Magee et al v. Cooper et al, No. 5:2019mc00017 - Document 8 (N.D. Tex. 2020)
Court Description: MEMORANDUM OPINION AND ORDER: The Court denies the Magees' motion to confirm with prejudice and grants Nationstar's motion to vacate. In doing so, the Court notes its concern with the extent and breadth of Sitcomm's seemingly fraudulen t activity. Arbitration documents involving Sitcomm have been filed in federal courts throughout the nation. Along with the Northern District of Texas, they have appeared in the Eastern District of Texas, Eastern District ofVirginia, Southern Distric t of Mississippi, Northern District of Oklahoma, Northern District of Illinois, and Federal Claims Court. Using the court system to file fraudulent claims burdens defendants, wastes judicial resources, and weakens the public's perception of the judicial branch. Accordingly, the Court will alert the United States Attorney's Office for the Northern District of Texas and the Attorney General Offices of Michigan, Mississippi, Hawaii, Virginia, Georgia, Wyoming, and Nevada to Sitcomm's activities by forwardingthis order. (Order has been forwarded to the listed parties) (Ordered by Judge James Wesley Hendrix on 3/11/2020) (krr)
Download PDF
<![CDATA[
Magee et al v. Cooper et al Doc. 8 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS LUBBOCKDIVISION RANCE MAGEE, et a1., Plaintiffs, No. 5:19-MC-017-H NATIONSTAR MORTGAGE, LLC, Ct al., Defendants MEMORANDUMO PINION AND ORDER On December 4, 2019, plaintiffs Rance and Michelle Magee moved to confirm a purpofied arbitration award issued by the Sitcomm Arbitration Association. ,!ee Dkt. No. 1. Sitcomm's "arbitration" found that numerous financial institutions and govemment officials-including Nationstar Mortgage, LLC-had breached a confract with the Magees. See Dkt. No. 1-1 at 2, 27. Subsequently, the Magees supplemented their filing by providing additional documents required by the Federal Arbitration Act (FAA), including the alleged arbitration agreement. See DkL No. 5. Nationstar Mortgage opposes the motion, arguing that it never agreed to arbitrate with the Magees and that the award was obtained by fraud. SeeDkl No. 3 at 5. Accordingly, it moved for the Court to deny the Magees' motion and vacate the arbitration award. Id. For the reasons set forth below, the Court denies the Magees' motion, vacates their award, and refers this order to the United States Attomey's Office for the Northem District of Texas and to the Attomey General Offices ofMichigan, Mississippi, Hawaii, Virginia, Georgia, Wyoming, and Nevada. Dockets.Justia.com 1. Factual Background This is one of the many cases in recent months where a court has repudiated an arbitration award made by Sitcomm. WL 61049 (S.D. Miss. Jan. 6,2020); 7 See, e.g., Nichols y. U.S. Bank, National Association, 2O2O Meekins v. Lakeview Loan Senicing, LLC,2019 WL 340300 (E.D. Va. Dec. 30, 2019); Kalmowitz v. Federal Home Mortgage Corporation, 2019 6249298 (E.D. Tex. Ocl 22, 2019); Brown Miss. Dec. 10, 2019); U. S. t WL Ally Financial, Inc., 2019 WL 6718672 (5.D. Bank, National Association t. Nichols, 2019 WL 427 6995 G\.D. Okla. Sept. 1,0,2019). These courts have expressed skepticism regarding whether Sitcomm is a valid arbitration entlty, and the Court knows ofat least one lawsuit filed against Sitcomm in the Southern District of Mississippi by a financial instirution alleging that Sitcomm and its associates have engaged in a far-reaching, fraudulent arbitration scheme. See PennyMac Loan Senices, LLC y. Sitcomm Arbitration Associar,or, No. 2:19-CV-193 (S.D. Miss. Feb. 4,2020). Other courts that have dealt with arbitration awards {iom Srtcomm have comprehensively detailed the contours ofthe scheme, and the Court notes that the Magees'fllings are virtually identical to those made in other cases. For completeness, the Court briefly recaps the events preceding the Magees' motion to confirm. On January 17 , 2019 , the Magees allegedly mailed a document titled "Show of Cause ProofofClaim Demand" to eleven "respondents," including numerous financial institutions, the Attomey General of Michigan, the United States Department of Justice, and the United States Supreme Court. .9ee Dkt. No. 5 at 3. The document purported to be an acceptance and counteroffer to a previous, undisclosed offer. Id. at4. It further demanded that the respondents respond to the litany of claims in the document within ten days or else admit to all of the Magees' ciaims by "tacit acquiescence." Id, at 12-13. The 2 document also contains an "arbiffation clause" calling for disputes to be settled by an arbiffator selected by the Magees- Id. at 14. After no answer was received, Sitcomm mailed "Notice of Arbitration Hearing,, to various parfies on May 18,2019. Id. at 19-20. These parties did not participate in Sitcomm's " arbitration, " which yielded a "Final Arbitration Award.,, See Dkt. No. 1-1. The arbitration award contails no factual findings conceming the underlying ,,dispute,, and includes a host ofbizarre assefiions. See, e.g., id. at 5 ("The Respondents . . . have . . . acted against the interest of the Claimant's [sic], depriving them of their right to properfy, their right to conffact, the dght to The Pursuit of Happiness and the enjoyment of 1ife.,,). Much of the award focuses on attempting to convince the reader of its "irrevocable" and ,,binding,, nantre. Id. at22. The document awarded the Magees $558,406 from each respondent. 1/. at2l. ,) The Court denies the motion to confirm and v,rcates the purported arbitration award, A. UnenforceableArbitrationAgreement An arbitrator's power derives from an arbitration agreement. See Timegate Studios, Inc. tt. Southpeak Interactive, LLC,713 F.3d 797,802-03 (5th Cir.2013). Thus, an arbiffator only has the power to grant an award if the parties have ageed to submit the matter to arbitration. Id. Under Texas law, a contract must be based on "a meeting of the minds on the essential terms of the contract, i.e., mutual assent." USAA Texas Lloyds Company t,. Menchaca,545 S.W.3d 479,502 n.21 (Tex. 2018). This means that there must be mutual understanding and assent to the agreement regarding the subject mattet and the essential terms of the conffact. Bandera County v. Hollingsworth, 419 S.W.3d 639,645 (Tex. San Antonio 2013, no pet.). 3 App.- Here, the arbitration agreement submitted by the Magees does not evince any mufual assent. SeeDkt.No.5 at3-18. It is not signedby any of the parties named in the arbitation award, and Nationstar maintains that it is "not with the Magees" to arbittate any claims. a party to any written contract Dkt. No. 3-1 at 4. Instead, the Magees ,Sae contend that Nationstar and the other parties "tacitlly] acquies[ced]" to the tems of the arbitration agreement by failing to respond to thet letter. SeeDkt. No. 5 at 12-i3. As other courts have made clear, this theory ofcontract formation is "conffary to hombook contract law" and does not give rise to a 4276995, atx4; see also valid agreement to atbitration. Meekins,2019 See Nichols,2019 WL WL 7340300, atx2. Since Sitcomm Arbitration's award was not made pursuant to a valid arbitration agleement, the Court denies the Magees' motion to confum. B. Awaril Procured Through Fraud Nationstar asks for the Court to vacate the Magees' arbitration award under Section 10(a) of the FAA, which allows arbitration awards to be vacated when it was "procured by colruption, fraud, or undue means." See Dkt. No. 3 at 4--5. The Court vacates the Magees' award under this provision. As rn Meekins, the Magees "obtained an arbitration hearing by sending Respondents an incomprehensible agreement to arbitrate and using their non-response to initiate an arbrtration. " See Meekins,2019 WL 7340300, at *3. This arbitration agreement was predicated on a "tacit acquiescence" theory of contract formation that flies in the face of contract doctrine. The Court does not believe that a legitimate arbitrator would accept such an agreement, and it joins other courts in expressing skepticism about the validity of Sitcomm as an arbitration entity. WL See id. at*3; 4 see also Schlihs v. United States,2020 46887 6, at *1 n.1 (Fed. Cl. Jan. 29,2020) (noting the "tarradiddle and lack of clariry,, in Sitcomm's decisions); Brown, 2019 wL 6718672, at *3 n.l (referring to Sitcomm arbitrations as "parts of a larger fraudulent enterprise"); Kalmowitz,2Oig 2019 WL 4276995, at WL 6249298, atx2; Nichols, *2. The Court finds that the Magees' arbitration award was procured by comrpt, fraudulent, and undue means, and therefore orders that it is vacated under Section i0(a). 3. Conclusion The Cout denies the Magees' motion to confum with prejudice and grants Nationstar's motion to vacate. In doing so, the Court notes its concem with the extent and breadth of Sitcomm's seemingly fraudulent activity. Arbitration documents involving Sitcomm have been flled in federai courts throughout the nation. Along with the Northern District of Texas, they have appearcd in the Eastem District of Texas, Eastem District of Virginia, Southem District of Mississippi, Northem District of Oklahoma, Northem District of Illinois, and Federal Claims Coun. Using the court system to file fraudulent claims burdens defendants, wastes judicial resources, and weakens the public's perception of the judicial branch. Accordingly, the Court will alert the United States Attomey's Office for the Northern District of Texas and the Attomey General Offices of Michigan, Mississippi, Hawaii, Virginia, Georgia, Wyoming, and Nevada to Sitcomm's activities by forwarding this order.l I Aside from Michigan, these are the states where the plaintiffs in the ongoing Southern Distnct of Mississippi litigation allege that Sitcomm and their associates are from. See PennyMac Loan Senices, LLC v. Sitcomm Arbitration Associatioz, No. 2:19-CV-193, Pl. Compl. fl!1 7-13 (S.D. Miss. Dec. 11, 2019). Michigan is included because that is where the Magees say they live, 5 So ordered on March ,2020 JAM 6 WESLEYHENDRIX D STATES DISTRICT JUDGE
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
