Another of a recent spate of TCPA cases turning on a defendant’s attempt to enforce an arbitration agreement. In this case, the attempt was against a non-signatory married to the person who inked the agreement.
In Canady v. Bridgecrest Acceptance Corp., 2020 U.S. Dist. LEXIS 71625, Case No. CV-19-047328-PHX-DWL, United States District Court for the District of Arizona, decided April 23, 2020, Tonya Canady’s husband bought a truck from the defendant’s predecessor in interest. In doing so, he entered into a Retail Purchase Agreement and a separate Arbitration Agreement. In a related loan application, he provided his wife’s cell phone number. Thereafter, Mr. Canady approved the addition of his wife as “an authorized third party” on his loan account and authorized Bridgecrest to speak with her about the account.
As for the arbitration agreement, it bound Mr. Canady “or any of his personal representatives” to resolve “any claim…of every kind and nature” through binding arbitration. However, disputes about the scope of the arbitration clause were for a court to decide.
Based on the authorization provided by Mr. Canady, Bridgecrest started to call his wife about the account and, complained Mrs. Canady, continued to do so even after she told them to stop. Her class action TCPA lawsuit followed.
Bridgecrest answered, “hold your horses;” arbitration is required here. Even though she never signed the arbitration agreement, Mrs. Canady is bound to arbitrate because she is her husband’s “personal representative” and in seeking to “exploit the underlying contract,” she should be equitably estopped from “avoiding its burdens.” Moreover, an alleged TCPA violation is a “statutory claim” within the scope of the agreement. Not so, says Mrs. Canady. She is neither bound by the arbitration agreement nor is the TCPA claim within its scope.
After wrestling with which state’s contract law should apply to determine whether Mrs. Canady “agreed” to be bound, the Court, for a variety of factors, applies Florida contract law. Under Florida law, the term “personal representative” is limited in its application and “is not, as Bridgecrest would have it, some sort of loose synonym for any person who is authorized to help another person.” Therefore, Mrs. Canady was not bound.
Bridgecrest’s other theory – that Mrs. Canady should be estopped from avoiding the arbitration agreement because a “‘non-signatory may be compelled to arbitrate when, as here, the non-signatory ‘knowingly exploits’ the benefits of the agreement and receives benefits flowing directly from the agreement ’” – was also unavailing. Under Florida law, at least, “the third-party beneficiary doctrine does not permit two parties to bind a third- without the third party’s agreement-merely by conferring a benefit on the third party.”
Further, the Court rejected precedent cited by Bridgecrest, where the plaintiffs “were clearly attempting to exploit the benefits of the underlying contract.” Here, the Court observed, “Canady’s TCPA claim is not somehow derivative of her husband’s rights under his contractual agreements with the car dealership.”
Another TCPAWorld lesson learned?– to avoid a result like Canady, best to get a signature or other affirmative agreement by the person against whom you seek to enforce an arbitration agreement.