BLUESTEM BRANDS, INC. d/b/a Fingerhut, Third-Party Defendant Below, Petitioner
DARLENE SHADE, Third-Party Plaintiff Below, Respondent
Submitted: September 19, 2017
from the Circuit Court of Berkeley County, West Virginia The
Honorable Gray Silver, III, Judge Civil Action No. 15-C-370
David Griffith, Jr., Esq. Joseph K. Merical, Esq. Thomas
Combs & Spann, PLLC Charleston, West Virginia and Aaron
D. Van Oort, Esq. Erin L. Hoffman, Esq. Jeffrey P. Justman,
Esq. Faegre Baker Daniels LLP Minneapolis, Minnesota Pro Hac
Vice Attorneys for Petitioner
Jonathan R. Marshall, Esq. Bailey & Glasser, LLP
Charleston, West Virginia and Andrew C. Skinner, Esq. Skinner
Law Firm Charles Town, West Virginia Attorneys for Respondent
"When an appeal from an order denying a motion to
dismiss and to compel arbitration is properly before this
Court, our review is de novo." Syl. Pt. 1,
W.Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc.,
238 W.Va. 465, 796 S.E.2d 574 (2017).
"When a trial court is required to rule upon a motion to
compel arbitration pursuant to the Federal Arbitration Act, 9
U.S.C. §§ 1-307 (2006), the authority of the trial
court is limited to determining the threshold issues of (1)
whether a valid arbitration agreement exists between the
parties; and (2) whether the claims averred by the plaintiff
fall within the substantive scope of that arbitration
agreement." Syl. Pt. 2, State ex rel. TD Ameritrade,
Inc. v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293 (2010).
"A meeting of the minds of the parties is a sine qua non
of all contracts." Syl. Pt. 1, Martin v. Ewing,
112 W.Va. 332, 164 S.E. 859 (1932).
non-signatory to a written agreement requiring arbitration
may utilize the estoppel theory to compel arbitration against
an unwilling signatory when the signatory's claims make
reference to, presume the existence of, or otherwise rely on
the written agreement. Such claims sufficiently arise out of
and relate to the written agreement as to require
an appeal from the July 21, 2016, order of the Circuit Court
of Berkeley County denying the motion of petitioner Bluestem
Brands, Inc. d/b/a Fingerhut (hereinafter
"Bluestem") to compel arbitration and dismiss the
third-party complaint. The circuit court found that the
arbitration agreement was not binding on respondent Darlene
Shade (hereinafter "Ms. Shade"), in part, because
1) Ms. Shade did not assent to arbitration given that she did
not receive a copy of the most recent credit card agreement
containing arbitration language; and 2) Bluestem's credit
partners-and not Bluestem- were party to any potentially
applicable credit agreement requiring arbitration.
careful review of the briefs, the appendix record, the
arguments of the parties, and the applicable legal authority,
we conclude that, although the most recent amendments to the
credit agreement lack mutual assent and therefore cannot be
utilized to compel arbitration of this matter, the 2010
version of the credit agreement contains a properly formed
agreement to arbitration and encompasses the claims asserted
by Ms. Shade. We find further that Bluestem, as a
non-signatory to the agreement, may utilize the theory of
equitable estoppel to compel arbitration under the agreement.
Therefore, the circuit court erred in denying Bluestem's
motion to compel arbitration.
FACTS AND PROCEDURAL HISTORY
doing business as "Fingerhut, " is a retailer of a
variety of consumer goods by way of catalog and internet
shopping channels; Bluestem partners with various banks to
offer credit to its customers for "Fingerhut"
purchases. Ms. Shade made her first "Fingerhut"
purchase in 2006. She made this purchase utilizing the credit
offered to customers through Bluestem's then-credit
partner, CIT Bank. Ms. Shade applied for and was approved
this credit by phone. Thereafter, Ms. Shade was sent a
welcome packet which included a written credit agreement
entitled "CIT Bank Fingerhut Credit Account
Agreement." The agreement contained no arbitration
provision, but did have a "change-of-terms"
provision allowing for future amendments. In 2007, the credit
agreement was amended to include an arbitration agreement,
along with an "opt-out" provision. This agreement
was sent to her with her monthly statement and she admits
receiving it. She did not opt out of the arbitration
agreement and continued to use the account to make additional
2010, Bluestem switched credit partners to MetaBank. Ms.
Shade was sent a notification of the change, along with a new
credit agreement, which contained essentially the same
arbitration agreement and opt-out provision. Ms. Shade
likewise admits receiving this agreement. The new agreement
indicated it would become effective "from the first time
a transaction is posted to your account." She thereafter
made thirty-four purchases.
2012, Bluestem changed credit partners again and sent Ms.
Shade a notification that its credit partner had switched to
WebBank; the notice contained an 800-number to call if she
had any questions about her "Account." The notice
made no mention of a new credit agreement and no new
agreement was included with this notice.Ms. Shade claims
that she never thereafter received a new agreement, nor does
Bluestem provide any evidence that she was ever provided with
this agreement. The 2012 credit agreement was purportedly
amended one additional time in 2013 and notice of the amended
agreement, which made no changes to the arbitration
provision, was sent to Ms. Shade. Ms. Shade likewise denies
receiving this agreement in full and, like the 2012
agreement, Bluestem provides no proof that it was sent to
her. Ms. Shade made her final purchase, purportedly subject
to the 2013 agreement, on March 20, 2013.
thereafter, Ms. Shade's account allegedly went delinquent
in the amount of $3, 351.52; collection efforts were
initiated by a debt collector, which filed the instant action
against her. Ms. Shade then brought a third-party complaint
against Bluestem, but none of the credit partners, alleging
that the finance charges and interest rate charged for her
purchases were in violation of the West Virginia Consumer
Credit and Protection Act, West Virginia Code §§
46A-1-101 et seq. Ms. Shade further alleges that
Bluestem-and not any of the various credit partners-is
actually the entity extending credit and is therefore
participating in a "rent-a-bank scheme" whereby it
evades licensure and regulation in the State.
moved to compel arbitration and dismiss the third-party
complaint, which motion was denied by the circuit court. The
circuit court found that 1) Ms. Shade never received the 2012
or 2013 credit card agreement and therefore could not be
compelled to arbitrate pursuant to it; and 2) Bluestem was
not a party to any of the prior arbitration agreements;
therefore, there was no arbitration agreement with Bluestem
to be enforced. This appeal followed.
STANDARD OF REVIEW
Court has held that "[w]hen an appeal from an order
denying a motion to dismiss and to compel arbitration is
properly before this Court, our review is de
novo." Syl. Pt. 1, W.Va. CVS Pharmacy, LLC v.
McDowell Pharmacy, Inc., 238 W.Va. 465, 796 S.E.2d 574