Non-Signatory Debt-Collection Law Firms Cannot Compel Arbitration as “Servicers” Absent Clear Contract Language

I. Introduction

Donte Jackson v. Protas, Spivok & Collins LLC (Fourth Circuit, May 18, 2026) addresses a recurring problem in consumer-credit litigation: whether a debt-collection law firm—though not a signatory to a borrower’s arbitration agreement—may nonetheless compel arbitration by characterizing itself as a loan “servicer.”

The dispute traces to a $30,000 WebBank loan made to Donte Jackson and later sold on the secondary market to Velocity Investments, LLC. When Jackson allegedly defaulted, Velocity (represented by Protas, Spivok & Collins LLC (PSC)) sued in Maryland state court but dismissed the action with prejudice shortly before trial. Jackson then filed a federal putative class action against Velocity and PSC challenging their alleged “practice of suing on time-barred debt.”

Both defendants sought to compel arbitration under the promissory note’s arbitration clause defining “you” to include WebBank, subsequent holders, and “any person servicing this Note.” The district court held Velocity waived arbitration by suing first, and held PSC was not a party to the arbitration agreement. Only PSC appealed.

II. Summary of the Opinion

The Fourth Circuit affirmed, holding PSC cannot compel arbitration because it is not a party to the arbitration agreement. The court interpreted “servicing this Note” to mean the administration of the loan in the ordinary sense—collecting and managing periodic payments and related records/communications—not litigation activity undertaken to collect after default. Because PSC merely represented Velocity in collection litigation and did not administer the loan like a servicer (e.g., the named servicer “Prosper”), PSC fell outside the contract’s definition of “you.”

III. Analysis

A. Precedents Cited

  • Meadows v. Cebridge Acquisition, LLC, 132 F.4th 716 (4th Cir. 2025)
    • Used for the review framework: de novo review of arbitrability rulings and the proposition that courts must compel arbitration when a valid agreement covers the dispute. The court relies on Meadows but emphasizes its implicit predicate: an enforceable agreement between the parties seeking to arbitrate.
  • Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983)
    • Cited for the FAA’s “liberal federal policy favoring arbitration.” The court treats this policy as important but not dispositive where the threshold issue is whether PSC ever became an agreement-holder at all.
  • Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468 (1989)
    • Provides two guardrails: arbitration promotes expeditious dispute resolution, but it remains “a matter of consent, not coercion.” Volt underwrites the court’s refusal to let a pro-arbitration policy “create” consent for a non-party law firm.
  • Adkins v. Lab. Ready, Inc., 303 F.3d 496 (4th Cir. 2002)
    • Quoted (via Meadows) for the directive that courts must grant a motion to compel when a valid arbitration agreement covers the dispute—again reinforcing that PSC’s problem is contractual status, not scope.
  • Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (2010)
    • Supplies the key limitation: courts may send to arbitration only those disputes the parties agreed to submit. The opinion uses Granite Rock to center “who agreed” as the controlling inquiry.
  • First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (1995)
    • Cited twice for foundational points: (1) arbitration requires agreement; (2) whether an arbitration agreement exists is a contract-formation question governed by state law. This supports the court’s move from federal policy to Maryland contract interpretation.
  • Schulman v. Axis Surplus Ins. Co., 90 F.4th 236 (4th Cir. 2024)
    • Used to anchor the choice of law: Maryland contract law governs the formation/interpretation issue presented.
  • Credible Behav. Health, Inc. v. Johnson, 220 A.3d 303 (Md. 2019)
    • The court’s principal Maryland interpretive guide: start with dictionary definitions, but interpret language in context and with common sense from the perspective of a reasonable party.
  • Ocean Petroleum, Co. v. Yanek, 5 A.3d 683 (Md. 2010)
    • Quoted (via Credible Behav. Health) for the contextual method of interpretation—critical to rejecting PSC’s attempt to read “servicing” abstractly as any payment-related activity.
  • United States v. Ward, 972 F.3d 364 (4th Cir. 2020)
    • Cited for caution in dictionary use: definitions must be applied precisely rather than generalized into an overbroad “idea,” a move PSC attempted in arguing that “service” merely “involves payments” or “providing something necessary.”
  • Ford v. Antwerpen Motorcars Ltd., 117 A.3d 21 (Md. 2015) and Rocks v. Brosius, 217 A.2d 531 (Md. 1966)
    • Provide the integrated-documents principle: instruments executed as part of the same transaction are construed together. This allowed the court to read the borrower registration agreement (naming “Prosper” as “the servicer”) alongside the promissory note, reinforcing the narrower, industry-standard meaning of “servicing.”
  • Schafer v. Barrier Island Station, Inc., 946 F.2d 1075 (4th Cir. 1991)
    • Used to describe attorneys’ implied authority to take necessary litigation steps, while distinguishing “substantive decisions” reserved to clients (e.g., whether to sue, dismiss, or settle). This buttresses the opinion’s broader theme: lawyer and client are distinct legal actors.
  • Hickman v. Taylor, 329 U.S. 495 (1947)
    • Cited for the proposition that lawyers’ duties as officers of the court persist notwithstanding agency for a client, supporting the court’s point that lawyers can incur independent liability and thus are not simply interchangeable with clients for contract benefits.
  • Schuele v. Case Handyman & Remodeling Servs., LLC, 989 A.2d 210 (Md. 2010)
    • Mentioned to acknowledge a possible alternative route—equitable estoppel allowing non-signatories to enforce arbitration in some circumstances—while noting PSC did not fit the contract language here and lacked “special circumstances” on the record.

B. Legal Reasoning

  1. Jurisdiction and standard of review. The court exercised interlocutory jurisdiction under 9 U.S.C. § 16(a)(1)(A) and reviewed de novo.
  2. Arbitration policy cannot substitute for assent. The FAA favors arbitration, but only for disputes the parties agreed to arbitrate; the threshold question is contract formation under Maryland law.
  3. PSC’s entire theory depended on one phrase: “servicing this Note.” The promissory note defined “you” to include “any person servicing this Note”; PSC argued its collection-litigation role qualified.
  4. Maryland method: dictionary meaning + context + common sense. PSC proposed (a) “service” as “paying interest” and (b) “service” as “providing something necessary.” The court rejected both as contextually incoherent and unbounded:
    • “Paying interest” refers to the borrower’s conduct (“me”), not the lender-side counterparty (“you”).
    • “Providing something necessary” would absurdly sweep in remote entities enabling payment (e.g., a bank or internet provider).
  5. The court selected the industry-standard meaning of loan “servicing.” It adopted the sense of “servicing” as administering the loan—collecting payments, maintaining schedules, recordkeeping, and communications—supported by multiple sources (including Oxford English Dictionary, Cambridge Dictionary, and Black's Law Dictionary).
  6. Integrated documents confirmed the intended “servicer.” The borrower registration agreement identified “Prosper” as “the servicer” and gave Prosper payment-collection and communication responsibilities; its arbitration clause tracked the note’s but substituted “Prosper” for “any person servicing this Note.” This strongly indicated “servicing” meant “Prosper-like administration,” not “PSC-like litigation.”
  7. Attorney-client separateness foreclosed “backdooring” arbitration benefits. The court explained that lawyers are crucial to debt collection but are not the creditor and do not automatically share the creditor’s contractual rights. Without broader contract language (e.g., covering “agents”) or a viable non-signatory doctrine (e.g., equitable estoppel), PSC remained a “stranger to the agreement.”

C. Impact

  • Debt-collection law firms face a higher bar to compel arbitration. In the Fourth Circuit (applying Maryland law here), a firm cannot compel arbitration merely because it acted to collect the debt in litigation; “servicer” language will be read in its ordinary loan-administration sense.
  • Contract drafting implications for lenders and buyers. If creditors want collection counsel to arbitrate borrower claims (including statutory or class claims tied to collection conduct), arbitration provisions likely must include explicit coverage (e.g., “agents,” “attorneys,” “law firms,” “representatives”).
  • Strategic implications for consumer plaintiffs and defendants. Plaintiffs may more readily keep claims against collection counsel in court even when claims against creditors might be arbitrable. Defendants will more frequently litigate threshold questions of non-signatory enforcement (agency language, third-party beneficiary status, equitable estoppel).
  • Limits of “pro-arbitration” framing. The opinion underscores that FAA policy is not a thumb on the scale for creating contractual parties; it operates after assent is established.

IV. Complex Concepts Simplified

  • Interlocutory appeal (9 U.S.C. § 16). Normally, parties cannot appeal until a case ends. The FAA makes an exception: an order denying arbitration can be appealed immediately.
  • De novo review. The appellate court gives no deference to the district court’s legal conclusions and decides the contract/arbitration question anew.
  • “Arbitration is consent, not coercion.” Courts enforce arbitration because parties agreed to it; courts do not force arbitration on someone who never became part of the arbitration agreement.
  • Non-signatory enforcement (equitable estoppel). Sometimes a non-signatory can enforce arbitration (for example, when a plaintiff sues based on a contract while trying to avoid its arbitration clause). The court noted this doctrine exists (Schuele v. Case Handyman & Remodeling Servs., LLC) but found no contractual language or “special circumstances” supporting PSC’s attempt here.
  • Reading related documents together. Maryland law may treat multiple documents signed as part of one transaction as a single set; the borrower registration agreement’s naming of “Prosper” as servicer illuminated what “servicing” meant in the note.
  • Loan “servicing” vs. debt-collection litigation. A servicer typically manages the day-to-day administration of payments and escrow/taxes/records; a collection lawyer litigates after default. The court treated these as distinct functions with distinct contractual consequences.

V. Conclusion

The Fourth Circuit’s published decision establishes a clear, contract-centered rule: a debt-collection law firm that is not a signatory cannot compel arbitration under a borrower’s note by rebranding litigation work as “servicing,” where the agreement—read with integrated transaction documents—uses “servicing” in its ordinary loan-administration sense. The opinion reinforces that FAA policy favors arbitration only after consent is shown, and it signals to creditors that extending arbitration protection to counsel requires explicit drafting or a valid non-signatory doctrine supported by the record.