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Miller v. TLC Resorts Vacation Club, LLC

United States District Court, W.D. Kentucky, Owensboro Division

December 18, 2018




         This matter is before the Court on Defendant's Motion to Compel Arbitration and Dismiss Action or, in the alternative, Motion to Dismiss [DN 8]. Fully briefed, this matter is ripe for decision. For the following reasons, the Defendant's motion is GRANTED IN PART and DENIED IN PART.

         I. Background

         Plaintiffs Michael and Magdalena Miller bring this action against Defendant TLC Resorts Vacation Club, LLC (“TLC”). In 2015, the Millers enrolled with TLC, a company that offers memberships for vacation discounts and benefits. During the enrollment process, the Millers provided their cell phone numbers and agreed to receive transaction and collection calls at the provided cell phone numbers. Eventually, the Millers defaulted on their 48-month Retail Installment Contract with TLC and subsequently began to receive phone calls from TLC attempting to collect on the Millers' debt. Despite the Millers' request that TLC not contact them any further, between March 16, 2017 and May 11, 2017, they received approximately fifty calls from TLC to their cell phones. On May 9, 2018, the Millers filed this lawsuit against TLC claiming violations of the Telephone Consumer Protection Act, the Kentucky Consumer Protection Act, and common law.

         TLC now asks the Court to compel arbitration of the Millers' claim. TLC's motion is based on an arbitration provision included in the contract that the Millers signed with TLC. By signing TLC's Club Rules, the parties promised that “we agree to resolve any disputes through binding arbitration or small claims court instead of in courts of general jurisdiction.” (TLC Club Rules [DN 8-4] 4.) Further, “Club Manager and you agree to arbitrate all disputes and claims between us that can't otherwise be resolved through customer service . . . This agreement to arbitrate is intended to be broadly interpreted . . . .” (Id.) On this basis, TLC asks this Court to compel arbitration and dismiss the Millers' lawsuit.

         II. Standard of Review

         The Federal Arbitration Act (“FAA”) provides, “A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. “Before compelling an unwilling party to arbitrate, the court must engage in a limited review to determine whether the dispute is arbitrable; meaning that a valid agreement to arbitrate exists between the parties and that the specific dispute falls within the substantive scope of that agreement.” Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003). Furthermore, “[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Id.

         III. Discussion

         The Millers do not dispute the existence of the arbitration agreement in the Club Rules included in their agreement with TLC. Rather, they argue that the Court should refuse to compel arbitration or dismiss their case for two reasons. First, the Millers contend that TLC waived its right to arbitration. Second, the Millers claim that TLC's arbitration agreement is unconscionable and thus, unenforceable.


         First, the Millers claim that TLC has waived its right to invoke arbitration. Plaintiffs' counsel sent a pre-litigation demand letter to TLC on May 31, 2017. After a delay in receiving the response, discussions about the case began on September 1, 2017. At that time, counsel for TLC made Plaintiffs' counsel aware of the arbitration provision within the TLC Club Rules. Plaintiffs' counsel requested a copy of the agreement containing the arbitration clause because the Millers no longer had a copy of the document they signed. Counsel for TLC did not send Plaintiff's counsel the agreement despite numerous requests. “The Plaintiffs waited until May 9, 2018, before finally deciding to file a lawsuit and seek relief.” (Resp. [DN 12] at 5.)

         Due to TLC's counsel's refusal to provide a copy of the contract and arbitration provision for an extended period of time, the Millers argue that TLC waived its right to arbitrate by forcing them to invoke judicial process. “An agreement to arbitration may be ‘waived by the actions of a party which are completely inconsistent with any reliance thereon.'” Highlands Wellmont Health Network, Inc. v. John Deere Health Plan, Inc., 350 F.3d 568, 573 (6th Cir. 2003); see also Am. Gen. Home Equity, Inc. v. Kestel, 253 S.W.3d 543, 556 (Ky. 2008) (“Because waiver is not to be lightly inferred and because the general policy of both federal law and Kentucky law is to favor arbitration where parties have reached a valid agreement that disputes be arbitrated, courts must enforce arbitration agreements where (as here) the party seeking arbitration has not engaged in litigation conduct that is clearly inconsistent with asserting their arbitration rights.”).

         In this case, TLC has not acted in a manner completely inconsistent with asserting their right to arbitrate. Although TLC's counsel did not provide a copy of the agreement when requested, the Millers were made aware of the arbitration provision contained within TLC's Club Rules. Furthermore, upon receiving notice of this lawsuit, TLC immediately invoked its right to arbitrate by bringing this motion requesting that the Court compel arbitration. For this reason, the Court does not find that TLC has waived its right to arbitrate this dispute.

         Uncons ...

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