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The Honorable Ralph R. Erickson, United States District Judge for the District

of North Dakota, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 07-1948

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Mary Koch, on behalf of herself and all *

others similarly situated, *

*

Plaintiff/Appellee, *

* Appeal from the United States

v. * District Court for the 

* Eastern District of Arkansas. 

Compucredit Corporation; Jefferson *

Capital Systems, LLC, *

*

Defendants/Appellants, *

*

J.A. Cambece Law Office, P.C., *

*

Defendant. * 

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Submitted: January 16, 2008

Filed: September 23, 2008

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Before COLLOTON, SHEPHERD, Circuit Judges, and ERICKSON,1

 District Judge.

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COLLOTON, Circuit Judge.

Mary Koch filed suit on behalf of herself and a putative class, alleging that

Compucredit Corp., Jefferson Capital Systems, LLC, and the J.A. Cambece Law
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Office, P.C., violated the Fair Debt Collection Practices Act (FDCPA) and the

Arkansas Deceptive Trade Practices Act (ADTPA) by attempting to collect on a debt

that Koch already had paid. The defendants, purported assignees of the original

creditor First North American National Bank (FNANB), moved to compel arbitration

under the arbitration clause contained in the credit card agreement between FNANB

and Koch. The district court denied the motion, reasoning that the assignment of the

credit agreement from FNANB to the defendants was invalid, and that the defendants

thus did not have an agreement to arbitrate with Koch. The defendants filed this

interlocutory appeal, and we reverse. 

I.

In 2000, Koch entered into a credit card agreement with FNANB. Koch admits

that she incurred debt from using the card, but alleges that she settled the debt in

January 2003. On August 31, 2005, FNANB assigned “all rights, title, and interest”

in Koch’s account to Jefferson Capital. At the time of the assignment, FNANB’s

records presumably indicated that Koch was past due on her account, as Jefferson

Capital hired the J.A. Cambece Law Office, P.C. (Cambece), to collect on the debt.

Cambece sent Koch a collection notice on December 9, 2005, claiming that she owed

$284.68 to Jefferson Capital as the assignee of FNANB.

Koch attempted to resolve the matter with Cambece, but the firm continued its

collection efforts, allegedly making various misrepresentations in the process. Koch

ultimately filed suit against Cambece, Jefferson Capital, and its corporate parent,

Compucredit, claiming that the defendants had violated the FDCPA and the ADTPA.

The defendants moved to stay the proceedings and compel arbitration, invoking the

arbitration clause contained in the credit agreement between FNANB and Koch. Koch

opposed this motion on the grounds that (1) the arbitration clause was invalid because

it was unconscionable, and (2) her claims did not fall within the scope of the

arbitration clause.
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The district court agreed with Koch that the arbitration clause could not be

invoked by the defendants, albeit for different reasons. The court focused on the

purported assignment of Koch’s account, accepting as true Koch’s allegation that she

settled her debt with FNANB in 2003. The court reasoned that absent an existing

debt, FNANB had no remaining interest in Koch’s account, and therefore had nothing

to assign. Because the absence of a “present interest” rendered the assignment invalid

under Arkansas law, the court concluded that Jefferson Capital could not be treated

as a party to the credit agreement or to the arbitration clause contained therein. The

court thus denied Jefferson Capital’s motion to compel, relying on the rule that a party

cannot compel arbitration without a valid arbitration agreement. Jefferson Capital and

Compucredit appealed. We will refer to the appellants as “Jefferson Capital” for

purposes of simplicity.

II.

The Federal Arbitration Act (FAA), 9 U.S.C. § 4, provides that a party

aggrieved by the failure of another party to arbitrate under a written agreement may

petition the district court for an order compelling arbitration. The purpose of the FAA

is “to move the parties to an arbitrable dispute out of court and into arbitration as

quickly and easily as possible.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 22 (1983). To effectuate that goal, Congress provided a limited

role for courts, allowing them to “consider only issues relating to the making and

performance of the agreement to arbitrate.” Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 404 (1967). These issues are presumptively committed to

judicial determination, because “arbitration is a matter of contract and a party cannot

be required to submit to arbitration any dispute which he has not agreed so to submit.”

United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960).

To decide questions of arbitrability, we must determine whether a valid

arbitration agreement exists between the parties and, if so, whether the subject matter
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of the dispute falls within the scope of the arbitration clause. United Steelworkers,

Local No. 164 v. Titan Tire Corp., 204 F.3d 858, 860 (8th Cir. 2000). The district

court concluded that there was no valid arbitration agreement between Jefferson

Capital and Koch, because FNANB’s assignment to Jefferson Capital was invalid.

Because the district court’s decision was based on the complaint alone, and did not

involve any determination of disputed factual issues, we review this decision de novo,

accepting as true the allegations in the complaint. See Suburban Leisure v. AMF

Bowling Prods., 468 F.3d 523, 525 (8th Cir. 2006).

At the outset, Jefferson Capital argues that the district court erred by

considering the validity of the assignment at all, because that issue should be decided

by the arbitrator. This position is in tension with our precedent in I.S. Joseph Co., Inc.

v. Mich. Sugar Co., 803 F.2d 396 (8th Cir. 1986), where we held, in the context of a

dispute between an assignee and an original contracting party, that “the enforceability

of an arbitration clause is a question for the court when one party denies the existence

of a contract with the other.” Id. at 400. We observed that “absent some indication

in the original agreement that the parties at that time provided for assignment of their

interests under the agreement or otherwise intended to bind themselves to entities not

then in existence, the validity of the assignment must be determined under the

common law of contract.” Id. Under those circumstances, referral of the assignment

question to the arbitrator “would require the arbitrator to look outside the agreement

to the circumstances of the contract itself and the contract law of the state in order to

determine his jurisdiction in the matter.” Id. That function, we said, is one reserved

for the court under the FAA. Accord American Safety Equipment Corp. v. J.P.

Maguire & Co., 391 F.2d 821, 829 (2d Cir. 1968).

Jefferson Capital contends that I.S. Joseph and similar decisions do not preclude

referral of the assignment dispute to the arbitrator in light of Buckeye Check Cashing,

Inc. v. Cardegna, 546 U.S. 440 (2006). The appellants note that Buckeye reiterated

a rule of “severability,” established by Prima Paint, that an arbitration clause is
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severable from the remainder of a contract. Prima Paint addressed a claim of fraud

in the inducement, and held that “if the claim is fraud in the inducement of the

arbitration clause itself – an issue which goes to the making of the agreement to

arbitrate – the federal court may proceed to adjudicate it.” Prima Paint, 388 U.S. at

403-04. But where the claim was one of fraud in the inducement of the contract

generally, Prima Paint declared that the issue was for the arbitrator. Id. Buckeye,

applying Prima Paint, reiterated that “unless the challenge is to the arbitration clause

itself, the issue of the contract’s validity is considered by the arbitrator in the first

instance.” 546 U.S. at 445-46 (emphasis added). Jefferson Capital urges that the

validity of the assignment here depends on the continuing validity of the contract as

a whole, not just the arbitration clause, so the dispute should be referred to the

arbitrator.

In Buckeye, the plaintiffs claimed that the defendant’s check cashing agreement

“violated various Florida lending and consumer protection laws,” and was therefore

void and illegal ab initio. Id. at 443. The Supreme Court held that because the

plaintiffs challenged “the agreement, but not specifically its arbitration provisions,”

the rule of severability applied, and the arbitration provisions were enforceable “apart

from the remainder of the contract.” Id. at 446. The Court specified, however, that

“[t]he issue of the contract’s validity is different from the issue whether any

agreement between the alleged obligor and obligee was ever concluded.” Id. at 444

n.1 (emphasis added). Thus, Buckeye did not speak to decisions holding that it is for

a court to decide “whether the alleged obligor ever signed the contract, whether the

signor lacked authority to commit the alleged principal, and whether the signor lacked

the mental capacity to assent.” Id. (citations omitted).

Just as Buckeye did not address disputes over whether an agreement was ever

concluded between an obligor and obligee, we do not think Buckeye undermines our

precedent in I.S. Joseph holding that the validity of an assignment is a matter for the

court. One of the principal authorities on the assignment question explains why
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decisions involving “severability” of arbitration clauses in challenges to contract

validity are not applicable to disputes over an assignment:

This case is quite different from those involving fraud in the inducement,

e.g., Prima Paint Corp. v. Flood & Conklin Mfg. Co. In those cases, an

agreement to arbitrate was reached by the parties; the fraud alleged went

not to the agreement to arbitrate but to the substance of the contract. The

arbitration clauses were held separable, and the issue of fraud in the

inducement was sent to arbitration. That approach is not available here;

it accomplishes nothing to treat the arbitration clause separately if [the

purported assignee of a licensor] is not a party to it. Therefore, before

ordering [the licensee] to arbitration, the district court should have first

determined whether there was an agreement to arbitrate between [the

licensee] and [the purported assignee]. 

American Safety, 391 F.2d at 829 (citations omitted). Similarly here, it “accomplishes

nothing” to treat the arbitration clause of Koch’s credit agreement separately if

Jefferson Capital was never a party to it. Accordingly, we believe the district court

was correct to address in the first instance whether FNANB’s assignment to Jefferson

Capital was valid, such that Jefferson Capital was a party to the credit agreement with

Koch. 

In this case, the existence of an arbitration agreement between the parties

depends on whether the assignment of Koch’s account from FNANB to Jefferson

Capital was valid. See I.S. Joseph, 803 F.2d at 399-400; Am. Safety, 391 F.2d at 829.

State law governs this determination, see Barker v. Golf U.S.A., Inc., 154 F.3d 788,

791 (8th Cir. 1998), and the parties do not dispute the district court’s decision to apply

Arkansas law. Under Arkansas law, the elements of a valid assignment are “delivery

of the subject matter with intent to make an immediate and complete transfer of all

right, title, and interest from the assignor to the assignee.” Keller v. Bass Pro Shops,

Inc., 15 F.3d 122, 125 (8th Cir. 1994). Because “an assignor can assign only what he

has,” Day v. Case Credit Corp., 427 F.3d 1148, 1153 (8th Cir. 2005) (internal
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quotations omitted), the assignor must have some “present interest in the subject

matter of the contract” to effectuate an assignment. Beal Bank, S.S.B. v. Thornton, 19

S.W.3d 48, 51 (Ark. App. 2000) (internal quotation omitted). Thus, in order to meet

the elements of an assignment under Arkansas law, FNANB must have had some

remaining interest in Koch’s account at the time of the attempted assignment. 

Koch argues that FNANB had no remaining interest in her account, because she

had settled her debt with the company, and was released from her obligations under

the credit agreement. We disagree. Even if the underlying credit agreement was

terminated by the settlement, such a termination does not necessarily release the

parties from their obligations under that agreement, including the obligation to

arbitrate. See, e.g., Litton Fin. Printing v. NLRB, 501 U.S. 191, 205 (1991). To the

contrary, there is “a presumption in favor of postexpiration arbitration of matters

unless negated expressly or by clear implication.” Id. at 204 (internal quotation

omitted); see also Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery

Workers Union, AFL-CIO, 430 U.S. 243, 255 (1977); Zucker v. After Six, Inc., 174 F.

App’x 944, 947 (6th Cir. 2006) (concluding that although Litton and Nolde Bros.

involved collective bargaining agreements, “their holdings are based upon principles

applicable to arbitration agreements generally, and their application need not be

limited to the collective bargaining context.”). Because the obligation to arbitrate

those “matters and disputes arising out of the relation governed by contract” continues

even after the expiration of the agreement, Koch’s claim that she was released from

all of her obligations when she settled her debt is erroneous. Id.

This continuing obligation to arbitrate gave FNANB a “present interest” in the

contract even after Koch settled her debt. Thus, FNANB had something to assign to

Jefferson Capital on August 31, 2005, and the assignment is valid. Through the

assignment, Jefferson Capital assumed all of FNANB’s remaining rights and

obligations under the contract.
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Of course, Jefferson Capital did not obtain an unlimited right to compel

arbitration against Koch. Jefferson Capital’s ability to compel arbitration is limited

to “matters and disputes arising out of the relation governed by contract.” Litton, 501

U.S. at 204. “A postexpiration grievance can be said to arise under the contract only

where it involves facts and occurrences that arose before expiration, where an action

taken after expiration infringes a right that accrued or vested under the agreement, or

where, under normal principles of contract interpretation, the disputed contractual

right survives expiration of the remainder of the agreement.” Id. at 205-06. 

The question then is whether a claim for a debt incurred during the contract

period and pursuant to the credit agreement, even if ultimately unfounded, fits within

one of the three categories outlined in Litton. We think it does. Even assuming that

Koch’s debt had been extinguished before the assignment, and that the collection

attempts by the defendants were erroneous, the heart of the dispute – the occurrence

and alleged payment of the debt – is one founded in the credit agreement. Although

Koch argues that the dispute centers around the defendants’ illegal actions, and has

“nothing to do with the credit arrangement at one time defined by the Cardholder

Agreement,” she also admits that the defendants’ collection efforts were

based – rightly or wrongly – on a debt incurred under the now-defunct credit

agreement. The dispute between Koch and the defendants thus involves “facts and

occurrences that arose before expiration” of the credit agreement, making it a dispute

“aris[ing] under the contract.” Litton, 501 U.S. at 206; Berkery v. Cross Country

Bank, 256 F. Supp. 2d 359, 367-68 (E.D. Pa. 2003). 

To be subject to arbitration, the dispute must also fall within the scope of the

arbitration clause. See Litton, 501 U.S. at 205; Nolde Bros., 430 U.S. at 252-53. The

arbitration clause here is broad, covering “any claim, dispute, or controversy arising

from or related to either this Agreement or the relationships that result from this

Agreement.” A dispute over the collection of a debt incurred under the credit

agreement is a “controversy arising from or related to . . . this Agreement,” so Koch’s
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claim “would have been subject to [arbitration] had it arisen during the contract’s

term.” Nolde Bros., 430 U.S. at 252. Nothing in the arbitration clause excludes from

its operation a dispute which arises under the contract, but which is based at least in

part on events that occur after its termination. Id. at 252-53. Thus, the arbitration

provision applies to the dispute between Koch and Jefferson Capital.

For these reasons, we reverse the decision of the district court and remand with

directions to grant the defendants’ motion to compel arbitration.

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