United States District Court, W.D. Missouri, Central Division
TREY NEAL, individually and on behalf of all others similarly situated, Plaintiff,
NAVIENT SOLUTIONS, LLC, et al., Defendants.
NANETTE K. LAUGHREY, UNITED STATES DISTRICT JUDGE.
the Court is a motion to compel arbitration and stay
proceedings filed by Defendants Navient Corporation, Navient
Credit Finance Corporation, Navient Private Loan Trust, and
Navient Solutions, LLC. Doc. 58. For the following reasons,
the motion is denied.
Trey Neal initiated this action for breach of contract, on
behalf of himself and other similarly situated, claiming that
interest on his student loans exceeded the limitation stated
in the loans' disclosures. Doc. 1. Neal originally
alleged that JP Morgan Chase Bank, N.A. (“Chase”)
made the loans, see, e.g., Id. at ¶¶ 2,
10, and later sold one loan to Navient Solutions, LLC
(“NSL”). Id. at ¶¶ 5, 24. All
defendants other than NSL were dismissed,  and in March
2019, Neal amended his complaint to add Navient Corporation,
Navient Credit Finance Corporation and Navient Private Loan
Trust as defendants (collectively, “Navient
defendants”) under essentially the same breach of
contract theory. Doc. 55 (Amended Complaint).
Amended Complaint, Neal alleges that NSL services student
loans, including Neal's loan, which Navient Credit
Finance Corporation purchased from Chase, and that NSL had
identified Navient Private Loan Trust as the current owner of
his student loan. Id. at ¶¶ 2, 4-5.
Navient Corporation is allegedly a direct or indirect owner
of the other Navient entities. Id. at 3. The Navient
defendants, however, have submitted a declaration stating
that “[i]n or about 2017, [Chase] sold a portfolio of
student loans, including a private student loan taken out by
plaintiff Trey Neal, and in connection with that sale NSL
became the servicer of Neal's loan and Jamestown Funding
Trust became the owner. Jamestown Funding Trust is related to
Navient Credit Finance Corporation, an affiliate of
NSL.” Doc. 59-5 (Iorio Declaration), ¶ 2.
Jamestown Funding Trust is not a party to this suit.
privately demanded that Neal submit to arbitration on an
individual basis, and when he refused, Defendants filed a
motion to stay proceedings and compel arbitration. Doc. 58.
Navient defendants argue that the arbitration clause in
Neal's credit agreement is valid and enforceable, and
that this dispute falls within the scope of the arbitration
clause. Doc. 59, pp. 12-14. Defendants further contend that
they can enforce the agreement because Navient Credit Finance
Corporation is a successor to Chase by virtue of its
relationship to Jamestown Funding Trust, the holder of the
loan, and that NSL is an agent to the successor, as servicer
of the loan. Doc. 63, p. 6. Neal highlights that the
agreement specifically defines who can enforce the
arbitration clause, and contends that based on the Navient
defendants' declaration, none of the defendants are
empowered under the contract to compel arbitration. Doc. 62,
Federal Arbitration Act requires courts to enforce private
arbitration agreements.” New Prime Inc. v.
Oliveira, 139 S.Ct. 532, 536 (2019). The Act states that
a “written provision in any . . . contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract . . .
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 Act establishes
“a national policy favoring arbitration, ”
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440, 443 (2006), while preserving the “fundamental
principle that arbitration is a matter of contract, ”
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
67 (2010). Thus, “[i]f two parties agree to arbitrate
future disputes between them and one side later seeks to
evade the deal, §§ 3 and 4 of the Act often require
a court to stay litigation and compel arbitration
‘accord[ing to] the terms' of the parties'
agreement.” New Prime, 139 S.Ct. at 537.
presented with a motion to compel, a court must
“‘ determine whether a valid arbitration
agreement exists between the parties and,  if so, whether
the subject matter of the dispute falls within the scope of
the arbitration clause.'” Neb. Mach. Co. v.
Cargotec Sols., LLC, 762 F.3d 737, 740 (8th Cir. 2014)
(citation omitted). “[S]tate contract law governs the
threshold question of whether an enforceable arbitration
agreement exists between litigants; if an enforceable
arbitration agreement exists, the federal substantive law of
arbitrability governs whether the litigants' dispute
falls within the scope of the arbitration agreement.”
Donaldson Co. v. Burroughs Diesel, Inc., 581 F.3d
726, 731 (8th Cir. 2009). Federal substantive law, in turn,
requires a court to “construe the clause liberally,
resolving any doubts in favor of arbitration.” 3M
Co. v. Amtex Sec., Inc., 542 F.3d 1193, 1199 (8th Cir.
the parties disagree as to whether an enforceable arbitration
agreement exists between the parties but agree that Ohio
contract law governs this threshold question.
The Terms of the Arbitration Clause
enforceability of contractual arbitration provisions is
governed by the laws of contract interpretation.”
Javorsky v. Javorsky, 2017-Ohio-285, 81 N.E.3d 971,
¶ 9 (Ohio Ct. App. 2017). In Ohio, “‘[t]he
basic objective . . . is . . . to ensure that commercial
arbitration agreements, like other contracts, are enforced
according to their terms, . . . and according to the
intentions of the parties.'” Council of Smaller
Enters. v. Gates, McDonald & Co., 80 Ohio St.3d 661,
668, 687 N.E.2d 1352 (Ohio 1998) (quoting First Options
of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947 (1995)).
“[I]n determining the intent of the parties, the court
must read the contract as a whole and give effect to every
part of the contract.” CSX Transp., Inc. v.
Columbus Downtown Dev. Corp., 307 F.Supp.3d 719, 739
(S.D. Ohio 2018) (citation omitted). “‘[N]o
provision of the contract should be ignored as inconsistent
if there exists a reasonable interpretation which gives
effect to both.'” Praxis Capital & Inv.
Mgmt. Ltd v. Gemini Holdings I, LLC, No. 15-2912, 2016
WL 2853591, at *3 (S.D. Ohio May 16, 2016) (quoting
Ottery v. Bland, 42 Ohio App.3d 85, 87, 536 N.E.2d
651 (Ohio Ct. App. 1987)).
the Court starts with the text of the arbitration provision
contained in ...