they did so." Id. at 944.

“If the agreement contains clear and unmistakable

evidence that the parties intended for the arbitrator to

decide timeliness questions, then the court must allow

the arbitrator to make that decision. However, if the

parties' contract is silent on the issue, and there is no

other evidence from which the court can clearly and
unmistakably conclude that the parties intended for the
arbitrator to decide the issue, then courts, not
arbitrators, must determine whether the parties agreed to
arbitrate specific claims or subject matter.”
Chicago Sch. Reform v. Diversified Pharm., 40 F.Supp.2d 987, 993
(N.D.I11. 1999) (citing First Options, 514 U.S. at 944).

Here, this court, not an arbitrator, must decide the
timeliness of Defendant’s arbitration claim. The record fails to
suggest the parties intended for the arbitrator to decide the
timeliness of arbitration claims. Nothing in the Agreement
indicates the parties intended the arbitrator to define its own
jurisdiction. Rather, the Agreement states an arbitrator “is not
authorized to change or alter the terms of this Agreement.”
(Agreement at p.1, 977.) In the absence of “clear and unmistakable
evidence” showing otherwise, the Court must conclude the parties
intended for the Court to resolve all disputes over arbitrability
of claims, including time restrictions that limit the arbitration.
Id.

Further, time constraints on arbitration proceedings are
substantive and jurisdictional rather than procedural matters, and

such questions of arbitrability must be decided by courts rather

than arbitrators. Geneva Securities, Inc. v. Johnson, 138 F.3d

4


clearly and unambiguously established a limitations period in which
to mandate arbitration. Defendant may not argue Plaintiff agreed
to arbitrate all disputes without qualification. Instead, the
parties only agreed to arbitrate claims if a party requested
arbitration before service of a lawsuit or within sixty days of
service. Since both parties agreed to this conditional
arbitration, the Court will not compel a party to endure an
arbitration in which it has no legal duty to participate. See AT&T
Tech v. Communications Workers of America, 475 U.S. 643, 648
(1986); Chicago Sch. Reform, 40 F.Supp.2d at 995-96.
CONCLUSION
For the above reasons, the Court DENIES the motion to dismiss

and to compel arbitration.

IT IS SO ORDERED.
DATED: August 20, 2002

WILLIAM J. BLER, DISTRICT JUDGE


served.” (Id. at p.1, 94.) Plaintiff maintains Defendant’s motion
to compel arbitration pursuant to the Agreement is time-barred by
the terms of the Agreement and Defendant has waived any right it
may have had under the Agreement to compel arbitration.

First, the Court, not the arbitrator, is the proper decision
maker to determine whether Defendant’s request for arbitration was
timely filed. The definition of “dispute” in the Agreement fails
to include the Agreement itself, i.e. the Agreement is silent on
the resolution of questions and issues regarding the Agreement’s
terms and conditions. Accordingly, the Court must decide whether
it or an arbitrator is the proper forum to resolve questions
arising out of the Agreement.

The critical inquiry for who decides the arbitrability of
claims is the parties’ intent when they entered into the Agreement,
and the Supreme Court has conclusively addressed this matter. In
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), the
Court held "just as the arbitrability of the merits of a dispute
depends upon whether the parties agreed to arbitrate that dispute,
++. so the question ‘who has the primary power to decide
arbitrability' turns upon what the parties agreed about that
matter," Id, at 943. Since the issue of which forum must
determine arbitrability is so critical, the Court instructed lower
courts to "not assume that the parties agreed to arbitrate

arbitrability unless there is clear and unmistakable evidence that


688-691-992 (7% Cir. 1998); Smith Barney, Inc. v. Schell, 53 F.3d
807, 809 (7** Cir. 1995); Edwards D. Jones & Co. v. Sorrells, 957
F.2d 509, 514 (7% Cir. 1992); Chicago Sch. Reform, 40 F.Supp.2d at
990. Regardless of where the time limit originated, whether it was
from the parties’ contract or a trade association rule, the effect
on the question of arbitrability is the same: the court and not an
arbitrator must decide if the parties have agreed to arbitrate the
claims. In Sorrells, the court observed that a trade association’s
arbitration rules “limit the range of disputes the parties
contractually agreed to arbitrate, thus limiting the jurisdiction
of the ... arbitrators. The Supreme Court has made clear that
defining the limits of arbitral jurisdiction is generally the
function of courts, not arbitrators.” Sorrells, 957 F.2d at 514.
“Similarly, contractual terms that expressly prohibit arbitrating
stale claims also ‘limit the range of disputes the parties
contractually agreed to arbitrate.’” Chicago Sch. Reform, 40
F,Supp.2d at 992 (quoting Sorrells, 957 F.2d at 514). Thus, the
Court must ascertain the range of disputes the parties agreed to
arbitrate and apply the limitation period to the facts of the case.

Here, the Agreement clearly provides for a sixty day window to
pursue arbitration after a complaint has been served. The
Agreement states “[e]ither you or we can [request that a dispute be
submitted to arbitration] before a lawsuit (which is usually

initiated by the filing of a “complaint”) has been served or within


‘inate Order Fora (06/97)

United States District Court, Northern District of Illinois

swmsemrat | Wiliam. vibber | Seat
CASE NUMBER 02 C 1875 DATE 8/20/2002
CASE TITLE Johnson v. Universal Financial Group, Inc.
[ln the following box (a) indicate the party filing the motion, e-g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
Defendant’s Motion to Dismiss and to Compel Arbitration
DOCKET ENTRY:
qd) ia Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) oO Answer brief to motion due___. Reply to answer brief due___.
(4) im Ruling/Hearing on set for at
(5) a Status hearing [held/continued to] [set for/re-set for] on set for at
(6) Oo Pretrial conference [heid/continued to] [set for/re-set for] on _ set for at
(7) o Trial [set for/re-set for] on at
(8) a [Bench/Jury trial] [Hearing] held/continued to___—_at
(9) a This case is dismissed [with/without] prejudice and without costs [by/agreement/pursuant to]
OOFRCP4(m) (General Rule21 [FRCP41(a)(1) [ FRCP41(a)(2).
qo) =f {Other docket entry] For the attached reasons, the Court DENIES Defendant’s motion to dismiss
and to compel arbitration. Enter Memorandum Opinion and Order.
(il) a {For further detail see order attached to the original minute order.]

No notices required, advised in open court,

No notices required, number of notices

Notices mailed by judge's staff.

quo 22

Notified counsel by telephone, date doc]

Docketing to mail notices.

Mail AO 450 form. “eck sia
Copy to judge/magistrate judge.
courtroom Luead Lopelsiq sn ue mailed notice
‘
y deputy’s \
initials —
(Patettime Ay)
‘contrat Clerk's OF railing deputy initials



60 days after a complaint, an answer, a counterclaim or an
amendment to a complaint has been served.” (Agreement at p.1, 94.)
As stated above, the Court must resolve any ambiguity in the
Agreement and interpret the Agreement’s terms and conditions.
Plaintiff served the complaint upon Defendant on March 14, 2002.
The Court granted Defendant leave to file this motion to compel
arbitration on July 11, 2002, but the Court entered the motion on
June 13, 2002 and the Plaintiff states the motion was filed on May
17, 2002. Each of these dates falls more than sixty days after
Plaintiff served the complaint upon Defendant. Thus, the window
for a party to mandate arbitration has closed and Defendant has
waived any right it may have had to compel arbitration pursuant to
the terms of the Agreement.

Finally, since arbitration under the Agreement is no longer an
option, Plaintiff may pursue litigation in the courts. The
Agreement suggests arbitration is not the only vehicle for a party
to obtain relief. A party to the Agreement has the “option” of
settling disputes through arbitration (Agreement at p.1, 41) and
“can request that a dispute be submitted to arbitration.”
(Agreement at pl, @ 4) (emphasis added). Moreover, Plaintiff
presumably brought his claim because he did not agree to arbitrate
issues that are more than sixty days old. The Court will not
simply disregard Plaintiff’s rights and force him to arbitrate

claims that are clearly stale and unarbitrable. The contract


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

EDWARD E. JOHNSON,
Plaintiff,

CASE NO. 02 C 1875

v.

JUDGE WILLIAM J. HIBBLER

UNIVERSAL FINANCIAL GROUP, INC.
Defendant.

wevvevvse

MEMORANDUM ORDER AND OPINION

Edward E. Johnson (“Plaintiff”) alleges Universal Financial
Group, Inc. (“Defendant”) refused to process Plaintiff’s rescission
of his mortgage loan transaction and thus violated the Truth~in-
Lending Act, 15 U.S.C. § 1635. Defendant responded that the
parties agreed to arbitrate any dispute in connection with the loan
transaction, pursuant to the document titled “Agreement for the
Arbitration of Disputes” (“Agreement”), and filed the present
motion to dismiss the complaint and compel arbitration under
Federal Rule of Civil Procedure 12(b)(1). The briefing schedule
set by the Court for the motion closed on August 15, 2002;
Plaintiff filed a response, but Defendant did not file a reply.
For the below reasons, the Court DENIES the motion to dismiss and
compel arbitration.

Standard of Review
In a motion to dismiss for lack of subject matter jurisdiction

under Rule 12(b)(1), the district court must accept as true all


well-pleaded factual allegations and draw reasonable inferences in
favor of the plaintiff. Ezekiel v. Michel, 66 F.3d 894, 897 (7
Cir. 1995). If the defendant questions the jurisdictional
allegations, then the plaintiff bears the burden of proving the
jurisdictional requirements have been met. Kontos v. United States
Dep’t of Labor, 826 F.2d 573, 576 (7 Cir. 1987). In ruling ona
12(b) (1) motion to dismiss, the court may look beyond the complaint
and consider additional evidence submitted by the parties when
subject matter jurisdiction is at issue. Ezekiel, 66 F.3d at 897.
Analysis

In relevant part, the Agreement states “any dispute,
regardless of when it arose, shall be settled, at your option or
ours, by arbitration in accordance with this Agreement.”
(Agreement at p.1, 91.) A “dispute” is further defined as “any
claim or controversy of any nature whatsoever arising out of or in
any way related to the loan... or any other aspect of the loan
transaction.” (Id. at p.1l, 3.) The American Arbitration
Association administers each arbitration pursuant to its Commercial
Arbitration Rules and the Federal Arbitration Act, 9 U.S.C. § 1,
etal.. (Id. at p.1, 95.) Further, the Agreement states “[e]ither
you or we can [request that a dispute be submitted to arbitration}
before a lawsuit (which is usually initiated by the filing of a
“complaint”) has been served or within 60 days after a complaint,

an answer, a counterclaim or an amendment to a complaint has been