Opinion
No. 01-74905
January 30, 2003
OPINION AND ORDER
I. INTRODUCTION
This matter is before the Court on Defendant's Motion to Enforce Settlement Agreement or Alternatively, to Compel Arbitration. Plaintiff responded and Defendant replied. The Court finds that the facts and legal arguments are adequately presented in the parties' papers and that the decision process would not be significantly aided by oral argument. Therefore, pursuant to E.D. MICH. LR 7.1(e)(2), it is hereby ORDERED that the motion he resolved on the briefs submitted. For the reasons set forth below, Defendant's Motion is GRANTED IN PART.
II. BACKGROUND
Plaintiff's claims arise out of a credit card account Plaintiff opened in order to purchase certain furniture. With her Complaint, Plaintiff alleges that Defendant wrongfully tried to collect on debt attributed to that credit card account. Plaintiff originally filed her Complaint in Michigan state court. Defendant removed the action to this Court, but this Court remanded Plaintiff's state law claims. The following count of Plaintiff's Complaint remains before the Court: Violation of the Federal Debt Collection Practices Act (Count II). Count I and Counts III-X having previously been remanded to Wayne County Circuit Court on January 15, 2002.
The Court takes judicial notice that on November 20, 2002, Wayne County Circuit Court Judge Daphne Means Curtis entered an Order granting in part Defendant's Motion for Summary Disposition, dismissing Plaintiff's state law claims without prejudice, and referring Plaintiff's claims to binding arbitration. See Order Granting In Part and Denying In Part Household Retail Services, Inc.'s Motion To Enforce Settlement Agreement Or, Alternatively, For Summary Disposition, Litteral v. Household Retail Services, Inc., No. 01-13799-CK, Wayne County Circuit Court, Nov. 20, 2002.
Nonetheless, with the instant Motion, Defendant seeks to dismiss Plaintiff's Complaint pursuant to an alleged settlement agreement, or, in the alternative, dismiss the action and compel the matter to binding arbitration. In support of its argument regarding the purported settlement agreement, Defendant argues that Defendant's and Plaintiff's counsel entered into an enforceable settlement agreement, and that Plaintiff's counsel was "clothed with apparent authority to settle this case." See Defendant's Brief in Support, p. 10. Defendant seeks to specifically enforce that alleged settlement agreement. Plaintiff does not contest that Defendant's counsel and Plaintiff's counsel entered into an agreement regarding the settlement of Plaintiff's claims, nor does Plaintiff argue that Plaintiff's counsel ever lacked the authority to enter into a settlement agreement. Instead, Plaintiff argues that since the agreement was neither put in writing, nor placed on the record, the agreement is unenforceable pursuant to MICH. CT. R. 2.507(H). With regards to Defendant's alternatively requested relief, Defendant seeks to refer Plaintiff's Complaint to binding arbitration pursuant to Account Agreements mailed to Plaintiff in July 1998 and May 1999. Plaintiff argues that Defendant has waived its right to arbitration.
Regardless of the applicability of MICH. CT. R. 2.507(H), and before this Court undergoes an analysis of the enforceability of the arbitration provisions contained in the Account Agreements, this Court must first determine whether the Full Faith and Credit Statute precludes further consideration of Defendant's arguments. See 28 U.S.C. § 1738.
Although neither party has raised the issue of collateral estoppel or res judicata before this Court, it is within the Court's discretion to raise the issue sua sponte. See Holloway Constr. Co. v. United States Dep't of Labor, 891 F.2d 1211, 1212 (6th Cir. 1989).
III. ANALYSIS
Under the Full Faith and Credit Statute, 28 U.S.C. § 1738, the judicial proceedings of Michigan state courts have the same full faith and credit in this Court as they would have in a Michigan state court. See 28 U.S.C. § 1738. In Plaintiff's state court action, Defendant presented the same arguments as are presented here, and sought to enforce the same purported settlement agreement or have Plaintiff's claims referred to binding arbitration pursuant to the July 1998 and May 1999 Account Agreements. After conducting a hearing on the matter, the state court referred Plaintiff's claims to binding arbitration. Accordingly, if the Court gives full faith and credit to the state court's decision, then Plaintiff's Complaint should be dismissed and her claim referred to binding arbitration.
In deciding whether the full faith and credit statute lends preclusive effect to the state court decision, this Court must look to Michigan law to "assess the preclusive effect it would attach" to that decision. See Gutierrez v. Lynch, 826 F.2d 1534, 1538 (6th Cir. 1987). In Michigan, collateral estoppel serves "an important function in resolving disputes by imposing a state of finality to litigation where the same parties have previously had a full and fair opportunity to adjudicate their claims." See Nummer v. Michigan Dep't of Treasury, 533 N.W.2d 250, 253 (Mich. 1995). Collateral estoppel applies to preclude relitigation of issues actually determined, and essential to, a prior final judgment. See Senior Accountants v. Detroit, 249 N.W.2d 121 (Mich. 1976). In order for collateral estoppel to apply, the issue must be identical to that determined in the prior action. See NAACP v. Detroit Police Officers Ass'n, 821 F.2d 328, 330 (6th Cir. 1987).
In the present case, the state court entered an Order which necessarily addressed the issues presented in the instant case. The state court denied Defendant's motion to enforce the settlement agreement, but determined that the arbitration provisions contained in the July 1998 and May 1999 Account Agreements, the same arbitration provisions that are before this Court, were valid and enforceable. Accordingly, the state court dismissed Plaintiff's claims and referred those claims to binding arbitration. Therefore, this Court finds that the identical issues have been presented to this Court as were presented to the state court — specifically, the enforceability of the purported settlement agreement and the enforceability of the arbitration provisions contained in the July 1998 and May 1999 Account Agreements. Under Michigan law, collateral estoppel precludes Defendant from contesting the enforceability of the purported settlement agreement, and Plaintiff from contesting the validity of the arbitration provisions. Therefore, pursuant to 28 U.S.C. § 1738, this Court must give full faith and credit to the state court's judgment. Defendant's alternatively requested relief must be granted.
IV. CONCLUSION
Accordingly, and for the reasons set forth above, Defendant's Motion to Enforce Settlement Agreement or, Alternatively, to Compel Arbitration is GRANTED IN PART. Plaintiff's Complaint is DISMISSED WITH PREJUDICE and her claim referred to binding arbitration, as provided in the July 1998 and May 1999 Account Agreements relating to Plaintiff's subject credit card account with Household Bank (SB) N.A.
IT IS SO ORDERED.