PAIGE J. GOSSETT UNITED STATES MAGISTRATE JUDGE

ORDER AND REPORT AND RECOMMENDATION

PAIGE J. GOSSETT UNITED STATES MAGISTRATE JUDGE

Plaintiff Crystal Anderson, a self-represented litigant, filed this action pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. Plaintiff files this action in forma pauperis under 28 U.S.C. § 1915. This matter is before the court pursuant to 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2) (D.S.C.) for a Report and Recommendation on Defendant Southern Finance of South Carolina Inc.'s (“Southern Finance”) motion to compel arbitration and stay the action. (ECF No. 14.) Anderson filed a response in opposition to the motion (ECF No. 25), and Southern Finance filed a reply (ECF No. 27). Having reviewed the record presented and the applicable law, the court recommends that the motion to compel arbitration be granted and the matter be dismissed in lieu of a stay.

BACKGROUND

Anderson filed this action on July 23, 2021, claiming Southern Finance violated federal consumer protection laws in attempting to collect on a loan between the parties, and seeking damages for the violations. Southern Finance filed an Answer and moved to compel arbitration. Southern Finance indicates that it entered into a loan agreement with Anderson on November 10, 2020. Southern Finance provides a copy of the note. (Def.'s Mot. to Compel, Ex. A, ECF No. 14- 1.) The note contains a provision for alternative dispute resolution, which provides in relevant part:

The parties agree that this alternative dispute resolution agreement is a material inducement for Lender to make this loan to Borrower. The parties agree that any claim arising out of or in connection with this loan or out of any dealing between Lender and Borrower related to this loan shall be submitted to binding arbitration in the state of Borrower's residence as of the date Lender's check is deposited by Borrower.

Arbitration Act, 9 U.S.C. § 2, and further, that the court should stay this action pending arbitration pursuant to 9 U.S.C. § 3. Anderson, however, argues that the arbitration provision in the note is “null and void” and denies her right to due process. (Pl.'s Resp. Opp'n, ECF No. 25 at 1.)

DISCUSSION

A. Arbitration Generally

A litigant can compel arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1, et seq., if the litigant can demonstrate: “(1) the existence of a dispute between the parties; (2) a written agreement that includes an arbitration provision which purports to cover the dispute; (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce; and (4) the failure, neglect or refusal of the [party] to arbitrate the dispute.” Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 87 (4th Cir. 2005) (quoting Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002)). The FAA provides that written arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The policy behind the FAA “was to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). Thus, courts are to afford a “healthy regard” for the federal policy favoring arbitration, id. at 26, and arbitration agreements are to be “rigorously enforced, ” Perry v. Thomas, 482 U.S. 483, 490 (1987). Doubts regarding the scope of issues covered by an arbitration agreement must be resolved in favor of arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).

When a question of arbitrability arises, the district court, not the arbitrator, decides whether a matter should be resolved through arbitration. See Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 299-301 (2010); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942-44 (1995); AT&T Tech., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 651 (1986). This determination, however, is limited to a two-step inquiry: (1) whether a valid arbitration agreement exists; and (2) whether the specific dispute falls within the substantive scope of the arbitration agreement. See Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938 (4th Cir. 1999); see also Chorley Enters., Inc. v. Dickey's Barbeque Rests., Inc., 807 F.3d 553, 563 (4th Cir. 2015). Arbitration is compelled “unless it may be said with positive assurance that the arbitration [agreement] is not susceptible of an interpretation that covers the asserted dispute.” Peoples Sec. Life Ins. Co. v. Monumental Life Ins. Co., 867 F.2d 809, 812 (4th Cir. 1989) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (1960)).

B. Motion to Compel Arbitration Standard

In ruling on a motion to compel arbitration, the court employs the summary judgment standard. Rowland v. Sandy Morris Fin. & Est. Plan. Servs., LLC, 993 F.3d 253, 258 (4th Cir. 2021); Shaffer v. ACS Gov't Servs., Inc., 321 F.Supp.2d 682, 684 (D. Md. 2004). Summary judgment is appropriate only if the moving party “shows that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A party may support or refute that a material fact is not disputed by “citing to particular parts of materials in the record” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). Rule 56 mandates entry of summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

In deciding whether there is a genuine issue of material fact, the evidence of the non-moving party is to be believed and all justifiable inferences must be drawn in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id. at 248.

The moving party has the burden of proving that summary judgment is appropriate. Once the moving party makes this showing, however, the opposing party may not rest upon mere allegations or denials, but rather must, by affidavits or other means permitted by the Rule, set forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56(c), (e); Celotex Corp., 477 U.S. at 322. Further, while the federal court is charged with liberally construing a complaint filed by a pro se litigant to allow the development of a potentially meritorious case, see, e.g., Erickson v. Pardus, 551 U.S. 89 (2007), the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege facts which set forth a federal claim, nor can the court assume the existence of a genuine issue of material fact where none exists. Weller v. Dep't of Soc. Servs., 901 F.2d 387 (4th Cir. 1990).

C. Southern Finance's Motion to Compel Arbitration

The court concludes that Southern Finance has met its burden of showing that arbitration should be compelled in this matter. No. dispute exists between the parties that Anderson filed suit over Southern Finance's debt collection practices on the note; the note includes an arbitration agreement that covers “any claim arising out of or in connection with this loan or out of any dealing between Lender and Borrower related to this loan, ” (Def.'s Mot. to Compel, Ex. A, ECF No. 14-1 at 5); the issuance of loans and credit affects interstate commerce, see Hartranft v. Encore Cap. Grp., Inc., C/A No. 318-cv-01187-BEN-RBB, 2021 WL 2473951, at *17 (S.D. Cal. June 16, 2021) (collecting cases finding claims arising out debt collection on a loan affect interstate commerce); and Anderson refuses to arbitrate this matter. See Wood, 429 F.3d at 87.

For her part, Anderson does not argue that her claims are not covered by the arbitration agreement. Rather, she argues that the arbitration agreement is a nullity and violates her right to due process. (Pl.'s Resp. Opp'n, ECF No. 25 at 1.) Anderson gives no explanation for these arguments. Nothing on the face the arbitration agreement appears to render it a nullity and Anderson does not put forth any argument to refute the validity of the agreement. Therefore, Anderson fails to show that there is a genuine dispute of material fact as to the validity of the agreement. See Rowland, 993 F.3d at 258. To the extent Anderson argues that her right to due process is violated by the agreement because it prevents her from litigating her claims in federal court rather than before an arbitrator, her argument is contravened by federal law's favor for enforcing arbitration agreements. See Gilmer, 500 U.S. at 24; Perry, 482 U.S. at 490. Accordingly, the court should compel arbitration.

D. Southern Finance's Motion to Stay

Southern Finance also seeks to stay this matter pending arbitration, but the court concludes that the case should instead be dismissed because there would be no matter to adjudicate in this court after arbitration. The United States Court of Appeals for the Fourth Circuit has held that a motion to stay the federal action should be granted where the arbitration agreement covers the matter in dispute, Hooters, 173 F.3d at 937 (citing 9 U.S.C. §§ 3, 4); but the Fourth Circuit has also signaled that where all of the issues presented are arbitrable, the matter should be dismissed, Choice Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 712 (4th Cir. 2001). The Fourth Circuit admits that “tension” may exist between these cases, but the Fourth Circuit has not directly resolved it. Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 376 (4th Cir. 2012) (“There may be some tension between our decision in Hooters-indicating that a stay is required when the arbitration agreement ‘covers the matter in dispute'-and Choice Hotels-sanctioning dismissal ‘when all of the issues presented are arbitrable.' . . . We need not resolve this disagreement because, even under Choice Hotels, dismissal is not appropriate where, as here, the issues are not all subject to arbitration.”) (citations omitted).

However, other courts within this circuit, applying these cases, have found that dismissal is appropriate when all of the issues in the case are covered by the arbitration agreement. See, e.g., Stone v. Wells Fargo Bank, N.A., 361 F.Supp.3d 539, 558 (D. Md. 2019) (noting that despite this tension, courts in the Fourth Circuit have continued to find dismissal appropriate, and collecting examples); U.S. ex rel. TBI Invs., Inc. v. BrooAlexa, LLC, 119 F.Supp.3d 512, 541 (S.D. W.Va. 2015) (applying Aggarao and Choice Hotels to state that dismissal is appropriate where all of the issues presented in the lawsuit are arbitrable, but finding a stay was appropriate because the defendants did not move to compel arbitration of one of the claims).

Here, all of Anderson's claims arise out of her loan from Southern Finance, and therefore, all of her claims are subject to the arbitration agreement and there would be no claims to adjudicate after arbitration. Moreover, although the parties have not briefed the issue of whether dismissal is appropriate in lieu of a stay, the court concludes that its recommendation of dismissal provides adequate notice to the parties and they may address the procedural issue during the objection period, if they so elect. See Sparling v. Hoffman Const. Co., 864 F.2d 635, 637 (9th Cir. 1988) (“First, Active contends that dismissal was improper because Hoffman only requested a stay pending arbitration, not a dismissal. The fact that a dismissal was not requested, however, does not make it improper. A trial court may act on its own initiative to note the inadequacy of a complaint and dismiss it for failure to state a claim. The court must give notice of its intention to dismiss and give the plaintiff some opportunity to respond unless the plaintiffs cannot possibly win relief.”) (internal quotations, citations, and alterations omitted); Porter Hayden Co. v. Century Indem. Co., 939 F.Supp. 424, 429 (D. Md. 1996) (“For reasons not expressly stated in the record, defendants have sought a stay but not outright dismissal of this case. Nevertheless, federal district courts are vested with the inherent power to control and protect the administration of court proceedings.”), aff'd, 136 F.3d 380 (4th Cir. 1998); Arabian Motors Grp. W.L.L. v. Ford Motor Co., 495 F.Supp.3d 541, 552 (E.D. Mich. 2020) (stating that courts in that district have regularly exercised their discretion to dismiss actions subject to arbitration event though the party invoking arbitration only sought a stay), appeal docketed (6th Cir Nov. 24, 2020). Consequently, the court concludes that this action should be dismissed rather than stayed.

RECOMMENDATION

Based on the foregoing, the court recommends that Southern Finance's motion to compel arbitration be granted (ECF No. 14), that Anderson's motions be denied (ECF Nos. 24 & 25), and that this action be dismissed.

The parties' attention is directed to the important notice on the next page.

Notice of Right to File Objections to Report and Recommendation

The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.' ” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).

Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:

Robin L. Blume, Clerk United States District Court 901 Richland Street Columbia, South Carolina 29201

Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).