Hurtado v. Own.Lease, Inc.

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 25-cv-01831-NYW-CYC
EVERTT HURTADO ,
Plaintiff,
v.
OWN.LEASE, INC.,
Defendant.
______________________________________________________________________________
ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
______________________________________________________________________________
Cyrus Y. Chung, United States Magistrate Judge.
Defendant Own.Lease, Inc. moves to compel plaintiff Evertt Hurtado to bring his claims
in arbitration rather than in court, citing an arbitration clause in the parties’ lease purchase
agreement. ECF No. 51. Because the arbitration clause is enforceable and encompasses the
plaintiff’s claims, the Court recommends that the Motion be GRANTED. The plaintiff seeks to
strike the arbitration clause, ECF No. 55, but that motion is DENIED for the same reasons. The
plaintiff also seeks leave to file two surreplies, ECF Nos. 62, 82, but they neither comport with
the proper purpose of a surreply nor comply with this Court’s Local Rules and, as such, leave is
DENIED.
BACKGROUND
On November 25, 2024, the plaintiff applied online for a lease purchase agreement for
new tires from the defendant, who provides lease-to-own services. ECF No. 51-2 ¶¶ 3–4; see
ECF No. 1 at 2. The defendant approved the application, and both parties executed the lease
purchase agreement (the “Contract”) online via DocuSign. See ECF No. 51-2 ¶¶ 5–6; ECF No.
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51-3. The Contract contained a jury trial waiver and arbitration clause (the “Clause”) expressed
in a question-and-answer format. ECF No. 51-3 at 9–10. In brief, the Clause provided that the
parties waived their right to go to court and instead would pursue arbitration for any claims that
involved the parties or the subject of the Contract, though the Clause preserved the ability to
bring claims worth less than $20,000 in small-claims court.
According to the plaintiff, four months later, the defendant withdrew funds from his bank
account without authorization; moreover, he says, it signed the Contract without a valid
operating license. ECF No. 13 at 3–4. The plaintiff then filed this action, asserting five claims
against the defendant and seeking damages of $500,000. Id. at 4–5.
These motions followed. ECF Nos. 51, 55, 62, 82.
ANALYSIS
The defendant moves to compel arbitration. The Federal Arbitration Act (“FAA”) makes
a “written provision in any . . . contract evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such contract or transaction . . . valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. “A party aggrieved by the alleged failure, neglect, or
refusal of another to arbitrate under” such an agreement ‘may petition any United States district
court which, save for such agreement, would have jurisdiction under title 28, in a civil action . . .
of the subject matter of a suit arising out of the controversy between the parties, for an order
directing that such arbitration proceed in the manner provided for in such agreement.” Id. § 4.
“By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but
instead mandates that district courts shall direct the parties to proceed to arbitration on issues as
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to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470
U.S. 213, 218 (1985).
“A court addressing a motion to compel arbitration . . . must first determine whether there
exists an enforceable agreement to arbitrate.” Brayman v. KeyPoint Gov’t Sols., Inc., 83 F.4th
823, 832 (10th Cir. 2023). Then, a court must “determine such matters as ‘who is bound by’ the
agreement, and . . . whether the ‘agreement covers a particular controversy.’” Id. (quoting Arthur
Andersen LLP v. Carlisle, 556 U.S. 624, 630 (2009), and Rent-A-Center, W., Inc. v. Jackson, 561
U.S. 63, 69 (2010)). In considering these elements, a court “should apply ordinary state-law
principles that govern the formation of contracts.” First Options of Chi., Inc. v. Kaplan, 514 U.S.
938, 944 (1995) (citation omitted).
Addressing these questions follows “a summary trial procedure.” Howard v. Ferrellgas
Partners, 748 F.3d 975, 978 (10th Cir. 2014). When “the making of the agreement for arbitration
or the failure to comply therewith is not in issue, the court shall make an order directing the
parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4.
But “[i]f the making of the arbitration agreement or the failure, neglect, or refusal to perform the
same be in issue, the court shall proceed summarily to the trial thereof.” Id. “This ‘framework is
similar to summary judgment practice’: the party moving to compel arbitration 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 . . . .” BOSC, Inc. v.
Bd. of Cnty. Comm’rs of Cnty. of Bernalillo, 853 F.3d 1165, 1177 (10th Cir. 2017) (quoting
Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1261 (10th Cir. 2012)). “[I]f 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.” Id. Thus, “[w]hen ‘a quick look at
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the case’ reveals that ‘no material disputes of fact exist,’ a district court may ‘decide the
arbitration question as a matter of law through motions practice and viewing the facts in the light
most favorable to the party opposing arbitration.’” Id. (quoting Howard, 748 F.3d at 978).
No such disputes exist here. Regarding the existence of an enforceable agreement to
arbitrate, for example, the defendant points to the executed Contract and the Clause therein
indicating an agreement to arbitrate. ECF No. 51-3. And the plaintiff does not contest these facts.
Instead, he contends that the Clause is an unconscionable contract provision. “In order to
support a finding of unconscionability, there must be evidence of some overreaching on the part
of one of the parties such as that which results from an inequality of bargaining power or under
other circumstances in which there is an absence of meaningful choice on the part of one of the
parties, together with contract terms which are unreasonably favorable to that party.” Davis v.
M.L.G. Corp, 712 P.2d 985, 991 (Colo. 1986). In Colorado, seven factors guide such an analysis:
(1) the use of a standardized agreement executed by parties of unequal bargaining power; (2) the
lack of an opportunity for the customer to read or become familiar with the document before
signing it; (3) the use of fine print in the portion of the contract containing the provision in
question; (4) the absence of evidence that the provision was commercially reasonable or should
reasonably have been anticipated; (5) the terms of the arbitration clause, including substantive
fairness; (6) the relationship of the parties, including factors of assent, unfair surprise, and notice;
and (7) the circumstances surrounding the formation of the contract, including setting, purpose,
and effect. See id. (citations omitted); see also Fedor v. United Healthcare, Inc., 976 F.3d 1100,
1105 (10th Cir. 2020) (“For federal courts to review” a claim of arbitrability or fraud in the
inducement, “the claim must be directed at the ‘arbitration clause itself.’” (quoting Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403 (1967)); Turner v. Chipotle Mexican
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Grill, Inc., No. 14-CV-02612-JLK, 2018 WL 11314701, at *4 (D. Colo. Aug. 3, 2018) (noting
that the “fifth Davis factor[] . . . examine[s] whether the Arbitration Agreement[’s] . . . terms are
substantively fair”). The first, second, third, sixth, and seventh factors relate to procedural
unconscionability; the fourth and fifth relate to substantive unconscionability. Turner, 2018 WL
11314701, at *3–4. The plaintiff, as the party opposing the Clause’s enforcement, bears the
burden of establishing both its procedural and substantive unconscionability. Id. at *2 (citing
Nesbitt v. FCNH, Inc., 74 F. Supp. 3d 1366, 1371 (D. Colo. 2014), aff’d, 811 F.3d 371 (10th Cir.
2016)). “[T]he finding of unconscionability is a question of law.” Mullan v. Quickie Aircraft
Corp., 797 F.2d 845, 849 (10th Cir. 1986).
The plaintiff fails to carry his burden. He makes no argument, for example, on the first
factor. An overview of the Agreement shows that it is a standardized agreement between parties
with unequal bargaining power. ECF No. 51-3. While this factor weighs in favor of the plaintiff,
this alone is not enough to find that the Agreement is unconscionable. Nesbitt, 74 F. Supp. 3d at
1371 (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346–47 (2011)).
Nor does the plaintiff address the second factor, his lack of an opportunity to read or
become familiar with the Contract, in his response. Nevertheless, “[a] pro se litigant’s pleadings
are to be construed liberally and held to a less stringent standard than formal pleadings drafted by
lawyers,” Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991), and, so construed, there is an
argument in the plaintiff’s separate motion to strike the Clause that he was confused and under
pressure to obtain tires for his girlfriend. ECF No. 55 at 6. But “[a]bsent fraud or concealment, a
person who signs a document is presumed to have knowledge of the document’s contents,
independent of whether that person has read the document.” Breaux v. Am. Fam. Mut. Ins. Co.,
387 F. Supp. 2d 1154, 1162 (D. Colo. 2005). So it is here: regardless of the pressure the plaintiff
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faced, the plaintiff’s signature imputes to him knowledge of the Contract’s contents. See Levine
v. Vitamin Cottage Nat. Food Mkts., Inc., No. 20-CV-00261-STV, 2021 WL 4439800, at *17 (D.
Colo. Sept. 27, 2021) (citing Axis Venture Grp., LLC v. 1111 Tower, LLC, No. 09-CV-01636-
PAB-KMT, 2010 WL 1278306, at *4 (D. Colo. Mar. 30, 2010)). This factor, then, weighs
against an unconscionability finding.
As for the third factor, the plaintiff asserts that the Clause was buried in the Contract and
in fine print. ECF No. 55 at 6; ECF No. 58 at 1. It was not. The Contract’s font size is the same
throughout, see ECF No. 51-3 at 8–11, and the Clause was “in normal print consistent with other
clauses in the contract,” weighing against finding it unconscionable. Rocky Mountain Chocolate
Factory, Inc. v. SDMS, Inc., No. 06-cv-01212-WYD-BNB, 2007 WL 4268962, at *7 (D. Colo.
Nov. 30, 2007). Indeed, the Clause spans three pages of questions and answers, ECF No. 51-3 at
8–11, evincing no attempt to hide the ball. Accordingly, this factor weighs against finding that
the Clause is unconscionable.
The plaintiff’s arguments on factors four and five, the substantive-unconscionability
factors, focus on his lawsuit’s principal grievances: unauthorized withdrawals, the changing of
payment terms, and the defendant’s inflexibility. But when faced with an agreement to arbitrate,
“a court is not to rule on the potential merits of the underlying claims.” AT&T Techs., Inc. v.
Commc’ns Workers of Am., 475 U.S. 643, 649 (1986). Moreover, the arguments are far afield
from the relevant inquiry here for the fourth factor — whether the Clause was unreasonable or
uncommon in rent-to-own contracts. See Jajack v. N.Y. Life Ins. Co., No. 20-CV-01590-MEH,
2020 WL 8269316, at *5 (D. Colo. Dec. 28, 2020). Accordingly, the fourth factor weighs against
finding that the Clause is unconscionable.
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Nor do the plaintiff’s arguments bear on the fifth factor of the Clause’s unfairness. The
plaintiff adds an allusion to his financial circumstances in his motion to strike, ECF No. 55 at 6,
but the Clause provides that the defendant will front the cost of arbitration, albeit with some
potential for repayment if the plaintiff does not prevail in arbitration. ECF No. 51-3 at 11. As
such, from a financial standpoint, the Clause is not unfair. See Jajack, 2020 WL 8269316, at *5–
6 (concluding that defendant’s “acceptance of responsibility for the full arbitration fee” mooted
argument relating to substantive unfairness). To the extent the plaintiff asserts unfairness because
the Clause precludes a jury trial, see ECF No. 55 at 7, “arbitration ‘necessarily waives jury trial,’
[and a] conclusion that this case [is] properly referred to arbitration undercuts [an] objection
that” a party is “wrongly denied a jury trial.” Hicks v. Cadle, 436 F. App’x 874, 879 n.2 (10th
Cir. 2011) (quoting Harington v. Atl. Sounding Co., 602 F.3d 113, 126 (2d Cir. 2010)).
Accordingly, the fifth factor weighs against finding that the Clause is unconscionable.
As for the sixth factor, the factors of assent, unfair surprise, and notice all weigh in the
defendant’s favor. Assent, for example, is demonstrated by the plaintiff’s signed initials
throughout the Contract and signature at the end of the Contract. ECF No. 51-3 at 1–12. There
was no unfair surprise in the Clause: the pressure to obtain tires for his girlfriend does not make
the three-page Clause a surprise. Indeed, regardless of whether the plaintiff reviewed the
Contract before signing it, he had sixty days thereafter to opt out of the Clause. ECF No. 51-3 at
11. Notice, then, also weighs in the defendant’s favor. The plaintiff protests that he did not
receive an email alerting him of his approval or a clearer explanation of the defendant’s
involvement, ECF No. 55 at 5, but he points to nothing requiring such an alert or elaboration for
notice to be sufficient. Accordingly, this factor weighs against finding that the Clause is
unconscionable.
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The seventh and final factor “is a catchall that allows for consideration of all of the
factors surrounding formation of the contract.” Nesbitt, 74 F. Supp. 3d at 1372. The plaintiff
argues that the Clause had to be in a separate document, but “there is no legal requirement that
the [arbitration] provision be a stand-alone document.” McCoy v. Cintas, Inc., No. 1:13-CV-134,
2013 WL 2620201, at *3 (S.D. Ohio June 11, 2013). Accordingly, the seventh factor weighs
against finding that the Clause is unconscionable.
In sum, the plaintiff failed to demonstrate that the Clause is unconscionable. The first
element is satisfied.
The plaintiff pivots. The Contract itself, he says, is invalid because it charges a usurious
interest rate, omitted a disclosure of a 50.7% annual percentage rate, came from a company
operating without a proper license, and was accompanied by the conduct of withdrawing funds
from his account without prior approval. ECF No. 58 at 1–8. But “a challenge to the validity of
the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator,”
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 449 (2006), and “a court is not to rule
on the potential merits of the underlying claims.” AT&T, 475 U.S. at 649. Accordingly, the
plaintiff must address these concerns with the arbiter.
As to the second element, whether the Clause binds the parties and covers this case, the
Contract is between the parties, and the Clause defines “disputes” as having the “broadest
possible meaning.” Such a definition allows for the “presumption of arbitrability” to apply here,
AT&T Techs., 475 U.S. at 650; see ARW Expl. Corp. v. Aguirre, 45 F.3d 1455, 1462 (10th Cir.
1995), and the disputes at issue here appear to arise directly out of the Contract. Nor does the
plaintiff contend otherwise. Accordingly, the second element is satisfied.
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If both elements are satisfied, then section 3 of the FAA obligates courts to stay litigation
on matters that the parties have agreed to arbitrate. 9 U.S.C. § 3. As the parties have a valid and
enforceable Clause that encompasses the plaintiff’s claims, the Court must stay this action
pending arbitration. See id. But given that administrative closure is “the practical equivalent of a
stay,” Quinn v. CGR, 828 F.2d 1463, 1465 n.2 (10th Cir. 1987), the Court recommends
administrative closure.
That addresses the issues properly before the Court.
The plaintiff submits additional argument in two proposed surreplies, ECF Nos. 62, 82,
but courts generally permit a surreply only when a party includes new material for the first time
in a reply brief. Green v. New Mexico, 420 F.3d 1189, 1196 (10th Cir. 2005). The defendant did
not do so. And the plaintiff’s proposed surreplies, ECF No. 62 at 3; ECF No. 82 at 3, simply seek
to bolster his earlier arguments. There is no reason, then, to permit them here.
Moreover, as the Court has explained previously, see ECF Nos. 23, 27, pursuant to
D.C.COLO.LCivR 7.1(a), the moving party must “confer or make reasonable, good faith efforts
to confer with any opposing counsel or unrepresented party to resolve any disputed matter”
before filing a motion. The plaintiff did not do so: indeed, his Local Rule 7.1(a) certification
referenced a conferral occurring before the defendant’s reply was ever filed. This cannot suffice
for conferral as to whether a surreply should be permitted. As such, the Court does not consider
the plaintiff’s surreplies.
CONCLUSION
For the foregoing reasons, the Court
1. 	RECOMMENDS that the Motion to Compel Arbitration, ECF No. 51, be
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GRANTED and that the case be ADMINSTRATIVELY CLOSED;
2. 	ORDERS that the Motion to Strike the Arbitration Agreement, ECF No. 55, be
DENIED;
3. 	ORDERS that the Plaintiff’s Motion for Leave to File Supplemental Brief in Support
of Plaintiff’s Response to Defendant’s Motion to Compel Arbitration, ECF No. 62, be
DENIED; and
4. 	ORDERS that the Plaintiff’s Motion for Leave to File Sur-Reply to Defendant’s
Reply in Support of Motion to Compel Arbitration, ECF No. 82, be DENIED.1
Respectfully submitted this 17th day of November, 2025, at Denver, Colorado.
BY THE COURT:
____________________________________
Cyrus Y. Chung
United States Magistrate Judge
1 Be advised that all parties shall have fourteen days after service hereof to serve and file any
written objections in order to obtain reconsideration by the District Judge to whom this case is
assigned. Fed. R. Civ. P. 72. The party filing objections must specifically identify those findings
or recommendations to which the objections are being made. The District Court need not
consider frivolous, conclusive, or general objections. A party’s failure to file such written
objections to proposed findings and recommendations contained in this report may bar the party
from a de novo determination by the District Judge of the proposed findings and
recommendations. United States v. Raddatz, 447 U.S. 667, 676–83 (1980); 28 U.S.C. §
636(b)(1). Additionally, the failure to file written objections to the proposed findings and
recommendations within fourteen days after being served with a copy may bar the aggrieved
party from appealing the factual findings and legal conclusions of the Magistrate Judge that are
accepted or adopted by the District Court. Duffield v. Jackson, 545 F.3d 1234, 1237 (10th Cir.
2008) (quoting Moore v. United States, 950 F.2d 656, 659 (10th Cir. 1991)). Finally, all parties
must consult and comply with the District Judge’s practice standards for any specific
requirements concerning the filing and briefing of objections.
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