Memorandum Opinion and Order - Page 1

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

RENEGADE TECHNOLOGY GROUP, §

INC., and APACHE ATM FUND, LLC, §

§

Plaintiffs, §

§

v. § Civil Action No. 3:04-CV-2126-L

§

CASH USA INC., et al., §

§

Defendants. §

MEMORANDUM OPINION AND ORDER

Before the court is Defendant Texas Health Resources Credit Union’s Motion to Modify

Memorandum Opinion and Order Entered August 10, 2005; For Entry of Default Judgment with

Respect to Plaintiffs’ Claim and Defendant’s Counterclaim, filed August 19, 2005. After careful

consideration, the court denies Defendant Texas Health Resources Credit Union’s Motion to Modify

Memorandum Opinion and Order Entered August 10, 2005; For Entry of Default Judgment with

Respect to Plaintiffs’ Claim and Defendant’s Counterclaim.

I. Background

On March 10, 2005, Texas Health Resources Credit Union (“THR”) filed a motion to stay

all proceedings in this action involving Plaintiffs and THR, and requested an order to compel

arbitration of all claims asserted by and against Plaintiffs. The motion was referred to the United

States magistrate judge for proposed findings and recommendation. On May 17, 2005, the Findings

and Recommendation of the United States Magistrate Judge were filed. The magistrate judge found

that all claims by and between Plaintiffs and THR are subject to arbitration. The magistrate judge

recommended that THR’s motion to compel be granted, and all claims by and between Plaintiffs and

 

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1

By way of clarification, the order should have reflected that the court denied the motion to stay,

granted the motion to compel, and dismissed without prejudice all claims by and between Plaintiffs and

THR in favor of arbitration. Despite the confusing language, this action was not stayed as to THR, and the

court issues this ruling nunc pro tunc.

2

The Federal Arbitration Act (“FAA”) provides, in pertinent part:

If any suit or proceeding be brought in any of the courts of the United States

upon any issue referable to arbitration under an agreement in writing for

such arbitration, the court in which such suit is pending, upon being

satisfied that the issue involved in such suit or proceeding is referable to

arbitration under such an agreement, shall on application of one of the

parties stay the trial of the action until such arbitration has been had in

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THR be dismissed in favor of arbitration. On August 10, 2005, the court accepted the findings of

the magistrate judge as those of the court. The court granted Defendant Texas Health Resources

Credit Union’s Motion to Stay Proceedings and/or Compel Arbitration; and dismissed without

prejudice all claims by and between Plaintiffs and THR in favor of arbitration.1

 The court also

struck Plaintiffs’ First Amended and Supplemental Complaint and dismissed with prejudice

Plaintiffs’ claims against the remaining Defendants, Cash USA, Inc., Dallas ATM Management

Services, Inc., Jerry Gregory, Linda Gregory, Ginger Bramlett, Janet Hisle, Kay Gregory, and Susan

Bally, for Plaintiffs’ failure to follow the court’s order to retain counsel. See Memorandum Opinion

and Order, August 10, 2005, Docket No. 35. The court also struck Plaintiffs’ defenses to Defendants

Cash USA and Dallas ATM’s counterclaim, and held Plaintiffs in default with respect to the

counterclaim. Id.

II. Discussion

THR requests the court to modify its opinion and order of August 10, 2005, dismiss all

claims asserted against THR by Plaintiffs, and grant default judgment as to THR’s counterclaim

against Plaintiff. THR maintains that submitting this matter to arbitration would frustrate the

purpose of the Federal Arbitration Act,2

 which is to “afford participants in transactions an

 

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accordance with the terms of the agreement, providing the applicant for the

stay is not in default in proceeding with such arbitration.

9 U.S.C. § 3.

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opportunity to secure prompt, economical and adequate solutions [to] controversies through

arbitration.” Motion at 5. 

The court is unpersuaded by THR’s arguments for its “about-face” from its previous position

seeking arbitration; to its current position requesting that arbitration not take place. THR makes this

request in light of the court’s granting default judgment in favor of the other Defendants. In other

words, THR wants to “piggyback” on an order that applied to defendants who were not subject to

arbitration. Moreover, Plaintiffs are not in violation of any order as it pertains to THR. Plaintiffs

are in default because of sanctions, not because they failed to answer or otherwise respond to THR’s

pleadings or motions. THR was the party who moved to compel arbitration. Even though Plaintiffs

are in default because of a failure to comply with a court order, nothing in the record indicates that

Plaintiffs would now waive arbitration. THR cites no authority that allows a party to reverse trend

under these circumstances, and absent such authority, the court will not “unring the bell.” 

 The Fifth Circuit has repeatedly emphasized the strong federal policy in favor of arbitration.

See Neal v. Hardee's Food Sys., Inc., 918 F.2d 34, 37 (5th Cir.1990). Any doubts concerning the

scope of arbitrable issues should be resolved in favor of arbitration. See Moses H. Cone Mem. Hosp.

v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983); Neal, 918 F.2d at 37. Arbitration should not

be denied “unless it can be said with positive assurance that [the] arbitration clause is not susceptible

of an interpretation which would cover the dispute at issue.” Personal Sec. & Safety Sys., Inc. v.

Motorola, Inc., 297 F.3d 388, 392 (5th Cir.2002) (quoting Neal, 918 F.2d at 37 (internal quotation

marks omitted) (alteration in original)). As the court has previously determined that the arbitration

 

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provision of the agreement between the parties should be enforced as written, THR’s motion for the

court to modify its opinion and order of August 10, 2005, and enter default judgment for THR

should be denied. 

III. Conclusion

For the reasons stated herein, the court denies Defendant Texas Health Resources Credit

Union’s Motion to Modify Memorandum Opinion and Order Entered August 10, 2005; For Entry

of Default Judgment with Respect to Plaintiffs’ Claim and Defendant’s Counterclaim.

It is so ordered this 23rd of December, 2005.

_________________________________

Sam A. Lindsay

United States District Judge

 

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