Failure to consider extrinsic material on motion was error

Where the district court did not consider extrinsic evidence submitted by a bank moving to dismiss/compel arbitration, believing that it could not do so on a motion to dismiss, that was error because a court is not limited to a review of the pleadings before it on a motion to compel arbitration.

Background

City National Bank of West Virginia has filed this interlocutory appeal seeking to challenge the district court’s order denying its “Motion to Dismiss, Motion to Stay, and to Strike Class Action Allegations” in a class action lawsuit brought against the bank by Brenda C. Noe on behalf of herself and all others similarly situated.

Noe alleges that the bank’s practice of assessing multiple non-sufficient funds fees on a single transaction breached contractual promises made in the bank’s 2017 “Terms and Conditions of Your Account” disclosure and fee schedule; violated the covenant of good faith and fair dealing, as well as the West Virginia Consumer Credit and Protection Act and resulted in the bank being unjustly enriched.

Jurisdiction

As a threshold matter, and although not challenged by the parties, the court has an independent “obligation to verify the existence of appellate jurisdiction[.]” An appeal from a district court’s order denying a motion to dismiss is generally not an appealable, interlocutory order. Federal law expressly permits an immediate appellate challenge to a district court’s order denying a motion to compel arbitration, however.

Admittedly, the bank only alternatively requested that the district court stay the litigation pending referral of the matter to arbitration, and the district court disposed of the bank’s motion after focusing primarily on whether Noe’s complaint was sufficiently pled to withstand a motion to dismiss. But the district court also went on to reject the bank’s alternative argument that the action should be stayed pending arbitration, and expressly denied that alternative relief, as well.

In any event, and regardless of the label the bank attributed to its request pertaining to arbitration or the district court’s treatment of the bank’s motion, the bank’s alternative request that the “matter be stayed pending referral of the matter to arbitration” equated to a motion seeking enforcement of a purported arbitration agreement and, thus, there is jurisdiction over this appeal.

Merits

After reviewing the documents attached to Noe’s complaint and taking all the allegations contained therein to be true, the district court here found it possible that the 2017 terms and conditions altered the terms of Noe’s original depository agreement, which would have eliminated the parties’ obligation to arbitrate their disputes. In arriving at this conclusion, however, the court refused to consider the bank’s evidence calling that elimination into question because the court believed the question was unfit for resolution on a motion to dismiss.

Had the district court more appropriately treated the bank’s motion as one to compel and stay pending arbitration, however, the court would not have been limited to a review of the pleadings before it. And if, after considering the bank’s evidence, the district court concluded that a genuine issue of material fact prevented it from deciding the arbitrability issue, the court would have been required to hold a hearing to resolve the factual dispute.

Because the district court erroneously denied the bank’s motion without determining the arbitrability of the underlying litigation, the court vacates that portion of the district court’s order denying the bank’s motion as it pertained to arbitration. The matter is remanded to the district court to determine whether Noe’s claims should be referred to arbitration. If the district court determines that unresolved questions of material fact prevent it from deciding the issue, it is directed to hold “an expeditious and summary hearing” to resolve the issue.

Vacated and remanded.

Noe v. City National Bank of West Virginia, Appeal No. 20-1230, Sept. 30, 2020. 4th Cir., from SDWVA at Huntington (Chambers). Dallas F. Kratzer III and Ancil G. Ramey for Appellant. Jason E. Causey, E. Adam Webb, Tiffany M. Yiatras and Francis J. “Casey” Flynn Jr. for Appellee. VLW 020-2-260. 7 pp.