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Armbrister v. Pushpin Holdings, LLC

United States District Court, N.D. Illinois, Eastern Division

September 17, 2012

Dwayne S. ARMBRISTER, Lawrence Guarnieri, Daron Williford, and Randolph Petron, individually and on behalf of the classes described below, Plaintiffs,
v.
PUSHPIN HOLDINGS, LLC, Defendant.

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[Copyrighted Material Omitted]

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Daniel A. Edelman, Catherine Anne Ceko, Cathleen M. Combs, James O. Latturner, Edelman, Combs, Latturner & Goodwin, LLC, Chicago, IL, for Plaintiffs.

Daron Williford, pro se.

Randolph Petren, pro se.

Michael P. Padden, Levenfeld Pearlstein, LLC, Chicago, IL, Scott E. Silberfein, Moses & Singer, LLP, New York, NY, for Defendant.

MEMORANDUM OPINION AND ORDER

ELAINE E. BUCKLO, District Judge.

This putative class-action complaint accuses Pushpin Holdings, LCC (" Pushpin" ) of unlawful lending practices, including filing suits on time-barred debts, threatening to report old debts to credit bureaus, and failure to honor the arbitration clauses in its contracts. Pushpin brings the instant motion to dismiss pursuant to Rules 12(b) and 9(b) of the Federal Rules of Civil Procedure. In the alternative, Pushpin asks for an order compelling Plaintiff Dwayne S. Armbrister (" Armbrister" ) to arbitrate his dispute with Pushpin and dismissing or staying this lawsuit as to Armbrister's claims pending arbitration. For the reasons stated, Armbrister's claims in Count I and Count II are stayed pending arbitration, and the remainder of Count II is dismissed, with leave to replead within 30 days of the date of this Order.

I.

In ruling on this motion to dismiss, I will accept the facts in the Second Amended Complaint (" SAC" ) as true. Pushpin is a limited liability company organized under Delaware law. Plaintiffs allege that Pushpin's

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principal business is filing suit, or threatening to file suit, on time-barred debts that it purchased for as little as a penny on the dollar. The named Plaintiffs, Armbrister, Lawrence Guarnieri (" Guarnieri" ), Daron Williford (" Williford" ), and Randolph Petren (" Petren" ) are businessmen who leased equipment from a unit of CIT Financial (" CIT" ), in Chicago.

A. Facts Relating to Armbrister

Armbrister operated a company called Ace Security Laminates, LLC, in North Carolina. On or about Sept. 6, 2002, he leased two credit card processing machines from CIT, and personally guaranteed the lease. Armbrister's business failed, and the last payment made on the lease was in early 2003. Armbrister returned the equipment at that time, and heard nothing further about the lease until May 2011.

On May 16, 2011, Armbrister received a delinquency letter from Alethea Wiggins, an account manager in the Legal Collections Department at Pushpin. Wiggins wrote that " [d]ue to your continued delinquency and failure to pay the outstanding balance listed above, your account has been referred to my department to initiate a civil action against you as allowed under your personal guaranty in your lease agreement." (emphasis in original) (Dkt. No. 54, App. A to SAC). Wiggins added: " Please be advised that your delinquency has been reported to the credit bureaus as a chargeoff or collection account and will be reflected on your credit report." (emphasis in original) ( Id. )

In November 2011, Armbrister received a letter from Pushpin's attorney demanding payment of $7,628.22 as well as a draft verified complaint for breach of a personal guaranty. (Dkt. No. 54, App. B to SAC). The draft complaint was to be filed in the Circuit Court of Cook County, but Pushpin has not filed it. The guaranty signed by Armbrister, but not those of the other named plaintiffs, contains an arbitration provision. It provides, " Any claim or controversy, including any contract or tort claim between or among us, you or any Guarantor related to this Lease, shall be determined by binding arbitration in accordance with Title 9 of the U.S.Code and the Commercial Arbitration Rules of the American Arbitration Association." (Dkt. No. 54, App. B.)

B. Facts Relating to Plaintiff Guarnieri

In 2001, Guarnieri opened a restaurant in Rancho Cucamonga, Calif. In February 2001, he leased equipment from CIT and personally guaranteed the lease. According to Pushpin, the restaurant defaulted on the lease on Nov. 5, 2001. Guarnieri filed for personal bankruptcy in the summer of 2001, and believes that the liability was discharged at that time.

In October 2011, Guarnieri received a form demand letter and a draft form complaint similar to the one Pushpin sent to Armbrister. In those documents, Pushpin sought $11,963.04 and threatened to file suit in the Circuit Court of Cook County. (Dkt. No. 54-1, App. D to SAC.) Pushpin filed a verified complaint for breach of a personal guaranty on Nov. 2, 2011. (Dkt. No. 54-1, App. E to SAC.) No action has been taken in the state court case.

C. Facts Relating to Plaintiff Williford

Williford operated a car wash in Anderson, South Carolina as a sole proprietorship. In January 2001, he leased equipment from CIT and personally signed the lease. According to Pushpin, the car wash defaulted on the lease on Dec. 18, 2001. Williford heard nothing further about the lease until mid-2011. On information

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and belief, at that time he received a delinquency letter similar to the one mailed to Armbrister. Also on information and belief, Plaintiffs allege that Williford received a demand letter and a draft complaint similar to the one described above. On Nov. 30, 2011, Pushpin filed suit against Williford in Cook County Circuit ...


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