UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

SOUTH BEND DIVISION

PATRICIA MENGERS, )

)

Plaintiff, )

)

v. ) No. 3:14 CV 1737

)

GULF STREAM COACH INC., et al., )

)

Defendants. )

OPINION AND ORDER

Defendant United Service Protection Corp. (“USPC” or “defendant”) has moved

to dismiss plaintiff Patricia Mengers’s claims against it. (DE # 29.) Defendant also seeks

an order directing plaintiff to submit her claims against it to arbitration. (Id.) Plaintiff

has filed a response (DE # 30), and defendant has filed a reply (DE # 39.) For the

following reasons defendant’s motion is granted.

I. Legal Standard

Defendant has moved to dismiss plaintiff’s complaint and compel arbitration

under section 4 of the Federal Arbitration Act (“FAA”). (DE # 29.) The Federal

Arbitration Act (“FAA”) “was originally enacted ‘to reverse the longstanding judicial

hostility to arbitration agreements that had existed at English common law and had

been adopted by American courts, and to place arbitration agreements upon the same

footing as other contracts.’” Kawasaki Heavy Indus. v. Bombardier Rec. Prods., 660 F.3d 988,

995 (7th Cir. 2011) (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)).

Furthermore, the FAA demonstrates that Congress supports “a liberal federal policy
favoring arbitration agreements.” Moses H. Cone Mem. Hosp. v. Mercury Contr. Corp., 460

U.S. 1, 24 (1983). 

Section 4 of the FAA allows a party to a written arbitration agreement to request

an order from a federal district court compelling the parties to arbitrate. See 9 U.S.C. § 4.

The court may look beyond the pleadings when reviewing a motion to compel

arbitration. Armbrister v. Pushpin Holdings, LLC, 896 F. Supp. 2d 746, 753 n. 3 (N.D. Ill.

2012).

II. Background and Facts

The court need not delve too deeply into the factual background supporting

plaintiff’s claims, as defendant’s current motion does not concern the merits of those

claims. In November of 2010, plaintiff bought an RV, which she was told was a new

2011 Gulf Stream Yellowstone Motorhome, from Route 66, an RV dealership in

Oklahoma. (DE # 2 at 15.) Plaintiff also purchased an extended service warranty

contract, which was administered by defendant USPC. (See DE # 30-1 at 1.) To complete

her purchase, plaintiff was required to sign numerous documents, but was not given

the opportunity to read them. (DE # 2 at 15.) After plaintiff purchased the RV, it

routinely had problems that often left plaintiff stranded. (Id.) 

Plaintiff brought this suit in Oklahoma state court against several defendants,

including USPC, alleging a host of claims, including breach of warranty and breach of

contract. (DE # 2 at 16-21.) Defendants then removed the case to an Oklahoma federal

district court. (DE # 2 at 1.) Because one of the contracts plaintiff signed with defendant

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Gulf Stream included a forum selection clause identifying Indiana as the forum for any

dispute, the Oklahoma district court judge transferred the case to the Northern District

of Indiana. (DE # 34.) 

Defendant USPC now contends that plaintiff agreed to arbitrate any claims

against it. (DE # 29.) Defendant, therefore, argues that plaintiff’s case must be dismissed

and that plaintiff must be compelled to arbitrate her claims against USPC. (Id.) In

support of its argument, defendant has provided the court with a copy of the signed

warranty agreement and accompanying documents that defendant contends outlines

the arbitration agreement plaintiff agreed to. (DE # 29-1 at 1.) In response, plaintiff

argues that she never agreed to the arbitration agreement because she was only

provided with the “Service Agreement Declaration Page” and was never provided with

the accompanying “Coverage Booklet” that actually contained the arbitration

agreement. (DE # 30 at 2; DE # 30-2 at 1.) 

The Service Agreement Declaration Page, which plaintiff signed, contains the

following language: 

The Administrator of this Service Agreement is United Service Protection

Corp. . . . . The entity obligated to perform under this Service

Agreement, which is referred to as “We”, “Us” and “Our” throughout the

Service Agreement Coverage Booklet, is United Service Protection Corp.

. . . . 

* * * 

Purchase of this Service Agreement is not required in order to purchase or

obtain financing for a Motor Home, Travel Trailer or Camper. This Service

Agreement is not valid unless this Declaration Page is completed and

attached to the Service Agreement Coverage Booklet. This Declaration

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Page shall be the basis upon which the Service Agreement is issued. Your

signature indicates that You have read the information set forth herein and

agreed that it is true and correct and that you accept the terms and

provisions of this Service Agreement and agree to be bound by the terms

thereof. 

(DE # 30-1 at 1 (emphasis in original).)

The Service Agreement Coverage Booklet contains the arbitration provision,

which states, in part: 

Any and all claims, disputes, or controversies of any nature whatsoever

(whether in contract, tort or otherwise, including statutory, common law,

fraud (whether by misrepresentation or by omission) or other intentional

tort, property, or equitable claims) arising out of, relating to, orin connection

with (1) this Service Agreement or any prior Service Agreement, and the

purchase thereof; and (2) the validity, scope, interpretation, or enforceability

of this Provision or of the entire Service Agreement (“Claim”), shall be

resolved by binding arbitration before a single arbitrator.

(DE # 29-1 at 7.) 

III. Analysis

“Under the Federal Arbitration Act, arbitration may be compelled if the

following three elements are shown: a written agreement to arbitrate, a dispute within

the scope of the arbitration agreement, and a refusal to arbitrate.” Zurich Am. Ins. Co. v.

Watts Indus., 417 F.3d 682, 690 (7th Cir. 2005). The second and third elements are not at

issue in this case. The agreement itself is quite broad (see DE # 29-1 at 7), and plaintiff

does not appear to contend that her claims are not covered by the terms of the

agreement. Instead, plaintiff’s argument is that she never agreed to an arbitration

provision (DE # 30 at 2), and the court will therefore confine its analysis to that issue. 

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Before addressing whether an agreement was reached, however, the court must

first address defendant’s argument that this issue should be decided by the arbitrator,

and not the court. (DE # 39 at 4.) “In Prima Paint Corp. v. Flood & Conklin Manufacturing

Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), the Supreme Court announced

that, when faced with motions to stay suits or order arbitration, courts should evaluate

only the validity of the arbitration agreement; challenges to the validity of the entire

contract—e.g., fraud in the inducement—should be left to the arbitrator.” Janiga v.

Questar Capital Corp., 615 F.3d 735, 741 (7th Cir. 2010). Defendant argues that this entire

dispute must be submitted to an arbitrator because plaintiff is challenging the formation

of the Service Agreement as a whole, citing Prima Paint. (DE # 39 at 4.) 

As the Supreme Court and the Seventh Circuit have made clear, however, when

a party disputes whether a contract was formed at all, it is a matter for the court to

decide. Janiga, 615 F.3d at 741-42. Plaintiff appears to be contending that no agreement

was ever reached between the parties regarding the Service Agreement Coverage

Booklet, which contains the arbitration agreement and which plaintiff claims she never

received. (DE # 30 at 2, 7.) The court, therefore, will address this issue. 

Federal courts rely on state contract law to determine whether an arbitration

agreement constitutes a valid contract. See Faulkenberg v. CB Tax Franchise Systems, LP,

637 F.3d 801, 809 (7th Cir. 2011). Defendant is the only party that identifies the law it

believes is applicable to this case – Oklahoma law. (DE # 39 at 2.) Defendant’s position

is that Oklahoma law applies because plaintiff purchased the Service Agreement in

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Oklahoma. (Id.) Plaintiff has failed to identify which state’s law she thinks applies to

this case, and, indeed, fails to cite any state law cases in her brief. (DE # 30.) Plaintiff has

therefore waived the issue, and the court will apply Oklahoma law. McCoy v. Iberdrola

Renewables, Inc., 760 F.3d 674, 684 (7th Cir.) reh’g denied, 769 F.3d 535 (7th Cir. 2014) 

But regardless of whether the court applies Indiana or Oklahoma law in this case,

the result would be the same. Plaintiff’s argument to avoid arbitration is essentially that

because she was never given the Service Agreement Coverage Booklet, which contained

the arbitration clause, she cannot be compelled to arbitrate her claims against USPC.

(DE # 30 at 2, 6, 7.) The problem with this argument, as defendant correctly points out

in its reply brief (DE # 39 at 10-12), is that plaintiff has brought claims against USPC

under the Service Agreement Coverage Booklet. Plaintiff is suing USPC for breach of the

Service Agreement (DE # 2 at 14), and nothing in the Declaration Page, the one page

plaintiff concedes to signing, would give plaintiff any cause of action against USPC

because it does not actually contain the terms of the agreement. (DE # 30-1 at 1.) The

actual terms of the agreement are found in the Coverage Booklet. (DE # 29-1 at 2.)

Because plaintiff is suing USPC for breach of contract and breach of warranty,

and because the only possible basis for these claims is the Coverage Booklet, plaintiff is

seeking to reap the benefits of the Coverage Booklet. Plaintiff cannot sue USPC under

the Coverage Booklet and also avoid the arbitration provision contained in that same

document. S & O Liquidating P’ship v. C.I.R., 291 F.3d 454, 459 (7th Cir. 2002) (“A party

who has accepted the benefits of a contract cannot ‘have it both ways’ by subsequently

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attempting to avoid its burdens.”); Hughes Masonry Co. v. Greater Clark Cnty. Sch. Bldg.

Corp., 659 F.2d 836, 839 (7th Cir. 1981) (“In short, (plaintiff) cannot have it both ways. (It)

cannot rely on the contract when it works to its advantage, and repudiate it when it

works to (its) disadvantage.” (citations and quotations omitted)); Phoenix Ins. Co. v.

Tomlinson, 125 Ind. 84, 25 N.E. 126, 127-28 (1890) (“When the company accepted

payment of the entire premium it waived all right to forfeit the policy, for, as the

insured can get back no part of the premium paid, neither can the company escape the

performance of its part of the contract. It cannot have the benefit, and escape the

burden.”); Walton v. Estate of Swisher, 3 N.E.3d 1088 (Ind. Ct. App. 2014) (unpublished)

(“A plaintiff may not enjoy the benefits of a contract without also accepting its

burdens.”); Local Fed. Sav. & Loan Ass’n v. Burkhalter, 1987 OK CIV APP 23, 735 P.2d

1202, 1205 (“We are constrained to point out that it is fundamental that one who accepts

the benefits of a contract must assume the detriments.”).

“The party opposing arbitration must identify a triable issue of fact concerning

the existence of the agreement in order to obtain a trial on the merits of the contract.”

Tinder v. Pinkerton Security, 305 F.3d 728, 735 (7th Cir. 2002). “Just as in summary

judgment proceedings, a party cannot avoid compelled arbitration by generally

denying the facts upon which the right to arbitration rests; the party must identify

specific evidence in the record demonstrating a material factual dispute for trial.” Id. “In

deciding whether the party opposing summary judgment (and by analogy compelled

arbitration) has identified a genuine issue of material fact for trial, the evidence of the

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non-movant is to be believed and all justifiable inferences are to be drawn in his favor.”

Id. (citations and quotations omitted). 

Because plaintiff seeks to benefit from the Service Agreement, she cannot avoid

its arbitration clause, and has failed to create a triable issue of fact with regard to the

arbitration agreement. Defendant’s motion will therefore be granted, and plaintiff will

be ordered to arbitrate her claims against USPC. 

Plaintiff’s arguments to the contrary are not persuasive. First, plaintiff argues

that the Declaration Page and Coverage Booklet are hearsay. (DE # 30 at 5.) “Statements

that constitute verbal acts (e.g., words of contract or slander) are not hearsay because

they are not offered for their truth.” Schindler v. Seiler, 474 F.3d 1008, 1010 (7th Cir.

2007). This argument therefore fails. 

Next, plaintiff argues that defendant has not properly authenticated the

Declaration Page and Coverage Booklet under Federal Rule of Evidence 901. (DE # 30 at

5-6.) In its reply brief, defendant has included an affidavit of a Route 66 sales manager

authenticating those documents. (DE # 39-1.) This argument therefore fails.*

Next, plaintiff argues that the evidence of the arbitration agreement must be

excluded under Federal Rule of Evidence 403 because its probative value is

substantially outweighed by its unfair prejudice and risk that it will confuse the issues.

(DE # 30 at 5.) The court disagrees. This evidence is clearly probative. And, considering

 Additionally, as the court explained earlier, plaintiff relies on these documents *

in her claims against defendant. 

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that plaintiff relies on other provisions in the Coverage Booklet in her claims against

defendant, plaintiff’s argument on this point has no merit. 

Finally, plaintiff argues that there is a question of fact regarding the arbitration

provision because when she previously made claims for repairs under the Coverage

Booklet, USPC denied her claims for repairs and told plaintiff that it had no record of

plaintiff having ever purchased the Service Agreement. (DE # 30 at 2.) As noted above,

however, plaintiff is bringing her claims against defendant under that Service

Agreement. This argument therefore fails. 

IV. Conclusion 

For the foregoing reasons, defendant United Service Protection Corp.’s motion to

compel arbitration and dismiss plaintiff Patricia Mengers’s suit against it is GRANTED.

(DE # 29.) Plaintiff’s complaint is DISMISSED WITHOUT PREJUDICE as it relates to

defendant USPC, and the parties are ordered to proceed to arbitration pursuant to the

arbitration agreement. Plaintiff’s motion for additional discovery regarding the

arbitration agreement is DENIED AS MOOT. (DE # 31.) Plaintiff’s suit will continue in

this court against defendants Route 66 RV’s, Inc. and Gulf Stream Coach Inc..

SO ORDERED.

Date: September 30, 2015

s/James T. Moody 

JUDGE JAMES T. MOODY

UNITED STATES DISTRICT COURT