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Swan v. Santander Consumer Usa

United States District Court, D. Maryland

March 17, 2015

DREKA SWAN, et al., Plaintiffs,
v.
SANTANDER CONSUMER USA, Defendant.

MEMORANDUM OPINION

PETER J. MESSITTE, District Judge.

Dreka Swan and Melinda Hairston ("Plaintiffs") have sued Santander Consumer USA ("Santander") for violating the notice requirements of the Credit Grantor Closed End Credit provisions of Maryland Commercial Law Code section 12-1021; for breach of contract; for seeking deficiencies from defaulting borrowers in violation of Maryland Commercial Law Code section 12-1018; and for violating provisions of the Maryland Consumer Debt Collection Act, Maryland Commercial Law Code section 14-202. Plaintiffs seek to represent a class of all Maryland residents whose cars were repossessed by Santander on or after May 1, 2011. Plaintiffs have filed a Motion to Remand to State Court, ECF No. 10, which Santander opposes. Santander has also filed a Motion to Compel Non-Class Arbitration and Stay Proceedings, ECF No. 5, which Plaintiffs oppose. For the following reasons, the Court DENIES Plaintiffs' Motion to Remand to State Court, and GRANTS Santander's Motion to Compel Non-Class Arbitration and Stay Proceedings.

A.

Factual and Procedural Background

Plaintiffs are a mother and daughter residing in Charles County who financed the purchase of a new car in 2008 from a Maryland auto dealer though CitiFinancial Auto Credit. Santander purchased the loan from CitiFinancial sometime in 2010 or 2011. Whether originated by Santander or purchased on a secondary market, Santander's business is to acquire security interests in cars such as the one purchased by Plaintiffs. Santander enforces its security interests by initiating and ordering repossession of the cars owned by buyers who default on their loans, and, in appropriate cases, by filing lawsuits in Maryland seeking deficiency judgments against borrowers following auction sales of the repossessed cars. Plaintiffs allege that in the course of its repossession process, Santander does not provide defaulting borrowers with complete and accurate notices of repossession or of sale, as required by Credit Grantor Closed End Credit provisions of Maryland Commercial Law Code section 12-1021 ("CLEC").

Plaintiffs made a number of monthly payments to CitiFinancial and Santander, but defaulted on the loan after the death of Ms. Swan's father. Plaintiffs allege that Santander repossessed the car, but did not send them prior notice of its intention to repossess the car, did not inform them of the location of the repossessed car, or the date and location of the auction sale, and failed to provide them with complete or accurate information about their rights of redemption.

After the car was sold at auction, Santander sent Plaintiffs a deficiency notice. But Plaintiffs allege that the deficiency notice fails to provide a complete accounting, and seeks to recover sums that are not allowed as a result of earlier notice violations. Plaintiffs allege that two years after the deficiency notice, Plaintiffs received a collection notice from Constar Financial Services LLC, but that the amounts itemized in the notice differed substantially from those set forth in Santander's earlier deficiency notice. The Complaint in this case is styled as a class action, and seeks judgment on behalf of Plaintiffs and all class members, defined as all Maryland residents whose cars were repossessed by Santander on or after May 1, 2011. See Compl. ¶ 20-26, ECF No. 2.

Plaintiffs originally filed the Complaint in the Circuit Court for Charles County, Maryland, against Santander. Santander removed the case to this Court on the basis of diversity jurisdiction under 28 U.S.C § 1332(d), as amended by the Class Action Fairness Act ("CAFA"). ECF No. 1. Within a few days, Santander filed its Motion to Compel Non-Class Arbitration and Stay Proceedings. ECF No. 5. Some ten days later, Plaintiffs filed their Motion to Remand to State Court, ECF No. 10, and the parties requested that the Court first rule on the Motion to Remand before accepting further briefing on the Motion to Compel Arbitration, ECF No. 11. The Court agreed to this request, ECF No. 12, held a hearing on the Motion to Remand, deferred ruling on the Motion to Remand, and directed the parties to submit briefing on the Motion to Compel Non-Class Arbitration and Stay Proceedings, ECF No. 21.

B.

The Court considers Plaintiffs' Motion to Remand.

CAFA confers jurisdiction on federal district courts with respect to alleged class actions in which a) the class comprises at least 100 members, 28 U.S.C. § 1332(d)(5)(B); b) any member of the class is a citizen of a state different from any defendant, 28 U.S.C. § 1332(d)(2)(A); and, c) the amount in controversy exceeds $5 million, exclusive of interest and costs, 28 U.S.C. § 1332(d)(2).

Plaintiffs do not contest that the parties are diverse for purposes of CAFA, [1] or that the class is comprised of over 100 members.[2] However, Plaintiffs contest that the amount in controversy exceeds $5 million. Plaintiffs' Complaint, however, does not allege a specific damages amount.[3]

In removing a class action based on diversity jurisdiction under CAFA, the party seeking to invoke federal jurisdiction must allege it in his notice of removal and, when challenged, demonstrate the basis for federal jurisdiction. See Strawn v. AT&T Mobility LLC, 530 F.3d 293, 298 (4th Cir. 2008). It is therefore Santander's burden to establish the jurisdictional amount by a preponderance of the evidence.[4]

To determine whether the jurisdictional minimum is satisfied, the district court looks to the aggregated value of class members' claims. Bartnikowski v. NVR, Inc., 307 F.Appx. 730, 734 (4th Cir. 2009). In Santander's Notice of Removal, Santander points out that, among their other claims, Plaintiffs allege a violation of the CLEC's notice requirements. Upon a violation of the CLEC, the civil penalties provisions of the CLEC provide that the credit grantor may not collect any interest, costs, fees and other charges, and may be required to forfeit three times the amount of those charges collected. See Def.'s Notice of Removal, ECF No. 1, at 3 (citing Md. Code Ann., Com. Law § 12-1018(a)(2), (b)). Santander represents that Plaintiffs incurred finance charges, fees, and costs of approximately $8500. See id. Santander argues that with at least 600 class members, and with these class members incurring finance charges, fees, and costs in an amount similar to the amount incurred by Plaintiffs, the amount of damages sought by Plaintiffs exceeds $5 million.[5] In an affidavit attached to Santander's Response in Opposition to the Motion to Remand, Santander revised its estimate upwards, representing that between May 1, 2011 and July 15, 2014, the number of Maryland residents whose cars were repossessed by or on behalf of Santander is approximately 15, 300, and that the average finance charge incurred on the accounts of Maryland residents whose cars were repossessed by Santander in that time frame was approximately ...


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