IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

DAWN GUIDOTTI on behalf of

herself and other class

members similarly situated

 Plaintiff,

v.

LEGAL HELPERS DEBT RESOLUTION,

L.L.C., et al.,

 Defendants.

HON. JEROME B. SIMANDLE

Civil No. 11-1219 (JBS/KMW)

OPINION

APPEARANCES:

Joseph Michael Pinto, Esq.

POLINO AND PINTO, P.C.

720 East Main Street, Suite 1C

Moorestown, NJ 08057

Counsel for Plaintiff

Shaji M. Eapen, Esq.

MORGAN, MELHUISH & ABRUTYN, ESQS.

and

Richard W. Epstein, Esq.

GREENSPOON MARDER, P.A.

100 W. Cypress Creek Road, Suite 700

Ft. Lauderdale, FL 33309

Counsel for Defendants

SIMANDLE, District Judge:

Table of Contents

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 2

II. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . 5

A. Parties.. . . . . . . . . . . . . . . . . . . . . . . 5

1. Law Firm Defendants .. . . . . . . . . . . . . . 6

2. Bank Defendants. . . . . . . . . . . . . . . . . 8

3. Other Moving Defendants. . . . . . . . . . . . . 9

4. Non-moving Defendants .. . . . . . . . . . . . 10

B. Facts . . . . . . . . . . . . . . . . . . . . . . . 11

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C. Procedural History .. . . . . . . . . . . . . . . . 21

III. DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . 21

A. Arbitration Motions.. . . . . . . . . . . . . . . . 22

1. Arbitration Clause in ARA .. . . . . . . . . . 23

2. Arbitration Clause in AADS . . . . . . . . . . 32

3. Motion to Stay . . . . . . . . . . . . . . . . 41

B. Motions to Dismiss - Personal Jurisdiction .. . . . 43

1. Standard of Review . . . . . . . . . . . . . . 43

2. Bank Defendants .. . . . . . . . . . . . . . . 45

3. Remaining Defendants . . . . . . . . . . . . . 49

C. Motions to Dismiss - Failure to State a Claim . . . 49

1. Standard of Review . . . . . . . . . . . . . . 49

2. Bank Defendants Global and RMBT .. . . . . . . 51

3. Remaining Defendant LHP .. . . . . . . . . . . 55

D. Non-Moving Defendants . . . . . . . . . . . . . . . 56

IV. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . 56

I. INTRODUCTION

This case is a putative class action alleging a conspiracy

to commit unlicensed debt adjustment services in violation of the

New Jersey Debt Adjustment and Credit Counseling Act, N.J. Stat.

Ann. § 17:16G-1, et seq., the New Jersey RICO statute, N.J. Stat.

Ann. § 2C:41-1, et seq., the New Jersey Consumer Fraud Act, N.J.

Stat. Ann. § 56:8-2, et seq., and various other common law causes

of action. Plaintiff names twenty two defendants and charges all

defendants collectively with eight different causes of action.

Essentially, Plaintiff alleges that she was deceived into

contracting with Defendants in the hopes that they would convince

her unsecured creditors to settle her consumer debts without

requiring that she declare bankruptcy. Instead, Plaintiff

alleges that they participated in a conspiracy to fleece her (and

others similarly situated) of her remaining assets without

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negotiating with her creditors or protecting her from her

creditors when they sued to collect on their debts.

Presently before the Court are six motions filed by eighteen

of the twenty two Defendants. Nine of the Defendants (the “Law

Firm Defendants”) have moved to compel arbitration and to dismiss

for lack of personal jurisdiction and for failure to state a

claim. [Docket Items 20 & 21.] Four of the Defendants (the “Bank

Defendants”) have similarly moved to compel arbitration and to

dismiss. [Docket Items 26 & 27.] Finally, a group of five other

Defendants have moved to stay the action pending the arbitration

requested by the other Defendants, and to dismiss for lack of

personal jurisdiction and for failure to state a claim. [Docket

Items 23 & 24.] All three of the motions to dismiss [Docket

Items 20, 23 & 26] include an as-applied constitutional challenge

to the New Jersey Debt Adjustment and Credit Counseling Act

(“NJDACCA”).

Plaintiff responded to these motions with two combined

briefs in opposition, one opposing the motions regarding

arbitration and one opposing the motions to dismiss. [Docket

Items 48 & 49.] The moving defendants filed their reply briefs

for both the motions to dismiss [Docket Items 72, 74 & 75] and

the motions regarding arbitration [Docket Items 73, 76 & 77], and

subsequently filed a notice of supplemental authority regarding

the arbitration issues [Docket Item 78]. Plaintiff was later

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granted leave to file a sur-reply brief to the Bank Defendants’

reply brief [Docket Item 83], and the Bank Defendants were then

granted leave to file a sur-sur-reply brief [Docket Item 88].

Additionally, the four Defendants that did not participate

in the instant motions filed letters with the Court requesting

that they be permitted to join in the motions, with the leave of

the moving parties’ counsel. [Docket Items 89 & 96.] Plaintiff

has notified the Court of her opposition to permitting these

nonmoving Defendants to join in the motions, explaining that

these additional Defendants raise different issues than the

moving Defendants and, therefore, would require additional

opposition from Plaintiff which she has not filed. [Docket Item

90.]

The Court heard oral argument on these motions on November

21, 2011. The motions require the Court to decide issues of

whether to enforce either of two different arbitration clauses. 

Depending on how the Court decides those issues, the Court may

also have to then decide whether Plaintiff has proven that the

various out-of-state corporations and corporate officers named as

Defendants in this action have established the minimum contacts

with New Jersey necessary to exercise personal jurisdiction over

these Defendants. Finally, for those Defendants that the Court

determines are subject to its personal jurisdiction, the Court

must determine whether Plaintiff’s Amended Complaint has alleged

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sufficient facts to state a claim under any of the eight asserted

theories, and whether doing so, as applied to those remaining

Defendants, would violate the United States Constitution,

specifically its Contracts Clause (Art. I, Sec. 10, Cl. 1) and

the Dormant Commerce Clause (Art I, Sec. 8, Cl. 3).

For the reasons stated below, the Court will grant the Law

Firm Defendants’ motion to compel arbitration (and consequently

deny their motion to dismiss as moot); deny the Bank Defendants’

motion to compel, and deny the remaining Defendants’ motion to

stay the action. The Court will further grant in part and deny

in part the Bank Defendants’ motion to dismiss, and will grant in

its entirety the Remaining Defendants’ motion to dismiss.

II. BACKGROUND

A. The Parties

Because Plaintiff’s Amended Complaint names so many parties,

and the alleged connections between the parties are so intricate,

the Court will begin with a description of the Defendants and how

they relate to each other. Because the moving Defendants have

organized themselves into three groups, the Court will begin by

identifying the Defendants that belong to each of those groups,

as well as the four remaining Defendants that were not among the

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moving parties.1

1. The Law Firm Defendants

The first group of Defendants is the Law Firm Defendants. 

The nine Defendants in this group connect to this action through

Plaintiff’s contract for legal and debt negotiation services. 

This group includes two organizational entities, Legal Helpers

Debt Resolution, LLC (“LHDR”) and Eclipse Servicing, Inc.

(“Eclipse”). Additionally, Plaintiff named seven individual

lawyers and corporate officers affiliated with these

organizations. Specifically, Plaintiff named as Defendants the

four managing members of LHDR: Thomas G. Macey, Jeffrey J.

Aleman, Jason E. Searns, and Jeffrey Hyslip. None of these four

attorneys are alleged to be residents of New Jersey, and

Plaintiff alleges that they are not licensed to practice law in

New Jersey. Am. Compl. ¶¶ 7-10. Plaintiff also named Thomas M.

Nicely, who is a member of the New Jersey Bar, and alleges that

he is a “managing member of or partner of LHDR”, a citizen of New

Jersey, and that he “claims to have an office” in Cherry Hill,

New Jersey, which Plaintiff alleges is not a “bona fide” office

 As will become clear through the discussion of the parties 1

and causes of action, there is not complete diversity of

citizenship between the parties in this action. However, because

subject matter jurisdiction in this action is based on the Class

Action Fairness Act, 28 U.S.C. § 1332(d), Plaintiff need not

establish complete diversity of citizenship, but only minimal

diversity. West Virginia ex rel. McGraw v. Comcast Corp., 705 F.

Supp. 2d 441, 448 (E.D. Pa. 2010).

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for the practice of law in New Jersey. Am. Compl. ¶¶ 11, 51. 

Finally, also included in the Law Firm Defendants Group are two

corporate officers of Eclipse: Harry Hedaya (the President of

Eclipse) and Amber N. Duncan (the Vice President of Eclipse). 

Am. Compl. ¶ 3.

Plaintiff alleges that LHDR is a national law firm,

incorporated in Nevada with its main office in Chicago, Illinois. 

Am. Compl. ¶ 2. Plaintiff alleges that LHDR markets itself as

“the nation’s largest debt resolution law firm maintaining

partners in all 50 states.” Id. ¶ 13. Also, Plaintiff alleges

that LHDR claims to “work[] in professional alliance with many of

the nations [sic] top reputable debt negotiation companies . . .

to provide consumers with debt resolution services similar to

those provided by large corporate law firms for their business

clients.” Id. ¶ 13(C).

Plaintiff alleges that Eclipse is one such debt negotiation

company with which LHDR works. Plaintiff alleges that Eclipse

markets itself as a “back office solution for debt settlement

companies looking to outsource their customer service and debt

management and negotiation requirements.” Id. ¶ 14. Plaintiff

alleges that LHDR contracted with Eclipse to provide customer

service, creditor negotiation services, provide online client

account access and electronic signature services. Id. In

Plaintiff’s attorney retainer agreement (“ARA”), Plaintiff agreed

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with LHDR that “LHDR shall subcontract certain tasks including

negotiations with creditors and collectors and certain customer

support responsibilities” to Eclipse, to be performed “under the

direct supervision of LHDR.” Retainer Agreement ¶¶ V, VIII,

Bratter Cert. Ex. C.

2. Bank Defendants

The second group of Defendants, of which there are four,

connect to this action through Plaintiff’s contract to open and

operate a special bank account out of which she would pay LHDR

and Eclipse’s fees and in which she would save money that was

intended ultimately to be paid to her settling creditors. 

Plaintiff names Rocky Mountain Bank & Trust (“RMBT” or “Rocky”)

as the financial institution where she opened this account and

Global Client Solutions (“Global”) as the “processing agent” that

would operate the automatic fund transfers into this account and

automatic payments out of it to LHDR and Eclipse. Am. Compl. ¶

4. Plaintiff additionally names as Defendants the corporate

officers of RMBT and Global, Douglas L. McClure, who Plaintiff

alleges is the President of RMBT, and Michael Hendrix, who

Plaintiff alleges is the President of Global. Plaintiff alleges 2

 Defendants Hendrix and McClure assert, in certifications 2

attached to their motion to dismiss, that their titles are

incorrectly alleged in the Complaint; Hendrix claims his correct

title is Managing Member of Global and McClure claims his correct

title is Director of RMBT. Hendrix Cert; McClure Cert. As these

are facts outside the Amended Complaint, and as they are

irrelevant to the pending motions, the Court will not consider

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that 

Global and Rocky maintain and operate debt

management accounts for hundreds of third

party businesses that offer debt adjusting

services, electronically withdraw funds from a

debtors [sic] account or receive funds

forwarded by other means from the debtor and

deposit these funds in a Special Purchase

[perhaps intended to be “Purpose”] Account in

Rocky, administered and maintained by Global. 

Id. ¶ 16(A).

3. Other Moving Defendants

Finally, an additional five Defendants have filed a pair of

motions to dismiss and to stay pending arbitration. Unlike the

previous two groups, the Defendants in this group are not

contractually connected with Plaintiff, but are individuals or

organizations that Plaintiff alleges are part of the larger

nationwide conspiracy with the previous two groups of defendants

to commit illegal debt adjustment services.

Defendant Legal Helpers P.C. (“LHP”) is alleged to be a

national bankruptcy law firm headquartered in Illinois, managed

by Defendant Macey, that lists an office at the same address as

the address listed for the office of Defendant LHDR in Newark,

New Jersey. Am. Compl. ¶ 11.

Defendant Legal Services Support Group, L.L.C. (“LSSG”) is

allegedly a Nevada Corporation that funnels customers seeking

debt relief services, such as Plaintiff (though not,

these facts on this motion.

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specifically, Plaintiff herself), to lawyers and law firms such

as LHDR. Id. ¶¶ 6, 19. Defendants Century Mitigations, L.P.

(“CMIT”), JEM Group (“JEM”), and Lynch Financial Solutions

(“LYNCH”) are alleged to be the managing members of LSSG. Id. ¶

6. All four of these corporations are alleged to be

headquartered and located in states other than New Jersey. Id.

4. Non-Moving Defendants

Finally, four Defendants were named in this action but did

not join in the instant motions (though all four have, after the

extensive briefing was completed, requested permission to join in

the motions to dismiss of Groups 2 and 3, discussed above). 

These Defendants include: JG Debt Solutions, L.L.C., Joel

Gavalas, Reliant Account Management, L.L.C. and Stephen Chaya. 

Defendant Gavalas is apparently an employee or officer of JG Debt

Solutions, and was the employee with whom Plaintiff allegedly

spoke when she initially sought out debt settlement assistance in

2009, who referred her to LHDR and Eclipse. Am. Compl. ¶¶ 21-22. 

Defendant Reliant Account Management is allegedly a California

corporation that engages in similar business as Defendant Global,

and Defendant Chaya is allegedly the managing member of Reliant. 

Id. ¶¶ 12, 16(B).

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B. Facts3

In September of 2009, Plaintiff had amassed approximately

$19,550 in unsecured consumer and credit card debt. Am. Compl. ¶

21; Attorney Retainer Agreement Schedule A, Bratter Cert. Ex. C.4

Plaintiff called Defendant JG Debt Solutions, seeking help to

reduce or negotiate a settlement of some of her debt rather than

file for bankruptcy, and spoke with Defendant Joel Gavalas. Am.

Compl. ¶ 21. Gavalas described a “debt reduction program” in

which he suggested that Plaintiff’s “credit card debt could be

cut in half and paid off within three years.” Id. Gavalas

explained that Defendant Eclipse would evaluate her financial

situation to determine whether she “qualified” for the program,

and that if she did, a payment program would be prepared for her. 

Id. Elsewhere in the Amended Complaint, Plaintiff alleges that

it was the practice of Eclipse to only accept referred clients

from JG (or similar lead generators) that had at least $10,000 in

debt and access to e-mail. Id. ¶ 68. 

 Unless otherwise noted, the following facts are those 3

alleged in the Amended Complaint or included in indisputedly

authentic documents, the existence of which Plaintiff alleges in

her Amended Complaint.

 Plaintiff alleges the existence of two contracts in this 4

action: the Attorney Retainer Agreement she signed retaining

LHDR, and the Special Purpose Account Application she signed to

open an account with RMBT. Am. Compl. ¶ 23. Defendants attached

undisputedly authentic copies of these agreements to the

certification of counsel for Defendants Rebecca Bratter. Where

necessary, the Court will take note of facts and information

contained in these attached documents.

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Some time after this initial call, Gavalas called Plaintiff

back and informed her that “she had been accepted in the program”

and that Eclipse had proposed two alternate plans for

participation in its program. Id. ¶ 22. Plaintiff was informed

that she would be required to make monthly payments into a new

bank account for a period of years out of which she would pay for

the debt settlement negotiation services and also settle her

debts with her creditors. Id. She was offered a three-year plan

in which she would pay approximately $358 per month or a fiveyear plan in which she would pay approximately $200 per month. 

Plaintiff chose the three-year plan. Id. 

In this conversation, Plaintiff was also informed that she

would be represented in the debt negotiation process by attorneys

from LHDR. Gavalas then “asked a series of questions to which

Plaintiff had to respond” which was recorded. Id. Elsewhere in

the Amended Complaint, Plaintiff alleged it was the practice of

JG and other similar organizations that fed clients to Defendants

Eclipse and LHDR to “prepare the customer for this recording.” 

Id. ¶ 70. 

Customers were told that certain questions had

to be asked of them to which they had to

respond and that, although some of the

questions and information which they would

hear might seem frightening or alarming, they

were merely to answer “yes” to the questions

and the JG representative would call them back

after the recording was finished. The

representative further explained that the

information they would hear during [this] call

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rarely, if ever, happened and that the

attorneys would not let it happen, taking care

of the problems that might arise. The

customer was advised not to ask any questions

during the [] call or the call would have to

be repeated. The recorded call was

transmitted to Eclipse.

Id. However, Plaintiff does not specifically allege that this

coaching and these reassurances were given to her, she merely

alleges that “Gavalas then asked a series of questions to which

plaintiff had to respond. This part of the call was recorded.” 

Id. ¶ 22. Plaintiff does not allege what questions were asked of

her, what her responses were, or what effect these questions had

on her decision to contract for debt negotiation services with

the Defendants.

Later that same month, Plaintiff received via e-mail a

collection of documents regarding the debt settlement program. 

Included in these documents was an attorney retainer agreement

(the “ARA”) and an application to open a Special Purpose Account

with RMBT (the “SPAA”). Id. ¶¶ 23(e), 23(b). Plaintiff signed

both documents and returned them. Id. ¶ 28.

The ARA lays out the respective roles of LHDR and Eclipse in

the debt settlement negotiation plan, states Plaintiff’s fee

arrangements to both of them, and limits the scope of the

representation to be provided by LHDR. Bratter Cert. Ex. C. The

Agreement describes LHDR as a “debt relief agency and law firm

that provides debt resolution services to its clients.” Id. ¶ I. 

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The ARA limits LHDR’s services to only “negotiate and attempt to

enter into settlements with creditors of the Client in an effort

to modify and/or restructure Client’s current unsecured debt.” 

Id. ¶ III. But the ARA expressly stated that LHDR would not

provide services related to “Represent[ing] Client in any matter

before a court, including foreclosure proceedings or in any

arbitration or hearing” and that “In the event a creditor or

collector sues Client, whether related to a debt obligation or

any other claim, LHDR is under no obligation to provide

representation.” Id.

The ARA further stated that LHDR would subcontract

“negotiations with creditors and collectors” to “a third party”

later identified in the ARA as Eclipse. Id. ¶¶ V, VIII. 

However, the ARA states that “LHDR and other legally trained,

licensed personnel will supervise all negotiations and customer

support and ensure that these services comply with established

procedures.” Id. ¶ V.

The fee structure established in the ARA provided that

Plaintiff would pay LHDR an initial flat fee retainer of $500 and

a contingency fee of 5% of the amount of debt reduction

accomplished by the work of LHDR and its staff, which would

include a credit of the initial retainer fee. Id. ¶ VIII. 

Additionally, the ARA established that Plaintiff would pay a

“service fee” to Eclipse of 15% of her total scheduled debt. Id. 

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In Plaintiff’s case, as her total scheduled debt was listed as

$19,550, this fee amounted to $2,932.50 (though it was nowhere

listed as a total figure in the ARA), to be paid in 15 monthly

installments (the first 15 months of the 36 month program). 

Id. Schedule B. In addition to these charges described in the

text of the ARA, the attached Payment Schedule & Fee Table listed

a monthly “maintenance fee” of $50, which, spread over the

anticipated 36 months of the program, amounted to an anticipated

$1,800. Id. 

The ARA also specified that Plaintiff agreed to establish an

“authorized bank account” from which the Service Fees and legal

fees would be automatically withdrawn on a monthly basis, with

the first payment to start on September 30, 2009. Id. ¶¶ VIIIIX.

The ARA included an enforceability clause, which states that

“In the event that any portion of this Agreement is determined to

be illegal or unenforceable, the determination will not affect

the validity or enforceability of the remaining provisions of

this Agreement, all of which shall remain in full force and

effect.” Id. XX. Finally, and crucially to the instant motions

to compel arbitration, the ARA also included an arbitration

clause, which states

Arbitration:

In the event of any claim or dispute between

Client and LHDR related to the Agreement or

related to any performance of any services

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related to this Agreement, such claim or

dispute shall be submitted to binding

arbitration upon the request of either party

upon the service of that request. The parties

shall initially agree on a single arbitrator

to resolve the dispute. The matter may be

arbitrated either by the Judicial Arbitration

Mediation Service or American Arbitration

Association, as mutually agreed upon by the

parties or selected by the party filing the

claim. The arbitration shall be conducted in

either the county in which Client resides, or

the closest metropolitan county. Any decision

of the arbitrator shall be final and may be

entered into any judgment in any court of

competence [sic] jurisdiction. The conduct of

the arbitration shall be subject to the then

current rules of the arbitration service. The

costs of arbitration, excluding legal fees,

will be split equally or be born by the losing

party, as determined by the arbitrator shall

decide [sic]. The parties shall bear their own

legal fees.

Id. ¶ XVIII. Plaintiff signed the ARA on September 21, 2009.

As stated above, the collection of documents e-mailed to

Plaintiff also included the SPAA, which was an application for

the “authorized bank account” which Plaintiff agreed to open in

the ARA for the purpose of automatically deducting her service

fees and legal fees to LHDR and Eclipse, and out of which she

would eventually pay her creditors in the eventuality that they

agreed to a negotiated settlement. The SPAA memorialized

Plaintiff’s agreement to permit RMBT, “through it’s [sic] agent

Global, to initiate debit entries” from her primary checking

account at TD Bank to the RMBT Special Purpose Account in the

amount of $348.68 per month, “for the purpose of accumulating

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funds to repay my debts in connection with a debt management

program sponsored by the organization identified below [LHDR,

listed as “Macey, Aleman, Hyslip & Searns, LLC”].” Bratter Cert.

Ex. A. The application also stated that Plaintiff agreed that

Global was authorized to “periodically disburse[] funds from the

Account pursuant to instructions that I may give from time to

time. In this regard, I hereby authorize payment from the Account

of the fees and charges provided for in this Application and the

Agreement.” Id.

Additionally, the SPAA included an acknowledgment and

agreement that “I understand that the Account’s features, terms,

conditions and rules are further described in an Account

Agreement and Disclosure Statement that accompanies this

Application (the “Agreement”). I acknowledge that I have

received a copy of the Agreement; that I have read and understand

it; that the Agreement is fully incorporated into this

Application by reference; and that I am bound by all of its terms

and conditions.” Id. Plaintiff signed the SPAA on September 30,

2009. Id.

The Account Agreement and Disclosure Statement (“AADS”),

referred to above, includes, perhaps unsurprisingly, an

arbitration clause. “In the event of a dispute or claim relating

in any way to this Agreement or our services, you agree that such

dispute shall be resolved by binding arbitration in Tulsa

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Oklahoma utilizing a qualified independent arbitrator of Global’s

choosing. The Decision of an arbitrator will be final and

subject to enforcement in a court of competent jurisdiction.” 

Id. 

Plaintiff claims, in her brief in opposition to Defendants’

motions to compel arbitration, that she had not received nor read

the AADS (or, consequently, the arbitration clause) prior to

signing the SPAA. While the Amended Complaint is silent on the

issue of when she first received the AADS, Plaintiff includes

evidence in her Appendix attached to her opposition brief

suggesting that at the time that she signed the SPAA in September

of 2009, the documents she had received from LHDR, Eclipse, RMBT,

and Global did not include the AADS, which did not arrive until

after she received the executed ARA and SPAA in a mailing from

LHDR postmarked on October 19, 2009. Pl.’s Combined Appx. at

129-146. There is, however, no evidence that, upon receiving the

AADS less than three weeks after signing the SPAA, she made any

effort to contest the terms or the arbitration clause.

Plaintiff’s first payment to the SPA was made on September

30, 2009; Plaintiff allegedly deposited into the RMBT account,

over the course of the following 15 months, a total of $5,626.97. 

Out of this account, the entire 15% service fee to Eclipse was

paid, amounting to $2,932.50, the $500 retainer fee was paid to

LHDR, and Plaintiff paid maintenance fees of $750. Am. Compl. ¶

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28. Plaintiff alleges that after all these fees were deducted,

she was left with a surplus of only $1,090.47 as of November 30,

2010. Id. 5

During those fifteen months that Plaintiff was paying her

monthly payments to the RMBT account, she was not making any

payments on her credit cards or other debts, apparently pursuant

to her understanding of the LHDR/Eclipse debt settlement

negotiation plan. Id. ¶ 23(d); ¶ 71(A) (“If the customer asked

if they should make their minimum payments, they were told that

if they did, it would interfere with the negotiation process and

make it harder to negotiate.”). She received multiple calls 6

from her creditors and settlement offers, all of which she

forwarded to LHDR, expecting that they would address and

negotiate a settlement on the accounts. Am. Compl. ¶ 29. 

However, none of her debts were settled by LHDR or Eclipse, and

she observed no negotiation efforts undertaken by either. Id.

(“plaintiff did not receive any communications from LHDR, Eclipse

or Global concerning any settlement offers or the various

contacts by the creditors.”) 

Plaintiff notes in her Amended Complaint that the ARA does

 The Court notes that these allegations leave approximately 5

$340 unaccounted for from the total amount Plaintiff is alleged

to have deposited into her SPA.

 The Court notes that there is no allegation in the Amended 6

Complaint that Plaintiff herself was told this.

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not explicitly state “when LHDR is to begin the negotiation

process or if the client must accumulate a certain amount of

funds before negotiations will commence.” Id. ¶ 27. Though

Plaintiff notes that she was sent a document from LHDR in a

“welcoming package” in October of 2009, listing frequently asked

questions, which stated that once it had been retained, LHDR

would “send letters to creditors notifying them that it

represents the plaintiff and LHDR will then begin the

negotiations.” Id. However, she alleges that if a customer were

to have asked JG during the initial client contact, the customer

would have been told that negotiations would not begin until the

customer “had enough money [saved in the SPA, after fees] to

begin negotiating with the smallest creditor first.” Id. ¶

71(B).

Throughout 2010, Plaintiff received increasingly dire

communications from her creditors, eventually resulting in three

of Plaintiff’s four creditors suing her to recover the sums owed. 

Id. ¶¶ 31-37. When Plaintiff requested LHDR’s assistance with a

suit for recovery filed by Target National Bank, Eclipse

responded by noting that the ARA did not cover defending

Plaintiff from suits, “but rather to manage and settle debts.” 

Id. ¶ 34. Plaintiff’s final payment to the SPA was made by

cashier’s check in December of 2010 because one of her creditors

levied the remaining funds in her TD Bank checking account. Id.

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¶ 38. The Amended Complaint does not specify how Plaintiff’s

relationship with Defendants was eventually terminated, or the

final total amounts she has been obligated to pay her creditors

in the form of judgments against her.

C. Procedural History

Plaintiff initially filed this action in the Superior Court

of New Jersey, Burlington County, on January 28, 2011. Defendant

LHDR was served with the summons and Complaint on February 9,

2011. LHDR removed the action to this Court on March 4, 2011.

[Docket Item 1.] Plaintiff thereafter filed the currently

operative Amended Complaint on March 17, 2011. [Docket Item 4.] 

Approximately two months later, the eighteen moving Defendants

filed the instant motions, upon which briefing was concluded, and

the Court heard oral argument on November 21, 2011.

III. DISCUSSION

As described briefly above, Defendants seek multiple,

alternative forms of relief from the Court through their motions. 

Because the moving Defendants seek different forms of relief in

self-organized groups, and each group of Defendants stands in

slightly different posture with respect to the Plaintiff, the

Court will address their pairs of motions in the following

sequence: first, the Court will address the motions to compel

arbitration and the motion to stay pending arbitration,

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evaluating the different groups of parties according to their

separate motions. Second, the Court will address the motions to

dismiss. Finally, the Court will briefly address the request by

the non-moving defendants to join in the motions to dismiss by

the Bank Defendants and the other moving Defendants.

A. Arbitration Motions

The Law Firm Defendants and the Bank Defendants both move to

compel arbitration, and the other moving Defendants move to stay

the action as to them pending the resolution of the arbitration. 

As there are two contracts at issue with two different

arbitration clauses, the Court will evaluate the Law Firm

Defendants’ arbitration clause in the ARA first before then

turning to the Bank Defendants’ arbitration clause in the AADS. 

The standard of evaluating the two clauses is the same.

As the Court of Appeals has repeatedly emphasized, “the

Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, provides that

arbitration agreements are enforceable to the same extent as

other contracts, and establishes a strong federal policy in favor

of the resolution of disputes through arbitration.” Morales v.

Sun Constructors, Inc., 541 F.3d 218, 221 (3d Cir. 2008)

(internal quotations and citations omitted). “Section 2 of the .

. . FAA makes agreements to arbitrate ‘valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity

for the revocation of any contract.” AT&T Mobility LLC v.

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Concepcion, -- U.S. --, 131 S. Ct. 1740, 1744 (2011) (quoting 9

U.S.C. § 2). 

There are, therefore, only two threshold questions that the

Court must answer when deciding a motion to compel arbitration:

“(1) whether a valid agreement to arbitrate exists and (2)

whether the particular dispute falls within the scope of that

agreement.” Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529,

532 (3d Cir. 2005).

1. Arbitration Clause in the ARA

The Law Firm Defendants claim that the arbitration clause in

the ARA, which Plaintiff signed, establishes an agreement to

arbitrate all of Plaintiff’s claims against them, as all of her

claims relate to their “performance of any services related to”

the ARA.

Plaintiff opposes enforcement of the ARA arbitration clause

for a laundry-list of reasons: (1) it was obscurely located, (2)

it was not clear that Plaintiff was waiving her right to a jury

trial, or her right to discovery, or fees and costs, (3) it used

insufficiently broad language such that it is not clear that

Plaintiff’s dispute falls within the scope of the agreement, and

(4) it is unconscionable.

For reference, the text of the ARA’s arbitration clause in

full is reproduced below. The Clause was located on the fourth

page of the ARA, four paragraphs up from (and on the same page

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as) the signature line, and began with a bolded paragraph

heading.

Arbitration:

In the event of any claim or dispute between

Client and LHDR related to the Agreement or

related to any performance of any services

related to this Agreement, such claim or

dispute shall be submitted to binding

arbitration upon the request of either party

upon the service of that request. The parties

shall initially agree on a single arbitrator

to resolve the dispute. The matter may be

arbitrated either by the Judicial Arbitration

Mediation Service or American Arbitration

Association, as mutually agreed upon by the

parties or selected by the party filing the

claim. The arbitration shall be conducted in

either the county in which Client resides, or

the closest metropolitan county. Any decision

of the arbitrator shall be final and may be

entered into any judgment in any court of

competence [sic] jurisdiction. The conduct of

the arbitration shall be subject to the then

current rules of the arbitration service. The

costs of arbitration, excluding legal fees,

will be split equally or be born by the losing

party, as determined by the arbitrator shall

decide [sic]. The parties shall bear their own

legal fees.

Attorney Retainer Agreement ¶ XVIII, Bratter Cert. Ex. C.

The Court finds that this arbitration agreement is valid and

enforceable. The Court will accordingly grant the Law Firm

Defendants’ motion to compel arbitration of Plaintiff’s claims

against the Law Firm Defendants.

First, Plaintiff’s argument that the ARA is an

unconscionable adhesion contract is without merit, since such

claims, which target the contract as a whole (rather than the

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arbitration clause itself), are themselves arbitrable. Buckeye

Check Cashing, Inc. V. Cardegna, 546 U.S. 440, 449 (2006) (“a

challenge to the validity of the contract as a whole, and not

specifically to the arbitration clause, must go to the

arbitrator.”). See also JLM Industries, Inc. v. Stolt-Nielsen

SA, 387 F.3d 163, 170 (2d Cir. 2004). 

Plaintiff’s arguments regarding the unconscionability of the

arbitration clause do not clearly establish whether Plaintiff’s

argument is that the ARA as a whole is unconscionable or whether

Plaintiff argues, in addition, that the terms of the arbitration

clause itself are unconscionable and therefore unenforceable. 

Most of Plaintiff’s arguments appear to be directed at the

contract as a whole (describing the contract as one of adhesion,

with unequal levels of sophistication and bargaining power,

e.g.). However, Plaintiff also argues that the terms of the

arbitration clause are substantively unconscionable because they

subject Plaintiff to “multiple arbitration forums and locations”

and that, because the LHDR Defendants were lawyers negotiating a

contract to represent the Plaintiff, the fact that the

arbitration agreement limited Plaintiff’s rights to statutory

claims and counsel fees was substantively unconscionable as well.

Defendant responds that there is no evidence of either

procedural or substantive unconscionability in the clause. The

terms of the clause are even-handed, in that the location of the

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arbitration is convenient to Plaintiff, rather than Defendants;

the choice of the arbitrator is mutually agreed by the parties,

and the arbitration service could be chosen by the Plaintiff in

filing the claim.

Regarding Plaintiff’s next arguments against enforcement of

the arbitration clause, its alleged obscurity and lack of

clarity, the Court interprets these arguments to attack the

contention that Plaintiff entered into an arbitration agreement. 

Plaintiff argues that New Jersey law requires that contractual

waivers of jury trials, discovery, and fees, when located in

contracts of adhesion, are required to be highlighted and more

obviously and clearly stated than the clause in the ARA. See,

e.g., Rockel v. Cherry Hill Dodge, 368 N.J. Super. 577 (App. Div.

2004). Defendants respond that, to the extent that Plaintiff

argues that special notice and clarity rules are necessary under

New Jersey law to enforce arbitration agreements, that

proposition is squarely rejected by the Supreme Court’s recent

opinion in AT&T Mobility LLC v. Concepcion, -- U.S. --, 131 S.

Ct. 1740, 1746 (2011) (declaring that the FAA preempts state-law

defenses to arbitration agreements “that apply only to

arbitration or that derive their meaning from the fact that an

agreement to arbitrate is at issue.”) See also id. at 1748

(“nothing in it [Section 2 of the FAA] suggests an intent to

preserve state-law rules that stand as an obstacle to the

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accomplishment of the FAA's objectives.”). 

Plaintiff argues that the New Jersey requirement of greater

clarity and obviousness for arbitration clauses, essentially a

notice requirement, survives AT&T Mobility, which explicitly

recognized that “states remain free to take steps addressing the

concerns that attend contracts of adhesion -- for example,

requiring class-action-waiver provisions in adhesive arbitration

agreements to be highlighted.” AT&T Mobility, 131 S. Ct. at 1750

n.6. This footnote has been recognized by the New Jersey

Appellate Division as preserving the existing state court rules

governing the clarity and obviousness of such waivers. 

In the aftermath of AT&T Mobility, state

courts remain free to decline to enforce an

arbitration provision by invoking traditional

legal doctrines governing the formation of a

contract and its interpretation. Applying

such core principles of contract law here, we

must decide whether there was mutual assent to

the arbitration provisions in the [defendant

car dealership’s] contract documents. As part

of that assessment, we must examine whether

the terms of the provisions were stated with

sufficient clarity and consistency to be

reasonably understood by the consumer who is

being charged with waiving her right to

litigate a dispute in court.

NAACP of Camden County East v. Foulke Management Corp., 421 N.J.

Super. 404, 428 (App. Div. 2011).

Thus, the Court must determine to what extent New Jersey

courts require heightened specificity and clarity in consumer

arbitration agreements, and whether the ARA signed by Plaintiff

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falls afoul of that rule.

Plaintiff argues that cases such as Rockel, 368 N.J. Super.

577, and Gras v. Associates First Capital Corp., 346 N.J. Super.

42 (App. Div. 2001) recognize a standard of clarity and

obviousness that is not met by the arbitration provision in the

ARA. In Rockel, an arbitration provision was deemed to be

unenforceable because the various contract documents signed by

the consumer included multiple, contradictory arbitration

provisions, and the provisions were located in small print in an

obscure portion of the contract. Rockel at 586-87. The

Appellate Division distinguished the provisions in Rockel, which

it found to be an insufficiently clear manifestation of a waiver

of statutory rights and jury trial rights, with the arbitration

provision in Gras v. Associates First, 346 N.J. Super. at 57,

where the Appellate Division found the language of an arbitration

agreement “specific enough to inform plaintiffs that they were

waiving their statutory rights to litigation in a court” because,

in part, the language of the agreement explicitly stated that the

provision limited the plaintiff’s right to a court action. Thus,

Plaintiff in the instant action argues that any arbitration

provision less explicit and obvious than the provision enforced

in Gras must be held void as an insufficient waiver of the

plaintiff/consumer’s right to a jury trial.

However, the Court notes, that other Appellate Division

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decisions have enforced contested arbitration clauses that are

considerably less expansive and explicit than that approved in

Gras. See, e.g., Griffin v. Burlington Volkswagen, Inc., 411

N.J. Super 515, 518 (App. Div. 2010) (approving arbitration

provision that did not explicitly refer to a “jury trial”

waiver); Kho v. Cambridge Management Group, LLC, N.J. Super.,

2010 WL 4056858 (App. Div., Aug. 4, 2010) (approving arbitration

provision that did not explicitly refer to waiving right to

resolve disputes in court action, or explicitly refer to waiving

statutory claims). The clearest statement of a rule regarding

the clarity/explicitness requirement in New Jersey Courts appears

to be that found in Curtis v. Cellco Partnership, 413 N.J. Super.

26, 33 (App. Div. 2010). An arbitration provision will be upheld

if “[t]he arbitration provisions are sufficiently clear,

unambiguously worded, satisfactorily distinguished from the other

Agreement terms, and drawn in suitably broad language to provide

a consumer with reasonable notice of the requirement to arbitrate

all possible claims arising under the contract.” Id.

Applying this rule to the instant dispute, then, the Court

finds that the arbitration provision located in the ARA narrowly

survives this level of scrutiny. The arbitration clause was

plainly written, contained within the main body of the contract

rather than hidden in fine print, bore a bolded paragraph

heading, and was mere inches away from Plaintiff’s signature

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line. While the provision did not explicitly state that the

Plaintiff agreed to waive any right to try her dispute in a court

of law, the provision clearly states that the arbitrator (and not

a court) would “resolve the dispute.” The Court finds that such

language is, in the circumstances of this case, minimally

sufficient.

Next, Plaintiff also argues that the disputes at issue do

not fall within the scope of the clause. Plaintiff objects to

the fact that the arbitration clause does not include the

“arising out of or arising under” language which is “normally

given broad construction by the courts.” The Court likewise

finds this argument unpersuasive.

"Courts have generally read the terms ‘arising out of' or

‘relating to' a contract as indicative of an ‘extremely broad'

agreement to arbitrate any dispute relating in any way to the

contract." Griffin v. Burlington Volkswagen, Inc., 411 N.J.

Super 515, 518 (App. Div. 2010). A dispute or claim “relates to”

the contract whenever the dispute requires "reference to the

underlying contract." Id. at 520. The Court finds that the ARA’s

arbitration clause, which encompasses “any claim or dispute

between Client and LHDR related to the Agreement or related to

any performance of any services related to this Agreement” is

sufficiently broad and encompasses the Plaintiff’s claims, which

relate to the Law Firm Defendants’ actions pursuant to the ARA. 

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Plaintiff claims that Defendants, by providing the debt

negotiation services to which Plaintiff contracted in the ARA,

violated a New Jersey Statute, and that their performance of the

contracted-for (and allegedly illegal) services violated the CFA,

and various other state and common-law causes of action. These

claims relate to the Law Firm Defendants’ performance of a

service related to the ARA. Plaintiff’s rights under these

statutes and other law may be determined by an arbitration.

Finally, the Court finds that the ARA’s arbitration

provision is enforceable as to all of the Law Firm Defendants.

Defendants argue that, in addition to LHDR (the contracting

party) the ARA’s arbitration clause also governs parties

sufficiently related to LHDR under the contract, which includes

Eclipse and the individual officers of the two organizations. It

is well settled that “agency and contract principles enable

courts to consider nonsignatories as parties to the arbitration

provision.” Crawford v. West Jersey Health Sys., 847 F. Supp.

1232, 1243 n.14 (D.N.J. 1994). Even were the Court to consider

Eclipse and the individual Law Firm Defendants to be “independent

contractors” of LHDR (as Plaintiff suggested for the first time

in oral argument), the Court would still find that the ARA

arbitration agreement covered Plaintiffs’ claims against such

defendants under the “equitable estoppel” doctrine discussed in

Bruno v. Mark MaGrann Assoc., 388 N.J. Super. 539, 548 (App. Div.

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2006) (holding that claims against independent contractor of

signatory to arbitration agreement must be arbitrated because

such claims were sufficiently “closely aligned” with claims

against the contracting party).

The Court will therefore enforce the arbitration agreement

and grant the Law Firm Defendants’ motion to compel. As a

result, the Court will deny the Law Firm Defendants’ motion to

dismiss as moot.

2. Arbitration Clause in the AADS

The Bank Defendants also move to compel arbitration,

claiming that, like with the Law Firm Defendants, Plaintiff

agreed to arbitrate all disputes with RMBT and Global (and their

agents) by signing the SPAA, which included by reference the

AADS.

Plaintiff opposes this motion on mainly the same grounds as

she opposes the Law Firm Defendants’ motion. However, Plaintiff

additionally argues that there is no evidence that Plaintiff

actually agreed to arbitrate with Global and RMBT because she

signed the SPAA before receiving a copy of the AADS.

Defendants respond, first, that there is no evidence in the

record supporting Plaintiff’s claim that she did not receive the

AADS and its arbitration clause until after she had signed and

returned the SPAA. Defendants point to the Amended Complaint,

which does not affirmatively allege that Plaintiff had not seen

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the AADS prior to signing the SPAA in September of 2009. Indeed,

Defendants argue, the Amended Complaint only alleges that

Plaintiff received documents (that she electronically signed and

returned) by e-mail, which included “a Special Purpose Account

application, and account agreement establishing a Special Purpose

Account with Rocky Mountain Bank and Trust . . . .” Am. Compl. ¶

23(b). Defendants argue that, by referring to both the SPAA and

an “account agreement”, Plaintiff has affirmatively alleged that

she received the AADS as well as the SPAA prior to electronically

signing the SPAA.

Plaintiff responds that the Amended Complaint does not

affirmatively allege she received the AADS, merely by using the

phrase “account agreement” in paragraph 23(b). Plaintiff argues

that the phrase “Special Purpose Account application, and account

agreement” merely refers to the SPAA itself, and does not refer

to the AADS, which she claims only arrived later. Plaintiff

further argues that evidence in the record permits the Court to

determine that Plaintiff first received the AADS in October along

with several other documents sent through first class mail. 

Plaintiff claims that the evidence supporting this proposition is

seen in the encoded header line attached to the top of each

document she received via e-mail in September of 2009. Those

documents did not include the AADS, she argues, demonstrated by

the fact that she is unable to produce a copy of the AADS with

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such an encoded header line. See Combined Appendix A129-A137

(including the ARA and the SPAA, but not the AADS). The Court

concludes that the record is sufficient to establish that

Plaintiff did not receive the AADS in her initial collection of

documents sent via e-mail, and further concludes that Plaintiff’s

vague reference to “agreement” in the Amended Complaint ¶ 23(b)

does not clearly contradict this evidence, as the sentence could

be interpreted to mean that Plaintiff was characterizing the

“Special Purpose Account” document as both an application and an

agreement, which she signed and returned. 

Defendants next argue that the SPAA that Plaintiff signed

and returned in September of 2009 did not form an agreement,

because the SPAA (an application) was merely an offer that only

formed an agreement upon Defendant RMBT’s acceptance of

Plaintiff’s offer. Thus, Defendants argue, Plaintiff received

the AADS prior the formation of the contract, which only occurred

later when RMBT approved her application, sent her the AADS,

among other documents, and Plaintiff’s later compliance and

performance of the terms of the agreement.

The elements of a contract are, simply, offer and acceptance

supported by valuable consideration. Devaney v. L’Esperance, 195

N.J. 247, 261 (2008). Thus, whether the SPAA constituted merely

an offer by Plaintiff to form a contract, or an acceptance by

Plaintiff of specific terms offered by Defendants dictates the

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point at which an agreement was formed between the parties in

this case. In the circumstances of the instant case, the Court

concludes that the SPAA that was sent to Plaintiff in September

of 2009 constituted an offer to form an agreement that Plaintiff

accepted by electronically signing and returning the form. An

offer is, simply, “the manifestation of willingness to enter into

a bargain, so made as to justify another person in understanding

that his assent to that bargain is invited and will conclude it.” 

Rest. 2d Contracts § 24.

In the case of the SPAA, Plaintiff alleges that she had

called Defendant JG, spoke with Defendant Gavalas, and indicated

her desire to enter into a debt reduction program. Am. Compl. ¶

21. She further alleges that she was later contacted by Gavalas

and told that she had been accepted into the program and

discussed particulars of the program that she wanted to pursue. 

Id. § 22. After settling on specific details, Plaintiff

received via e-mail a collection of electronic documents, in an

e-mail message with the subject line “Debt Settlement Service

Agreement.” Combined Appendix. A128. The attached documents all

appeared to exhibit a request that Plaintiff accept the

particular terms, contained within each. The SPAA itself begins

with the sentence “I hereby apply for and agree to establish a

special purpose account with Rocky Mountain Bank . . .” Id.

A130. There are no further steps required of Plaintiff after she

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has electronically signed and submitted the completed form. The

form indicates that there nothing for RMBT to do once the

completed SPAA has been submitted other than opening her account

and begin accepting her deposits. 

In these circumstances, the Court concludes that by

completing and returning the SPAA, Plaintiff accepted RMBT’s

offer to open an account, thereby forming an agreement. See Klos

v. Mobil Oil Co., 55 N.J. 117 (1969) (“In short, there is nothing

for a cardholder or [defendant] American to do after the

application is made other than the latter’s purely mechanical

operation of processing the matter. In these circumstances we

believe that the sending of the letter, brochure, and application

form constituted an offer by American which could be accepted by

Klos.”). Consequently, the Court concludes that the agreement to

open an SPA was formed when Plaintiff signed and returned her

SPAA, and that she did so before having been provided with the

terms contained in the AADS, including the arbitration clause.

Defendants next argue that even if Plaintiff did not receive

the AADS until approximately three weeks after the SPA agreement

was formed, the fact that she signed the SPAA, with its

incorporation clause referring to the AADS and its acknowledgment

and agreement to be bound by those conditions in the AADS, and

because she did not object to the arbitration clause when she did

later receive the AADS, and continued to perform under the SPAA

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after having received it, she manifested her agreement

sufficiently to be later bound by the AADS.

Plaintiff cites to a Ninth Circuit case involving Defendant

Global in a virtually identical fact pattern, in which the

plaintiff had not received the AADS with its arbitration

agreement prior to signing the SPAA, where the Ninth Circuit

affirmed the District Court’s conclusion that Plaintiff had not

agreed to arbitration. Carlsen v. Global Client Solutions,

L.L.C., 423 F. App’x 697 (9th Cir. 2011). (“The district court

did not clearly err in finding that there was no agreement to

arbitrate.”). The District Court in that action held that “It

goes without saying that a person should at least have an

opportunity to review the terms of a contract before deciding to

execute a document which binds him or her to those terms.” 

Carlsen v. Global Client Solutions, L.L.C., 2010 WL 786254 at *3

(E.D. Wash., Mar. 4, 2010).

Defendants, by contrast, cite to a different case, also

involving Defendant Global, where a New Jersey court similarly

was forced to confront the question of whether a Plaintiff who

signed the SPAA, with its clear incorporation clause, prior to

receiving the AADS manifested asset to be bound in the

unpublished case of Festa v. Capital One Bank, L-4851-10

(unpublished) Sup. Ct. Law Div., Apr. 21, 2011. (Bratter Decl.

Ex. A, Docket Item 73). There, again under virtually identical

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facts as here, the third-party Plaintiff Frank Festa claimed that

Global’s arbitration agreement was not enforceable because he had

not seen it prior to signing the SPAA. The Court rejected

Plaintiff’s argument.

Whether or not Festa actually read or

understood the ‘Account Agreement and

Disclosure Statement’ at the time that he

signed the Application is irrelevant. Legally,

when Festa signed the Application, he

acknowledged that he accepted the terms and

provisions therein, including the

incorporation of the ‘Account Agreement and

Disclosure Statement’ and its arbitration

clause. See Restatement (Second) of the Law

of Contracts § 211. Therefore if Festa signed

the Application, he is legally bound by the

terms contained therein, whether or not he

truly understood what he was signing.

Id. at *4.7

Plaintiff argues in her sur-reply that Festa was wrongly

decided because it incorrectly applied the law regarding

incorporation clauses, citing to Alpert v. Goldberg, 410 N.J.

Super. 510 (App. Div. 2009), for the proposition that greater

specificity is required to incorporate absent clauses into a

contract. Defendants respond in their sur-sur-reply that Alpert

 The Court notes that Defendants Global and RMBT seem to 7

be accustomed to making this argument that the late-arriving

conditions in the AADS should bind the consumer, perhaps because

they so frequently fail to send a copy of the AADS until after

the consumer/debtor has already committed to its terms via the

incorporation clause in the SPAA. See, e.g., Davis v. Global

Client Solutions, LLC, 2011 WL 4738547 at *1 (W.D. Ky. Oct. 7,

2011); Webster v. Freedom Debt Relief, LLC, Civ. No. 10-1587

(N.D. OH., July 17, 2011) (Magistrate Recommendation adopted by

District Court on August 4, 2011, 2011 WL 3422872).

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is distinguishable because it was limited to incorporation

clauses in an attorney/client relationship signing a retainer

agreement, which is not present here. 

In Alpert, a law firm sued its former client for unpaid

legal fees and various costs that were included in a “master

retainer agreement” incorporated by reference into the

client/defendant’s retainer agreement but not expressly described

in the agreement. Id. at 523-24. On appeal, the appellate

division held that the terms included in the “master retainer

agreement” could not be enforced because they were not properly

incorporated into the agreement. “In order for there to be a

proper and enforceable incorporation by reference of a separate

document, the document to be incorporated must be described in

such terms that its identity may be ascertained beyond doubt and

the party to be bound by the terms must have had ‘knowledge of

and assented to the incorporated terms.’” Id. at 533.

The Court disagrees with Defendants, finding that Alpert is

not distinguishable on the basis of the fact that the plaintiff

seeking to impose the incorporated terms was an attorney. The

Alpert court was clear that the proposition regarding

incorporation of absent terms by reference was a question of

general contract law, not specific to the attorney-client

relationship. See Id. at 534 (citing cases from other

jurisdictions repeating the requirement, in contexts unrelated to

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the attorney-client relationship).

Moreover, the Court disagrees with the unpublished decision

in Festa, which in any event is not a decision of the New Jersey

Supreme Court and is not binding upon this federal Court in

determining New Jersey law. Festa’s premise that an arbitration

clause may be contained in an undisclosed document that has been

incorporated into a contract only by reference is incorrect. It

is clear that, at the very minimum, an arbitration clause must be

made known to the contracting party in all detail when the

contract is made. An undisclosed provision for arbitration does

not comply with the minimal requirements of being “sufficiently

clear, unambiguously worded, satisfactorily distinguished from

the other Agreement terms, and drawn in suitably broad language

to provide a customer with reasonable notice of the requirement

to arbitrate all possible claims arising under the contract,” as

required by Curtis v. Cellco Partnership, supra, 413 N.J. Super.

at 33.

Applying the rule from Alpert, the Court finds that the

arbitration clause in the AADS was not effectively incorporated

into the SPAA that Plaintiff signed. While the SPAA clearly and

unambiguously referred to the AADS by name (such that its

“identity may be ascertained beyond doubt”), the party to be

bound, Guidotti, does not appear to have had “knowledge of and

assented to the incorporated terms.” If, as Defendants concede

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is possible, Plaintiff had never seen the AADS at the time she

applied for the SPA, she could not have had knowledge of the

existence of the arbitration clause or its specific conditions,

even if she assented to its incorporation. Thus, the Court finds

that the clause was not properly incorporated into the SPAA, and

cannot now bind Plaintiff to arbitrate her claims against the

Bank Defendants.8

3. Motion to Stay

As Court has decided to grant the Law Firm Defendants’

motion to compel arbitration but deny the Bank Defendants’

motion, the Court must therefore confront whether to grant the

remaining Moving Defendants’ motion to stay the action pending

the arbitration of the Law Firm Defendants’ claims. 

The decision to grant a stay pending arbitration of related

claims and parties is within the Court’s discretion. Moses H.

Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 20 n.23 (“in

some cases, of course, it may be advisable to stay litigation

among the non-arbitrating parties pending the outcome of the

arbitration. That decision is one left to the district court . .

 Additionally, even if the Court were inclined to find the 8

arbitration clause effectively incorporated, the Court would find

that the application of the absent terms, in circumstances

raising the inference that it was a business practice of the Bank

Defendants to withhold the AADS and its terms from the

contracting consumer until after the consumer had signed the SPAA

(based only on the cases cited by the Parties in this dispute,

Plaintiff Guidotti appears to be the fifth customer so treated by

these Defendants), would be unconscionable. 

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. as a matter of its discretion to control its docket.”). Courts

in this district that have considered the issue have previously

entered such stays. “Where significant overlap exists between

parties and issues, courts generally stay the entire action

pending arbitration.” Crawford v. West Jersey Health Sys., 847

F. Supp. 1232, 1243 (D.N.J. 1994) (collecting cases). 

Section 3 of the FAA provides District Courts with the

authority to enter a stay in such circumstances. 9 U.S.C. § 3. 

The Court’s primary considerations are fairness to the parties

and judicial efficiency. See CTF Hotel Holdings, Inc. v.

Marriott Intern., Inc., 381 F.3d 131, 139 (3d Cir. 2004). In the

instant case, the Court concludes that on balance, the

considerations of fairness to the parties and judicial efficiency

weigh against staying the balance of Plaintiff’s claims in this

Court pending her arbitration of her claims with the Law Firm

Defendants. As Plaintiff’s claims against the Law Firm

Defendants relates to a different contract and distinct services

and payments, any risk of res judicata or collateral estoppel is

minimal in this action. Additionally, the Court concludes that

staying Plaintiff’s claims against the other Defendants in this

Court not subject to a valid arbitration clause invites problems

of staleness, litigation fatigue, spoliation of evidence, and

potential insolvency of the parties. Consequently, the Court

declines to exercise its discretion to enter a stay of

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Plaintiff’s claims pending resolution of her arbitration with the

Law Firm Defendants. The Court can revisit this issue if future

events warrant a temporary stay.

B. Motions to Dismiss For Lack of Personal Jurisdiction

Having concluded that the Law Firm Defendants’ motion to

compel arbitration will be granted, their motion to dismiss will

be denied as moot. However, as the Court has decided to deny the

Bank Defendants’ motion to compel and the Remaining Defendants’

motion to stay, it will now determine which, if any, Defendants

and claims should be dismissed pursuant to Fed. R. Civ. P.

12(b)(2) or 12(b)(6).

1. Personal Jurisdiction Standard of Review

Defendants move to dismiss on the grounds of lack of

personal jurisdiction and for failure to state a claim. The

Court will begin by examining the motions to dismiss for lack of

personal jurisdiction. 

To exercise personal jurisdiction over a defendant, a

federal court must undertake a two-step analysis. First, the

court must apply the relevant state long-arm statute to see if it

permits the exercise of personal jurisdiction. See Pennzoil

Prods. Co. v. Colelli & Assocs., Inc., 149 F.3d 197, 200 (3d Cir.

1998). Next, the court must determine whether exercising

personal jurisdiction would violate federal due process. See IMO

Indus., Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998);

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Pennzoil, 149 F.3d at 200. In New Jersey, this inquiry is

combined into a single step because the state's long-arm statute,

N.J. Civ. Prac. R. 4:4-4, permits the exercise of personal

jurisdiction to the fullest limits of due process permitted by

the Fourteenth Amendment. See DeJames v. Magnificence Carriers,

Inc., 654 F.2d 280, 284 (3d Cir. 1981); Decker v. Circus Circus

Hotel, 49 F. Supp. 2d 743, 745 (D.N.J. 1999).

Once a party raises the defense of lack of personal

jurisdiction, the burden is on the plaintiff to show that the

defendant himself has purposefully directed his activities toward

the residents of the forum state or otherwise “purposefully

availed itself of the privilege of conducting activities within

the forum State, thus invoking the benefits and protections of

its laws.” See Hanson v. Denckla, 357 U.S. 235, 253 (1958); see

also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).

A plaintiff may not rely on the pleadings alone in order to

withstand a motion to dismiss for lack of personal jurisdiction. 

See Stranahan Gear Co., Inc. v. NL Indus., 800 F.2d 53, 58 (3d

Cir. 1986). Therefore, the plaintiff must come forward with

facts sufficient to establish by a preponderance of the evidence

that the district court has personal jurisdiction over the

defendant. Time Share Vacation Club v. Atlantic Resorts, Ltd.,

735 F.2d 61, 65 (3d Cir. 1984); see also IMO Indus., 155 F.3d at

257 (“the plaintiff bears the burden of proving that personal

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jurisdiction is proper”); Gehling v. St. George's Sch. of Med.,

773 F.2d 539, 542 (3d Cir. 1985) (“[P]laintiff bears the burden

of establishing with reasonable particularity sufficient contacts

between the defendant and the forum state to support

jurisdiction.”).

2. Bank Defendants

The Bank Defendants begin their motion to dismiss by arguing

that Plaintiff has failed to allege or point to evidence

supporting the Court’s exercise of personal jurisdiction over

these four out-of-state defendants. Defendants argue that the

mere fact that Plaintiff applied for a bank account at RMBT does

not indicate sufficient minimum contacts to establish specific

jurisdiction over any of the Defendants in this group.

Plaintiff responds that Defendant RMBT is party to a

contract with Plaintiff in the state of New Jersey. 

Additionally, Plaintiff claims that Defendants Global and RMBT

admit to having approximately 2,000 New Jersey clients, citing,

apparently, to the Notice of Removal in this action. [Docket Item

1.]

Defendants respond that the notice of removal was filed

solely by LHDR, and is therefore not an admission by any of the

Bank Defendants. Whether or not Defendant LHDR has 2,000 New

Jersey clients is not determinative of whether the Bank

Defendants had sufficient contacts with New Jersey. 

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Additionally, Defendants cite to Arms, Inc. v. Sedona Research,

Inc., Civ. No. 93-3601 1993 WL 534361 at *3 (D.N.J. Dec. 16,

1993) for the proposition that a “contract between a forum

resident and an out-of-state party will not automatically

establish sufficient contacts with the forum to justify in

personam jurisdiction.” (Citing Burger King Corp. v. Rudzewicz,

471 U.S. 462, 478 (1985)).

This issue is a close question, as to Defendants Global and

RMBT. Merely having accepted Plaintiff’s application for a bank

account would not seem to be enough to establish the “purposeful

availment” standard of personal jurisdiction. However, Plaintiff

alleges greater contacts with the forum state than merely the

existence of a contract. In the Amended Complaint, she clearly

alleges that Defendant Gavalas and JG, working within New Jersey,

“would receive phone calls in response to the advertising and

marketing by LHDR, Eclipse, Global, Rocky and JG from inquiring

debtors. JG received calls not only from New Jersey residents

such as the lead plaintiff, but from different parts of the

country as the phone calls were transferred around the country on

a round robin basis to other front-end entities such as JG.” Am.

Compl. ¶ 65. This allegation would seem to indicate that Global

and RMBT had affirmatively reached an agreement with JG to

channel leads from New Jersey, among other states, toward them,

thereby purposefully availing themselves of the forum sufficient

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to satisfy due process. 

As Plaintiff bears the burden of not only alleging

sufficient contacts, but by submitting evidence sufficient to

prove such contacts by a preponderance, she must do more than

merely allege such a scheme. The Court finds, however, that

Plaintiff has submitted minimally sufficient evidence to meet

this burden. In support of the contention that Global and RMBT

were purposefully availing themselves of the forum, Plaintiff

attaches deposition testimony from Global and RMBT officers

Hendrix and McClure, taken in a different civil action. Pl.’s

Combined Appendix, A311-A389. In those depositions, McClure,

speaking on behalf of Defendant RMBT admitted paying a marketing

fee to Global to attract debt settlement customers, such as

Plaintiff, outside of RMBT’s geographic area. McClure Dep.

A333:20-A335:9. Global, in turn, would solicit referral of such

clients, or “leads” from debt settlement companies such as LHDR,

aware that such companies were soliciting clients from nearly any

state in the nation, including states with regulatory

restrictions on the business. Hendrix Dep. A382:9-384:9. 

Finally, Plaintiff attaches a sample marketing and clientreferring agreement produced by LHDR, that indicated that it

would actively solicit and accept business from consumers in New

Jersey, among other states. LHDR Marketing Agreement, Combined

Appendix at A112. The Court finds that this evidence is

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sufficient to meet Plaintiff’s burden of supporting her

allegations of purposeful availment sufficient to meet the

requirements of due process as to Defendants Global and RMBT.

As to Defendants Hendrix and McClure, Plaintiff has not

sufficiently alleged contacts with New Jersey as to them

individually to satisfy due process, and the two will therefore

be dismissed for lack of personal jurisdiction. Plaintiff’s

allegations of personal jurisdiction as to Hendrix and McClure

are exclusively based on their actions as out-of-state corporate

officers, rather than as acting in their individual capacity. 

However, “jurisdiction over ... [individual] defendants does not

exist simply because they are agents or employees of

organizations which presumably are amenable to jurisdiction in”

the forum state. Nicolas v. Saul Stone & Co., 224 F.3d 179, 184

(3d Cir. 2000). Instead, “[e]ach defendant’s contacts with the

forum state must be assessed individually.” Id. at 781 n.13. 

Thus, Plaintiff’s claim that Defendants Hendrix and McClure are

subject to this Court’s in personam jurisdiction simply because

they acted as officers of Global and RMBT is insufficient.

To the extent that Plaintiff argues that personal

jurisdiction can be established over these individual defendants

on the basis of their vicarious or conspiracy liability with the

other in-forum Defendants the Court observes that New Jersey has

never recognized a “conspiracy theory of jurisdiction.” See

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Lasala v. Marfin Popular Bank Public Co., Ltd., Civ. No. 09-968,

2010 WL 715482 at *3 (D.N.J. Mar. 1, 2010). Thus, the Court will

dismiss Hendrix and McClure for lack of personal jurisdiction.

3. The Remaining Defendants

As to the remaining moving Defendants, four of the five

defendants move to dismiss for lack of personal jurisdiction

(LSSG, CMIT, JEM, and LYNCH, but not LHP). The Court notes that

Plaintiff has alleged nothing more than a relationship via

conspiracy or vicarious contacts with the forum state as to any

of these entities. The Court will therefore grant the motion to

dismiss as to Defendants LSSG, CMIT, JEM and LYNCH.

C. Motions to Dismiss For Failure to State a Claim

Finally, the Court turns to the motions to dismiss for

failure to state a claim pursuant to Fed. R. 12(b)(6). As the

Court has already determined that all moving Defendants should be

dismissed from the action save the Bank Defendants Global and

RMBT as well as Defendant LHP, which did not move to dismiss for

lack of personal jurisdiction, the Court will now turn to assess

whether Plaintiff’s Amended Complaint sufficiently pleads any

cause of action as to Global, RMBT and LHP sufficient to

withstand Defendants’ 12(b)(6) motion.

1. Rule 12(b)(6) Standard of Review

In order to give defendant fair notice, and to permit early

dismissal if the complained-of conduct does not provide adequate

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grounds for the cause of action alleged, a complaint must allege,

in more than legal boilerplate, those facts about the conduct of

each defendant giving rise to liability. Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007); Fed. R. Civ. P. 8(a) and

11(b)(3). These factual allegations must present a plausible

basis for relief (i.e., something more than the mere possibility

of legal misconduct). See Ashcroft v. Iqbal, 129 S.Ct. 1937,

1951 (2009). In its review of a motion to dismiss pursuant to

Rule 12(b)(6), Fed. R. Civ. P., the Court must "accept all

factual allegations as true and construe the complaint in the

light most favorable to the plaintiff." Phillips v. County of

Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v.

Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). 

The assumption of truth does not apply, however, to legal

conclusions couched as factual allegations or to “[t]hreadbare

recitals of the elements of a cause of action, supported by mere

conclusory statements.” Iqbal, 129 S.Ct. at 1949.

The Court, in evaluating a Rule 12(b)(6) motion to dismiss

for failure to state a claim, may consider the complaint,

exhibits attached thereto, matters of public record, and

undisputedly authentic documents if the plaintiff's claims are

based upon those documents. See Pension Benefit Guar. Corp. v.

White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

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2. The Bank Defendants Global and RMBT

The Bank Defendants move to dismiss on the grounds that

Plaintiff fails to state a claim for several reasons. The first

argument in this area is that the Global and RMBT were not “debt

adjusters” sufficient to be sued under the NJDACCA, as defined

under N.J. Stat. Ann. § 17:16G-1(c)(1).

“Debt adjuster” means a person who either (a)

acts or offers to act for a consideration as

an intermediary between a debtor and his

creditors for the purpose of settling,

compounding, or otherwise altering the terms

of payment of any debts of the debtor, or (b)

who, to that end, receives money or other

property from the debtor, or on behalf of the

debtor, for payment to, or distribution among,

the creditors of the debtor.

Id.

Defendants argue that they do not fit the definition of debt

adjusters because they were not acting as intermediaries between

Plaintiff and her creditors. This is a misreading of the

statute, which clearly states that one can be a debt adjuster,

even without being an intermediary, so long as one is receiving

money from the debtor to pay creditors “to that end”, meaning for

the purpose of adjusting a debt. A person who, “to that end [for

the purpose of settling, compounding, or otherwise altering the

terms of payment on behalf of the debtor], receives money or

other property from the debtor, or on behalf of the debtor, for

payment to, or distribution among, the creditors of the debtor.” 

Id. Defendants’ insistence on reading the requirement of being

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an intermediary into the statute is unnecessary and contrary to

the structure of the statute. The Court finds that Plaintiff has

sufficiently alleged that Defendants RMBT and Global received

Plaintiff’s money; the purpose of receiving Plaintiff’s money was

to effectuate Plaintiff’s debt negotiation plan with LHDR and

Eclipse, with the eventual intent that the money be distributed,

in part, among Plaintiff’s creditors. The Court finds that these

allegations are sufficient to meet the statutory definition of

“debt adjuster” under N.J. Stat. Ann. § 17:16G-1(c)(1)(b).

Defendants additionally argue that Plaintiff has

insufficiently alleged facts with sufficient particularity

necessary to state a claim under the CFA, but this argument is

continent on Defendants winning the NJDACCA “debt adjuster”

action. Specifically, Defendants argue that Plaintiff fails to

allege unlawful conduct on the part of Defendants, a necessary

element of a CFA claim. As the Court has determined that

Plaintiff’s NJDACCA claim will not be dismissed, however, the

Court must also determine that Plaintiff has sufficiently alleged

unlawful conduct on the part of Defendants. Thus, Defendants’

arguments regarding the CFA will also be dismissed. 

Defendants also argue that Plaintiff fails to adequately

plead a NJ RICO claim because Plaintiff alleges only the

threadbare elements of the claim and Plaintiff did not include a

RICO case statement. The Court disagrees that Plaintiff does not

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adequately allege facts sufficient to state a claim for a

violation of NJ RICO, noting that she has alleged that RMBT and

Global were associated with and participated in the conduct of

the affairs of an enterprise (namely, illegal debt adjustment

activities), consisting of other Defendants such as LHDR and

Eclipse, and that Global and RMBT participated through a pattern

of racketeering activity, consisting of at least two related acts

of acting as a debt adjuster. To the extent Defendants claim

that Plaintiff’s failure to follow the model established in the

District’s RICO case statement, Defendants cite to no authority

for the proposition that including a RICO case statement is a

necessary requirement to state a claim under the New Jersey RICO

statute. Instead, a judge has discretion to require a plaintiff

to file a RICO case statement pertaining to a federal RICO claim,

in the form set forth in Appendix O of the Local Civil Rules,

entitled “Optional RICO Case Order.” The Court therefore finds

that Plaintiff adequately plead facts to state a claim under the

NJ RICO at this stage in the litigation.

The Court likewise finds Plaintiff’s common law causes of

action to be sufficiently plead to state a cause of action.

Thus, the Court will not dismiss Plaintiff’s claims for civil

conspiracy, unjust enrichment, breach of fiduciary duty,

unconscionability, and common law fraud.

Finally, Defendants gesture somewhat weakly at a

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constitutional challenge. Defendants state merely that if the

New Jersey Debt Adjustment Act is applied to their activities in

this action, it would violate their rights under the Contract

Clause, the Dormant Commerce Clause, and the Equal Protection and

Due Process Clauses of the Fourteenth and Fifth Amendments. 

Defendants provide no explanation in their brief how these

violations would come about, and cite no authority in support of

their challenge. The Court will reject this challenge to the

application of the statute. 

It is well established that the Contract Clause, found in

Article I, § 10 of the Constitution, does not apply to

prospective state action. American Exp. Travel Rel. Svcs. Co.,

Inc. v. Sidamon-Eristoff, 755 F. Supp. 556, 611 (D.N.J. 2010). 

Thus, because Plaintiff’s alleged contracts with Defendants were

created long after the enactment of the New Jersey Debt

Adjustment Act, the clause offers no protection to Defendants. 

Similarly, the Court denies Defendants’ challenge to the

application of the statute under the Commerce Clause. The Court

finds that Defendants have not established that the statute

burdens interstate commerce excessively, pursuant to Pike v.

Bruce Church, Inc., 397 U.S. 137, 142 (1970).

Likewise, the Court denies Defendants’ challenge to the

application of the statute under the Due Process and Equal

Protection Clauses. 

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When local economic regulation is challenged

solely as violating the Equal Protection

Clause, the Court consistently defers to

legislative determinations as to the

desirability of particular statutory

discriminations. Unless a classification

trammels fundamental personal rights or is

drawn upon inherently suspect distinctions

such as race, religion, or alienage, our

decisions presume the constitutionality of the

statutory discriminations and require only

that the classification challenged by

rationally related to a legitimate state

interest.

City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976). The

Supreme Court has previously upheld a similar debt adjusting

statute as the New Jersey statute on an equal protection

challenge. See Ferguson v. Skrupa, 372 U.S. 726, 732 (1963). As

Defendants offer no reason to distinguish Ferguson, nor any

argument why the Court should set aside the presumption of

constitutionality of this economic regulation, the Court will

deny Defendants’ challenge to the statute under the Equal

Protection Clause.

3. Rule 12(b)(6) as to Defendant LHP

As to Defendant LHP, by contrast, the Court grants the

motion to dismiss for failure to state a claim as to it, for the

following reasons. Plaintiff makes no specific allegations about

actions taken by LHP, any agreement that it entered into with any

other Defendant, or other wrongs committed by LHP. The only

specific allegation as to LHP in the Amended Complaint is that it

shares an address with LHDR’s New Jersey office, and that Nicely

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is listed as a partner for the firm. This is insufficient to

state a claim under any of the asserted theories of recovery, and

LHP will, consequently, be dismissed.

D. Non-moving Defendants

Finally, Defendants JG, Gavalas, Reliant Account Management

LLC, and Chaya ask to join the motions to dismiss of the Bank

Defendants and the other moving Defendants. As stated on the

record at the hearing on these motions, the Court will not permit

these parties to join because Plaintiff has not been offered a

chance to respond to specific reasons why these defendants should

be dismissed, and the differences between these Defendants and

the moving Defendants (e.g., their contacts with the forum, and

the specific allegations in the Complaint as to each) are

significant.

IV. CONCLUSION

 For the reasons stated above, the Court will grant the Law

Firm Defendants’ motion to compel arbitration and consequently

deny the Law Firm Defendants’ motion to dismiss as moot. Thus,

the Court will dismiss from the action Defendants Legal Helpers

Debt Resolution, LLC, Eclipse Servicing, Inc., Macey, Aleman,

Searnes, Hyslip, Nicely, Duncan, and Hedaya. The Court will

deny, however, the Bank Defendants’ motion to compel arbitration,

having concluded that Plaintiff did not manifest an intention to

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be bound by the arbitration clause because it was insufficiently

incorporated into the agreement she signed. The Court will,

likewise, deny the remaining Defendants’ motion to stay pending

arbitration.

As to the motions to dismiss, the Court will grant the

motions to dismiss for lack of personal jurisdiction as to

Defendants Hendrix, McClure, Legal Services Support Group, LLC,

Lynch Financial Solutions, JEM Group, and Century Mitigations. 

The Court will also grant the motion to dismiss for failure to

state a claim of Defendant Legal Helpers, P.C. However, the

Court will deny the motion to dismiss for lack of personal

jurisdiction or failure to state a claim by Defendants Global

Client Solutions and Rocky Mountain Bank and Trust. The

accompanying order will be entered. 

December 20, 2011 s/ Jerome B. Simandle 

Date JEROME B. SIMANDLE

United States District Judge

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