Opinion by Judge Catherine C. Blake
Holding: Under the doctrine of equitable estoppel, a party to a contract containing a mandatory arbitration provision cannot avoid arbitration of a claim against a nonsignatory to the subject contract when the basis for the claim is that contract.
Facts: Plaintiff Lomax financed the purchase of a car with a loan obtained through a retail installment contract (the “RISC”) with Credit Acceptance Corporation (“CAC”). After CAC repossessed and sold the car it retained Weinstock to obtain a deficiency judgment against Lomax. Lomax filed suit against Weinstock alleging the firm violated the Fair Debt Collection Practices Act, the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act. Weinstock filed a motion to dismiss or, in the alternative, to stay the action and compel arbitration based on the RISC’s mandatory arbitration provision.
Analysis: It is settled that parties must submit claims to arbitration where they have a valid arbitration agreement and it covers the issues in dispute. Lomax did not dispute the validity of the RISC or the arbitration agreement within it, but argued that Weinstock, as a nonsignatory to the RISC, could not invoke the arbitration clause. The Court held, however, that when each of a signatory's claims against a nonsignatory makes reference to or presumes the existence of the written agreement, the signatory is equitably estopped from refusing to submit such claims to arbitration if the arbitration provision is sufficiently broad to encompass the claims. Because Lomax relied on the RISC as the basis for her attempt to collect damages from Weinstock and the arbitration provision in the RISC was broadly worded so as to include claims against the seller’s attorneys, Lomax was estopped from disclaiming the mandatory arbitration provision contained in the RISC.
The Court granted the motion to dismiss.
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