Case Title: NC Financial Solutions of Utah, LLC v. Commonwealth

Citation: 

Docket Number: 190840

State: virginia

Court: Virginia Supreme Court

Date: 2021-02-25T00:00:00Z

Document:
PRESENT:  All the Justices 
 
NC FINANCIAL SOLUTIONS  
OF UTAH, LLC, 
 
 
 
OPINION BY 
v.  Record No. 190840 
JUSTICE TERESA M. CHAFIN 
 
 
 
 FEBRUARY 25, 2021 
COMMONWEALTH OF VIRGINIA 
EX REL. MARK R. HERRING,  
ATTORNEY GENERAL 
 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Daniel E. Ortiz, Judge 
 
 
 
The Attorney General, acting on behalf of the Commonwealth, filed the present action 
against NC Financial Solutions of Utah, LLC (“NCFS-Utah”), to enforce the provisions of the 
Virginia Consumer Protection Act (the “VCPA”), Code §§ 59.1-196–59.1-207. 
On appeal, NCFS-Utah argues that the Circuit Court of Fairfax County erred when it 
refused to enforce arbitration agreements between NCFS-Utah and the individual consumers 
who were affected by the alleged VCPA violations.  Additionally, NCFS-Utah maintains that the 
VCPA does not permit the Commonwealth to pursue restitution for individual consumers.  For 
the following reasons, we affirm the circuit court’s judgment. 
I.  BACKGROUND 
NCFS-Utah is an online lender.  Between 2012 and 2018, NCFS-Utah provided loans to 
over 47,000 Virginia consumers, at interest rates that ranged from 34 to 155 percent.  On April 
23, 2018, the Attorney General filed a complaint against NCFS-Utah on behalf of the 
Commonwealth.  The complaint alleged that NCFS-Utah’s lending practices violated certain 
provisions of the VCPA. 
 
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The complaint requested injunctive relief, civil penalties, and awards of attorney’s fees, 
costs, and reasonable expenses.  The complaint also requested that the circuit court “[g]rant 
judgment against [NCFS-Utah] and award to the Commonwealth all sums necessary to restore to 
any consumers the money or property which may have been acquired from them by [NCFS-
Utah] in connection with its violations . . . of the VCPA.”  Furthermore, the complaint requested 
that the circuit court “[e]nter any additional orders or decrees as may be necessary to restore to 
any consumers the money or property” that NCFS-Utah acquired through its unlawful conduct. 
On July 17, 2018, NCFS-Utah filed a “Motion to Dismiss, or Alternatively, to Compel 
Arbitration of Individual Damages.”  Based on arbitration provisions in the loan agreements 
between NCFS-Utah and the individual Virginia consumers, NCFS-Utah argued that the 
consumers had agreed to arbitrate any disputes arising from the loans at issue.1  NCFS-Utah 
maintained that an award of restitution would circumvent these arbitration agreements.  
Moreover, NCFS-Utah asserted that an award of restitution would be inconsistent with the 
provisions of the Federal Arbitration Act (the “FAA”), 9 U.S.C. §§ 1–16.  Thus, NCFS-Utah 
argued that an award of restitution was preempted by federal law.  NCFS-Utah requested that the 
circuit court either dismiss the restitution component of the complaint or compel the Virginia 
consumers to arbitrate any individual claims for damages. 
 
The Commonwealth filed a memorandum opposing NCFS-Utah’s motion on August 10, 
2018.  Citing EEOC v. Waffle House, Inc., 534 U.S. 279 (2005), the Commonwealth argued that 
 
 
1 The loan agreements between NCFS-Utah and the Virginia consumers contained broad 
arbitration provisions.  The arbitration provisions stated that all claims “arising from or relating 
directly or indirectly” to the loan agreements were subject to arbitration, including any claims 
“based upon a violation of any state . . . statute or regulation” and any claims “asserted on [the 
consumer’s] behalf by another person.”  The loan agreements also stated that the arbitration 
provisions were “governed by the [FAA].” 
 
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it was not bound by the arbitration provisions at issue.  The Commonwealth noted that it was not 
a party to the loan agreements that contained the arbitration provisions.  The Commonwealth 
also emphasized that it was attempting to enforce the VCPA on behalf of the public in general 
rather than the individual consumers. 
The circuit court held a hearing regarding NCFS-Utah’s motion on December 7, 2018.  
At the hearing, NCFS-Utah argued that Waffle House only applies to employment claims 
pursued by the Equal Employment Opportunity Commission (the “EEOC”).  NCFS-Utah 
maintained that an award of restitution would nullify the arbitration agreements between NCFS-
Utah and the Virginia consumers and conflict with the provisions of the FAA.  NCFS-Utah also 
argued that the VCPA did not allow the Commonwealth to collect restitution for individual 
consumers. 
In response, the Commonwealth argued that Waffle House was dispositive of the pending 
motion.  The Commonwealth maintained that the FAA was not implicated in the present case 
because the Commonwealth was not bound by the arbitration agreements between NCFS-Utah 
and the Virginia consumers.  The Commonwealth argued that its ability to enforce the VCPA 
was not limited by the arbitration agreements at issue, and that it had statutory authority to 
pursue restitution when enforcing the VCPA on behalf of the public. 
The circuit court denied NCFS-Utah’s motion on February 25, 2019.  Relying on Waffle 
House, the circuit court concluded that the Commonwealth was not bound by the arbitration 
agreements between NCFS-Utah and the Virginia consumers.  The circuit court determined that 
the Commonwealth had statutory authority to pursue litigation to enforce the VCPA.  
Additionally, the circuit court determined that Code §§ 59.1-203 and 59.1-205 authorize the 
 
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Commonwealth to seek restitution for individual consumers in VCPA enforcement actions.  This 
appeal followed.2 
II.  ANALYSIS 
 
NCFS-Utah presents two primary arguments on appeal.  First, NCFS-Utah contends that 
an award of restitution in this case would conflict with the provisions of the FAA and general 
principles of contract law.  Second, NCFS-Utah argues that the VCPA does not authorize the 
Commonwealth to collect restitution for individual consumers.  These arguments present issues 
of statutory interpretation and other issues of law that are subject to de novo review.  See 
Virginia Marine Res. Comm’n v. Chincoteague Inn, 287 Va. 371, 380 (2014); Anthony v. Verizon 
Va., Inc., 288 Va. 20, 29 (2014). 
A. 
NCFS-Utah argues that the FAA and general principles of contract law bar an award of 
restitution in this case.  This argument fails for a fundamental reason.  As noted by the circuit 
court, the Commonwealth was not a party to the loan agreements between NCFS-Utah and the 
Virginia consumers.  Accordingly, the Commonwealth is not bound by the arbitration provisions 
contained in the loan agreements, and it could therefore pursue its claim for restitution in a 
judicial forum.  Neither the FAA nor general principles of contract law preclude the 
Commonwealth from seeking restitution under the circumstances of the present case. 
The FAA was enacted to “place arbitration agreements upon the same footing as other 
contracts.”  Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991).  In pertinent part, 
Section 2 of the FAA states: 
 
 
2 NCFS-Utah filed an interlocutory appeal pursuant to Section 16 of the FAA, 9 U.S.C.  
§ 16, and Code § 8.01-581.016, a similar provision of the Virginia Uniform Arbitration Act (the 
“VUAA”). 
 
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A written provision in . . . a 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. 
 
In general, the provisions of the FAA reflect the “liberal federal policy favoring 
arbitration agreements.”  Gilmer, 500 U.S. at 25 (quoting Moses H. Cone Mem’l Hosp. v. 
Mercury Constr. Corp., 460 U.S. 1, 24 (1983)).  The FAA ensures that arbitration agreements are 
consistently enforced, “notwithstanding any state substantive or procedural policies to the 
contrary.”  Perry v. Thomas, 482 U.S. 483, 489 (1987).  Nevertheless, the FAA is simply “at 
bottom a policy guaranteeing the enforcement of private contractual arrangements.”  Mitsubishi 
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 (1985) (quoting Moses H. 
Cone Mem’l Hosp., 460 U.S. at 24). 
 
Like the federal policy, the public policy of Virginia also favors arbitration.3  See TM 
Delmarva Power, L.L.C. v. NCP of Va., L.L.C., 263 Va. 116, 122 (2002).  Pursuant to the FAA, 
this Court applies “federal substantive law to determine whether the parties must submit to 
binding arbitration as required by [a] contract.”  Amchem Products, Inc. v. Newport News Cir. 
Ct. Asbestos Cases Plaintiffs, 264 Va. 89, 96 (2002).  The FAA, however, does not purport “to 
alter background principles of state contract law regarding the scope of agreements (including 
 
 
3 The VUAA contains a provision that is nearly identical to Section 2 of the FAA.  Code 
§ 8.01-581.01 states that: 
 
[a] written agreement to submit any existing controversy to 
arbitration or a provision in a written contract to submit to 
arbitration any controversy thereafter arising between the parties is 
valid, enforceable and irrevocable, except upon such grounds as 
exist at law or in equity for the revocation of any contract. 
 
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the question of who is bound by them).”  Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630 
(2009).  Therefore, we rely on the general “law of contracts” in order to determine whether a 
“valid and enforceable agreement to arbitrate” exists between the parties in any given case.  
Mission Residential, LLC v. Triple Net Properties, LLC, 275 Va. 157, 160 (2008). 
As a general principle, “[a] party cannot be compelled to submit to arbitration unless [it] 
has first agreed to arbitrate.”  Id. at 161 (quoting Doyle & Russell, Inc. v. Roanoke Hosp. Ass’n, 
213 Va. 489, 494 (1973)).  “Arbitration under the [FAA] is a matter of consent, not coercion.”  
Waffle House, 534 U.S. at 294 (quoting Volt Info. Scis., Inc. v. Board of Trustees of Leland 
Stanford Junior Univ., 489 U.S. 468, 479 (1989)) (alteration in original).  “The FAA directs 
courts to place arbitration agreements on equal footing with other contracts, but it ‘does not 
require parties to arbitrate when they have not agreed to do so.’”  Id. at 293 (quoting Volt Info. 
Scis., Inc., 489 U.S. at 478).  While the FAA “ensures the enforceability of private agreements to 
arbitrate, [it] does not purport to place any restriction on a nonparty’s choice of a judicial forum.”  
Id. at 289. 
 
In Waffle House, the Supreme Court of the United States determined that an arbitration 
agreement between an employer and an employee did not preclude the EEOC from pursuing an 
enforcement action against the employer to obtain “victim-specific” relief for the employee (i.e., 
backpay, reinstatement, and other damages).  See id. at 282. 
The Supreme Court noted that the EEOC was not a party to the arbitration agreement 
between the employer and the employee.  Id. at 294.  Additionally, the Supreme Court observed 
that the EEOC never agreed to arbitrate the employment dispute at issue.  Id.  Consequently, the 
 
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Supreme Court concluded that the EEOC was not bound by the arbitration agreement.  See id. 
(“It goes without saying that a contract cannot bind a nonparty.”).4 
 
Moreover, the Supreme Court noted that the FAA does not address enforcement actions 
that are brought by public agencies.  See id. at 289.  The Supreme Court concluded that the 
EEOC was pursuing the enforcement action on behalf of the public, despite its request for 
individual-specific remedies.  See id. at 296 (“[W]henever the EEOC chooses from among the 
many charges filed each year to bring an enforcement action in a particular case, the agency may 
be seeking to vindicate a public interest, not simply provide make-whole relief for the employee, 
even when it pursues entirely victim-specific relief.”). 
Additionally, the Supreme Court noted that the EEOC’s claim was not merely 
“derivative” of the employee’s claim.  See id. at 297.  While the Supreme Court acknowledged 
that the employee’s conduct may have limited the relief available to the EEOC, the Court 
explained that the EEOC was not proceeding as a “proxy for the employee.”  See id. at 297-98. 
 
We recognize that Waffle House was decided within the context of a “detailed 
enforcement scheme created by Congress.”  See id. at 296.  Specifically, Waffle House involved 
an alleged violation of the Americans with Disabilities Act of 1990 (the “ADA”) that was 
challenged by the EEOC through the procedures set forth in Title VII of the Civil Rights Act of 
1964 (“Title VII”).  See id. at 285.  The holding in Waffle House, however, was primarily based 
 
 
4 We note that this is a general statement.  The Supreme Court has explained that 
traditional principles of contract law allow contracts to be enforced against third parties in certain 
circumstances, through “assumption, piercing the corporate veil, alter ego, incorporation by 
reference, third-party beneficiary theories, waiver and estoppel.”  See Arthur Andersen LLP, 556 
U.S. at 631 (quoting 21 Samuel Williston & Richard A. Lord, A Treatise on the Law of 
Contracts § 57:19, at 183 (4th ed. 2001)).  These theories of third-party liability do not apply in 
the present case. 
 
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on the scope of the FAA and the limitations of the underlying arbitration agreement rather than 
the specific provisions of the ADA or Title VII. 
The principles underlying the Waffle House decision apply with equal weight in the 
present case.  Like the EEOC in Waffle House, the Commonwealth was not a party to the 
underlying arbitration agreements.  Furthermore, the Commonwealth filed its complaint against 
NCFS-Utah in order to enforce the VCPA on behalf of the public.  Although the Commonwealth 
sought restitution for individual consumers, restitution in this context is similar to the “victim-
specific” relief pursued by the EEOC in Waffle House.  See Waffle House, 534 U.S. at 296.  The 
Commonwealth pursued restitution, along with other forms of relief, to vindicate the public 
interest and enforce the laws of the Commonwealth that are intended to protect consumers.  See 
generally Code § 59.1-197 (explaining that the VCPA is intended to “promote fair and ethical 
standards of dealings between suppliers and the consuming public”). 
 
Under Waffle House and general principles of contract law, the Commonwealth is not 
bound by the arbitration agreements at issue.  Accordingly, the FAA does not preclude the 
Commonwealth from pursuing its VCPA enforcement action in a judicial forum.  Moreover, the 
Commonwealth is not precluded from seeking “victim-specific” relief, including restitution for 
individual consumers, when enforcing the VCPA on behalf of the public.  See Waffle House, 534 
U.S. at 296. 
B. 
 
NCFS-Utah also contends that the VCPA did not authorize the Commonwealth to collect 
restitution for individual consumers.  This argument conflicts with the plain language of the 
pertinent provisions of the VCPA and the remedial purpose of the legislation. 
 
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“When the language of a statute is unambiguous, we are bound by the plain meaning of 
that language.”  Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104 (2007).  “[I]t 
is our duty to interpret the several parts of a statute as a consistent and harmonious whole so as to 
effectuate the legislative goal.”  REVI, LLC v. Chicago Title Ins. Co., 290 Va. 203, 208 (2015) 
(quoting VEPCO v. Board of Cty. Supervisors, 226 Va. 382, 387-88 (1983)).  “[S]tatutes are not 
to be considered as isolated fragments of law, but as a whole, or as parts of . . . a single and 
complete statutory arrangement.”  JSR Mech., Inc. v. Aireco Supply, Inc., 291 Va. 377, 384 
(2016) (quoting Prillaman v. Commonwealth, 199 Va. 401, 405 (1957)). 
The General Assembly has indicated that the VCPA is to “be applied as remedial 
legislation to promote fair and ethical standards of dealings between suppliers and the consuming 
public.”  See Code § 59.1-197.  “The legislature seldom chooses to expressly direct the courts 
how to apply a statute.  When it does so we must pay special attention to that choice and ensure 
that it is given full effect.”  Ballagh v. Fauber Enters., Inc., 290 Va. 120, 125 (2015).  “We 
construe remedial legislation liberally in favor of the injured party.”  Id. 
Pursuant to Code § 59.1-203, “the Attorney General . . . may cause an action to be 
brought in the appropriate circuit court in the name of the Commonwealth . . . to enjoin any 
violation of [the VCPA].”  Code § 59.1-203(A).  Thereafter, the “circuit court having jurisdiction 
may enjoin such violations notwithstanding the existence of an adequate remedy at law.”  Id.  
The circuit court is “authorized to issue temporary or permanent injunctions to restrain and 
prevent violations of [the VCPA].”  Code § 59.1-203(C). 
 
Code § 59.1-205 allows a circuit court to award restitution when it permanently enjoins a 
practice that violates the VCPA.  Pursuant to Code § 59.1-205, 
[t]he circuit court may make such additional orders or decrees as 
may be necessary to restore to any identifiable person any money 
 
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or property, real, personal, or mixed, tangible or intangible, which 
may have been acquired from such person by means of any act or 
practice declared to be unlawful in [Code] § 59.1-200 . . . , 
provided, that such person shall be identified by order of the court 
within 180 days from the date of the order permanently enjoining 
the unlawful act or practice. 
 
 
We conclude that Code § 59.1-205 refers to the remedy of restitution, even though it fails 
to expressly use that particular term.5  Code § 59.1-205 permits money or property to be 
“restored” to the victim of a VCPA violation.  “‘Restitution’ is defined, in pertinent part, as ‘a 
restoration of something to its rightful owner: the making good of or giving an equivalent for 
some injury (as a loss of or damage to property).’”  Howell v. Commonwealth, 274 Va. 737, 740 
(2007) (emphasis added) (quoting Webster’s Third New International Dictionary 1936 (1993)). 
 
The plain language of Code § 59.1-203 allows the Attorney General to file an action on 
behalf of the Commonwealth to enjoin practices that violate the VCPA.  In turn, Code § 59.1-
205 permits a circuit court to award restitution after it enters an order permanently enjoining an 
unlawful practice.  When Code §§ 59.1-203 and 59.1-205 are read together, the statutes 
implicitly authorize the Attorney General to request an award of restitution when pursuing a 
VCPA enforcement action on behalf of the Commonwealth.  This construction is consistent with 
the plain language of the statutory provisions at issue and the remedial purpose of the VCPA.  
See Code § 59.1-197; Ballagh, 290 Va. at 125. 
 
 
 
5 Numerous jurisdictions have interpreted identical or similar statutory language to 
encompass the remedy of restitution.  See California v. IntelliGender, LLC, 771 F.3d 1169, 1174 
(9th Cir. 2014); People v. Pacific Land Research Co., 569 P.2d 125, 127 n.4 (Cal. 1977); 
Commonwealth v. ABAC Pest Control, Inc., 621 S.W.2d 705, 706 (Ky. Ct. App. 1981); State v. 
Master Distribs., Inc., 615 P.2d 116, 123 (Idaho 1980); Kugler v. Romain, 279 A.2d 640, 642 
(N.J. 1971); Thomas v. State, 226 S.W.3d 697, 706 (Tex. App. 2007); State v. Ralph Williams’ 
N.W. Chrysler Plymouth, Inc., 510 P.2d 233, 241 (Wash. 1973) (en banc). 
 
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III.  CONCLUSION 
 
For the reasons stated, we affirm the judgment of the circuit court. 
Affirmed.