Court Opinion

ID: 5136117
Source: CourtListenerOpinion
Date Created: 2021-12-17 21:00:32.174224+00
Date Added: 2024-06-11T08:23:53.470557
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       DEC 17 2021
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

JODY ALIFF; et al.,                             No.   20-56121

                Plaintiffs-Appellees,           D.C. No.
                                                3:20-cv-00697-DMS-AHG
 v.

VERVENT, INC., FKA First Associates             MEMORANDUM*
Loan Servicing, LLC; et al.,

                Defendants-Appellants,

and

DEUTSCHE BANK TRUST COMPANY
AMERICAS,

                Defendant.

                  Appeal from the United States District Court
                     for the Southern District of California
                 Dana M. Sabraw, Chief District Judge, Presiding

                    Argued and Submitted November 19, 2021
                              Pasadena, California

Before: WARDLAW and HURWITZ, Circuit Judges, and BOUGH,** District
Judge.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
            The Honorable Stephen R. Bough, United States District Judge for the
Western District of Missouri, sitting by designation.
       In this putative class action, a group of for-profit college students who took

out student loans (“Students”) are suing their lender, their loan servicer, and a

collection of related entities (collectively “Vervent”). They allege that Vervent

serviced their loans in a manner than violated various provisions of federal and state

law. The district court denied Vervent’s motion to compel arbitration. We have

jurisdiction over Vervent’s appeal under 9 U.S.C. § 16(a)(1)(B) and affirm.

       1.        The arbitration clause in the loan agreements lacks “clear and

unmistakable evidence” that the Students agreed to arbitrate the issue of arbitrability

with Vervent, a non-signatory. Kramer v. Toyota Motor Corp., 705 F.3d 1122,

1127–28 (9th Cir. 2013); see also First Options of Chi., Inc. v. Kaplan, 514 U.S.

938, 943 (1995). The district court therefore did not err in determining the issue of

arbitrability.

       2.        The district court did not err in holding that Vervent was not entitled to

enforce the arbitration agreement as an agent of the lender, one of the signatories.

See Murphy v. DirecTV, Inc., 724 F.3d 1218, 1232 (9th Cir. 2013). The servicing

agreement between Vervent and the lender gave Vervent agency powers “solely for

endorsing and depositing negotiable instruments (checks, money orders, etc.)”

received by Vervent from borrowers. For all other purposes, the servicing agreement

designated Vervent as an “independent contractor,” and entitled it “to determine the

manner in which the Services are accomplished.” The allegations Students made

                                              2
against Vervent in the complaint did not implicate Vervent’s limited agency powers,

but rather the manner in which it collected loans.

      3.     The district court did not err in holding that Vervent could not enforce

the arbitration agreement under the principle of equitable estoppel. Students’ claims

against Vervent were not “founded in or intertwined with” the loan agreements, nor

did the complaint rest upon “interdependent and concerted misconduct” between

Vervent and signatories to the loan agreements founded in the agreements’

obligations. See Goldman v. KPMG, LLP, 173 Cal. App. 4th 209, 219 (2009)

(cleaned up); see also Murphy, 724 F.3d at 1231–32.

             AFFIRMED.1

1
       While this appeal was pending, the district court granted Students’ motion to
file an amended complaint. Because that amended complaint is not before us, we
express no opinion as to whether Vervent can compel arbitration of the claims the
amended complaint asserts.

                                          3