The opinion of the court was delivered by: J. Phil Gilbert District Judge
This matter comes before the Court on the motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6) filed by defendants John Urankar and Gateway Automotive (Doc. 18). Plaintiff Andrew Sales has responded to the motion (Doc. 19). The Court also addresses Sales's motions for summary judgment (Doc. 21), for sanctions (Doc. 23) and for reconsideration of appointment of counsel (Doc. 24).
This suit arose after Sales purchased a car from Gateway Automotive in April 2008. Urankar is one of Gateway's employees. The complaint alleges that on April 10, 2008, Sales entered into a retail installment contract to purchase from Gateway a 2002 GMC Yukon. As a part of the deal, Sales traded in a 2003 GMC Yukon, paid $1,000 as a downpayment and applied to finance $11,383.95. The April 10 retail installment contract provided that Gateway had assigned the contract to Credit Acceptance Corporation and that all future payments should be made to Credit Acceptance. Sales's payments under that contract would be $369.89 for 57 months.
On April 24, Gateway notified Sales that the assignment of his retail installment contract had not been accepted by Credit Acceptance but that he could re-apply for credit through Car Financial Services, Inc. On that day, Sales entered into a second retail installment contract to finance $12,678.95 which obligated him to pay $531.25 per month for 36 months beginning May 24. Apparently Gateway told him he could not get financing without purchasing an extended warranty, which added $1,295 to the $11,383.95 price of the car. The April 24 retail installment contract is between Sales and Gateway and does not mention assignment to Car Financial Services.
When Sales sought to make his first payment on May 24, he learned that his April 10 retail installment contract had been assigned to and accepted by Credit Acceptance, and that Credit Acceptance had reassigned Sales's April 10 retail installment contract to Gateway at Gateway's request. Upon learning this, Sales tried to cancel the April 24 financing contract, but Gateway told him it was impossible because they had already sold his trade-in vehicle. Nothing in the filings suggests Gateway assigned the April 24 retail installment contract to any other entity.
After unsuccessfully attempting to pursue this matter in the United States District Court for the Eastern District of Missouri, in December 2008, Sales filed this lawsuit claiming the defendants violated the Truth in Lending Act ("TILA"), 15 U.S.C. § 1602, by changing the terms of his April 10 retail installment contract (Count 1) and the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act"), 815 ILCS 505/2c and 2, by failing to return his trade-in vehicle (Count 2) and by misrepresenting the condition of 2002 GMC Yukon he purchased from Gateway, which developed serious problems shortly after Sales purchased it (Count 3).
The defendants now ask the Court to dismiss the case on the basis that an arbitration agreement Sales signed on April 10 compels him to arbitrate this dispute at Gateway's request. Alternatively, they seek to dismiss all Sales's claims for failure to state a claim and Count 1 against Urankar because he cannot be liable under the TILA.
The arbitration aspect of this dispute is governed by the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq. The FAA "is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. The effect of the section is to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act." Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983); accord Perry v. Thomas, 482 U.S. 483, 488 (1987). The FAA provides that "[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable. . . ." 9 U.S.C. § 2; see Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443-44 (2006); Matthews v. Rollins Hudig Hall Co., 72 F.3d 50, 53 (7th Cir. 1995). An arbitration clause must be enforced "unless the agreement to arbitrate is not part of a contract evidencing interstate commerce or is revocable 'upon such grounds as exist at law or in equity for the revocation of any contract.'" Perry, 482 U.S. at 489 (quoting 9 U.S.C. § 2). Whether the parties have formed an agreement to arbitrate is normally a question for the Court to decide using state law contract principles. Continental Cas. Co. v. American Nat'l Ins. Co., 417 F.3d 727, 730 (7th Cir. 2005). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H. Cone, 460 U.S. at 24-25; accord County of McHenry v. Insurance Co. of the West, 438 F.3d 813, 823 (7th Cir. 2006).
The defendants rest their arguments on an arbitration agreement dated April 10, 2008, in which Sales and Gateway agreed that either may choose to arbitrate before the National Arbitration Forum any controversy or claim (other than a claim relating to [Gateway's] right to repossess the vehicle by self-help, if permitted or by judical [sic] process) arising from or relating to the vehicle lease, loan or financing agreement (the obligation) you have entered into with us on the date shown above. . . [including] all tort claims arising from the transaction to which the obligation relates or arising from our enforcement of the obligation, and any question reguarding [sic] whether a matter is subject to arbitration under this arbitration agreement.
There is no allegation the April 24 retail installment contract contained any agreement to arbitrate.
It is clear that this arbitration agreement is between Sales, Gateway and Gateway's assignees. It does not bind Urankar, who is merely an employee of Gateway. Thus, the arbitration agreement provides ...