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Carvant Fin. LLC v. Autoguard Advantage Corp.

United States District Court, E.D. New York

August 5, 2013

CARVANT FINANCIAL LLC, Plaintiff,
v.
AUTOGUARD ADVANTAGE CORPORATION, d/b/a AMERIGARD, DIMENSION SERVICE CORPORATION, and AMERICAN BANKERS INSURANCE COMPANY, Defendants

Page 391

For the Plaintiff: Martin Silver, Esq., Of Counsel, Martin Silver P.C., Hauppauge, NY.

For the Defendants Autoguard Advantage Corporation and Dimension Service Corporation: Ernest Edward Badway, Esq., Of Counsel, Fox Rothschild LLP, New York, NY.

For the Defendants Autoguard Advantage Corporation and Dimension Service Corporation: Robert H. Miller, Esq., Joseph F. Murray, Esq., Of Counsel, Murray Murphy Moul Basil LLP, Columbus, OH.

For the Defendant American Bankers Insurance Company: Francis F. Quinn, Esq., Of Counsel, Lavin, O'Neil, Ricci, Cedrone & DiSipio P.C., New York, NY.

For the Defendant American Bankers Insurance Company: Walter D. Willson, Esq., Of Counsel, Wells Marble & Hurst, PLLC, Ridgeland, Mississippi.

OPINION

Page 392

MEMORANDUM OF DECISION AND ORDER

ARTHUR D. SPATT, United States District Judge.

On January 9, 2013, the Plaintiff Carvant Financial LLC (the " Plaintiff" or " Carvant" ) commenced this action sounding in breach of contract in Supreme Court, Nassau County. On February 15, 2013, the Defendants AutoGuard Advantage Corporation, d/b/a Amerigard (" Autoguard" ), Dimension Service Corporation (" Dimension" ), and American Bankers Insurance Company (" American Bankers" ) (collectively the " Defendants" ) removed this action to this Court on the basis of diversity jurisdiction.

Presently pending before the Court is the Defendants' motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq . (the " FAA" ) and to dismiss the complaint pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 12(b)(1). For the following reasons, the motion is granted in part and denied in part.

I. BACKGROUND

A. Factual History

Unless otherwise stated, the following facts are drawn from the complaint and construed in a light most favorable to the Plaintiff.

The Plaintiff is in the business of financing consumer purchases of used motor vehicles. Autoguard and Dimension are in the business of providing and administrating service contracts for motor vehicles such as those financed by the Plaintiff. American Bankers is in the business of

Page 393

guaranteeing and insuring that Autoguard would provide the services it agreed to provide under its service contracts with the customers of the Plaintiff.

In 2011, Autoguard and Dimension allegedly induced the Plaintiff to provide to the Plaintiff's customers Service Contracts which provided, in part, that the Autoguard would pay for the cost of the repair or replacement of various parts or components of motor vehicles financed by the Plaintiff in the event that such parts or components would suffer a breakdown.

Pursuant to each Service Contract, American Bankers insured and guaranteed that Autoguard would properly perform under each such service contract and that all covered claims would be paid within 60 days from the filing of such claims. The Plaintiff was a lien holder on each motor vehicle covered by the Service Contracts. In this regard, the Plaintiff insists that it was a third-party beneficiary to each Service Contract.

Also, the Service Contract contained an Arbitration provision, which stated as follows:

VIII. ARBITRATION
READ THE FOLLOWING ARBITRATION PROVISION (" Provision" ) CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO OBTAIN RELIEF OR ...

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