The opinion of the court was delivered by: Castillo, District Judge.
Pamela Dorsey ("Dorsey") sues the defendants, H.C.P. Sales ("HCP") and
Greentree Financial Services ("Greentree"), for harms allegedly caused by
their performance of various home improvements and the related financing
contracts. Although most of her claims arise under state law, she
presents a federal question under the Truth in Lending Act,
15 U.S.C. § 1635 ("TILA"). Presently before the Court is Greentree's
motion to compel arbitration under the terms of a financing agreement
signed by Dorsey. We grant Greentree's motion to compel arbitration and
stay these proceedings pending completion of that arbitration.
In December 1997, Dorsey hired HCP to perform certain improvements on
her home. HCP agreed to arrange financing by Greentree. HCP began
remodeling Dorsey's home at the end of December 1997 even though Dorsey
had yet to see, much less sign, any loan documents. The first time Dorsey
saw any loan paperwork was on February 4, 1998, after HCP had
substantially completed its work on her home. Dorsey signed all of the
documents HCP placed before her.*fn1
One of the documents Dorsey signed, the Retail Installment Contract and
Security Agreement for Home Improvement ("Installment Contract"),
contains an arbitration clause:
All disputes, claims, or controversies arising from or
relating to this contract or the relationships which
result from this contract, or the validity of this
arbitration clause or the entire contract, shall be
resolved by binding arbitration. . . . The parties
agree and understand that all disputes arising under
case law, statutory law, and all other laws
including, but not limited to, all contract, tort, and
property disputes, will be subject to binding
arbitration in accord with this contract.
(Compl.Ex. C, Installment Contract at 3.) The contract, however, exempts
certain types of legal actions from mandatary arbitration:
Notwithstanding anything hereunto the contrary, we
retain an option to use judicial or non-judicial
relief to enforce a mortgage, deed of trust, or other
security agreement relating to the real property
secured in the in a transaction underlying this
arbitration agreement, or to enforce the monetary
obligation secured by the real property, or to
foreclose on the real property.
(Id.) In exchange for a $14,500 loan, Dorsey pledged a security interest
in her house and in the goods she purchased with the loan. (Id. at 1.)
Predictably (because we are here), Dorsey was unhappy with HCP's work
and, on July 29, 1998, mailed a letter purporting to rescind the
Installment Contract under TILA, 15 U.S.C. § 1635, and Regulation Z,
12 C.F.R. § 226.23. (Compl.Ex. H, Letter from Dorsey's attorney,
Michelle Weinberg, to HCP and Greentree of 7/29/98.) In October 1998, she
filed her federal lawsuit. Dorsey believes that HCP and Greentree
violated TILA by failing to disclose the statutory recission period and
provide written notice of her right to rescind. (Compl. Count I.) She also
presents four claims based in state law.
Dorsey signed a document containing as broad an arbitration clause as
it is possible to draft. Not only does it reserve for arbitration the
merits of all disputes, the validity of the contract, and the
arbitrability of a dispute; it also reserves the validity of the
arbitration clause itself to an arbitrator. That last provision leaves us
with a somewhat circular problem: on its face, the contract dictates
arbitration of the issue whether Dorsey agreed to arbitrate her disputes
but Dorsey claims she never agreed to that contractual term. In other
words, the issues Dorsey raises must be arbitrated unless, based on the
issues she raises, she never agreed to arbitrate those issues. Because
the Federal Arbitration Act instructs courts to compel arbitration "upon
being satisfied that the issue involved in [the lawsuit] is referable to
arbitration under [the arbitration] agreement," we must satisfy ourselves
that Dorsey did in fact agree to arbitrate her disputes. See Gibson v.
Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997)
("If there is no contract there is to be no forced arbitration.").
[1,2] When ruling on a motion to compel arbitration, "a federal court
may consider only issues relating to the making and performance of the
agreement to arbitrate." Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). We look only to
issues regarding the arbitration clause itself, and "will not allow a
party to unravel a contractual arbitration clause by arguing that the
clause was part of a contract that is voidable." Colfax Envelope Corp.
v. Local 458-3M, Chicago Graphic Communications Int'l Union, 20 F.3d 750,
754 (7th Cir. 1994) (citations omitted). Thus, Dorsey's recission
argument is unavailing.*fn2 See Sokaogon Gaming Enter. Corp. v.
Tushie-Montgomery Assoc., Inc., 86 F.3d 656, 659 (7th Cir. 1996)
("Although the arbitration clause is contained in a contract that the
tribe contends is illegal, the tribe rightly does not contend that the
illegality of the contract infects the arbitration clause."); Colfax, 20
F.3d at 755 ("[A] contract dispute is arbitrable even if one party argues
that the contract ...