A District Court judge in Texas has denied a defendant’s motion to dismiss a complaint and compel arbitration because the terms of the agreement between the original creditor and the plaintiff did not specifically name the defendant, even thought it did say the agreement included “our controlled subsidiaries, assignees, and agents.”
A copy of the ruling in the case of Moody v. I.C. System can be accessed by clicking here.
The plaintiff received a collection letter from the defendant that included the following statement: “This settlement offer is valid for the balance shown on your account(s) as of the date of this letter. Any additional balances added after this date are not included.” The plaintiff filed a class-action suit, alleging the letter violated the Fair Debt Collection Practices Act because it implied that additional charges could be added to the balance at a later date and because the defendant failed to accurately state the amount of the debt.
When entering into an agreement with the original creditor, the plaintiff agreed — but did not sign — to follow a list of terms and conditions, one of which was a mandatory arbitration clause. The plaintiff argues that the defendant has not demonstrated that it is an agent of the original creditor and that arbitration is only an option when the original creditor is part of the suit, which it is not in this case.
But Judge Ada Brown of the District Court for the Northern District of Texas, Dallas Division, did not see it that way, ruling there was nothing to allow her to conclude that the defendant was acting as an agent of the creditor. “The mere fact that the Terms contemplate use of a debt collector does not establish an agency relationship between T-Mobile and Defendant,” she wrote in ruling the defendant had not met its burden “to establish that a valid agreement to arbitrate exists between it and Plaintiff.”