Christensen v. Desert Rock Capital

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way" to the Loan Documents must be resolved through arbitration,⁵and he waived his ability to bring any claims related to the Note as a class action lawsuit.⁶

Christensen brings this putative class action under 47 U.S.C. § 227, the Telephone Consumer Protection Act (TCPA).⁷Christiansen alleges Desert Rock sent him texts and calls advertising its services him even though he is on the National Do-Not-Call Registry.⁸ Christiansen also alleges Desert Rock continued this practice even after he repeatedly asked them to stop.⁹Christensen asserts two claims on behalf of two proposed classes: (1) a claim for violation of the TCPA's restriction on placing telemarketing calls and sending text messages to telephone numbers registered on the National Do-Not-Call Registry; and (2) a claim for failing to comply with the TCPA's rules and regulations relating to recording and honoring internal do-not- call requests.¹⁰Desert Rock now moves to dismiss Christensen's Complaint and/or compel arbitration.¹¹The Motion is fully briefed and ripe for review.¹²

ANALYSIS

Desert Rock contends Christensen's claims relate to the Loan Documents, which Desert Rock believes contain mandatory arbitration provisions. In any case, Desert Rock argues the arbitration provisions require an arbitrator to resolve disputes about arbitrability. Christensen, on the other hand, contends he never entered into a valid agreement to arbitrate.

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The court agrees with Desert Rock. The Loan Documents contain arbitration provisions that unequivocally delegate questions of arbitrability to an arbitrator. Because Christensen's challenges to the arbitration provisions raise questions of arbitrability, the court must submit his claims to arbitration and stay the case.

I. Christensen Raises Issues That Must Be Submitted to Arbitration.

The Federal Arbitration Act (FAA) reflects a "liberal federal policy favoring arbitration."¹³"[A]rbitration is a matter of contract,"¹⁴and courts must "rigorously enforce"

arbitration agreements according to their terms.¹⁵And although courts "presume that it is for courts, not arbitrators, to decide whether the parties have agreed to arbitrate," this is not so when

"there is clear and unmistakable evidence" that the parties delegated this authority to the arbitrator.¹⁶Where an arbitration agreement incorporates American Arbitration Association (AAA) rules into the agreement, the Tenth Circuit has found that the "clear and unmistakable evidence" standard is met.¹⁷In the context of a Motion to Compel Arbitration, the movant

"bears the initial burden of presenting evidence sufficient to demonstrate the existence of an enforceable agreement and the opposing party's failure, neglect, or refusal to arbitrate; if it does so, the burden shifts to the nonmoving party to raise a genuine dispute of material fact regarding the existence of an agreement or the failure to comply therewith."¹⁸

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Here, Desert Rock has provided evidence of its agreements with Christensen that clearly require disputes about arbitrability to be submitted to an arbitrator. Christensen contends he never agreed to arbitrate claims with Desert Rock because the arbitration agreements fail to demonstrate a meeting of the minds, are illusory, and are unconscionable.¹⁹He also contends that if the agreements are valid, he need not submit his claims to arbitration because Desert Rock was the first to breach them and because Desert Rock otherwise waived its right to compel arbitration.²⁰But these contentions all fundamentally challenge the validity of the arbitration agreements or their applicability to the current dispute.²¹In other words, Christensen's arguments raise the issue of whether his claims are arbitrable in the first place. Accordingly, these arguments are neither here nor there because the arbitration provisions in the Loan Documents explicitly incorporate AAA Rules, precluding this court from addressing them:

Any and all controversies, claims, alleged breaches or disputes arising out of or relating in any way to this Agreement, including whether any controversy, claim, alleged breach or dispute is subject to arbitration, and including, without limitation, any and all claims that would otherwise be subject to class actions, shall upon the request of any party hereto, be subject to binding arbitration pursuant to the Commercial Arbitration Rules administered by the American Arbitration Association ("AAA"), under the AAA Consumer Rules in effect at the time the claim is filed ("AAA Rule").²²

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Any and all controversies, claims, alleged breaches or disputes arising out of or relating in any way to this Application, including whether any controversy, claim, alleged breach or dispute is subject to arbitration, and including, without limitation, any and all claims that would otherwise be subject to class actions, shall upon the request of any party hereto, be subject to binding arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association.²³

Whether Christensen's arguments are valid—and whether his claims are arbitrable—are questions that must be resolved by the arbitrator. Despite his many concerns with the Loan Documents, Christensen nowhere offers evidence sufficient to create a genuine dispute of fact contesting whether the Loan Documents delegate questions of arbitrability to an arbitrator by incorporating AAA rules. In light of the "clear and unmistakable" evidence that the parties delegated the question of arbitrability to an arbitrator,²⁴the court agrees with Desert Rock that federal adjudication of this case must be stayed.

II. Supreme Court Precedent Requires a Stay Rather Than Dismissal.

Desert Rock seeks dismissal of Christiansen's Complaint on account of arbitration provisions in the Loan Documents under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim. However, while Desert Rock is correct that the Tenth Circuit has not definitively explained on what grounds—if any—a party may raise a mandatory arbitration provision defense under Rule 12,²⁵recent Supreme Court

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precedent requires this court to stay the case rather than dismiss it when a party requests a stay.²⁶ Here, Desert Rock requests a stay in the alternative of dismissal,²⁷and Christensen explicitly asks the court to issue a stay if it grants Desert Rock's Motion.²⁸Nowhere does Desert Rock oppose this argument or otherwise explain why a dismissal is favored relative to a stay. Accordingly, the court decides to stay this case pending resolution of the parties' arbitrability dispute.

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CONCLUSION

For the foregoing reasons, the court GRANTS Desert Rock's Motion insofar as it requests an order staying the case and compelling arbitration.²⁹The case is STAYED pending

the outcome of the arbitration. Moreover, Desert Rock is ORDERED to file a Status Report every 120 days updating the court as to the status of the arbitration proceedings. The first report is due on October 1, 2025. Within 14 days of the parties' arbitration, Desert Rock must also submit a final report stating the outcome of the arbitration and recommending any actions the court may need to take moving forward.

SO ORDERED this 17th day of April 2025.

BY THE COURT:

____________________________

ROBERT J. SHELBY

United States Chief District Judge

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