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Terlizzi v. Altitude Marketing, Inc.

United States District Court, D. Colorado

May 14, 2018

JASON TERLIZZI and REBECCA TERLIZZI, individually and on behalf of all others similarly situated, Plaintiffs,


          William J. Martínez Judge

         Plaintiffs Jason and Rebecca Terlizzi (“the Terlizzis”) bring this putative class action against Defendants Altitude Marketing, Inc. (“Altitude”), and GreenSky, LLC (“GreenSky”), for claims related to Defendants' allegedly deceptive marketing and sale of high-interest financing for rooftop solar power systems. (ECF No. 1.) Currently before the Court is GreenSky's Motion to Dismiss or, in the Alternative, to Compel Arbitration and Stay Proceedings. (ECF No. 86.) Despite its title, this motion primarily addresses arbitration and, alternatively, dismissal for failure to state a claim. The Terlizzis respond that they never entered into an arbitration agreement and that their claims are sufficiently pleaded.

         For the reasons stated below, the Court finds that an arbitration agreement exists between the Terlizzis and GreenSky, and that the arbitration agreement encompasses all of the disputes at issue here. Accordingly, under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., the Court must refer the parties to arbitration. GreenSky's motion will therefore be granted to that extent, and is otherwise denied without prejudice. The Court will stay proceedings between the Terlizzis and GreenSky, and the Terlizzis will be required to submit an appropriate filing regarding the current status of Altitude.


         For clarification, the Court notes the following:

         The Terlizzis filed this lawsuit in July 2016. (ECF No. 1.) GreenSky filed its Motion to Compel in August 2016. (ECF No. 13.) Altitude filed its own similar motion in September 2016. (ECF No. 23.) The Terlizzis filed a combined response to both motions in October 2016. (ECF No. 40.) Later than same month, GreenSky filed its reply brief (ECF No. 45), as did Altitude (ECF No. 46).

         In February 2017 (before the Court had ruled on the pending motions), the parties filed a Joint Motion to Stay Pending Settlement Discussions. (ECF No. 56.) Rather than simply stay all deadlines, the Court administratively closed the case and ordered the parties to file a joint status report, dismissal papers, or a motion to reopen no later than June 12, 2017. (ECF No. 57.)

         In April 2017, Altitude's counsel moved to withdraw. (ECF No. 58.) The Magistrate Judge granted that motion on May 5, 2017, and ordered Altitude to obtain new counsel by June 2, 2017. (ECF No. 61.) Altitude did not do so by that date, nor has it done so since.

         On June 12, 2017, the Terlizzis and GreenSky filed a Joint Status Report requesting thirty additional days for settlement discussions. (ECF No. 65.) In that report, the Terlizzis and GreenSky announced their understanding that Altitude had filed for bankruptcy and so the Terlizzis were no longer actively negotiating with Altitude. (Id. at 1 n.1.)[1] No suggestion of bankruptcy has been filed, however.

         The Court entered no order either approving or disapproving of the extra thirty days. However, the Magistrate Judge held a status conference on August 23, 2017, and concluded that the case should remain administratively closed while the Terlizzis and GreenSky continue to pursue settlement. (ECF No. 71.)

         On September 26, 2017, the Terlizzis and GreenSky moved to reopen the case, announcing the failure of their settlement negotiations. (ECF No. 74.) The Court granted that motion. (ECF No. 76.) GreenSky then began filing notices of supplemental authority in support of its Motion to Compel, which it identified as ECF No. 23. (See ECF Nos. 81-83.) ECF No. 23 was, in fact, Altitude's motion, not GreenSky's. In any event, the Court responded with the following text-only order (square-bracketed numerals indicate docket entries):

This matter is before the Court on the Notices of Supplemental Authority filed by Defendant GreenSky, LLC [81], [82], [83], and the parties' Joint Status Report [84]. These filings reflect that GreenSky views its previously-filed Motion to Dismiss [23] as still pending. However, under D.C.COLO.LCivR 41.2, “[r]eopening of a civil action does not reinstate any motion.” Therefore Defendants' previously-filed motion is not presently pending as a motion ripe for decision by the Court. GreenSky is therefore DIRECTED to re-file its motion to dismiss in the same form and content previously filed as a new docket entry. The Court will review the previously-filed Response [40] and Reply [46] briefs without requiring re-filing. To the extent GreenSky wishes the Court to consider authority not cited in its previously-filed motion, it should file a Motion for Leave pursuant to WJM Revised Practice Standards III.K. These same directives shall apply equally to Defendant Altitude Marketing, Inc., if and when it obtains new counsel to represent it in this action, although the Court notes that Altitude was previously ordered to obtain new counsel not later than June 2, 2017, but has not done so. (See ECF No. 61.) SO ORDERED[.]

         (ECF No. 85.) This order should have identified GreenSky's Motion to Compel as ECF No. 13, rather than 23; and GreenSky's reply brief as ECF No. 45, not 46. This error flowed from GreenSky's misidentification of its own motion.

         In any event, GreenSky refiled its own motion, as directed, and that is the motion currently before the Court. (ECF No. 86.) The Court has reviewed that motion as well as the Terlizzis' previously-filed response (ECF No. 40) and GreenSky's previously-filed reply (ECF No. 45). The Court has also considered the supplemental authority submitted by GreenSky at ECF No. 87-1.


         According to FAA § 3:

If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

9 U.S.C. § 3. Given the Terlizzis' claim that they never entered into an arbitration agreement, the question here is whether the Court is “satisfied that the issue[s] involved” in this dispute are “referable to arbitration.”

         “The existence of an agreement to arbitrate is a threshold matter which must be established before the FAA can be invoked.” Avedon Eng'g, Inc. v. Seatex, 126 F.3d 1279, 1287 (10th Cir. 1997). When a party raises a challenge to the existence of an arbitration agreement, this District has frequently treated such challenges as “governed by a standard similar to that governing motions for summary judgment.” Stein v. Burt-Kuni One, LLC, 396 F.Supp.2d 1211, 1213 (D. Colo. 2005); see also Goodwin v. H.M. Brown & Assocs., Inc., 2011 WL 820025, at *3 (D. Colo. Mar. 2, 2011) (citing cases following Stein). “Under this approach, ” it is said,

the moving party bears the initial burden of presenting evidence sufficient to demonstrate than an enforceable arbitration agreement exists. If the moving party satisfies that burden, the burden then shifts to the party opposing arbitration, which must show that there is a genuine issue of material fact as to the making of the agreement, using evidence comparable to that identified in Fed.R.Civ.P. 56.

Let's Go Aero, Inc. v. Cequent Performance Prod., Inc., 78 F.Supp.3d 1363, 1373 (D. Colo. 2015) (citations and internal quotation marks omitted). If the opponent “demonstrates a genuine issue of material fact, then a trial on the existence of the arbitration agreement is required.” Stein, 396 F.Supp.2d at 1213 (citing, inter alia, 9 U.S.C. § 4).

         The Terlizzis argue that the Court should apply the foregoing procedure (see ECF No. 40 at 12-13) and GreenSky's reply brief contains no counterargument (see ECF No. 45). GreenSky instead argues that the question of whether the parties entered into an arbitration agreement is something that the arbitration clause itself refers to an arbitrator. (Id. at 2-6.)

         GreenSky is incorrect on this point. Although interpretation of the scope of an arbitration clause is a matter that the parties may delegate to an arbitrator, the threshold question of whether they entered any agreement to arbitrate is a matter for the Court. See, e.g., Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 71 (2010) (“If a party challenges the validity . . . of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with that agreement . . . .”); Dumais v. Am. Golf Corp., 299 F.3d 1216, 1220 (10th Cir. 2002) (“The presumption in favor of arbitration is properly applied in interpreting the scope of an arbitration agreement; however, this presumption disappears when the parties dispute the existence of a valid arbitration agreement.”).

         Because GreenSky does not challenge the Terlizzis' proffered procedure for resolving the question of whether an arbitration agreement exists, the Court therefore deems the Terlizzis' argument conceded and will apply this District's typical approach.[2]

         III. FACTS

         The following facts are undisputed unless attributed to one party or another, or otherwise noted.

         A. The Terlizzis' Agreement to Purchase a ...

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