Guidotti v. Legal Helpers Debt Resolution, L.L.C., No. 12-1170; Third Circuit; opinion by Jordan, U.S.C.J.; filed May 28, 2013. Before Judges Scirica, Jordan and Roth. On appeal from the District of New Jersey, No. 11-cv-1219. [Sat below: Judge Simandle.] DDS No. 03-8-xxxx [34 pp.]

Dawn Guidotti contacted JG Debt Solutions, L.L.C., for help in negotiating a settlement of her debt. She received an email from, an email domain associated with Legal Helpers Debt Resolution and Eclipse Servicing Inc., which contained a link to various online documents maintained by DocuSign. She claims that included therein were an attorney retainer agreement (ARA) and a Special Purpose Account Application (SPAA) to set up an account to pay the debt negotiations service fees and a negotiated settlement. The SPAA included a provision acknowledging that she had received, read, understood and accepted an account agreement that included an arbitration provision. Although she signed the SPAA and the ARA, Guidotti claims that she did not receive the account agreement until three weeks later.

When no settlement materialized, Guidotti filed this putative class action claiming defendants had conspired to provide unlicensed debt adjustment services in violation of the Debt Adjustment and Credit Counseling Act, N.J.S.A. 17:16G-1, New Jersey RICO, N.J.S.A. 2C:41-1, the Consumer Fraud Act, 56:8-2, and various common-law principles.

The district court granted a motion to compel arbitration as to the claims against most of the defendants but it denied the motion as it pertained to Rocky Mountain Bank and Trust and Global Client Solutions (appellants), through whom Guidotti opened the special account. With respect to those defendants, the court held that the pleadings and certain evidence adduced by Guidotti were sufficient to show that there had been no meeting of the minds on an agreement to arbitrate and that her claims against them were therefore not subject to arbitration.

Held: Because the record before the district court was insufficient to prove that there was no genuine dispute of material fact as to whether appellants and Guidotti agreed to arbitrate, the order denying arbitration is vacated and the matter is remanded. In so doing, the court clarifies the standards to be applied to motions to compel arbitration, identifying the circumstances under which district courts should apply the standard for a motion to dismiss, as provided by Rule 12(b)(6), and those under which they should apply the summary judgment standard found in Rule 56.

The court says that because arbitration is a matter of contract between the parties, a judicial mandate to arbitrate must be predicated on the parties’ consent. Precedents are not entirely clear on the standard for district courts to apply when determining whether an agreement to arbitrate was reached. Some cases treat a motion to compel arbitration as a motion to dismiss for failure to state a claim on which relief can be granted under Rule 12(b)(6). Others say a district court should use the standard used in resolving summary judgment motions pursuant to Rule 56. Determining which standard should be used is of utmost importance because they differ in significant ways.

The court says the split pronouncements on the standard for deciding a motion to compel arbitration are reconcilable. When it is apparent, based on the face of a complaint and documents relied on in the complaint, that certain of a party’s claims are subject to an enforceable arbitration clause, a motion to compel arbitration should be considered under a Rule 12(b)(6) standard without discovery’s delay. But if the complaint and its supporting documents are unclear regarding the agreement to arbitrate, or if the plaintiff has produced additional facts sufficient to place the agreement to arbitrate in issue, then the parties should be entitled to discovery on the question of arbitrability and, after limited discovery, the court may entertain a renewed motion to compel arbitration, this time judging the motion under a summary judgment standard. If summary judgment is not warranted because there is a genuine dispute as to the enforceability of the arbitration clause, the court may proceed summarily to a trial regarding the making of the arbitration agreement or the failure, neglect, or refusal to perform the same.

Here, appellants contend that the complaint was sufficiently clear to establish that Guidotti received, and agreed to the terms of, the account agreement when she signed the SPAA. They base that contention on language from the complaint and on the SPAA. The court says they make a compelling case. The signed SPAA states on its face that Guidotti received, read and understood the account agreement and that she knew she was bound by its terms and conditions. Under the Rule 12(b)(6) standard, there would be no reading of the complaint that could rightly relieve her of the arbitration provision in the account agreement, if the complaint were the only document in play. But it is not.

Despite her signed acknowledgment, Guidotti asserts that the account agreement was not supplied to her and she was unaware of its arbitration provision until after she had submitted the SPAA.

The court says contrary to appellants’ emphatic position, Guidotti’s denial is not entirely unsupported. The one-page SPAA and every page of the ARA have an encoded "DocuSign" header line, but the account agreement does not. She argues that the documents that contain the header were sent to her by email with the intent that she would sign and return them, while the document that does not contain the header — the account agreement — was only later mailed to her.

The court finds that this evidence is sufficient to trigger the summary judgment standard in Rule 56.

The court says the district court, without ordering discovery, concluded that the record was sufficient to establish that Guidotti did not receive the account agreement in the documents sent via email for two reasons. It apparently accepted Guidotti’s argument regarding the significance of the presence and absence of the header and it found support for her assertion in four cases from other jurisdictions in which the parties who appear here as appellants purportedly provided customers with the same account agreement only after they had already signed the SPAA.

Unlike the district court, the Third Circuit is persuaded that a genuine issue of material fact remains regarding the agreement to arbitrate since there has been no showing that all documents provided in the email must necessarily contain the header. The district court should not have denied appellants’ motion to compel arbitration without first allowing limited discovery and then entertaining their motion under a summary judgment standard. If, after presentation of the evidence uncovered during discovery, a genuine dispute of material fact remained, the court should have submitted to a jury the question of whether Guidotti was aware of the arbitration clause in the account agreement when she signed and submitted the SPAA.

For appellants — Shaji M. Eapen (Morgan Melhuish Abrutyn) and Richard W. Epstein and John H. Pelzer, both of the Fla. bar (Greenspoon Marder). For appellee — Joseph M. Pinto (Polino & Pinto).