Act, 9
U.S.C. §§ 1–307 (2006), the authority of the trial court is
limited to determining the threshold issues of (1) whether a
valid arbitration agreement exists between the parties; and (2)
whether the claims averred by the plaintiff fall within the
substantive scope of that arbitration agreement.
Syl. Pt. 2, State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293
(2010). With this framework in mind, we examine the circuit court’s refusal to compel
arbitration.
5
A. Existence of a Valid Agreement
The United States Supreme Court has explained that “arbitration is simply a
matter of contract between the parties; it is a way to resolve disputes—but only those
disputes—that the parties have agreed to submit to arbitration.” First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938, 943 (1995). Therefore, an agreement to arbitrate must
contain the elements required for proper formation of any contract. Inasmuch as our
analysis requires us to first determine if any arbitration agreement which may potentially
govern this matter was legally formed, we will examine each potentially applicable
agreement.
Ms. Shade does not dispute receiving the 2007 and 2010 credit agreements,
both of which contained an arbitration provision, along with an “opt-out” provision.
Both agreements contain largely similar language requiring arbitration. The arbitration
provision in the 2010 agreement provides that
[a]ny claim, dispute or controversy (whether in contract,
regulatory, tort or otherwise, whether pre-existing, present or
future and including constitutional, statutory, common law,
intentional tort and equitable claims) arising from or relating
to the credit offered or provided to you, the actions of
yourself, us, or third parties; or the validity of this Arbitration
provision . . . must, after an election by you or us, be resolved
by binding arbitration[.]
The 2010 agreement further contains a notice in bold lettering in a box at the beginning
of the agreement stating: “Arbitration notice: This Agreement provides that all disputes
arising from or related to your Account may be resolved by arbitration. See ‘Arbitration’
6
below.” Moreover, the 2010 agreement provides that it becomes operable upon first use:
“You . . . will be bound by this Agreement from the first time you use the Account.” Ms.
Shade made forty-one purchases following receipt of the 2010 agreement.
Therefore, it appears clear that the 2007 and 2010 credit agreements
contained express arbitration provisions of which Ms. Shade had notice and an
opportunity to decline. Ms. Shade’s continued use of the credit after receiving the 2007
and 2010 credit agreements containing the arbitration agreements, per the language of the
agreement and as held by this Court, plainly constitutes mutual assent. As this Court has
explained:
West Virginia contract law requires mutual assent to form a
valid contract. . . . “‘In order for this mutuality to exist, it is
necessary that there be a proposal or offer on the part of one
party and an acceptance on the part of the other. Both the
offer and acceptance may be by word, act or conduct that
evince the intention of the parties to contract. . . .’”
New v. GameStop, Inc., 232 W.Va. 564, 572-73, 753 S.E.2d 62, 70-71 (2013) (emphasis
added) (quoting Ways v. Imation Enters. Corp., 214 W.Va. 305, 313, 589 S.E.2d 36, 44
(2003)); see also Citizens Telecomms., 239 W. Va. at ___, 799 S.E.2d at 149 (discussing
mutual assent and modification of unilateral contracts; noting that acceptance of
contractual terms and conditions occurred through “continued use” of the service); First
Nat. Bank of Gallipolis v. Marietta Mfg. Co., 151 W.Va. 636, 641-42, 153 S.E.2d 172,
176 (1967) (“That an acceptance may be effected by silence accompanied by an act of the
offeree which constitutes a performance of that requested by the offeror is well
7
established.”). Accordingly, both agreements were properly formed and, upon acceptance
of the terms of the 2010 agreement, it became the agreement governing Ms. Shade’s use
of the credit provided thereunder. 3
The 2012 and 2013 agreements, however, present an entirely different
factual scenario. Ms. Shade contends that she never received either of these agreements
and Bluestem provides no evidence that Ms. Shade was ever sent a copy of these
agreements. Instead, Bluestem claims the 2012 and 2013 purported amendments to the
2010 credit agreement were properly made through provision of a “notice” of the change
of credit provider. Citing West Virginia Code § 46A-3-116(2) (1994), Bluestem
maintains that the credit agreement may be unilaterally amended with simple written
notice and that actual provision of the agreement is not necessary:
A creditor may change the terms of a revolving charge
account or revolving loan account whether or not the change
is authorized by prior agreement. The creditor shall give to
the consumer written notice of such change not less than
fifteen days prior to the effective date of such change.
3
Not surprisingly then—albeit belatedly—in a responsive supplement recently
provided to the Court, Ms. Shade expressly concedes that the 2007 and 2010 agreements
were “legally formed” but merely maintains that such agreements were not entered into
with Bluestem. In this supplement, she also launches several previously undeveloped
challenges to the 2010 agreement’s applicability to this action, despite conceding in her
initial brief that “there is no dispute in this case regarding ‘the scope of arbitrable
issues.’” These newly-formed challenges to the scope of the arbitration language are
addressed more fully infra.
8
The circuit court found, and Ms. Shade argues, that the lack of receipt of this purported
modification in this instance is fatal to mutual assent to arbitrate under the 2012 and 2013
agreements.4 We agree.
Bluestem appears to take the tenuous position that insofar as the “notice”
provision contained in West Virginia Code § 46A-3-116(2) is satisfied, mutual assent is
established. Bluestem’s argument is unavailing. While the statute does in fact allow for
unilateral modification of a revolving charge account with written notice to the consumer,
implicit in this notice requirement is the necessity of providing the consumer with the
modifications, so as to establish mutual assent. The statute cannot be read to obviate the
necessity of this element of contract formation. Bluestem’s notice indicates merely that
there was a change in credit partners. It makes no reference whatsoever to the existence
of a new credit agreement.
To overcome this inadequacy, Bluestem cites a litany of cases which it
claims stand for the proposition that its “notice,” along with the availability of an 800
number for questions regarding Ms. Shade’s “[a]ccount” were sufficient to establish
mutual assent to a subsequent amendment to the 2010 agreement. Bluestem argues that
had Ms. Shade desired to obtain the new credit agreement, she need only have availed
4
The circuit court also found that the credit agreements were illusory simply
because they were unilaterally amended several times. We find this conclusion erroneous
and note the circuit court’s apparent failure to consider West Virginia Code § 46A-3
116(2), which expressly permits amendment of revolving charge account agreements.
9
herself of the 800-number to request it. However, in all of the cases cited by Bluestem,
the subsequent amendment at issue was either provided to the consumer or was
sufficiently described such as to put the consumer on notice regarding the substance of
the amendment and that further information regarding the amendment could be obtained
by following the instructions given. See, e.g., Cicle v. Chase Bank USA, 583 F.3d 549,
551, 554 (8th Cir. 2009) (“Chase sent Cicle a new arbitration agreement that replaced the
one previously in effect” and “[t]he notice [of amendment to cardholder agreement]
specifically stated in the ‘Summary of Changes’ section that the arbitration agreement
was being amended and suggested that the cardholder review the changes.”); Ackerberg
v. Citicorp USA, Inc., 898 F. Supp. 2d 1172, 1174 (N.D. Cal. 2012) (“Citibank notified
plaintiff that it would be modifying the terms of all former Sears accounts. The
modifications would include changes to, inter alia, the arbitration clause and the
governing law.” (citations omitted)); Guerrero v. Equifax Credit Info. Servs., Inc., No.
CV 11-6555, 2012 WL 7683512, at *3 (C.D. Cal. Feb. 24, 2012) (“Citibank mailed its
cardmembers, including Plaintiff, a ‘notice of Change in Terms regarding Binding
Arbitration to Your Citibank Card Agreement[.]’ . . . The 2001 Change–in–Terms was
mailed to Plaintiff with his October 2001 billing statement, along with an express
directive to ‘please see the enclosed change in terms notice for important information
about the binding arbitration provision we are adding to your Citibank card
agreement.’”); Daugherty v. Experian Info. Sols., Inc., 847 F. Supp. 2d 1189, 1191 (N.D.
Cal. 2012) (“Sears changed the terms of Plaintiff’s credit card account by mailing him
10
new credit card agreements. Each of these agreements contained a change of terms
provision, an arbitration provision, and an assignment provision.” (citations omitted)).
None of the cited cases found that a subsequent amendment was valid
where the consumer was neither 1) provided with the amendment, nor 2) provided with
sufficient notice of the substance of the amendment and opportunity to obtain additional
information and/or the actual amendment. Bluestem’s notice that it was changing credit
partners fails to even suggest that there is a new agreement to obtain. In fact, Bluestem’s
notice reads in such a way as to reassure the consumer that nothing has changed despite
the switch in credit partners: “Your account number will remain the same. In addition,
this change will not affect your existing balance, future purchases or how you use your
account.” It is self-evident that a party cannot assent to a change of which it is unaware.
“A meeting of the minds of the parties is a sine qua non of all contracts.” Syl. Pt. 1,
Martin v. Ewing, 112 W.Va. 332, 164 S.E. 859 (1932).
This precise issue was recently addressed in a case involving Bluestem and
these same credit agreements in the Minnesota District Court. In Parm v. Bluestem
Brands, Inc., Civil Nos. 15-3437 and 16-624, 2017 WL 1193993, at *7 (March 30, 2017,
D. Minn.), appeal filed, No. 17-1931 and -1932, (8th Cir. May 2, 2017), the District
Court found that the lack of adequate notice of the new agreement and arbitration
provision made the 2012 agreement invalid: “Parm and Bowers received no notice of
updates to the 2010 Agreement other than those specifically mentioned in mailings. The
11
Banks therefore did not effectively modify the 2010 Agreement or the arbitration
provision therein[.]” We agree with the Parm court and find that Ms. Shade cannot be
bound by the terms of the 2012 or 2013 arbitration agreements since the attempted
amendments of the credit agreement were invalid.
However, notwithstanding the ineffective modification attempted by the
2012 and 2013 agreements, it is clear that the validly formed 2010 credit agreement and
attendant arbitration provision continued to be in effect and governed Ms. Shade’s use of
the credit. Simply because the 2012 and 2013 amendments were ineffective does not
render the pre-existing credit agreement nonexistent. The Parm court came to the same
conclusion: “The Banks therefore did not effectively modify the 2010 Agreement or the
arbitration provision therein, and [t]he arbitration provision in the 2010 Agreement, as
opposed to a later version of the Credit Agreement, is binding on Parm and Bowers.” Id.
Accordingly, Ms. Shade is subject to the arbitration agreement contained in
the most recent agreement to which she assented—the 2010 agreement.5 Quite simply,
5
As previously noted, in a supplement provided to the Court, Ms. Shade launches
a more substantive defense to the applicability of the 2010 agreement, seemingly
recognizing—albeit belatedly—the potential to be bound by the 2010 agreement.
Therein, Ms. Shade takes the position that the 2010 agreement “did not apply at the time
the underlying conduct occurred in any event[.]” (emphasis added). However, the
briefing scarcely mentions, much less fully develops, this issue. “It is . . . well settled . . .
that casual mention of an issue in a brief is cursory treatment insufficient to preserve the
issue on appeal.” State v. Lilly, 194 W.Va. 595, 605 n.16, 461 S.E.2d 101, 111 n.16
(1995) (quoting Kost v. Kozakiewicz, 1 F.3d 176, 182 (3d Cir. 1993)). Ms. Shade’s
defense to the 2007 and 2010 agreements can be fairly said to be limited to the issue of
(continued . . .)
12
Ms. Shade agreed to arbitrate claims arising from the use of the credit provided for
“Fingerhut” purchases; a dispute about which particular agreement is binding does not
extinguish her unequivocal agreement to arbitrate any such claims. See EEC, Inc. v.
Baker Hughes Oilfield Operations, Inc., 460 F. App’x 731, 735 (10th Cir. 2012) (finding
that multiple documents “unambiguously reflect[ing] the parties’ intent” to arbitrate
required arbitration, irrespective of which particular agreement controlled).
B. Enforcement of Arbitration Agreement by Bluestem
Having determined that the 2010 credit agreement was validly formed and
continued to govern Ms. Shade’s use of the credit, the remaining question is whether
Bluestem may enforce the arbitration provisions contained therein. Ms. Shade argues
that the credit agreements were with the credit partners, 6 rather than Bluestem.
Therefore, she argues that Bluestem cannot enforce the arbitration agreement.
Bluestem being a non-signatory to the agreement. She did not advance a time-based
defense to applicability of those agreements.
Nevertheless, we note that Ms. Shade’s complaint itself belies her contention that
the complained-of conduct is limited to a particular period of time not encompassed by
the 2010 agreement, particularly since we have determined that such agreement
continued in effect throughout the duration of her relationship with Bluestem. She
alleges that the excessive interest was levied “every month” and late fees were charged
“after her first and all subsequent late payments,” respectively.
6
Once again, in a supplement to the Court, Ms. Shade develops yet another new
argument focused on the 2010 agreement, suggesting that since that agreement involved a
credit partner other than WebBank—against whom she directs her “rent-a-bank”
allegations—it is inapplicable to the current dispute. This is but a different facet of the
similarly undeveloped argument described in n.5 supra. This Court has made clear that
(continued . . .)
13
However, “[w]ell-established common law principles dictate that in an
appropriate case a nonsignatory can enforce, or be bound by, an arbitration provision
within a contract executed by other parties.” Int’l Paper Co. v. Schwabedissen
Maschinen & Anlagen GMBH, 206 F.3d 411, 416-17 (4th Cir. 2000). This Court
recently addressed enforcement of arbitration agreements relative to non-signatories in
Chesapeake Appalachia, L.L.C. v. Hickman, 236 W.Va. 421, 781 S.E.2d 198 (2015). In
Chesapeake Appalachia, however, the issue involved a signatory’s attempt to enforce
arbitration against a non-signatory and we therefore issued a syllabus point articulating
five theories under which a non-signatory may be so compelled. See Syl. Pt. 10, Id. (“A
signatory to an arbitration agreement cannot require a non-signatory to arbitrate unless
the non-signatory is bound under some traditional theory of contract and agency law. The
five traditional theories under which a signatory to an arbitration agreement may bind a
“‘[a] skeletal “argument,” really nothing more than an assertion, does not preserve a
claim. . . . Judges are not like pigs, hunting for truffles buried in briefs.’” State, Dept. of
Health v. Robert Morris N., 195 W.Va. 759, 765, 466 S.E.2d 827, 833 (1995), (quoting
United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991)). Furthermore, “[a]lthough we
liberally construe briefs in determining issues presented for review, issues which are not
raised, and those mentioned only in passing but are not supported with pertinent
authority, are not considered on appeal.” State v. LaRock, 196 W.Va. 294, 302, 470
S.E.2d 613, 621 (1996).
Nevertheless, our analysis of the non-signatory issue effectively resolves this
argument. Ms. Shade unequivocally agreed to arbitrate disputes arising from her use of
the credit provided for “Fingerhut” purchases and she expressly chose not to name
WebBank as a defendant. As discussed infra, her claims plainly arise from and relate to
the credit agreement she seeks to disavow. Any attempt to engineer her pleadings to
evade that agreement is rendered unsuccessful by virtue of the estoppel theory.
14
non-signatory are: (1) incorporation by reference; (2) assumption; (3) agency; (4) veil
piercing/alter ego; and (5) estoppel.”).
Although Chesapeake Appalachia dealt with the converse of the factual
scenario in this case, we nevertheless acknowledged the estoppel theory of arbitration
enforcement by a non-signatory: “[A] willing non-signatory seeking to arbitrate with a
signatory that is unwilling may do so under what has been called an alternative estoppel
theory, which takes into consideration the relationships of persons, wrongs and issues.”
Id. at 440, 781 S.E.2d at 217 (quoting Merrill Lynch Inv. Managers v. Optibase, Ltd., 337
F.3d 125, 131 (2d Cir. 2003)). See Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64 F.3d
773, 779 (2d Cir. 1995) (observing courts have widely held “parties [are] estopped from
avoiding arbitration [where] they ha[ve] entered into written arbitration agreements,
albeit with the affiliates of those parties asserting the arbitration and not the parties
themselves.”).
The Fourth Circuit has elaborated on the concept, setting forth a test for
application of the estoppel theory of arbitration enforcement by a non-signatory, as
follows:
[E]stoppel applies when the signatory to a written agreement
containing an arbitration clause must rely on the terms of the .
. . agreement in asserting its claims against the nonsignatory.
When each of a signatory’s claims against a nonsignatory
makes reference to or presumes the existence of the written
agreement, the signatory’s claims arise out of and relate
directly to the written agreement, and arbitration is
appropriate.
15
Am. Bankers Ins. Grp., Inc. v. Long, 453 F.3d 623, 627 (4th Cir. 2006) (quoting Brantley
v. Republic Mortg. Ins. Co., 424 F.3d 392, 395–96 (4th Cir. 2005)) (emphasis added).
Accordingly, we hold that a non-signatory to a written agreement requiring arbitration
may utilize the estoppel theory to compel arbitration against an unwilling signatory when
the signatory’s claims make reference to, presume the existence of, or otherwise rely on
the written agreement. Such claims sufficiently arise out of and relate to the written
agreement as to require arbitration.
Therefore, Ms. Shade’s argument that she may not be compelled to
arbitrate simply because Bluestem was not a signatory to the credit agreement
necessitates further analysis. The Court must view Ms. Shade’s allegations against
Bluestem to determine whether they reference, presume the existence of, or otherwise
rely on the 2010 credit agreement. In her recent supplement, Ms. Shade attempts to
utilize the Parm case to argue that the arbitration agreement does not reach her claims;
however, Parm fully supports a requirement to arbitrate.
Consistent with the estoppel rule articulated hereinabove, the Parm court
found that, despite the arbitration agreement’s language that “any and all disputes” were
subject to arbitration, only those that “‘aris[e] out of or relat[e] to’” the agreement or
relationship with WebBank were arbitrable. 2017 WL 1193993 at *11. Accordingly, the
Parm court found that allegations regarding Bluestem’s pricing of goods were not subject
16
to arbitration, as such allegations did not pertain or relate to the extension of credit. Id.
However, the court expressly found that allegations regarding interest rates and finance
charges were specifically governed by the arbitration agreement. Id. at *11-12. We
likewise find that Ms. Shade’s allegations pursuant to the West Virginia Consumer Credit
and Protection Act for unlawful late fees and usurious interest rates pertain exclusively to
charges arising pursuant to the credit provided to her, thereby permitting the use of
estoppel to compel arbitration of these claims.
As to her “rent-a-bank scheme” allegations, Ms. Shade alleges the existence
and operation of a deceptive scheme being perpetrated by Bluestem utilizing WebBank as
a “front” for its own creditor activity. She argues that because she has leveled these
claims only against Bluestem and contends that Bluestem is the “real” credit lender—
disavowing any involvement with the credit partners—such allegations could not
possibly “arise out of” any agreement with the credit partners. We find this contention to
be disingenuous.
Although Ms. Shade may not be trying to “prove” any of the credit
agreement’s terms, the existence of the credit purportedly extended under the agreement
is the necessary underpinning of her “rent-a-bank” allegations. Without the credit
agreement—which provided for the fees and interest rates she now complains of and sets
the stage for the relationships and “scheme” she alleges—she would have no cause of
action. See Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 382 (5th Cir. 2008)
17
(“Sherer has agreed to arbitrate any claims arising from ‘the relationships which result
from th[e] [a]greement.’ A loan servicer, such as Green Tree, is just such a ‘relationship.’
Indeed, without the Loan Agreement, there would be no loan for Green Tree to service[.]
. . . Sherer’s FDCPA and FCRA claims arise from Green Tree’s conduct as Sherer’s loan
servicer and, therefore, fall within the terms of the Loan Agreement’s arbitration
clause.”).
Accordingly, pursuant to the estoppel method of arbitration enforcement,
because her claims are necessarily predicated upon the existence of the credit utilized in
her relationship with Bluestem, Ms. Shade may be properly compelled to arbitrate her
claims against it. Therefore, we conclude that the circuit court erred in denying
Bluestem’s motion to compel arbitration.7
7
In view of our resolution of this matter, we find it unnecessary to address the
issues raised by Bluestem following oral argument regarding the delegation of issues of
arbitrability.
However, we take this opportunity to note that the parties to this matter
collectively provided no less than six letters after this appeal was perfected, ostensibly as
“notice of additional authorities” pursuant to Rule 10(i) of the West Virginia Rules of
Appellate Procedure. While certain of the communications pertained to cases recently
issued, we would be remiss if we did not note the unacceptable use of this procedural
mechanism to augment and/or develop arguments inadequately presented in the original
briefing. See n.3, 5, and 6, supra. We caution counsel that supplementation under Rule
10(i) is not to be utilized for otherwise impermissible responsive argument or raising
and/or developing new arguments or issues.
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IV. CONCLUSION
For the reasons set forth hereinabove, we reverse the July 21, 2016, order of
the Circuit Court of Berkeley County, West Virginia, and remand this matter for entry of
an order dismissing the action and compelling arbitration.
Reversed and remanded with directions.
19