The opinion of the court was delivered by: District Judge Walter Herbert Rice
Chief Magistrate Judge Michael R. Merz
DECISION AND ORDER DENYING DEFENDANT'S MOTION FOR RECONSIDERATION
This case is before the Court on Defendant's Motion for Reconsideration (Doc. No. 14) of the Magistrate Judge's Decision and Order (Doc. No. 13) denying Defendant's Motion to Compel Arbitration and Stay Proceedings (Doc. No. 7).
The Motion for Reconsideration apparently seeks that reconsideration from the Magistrate Judge. The initial Motion to Compel was decided by the Magistrate Judge as a pre-trial nondispositive motion under 28 U.S.C. §636(b)(1)(A). While the parties had a right to appeal that decision to District Judge Rice under Fed. R. Civ. P. 72, the Motion for Reconsideration is not styled as an appeal or objection.
This litigation arises out of a loan transaction involving Ronald and Talat Akbar and Defendant in September, 2002. With the apparent assistance of the Miami Valley Fair Housing Center, Messrs. Akbar rescinded the transaction in September, 2005. A year later the Plaintiff filed this action pro se in the Montgomery County Common Pleas Court, claiming in very general terms that Defendant had violated the Truth in Lending Act and had acted as a predatory lender (Complaint, Doc. No. 2). Because the Complaint made claims which arise under federal law, Defendant removed the case to this Court on October 6, 2006 (Notice of Removal, Doc. No. 1). After answering (Doc. No. 5), Defendant moved to compel arbitration on the theory that the contract between the parties made arbitration with the National Arbitration Forum the sole forum for resolution of disputes arising under or from those contracts.
In the Decision for which reconsideration is sought, the Magistrate Judge concluded that the contract, fairly read, permitted either party to elect arbitration of any disputes, but did not mandate that they be resolved by arbitration.
The key relevant contract provision reads:
RIGHT TO ELECT ARBITRATION
You or Lender can elect to have "Covered Claims" (as defined below) be resolved by binding arbitration in accordance with the Arbitration Provisions, except for matters not covered by arbitration (as provided below). This election applies even if there is a pending or completed judicial action (up to entry of final judgment or settlement). If you bring a covered claim against Lender in court (either as a claim or counterclaim), Lender can choose to have that covered claim resolved by binding arbitration. If Lender brings a covered claim in court (either as a claim or counterclaim), then you can elect to have that covered claim resolved by binding arbitration.
(Motion, Doc. No. 7, Ex. 2.) The Court's interpretation of the foregoing provision was reinforced by the provision for beginning arbitration.
Either you or Lender can start arbitration anytime a covered claim arises between you and us. To start arbitration, you or Lender must do the following things, (a) complete a demand for arbitration (contract NAF for a copy); (b) send three copies of the complete d Demand For Arbitration and three copies of this Agreement, along with the filing fee, to National Arbitration Forunm,, P.O. Box 50191, Minneapolis, Minnesota 55405; and (c) send one copy of the Demand for Arbitration to the other party (that is, if Lender starts arbitration, Lender sends it to you; if you start arbitration, you send it to Lender) at the address shown herein.
Id. The Magistrate Judge concluded that the arbitration provisions require "that the party desiring to have a covered claim arbitrated make a demand for arbitration by the means set forth in the contract. Because it is the Lender which prefers arbitration, it is the Lender which must make the demand. Defendant has presented no evidence to the Court that it has yet made such a demand." (Decision and Order, Doc. No. 13, at 3.)
Defendant argues "[s]ince it is Plaintiff, not AGFS, who asserts an affirmative claim, it is illogical to require AGFS to initiate an arbitration proceeding. . . . [T]he correct procedure is that the plaintiff files his claim before the appropriate arbitration forum . . . and then the respondent (here AGFS) files its response." (Motion for Reconsideration, Doc. No. 14, at 1.) Defendant notes that having a case decided by arbitration is "merely a change of forum, not a change of party status," suggesting that if it files the arbitration demand, it ...