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Graham v. Santander Consumer USA, Inc.

United States District Court, D. Maryland

June 1, 2018

Troy Graham
Santander Consumer USA, Inc.,


          Catherine C. Blake United States District Judge

         The plaintiff, Troy Graham, has filed a class action lawsuit against the defendant, Santander Consumer USA, Inc., (“Santander”), alleging that Santander violated Maryland's Credit Grantor Closed End Credit provisions. Santander now moves to compel non-class arbitration of the dispute as provided in the parties' underlying contract, and has asked the court to seal several of its filings. For his part, Graham has filed a motion to strike and a motion under Fed.R.Evid. 106.[1] For the reasons stated below, Santander's motion to compel arbitration will be granted, but its motions to seal, and each of Graham's motions, will be denied.


         This dispute arises from two financing agreements used by Graham to purchase a 2008 Dodge Avenger-a Buyer's Order and a Retail Installment Sales Contract (“RISC”)-from Darcars of Auth Way Inc., (“Darcars”).[2] (Mot. to Compel, ECF No. 9, Nightengale Decl., Exs. A, B). After Darcars assigned these agreements to Santander, (Nightengale Decl. at ¶ 4), Graham defaulted on his monthly payments in breach of the RISC, prompting Santander to repossess the Dodge Avenger in November 2013. (Am. Compl., ECF No. 20, at ¶¶ 38, 43, 49). Three years later, Santander assigned its rights to any monetary claim on Graham's debt to NCB Management services. (Def.'s Reply, ECF No. 26, Nightengale Decl., Ex. A, ¶ 2.1).

         On September 22, 2017, Graham filed a class-action complaint in Maryland state court alleging that Santander violated the Maryland Credit Grantor Closed End Credit Provisions (“CLEC”), Md. Code Comm. Law § 12-1001 et seq. (Id. at ¶¶ 76-89). The complaint alleged that four classes of consumers have been harmed by Santander: (1) those charged a convenience fee; (2) those who had their vehicles repossessed and were charged a storage fee to redeem personal property; (3) those who had their vehicles repossessed and were required to pay a different fee to redeem personal property; and (4) those who had their vehicles repossessed and did not receive a timely redemption notice. (Id. at ¶ 60).

         Santander removed the case to federal court in October 2017. (ECF No. 1). Since then, Santander moved to compel non-class arbitration under the Buyer's Order and RISC, (ECF No. 9), and to seal several filings, (ECF Nos. 27, 31, 33, 50), and Graham filed a motion to strike a portion of Santander's reply to Graham's opposition to the motion to compel, (ECF No. 29), and filed a motion to compel Santander to provide additional evidence, (ECF No. 48).

         Standard of Review

          “Motions to compel arbitration exist in the netherworld between a motion to dismiss and a motion for summary judgment” and “[w]hether the motion should be treated as a motion to dismiss or a motion for summary judgment turns on whether the court must consider documents outside the pleadings.” PC Const. Co. v. City of Salisbury, 871 F.Supp.2d 475, 477-78 (D. Md. 2012); see also Iraq Middle Mkt. Dev. Found. v. Harmoosh, 848 F.3d 235, 241-42 (4th Cir. 2017) (adopting the summary judgment standard used by the district court). Because the court will consider documents outside the pleadings, Santander's motion to compel will be reviewed under the summary judgment standard.

         Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a) (emphases added). “A dispute is genuine if ‘a reasonable jury could return a verdict for the nonmoving party.'” Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012)). “A fact is material if it ‘might affect the outcome of the suit under the governing law.'” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Accordingly, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment[.]” Anderson, 477 U.S. at 247-48. The court must view the evidence in the light most favorable to the nonmoving party, Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (per curiam), and draw all reasonable inferences in that party's favor, Scott v. Harris, 550 U.S. 372, 378 (2007) (citations omitted); see also Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 568-69 (4th Cir. 2015).


         Santander's motions will be granted in part and denied in part. Its motion to compel arbitration will be granted because a binding arbitration agreement exists between the parties, but its motions to seal will be denied because Santander has not shown that redaction would not just as well serve its needs. Graham's motions will be denied. He has not shown that he has been prejudiced by any new arguments raised in Santander's reply nor has he shown that compelling the introduction of additional evidence is necessary to avoid unfairness.

         I. Motion to Compel Arbitration Agreement

         Graham opposes Santander's motion to compel on three grounds: (1) neither Santander specifically, nor an assignee generally, was named in the contract; (2) the arbitration agreement is not enforceable by an assignee; and (3) even if Santander could enforce the contract, and even if the arbitration agreement could be enforced by an assignee, Santander assigned away its right to arbitration.[3]

         Both parties agree that their dispute is governed by the Federal Arbitration Act, a statute that permits “[a] party aggrieved by [an] alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration . . . [to] petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. Four elements must be satisfied before applying the FAA: “(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of [a party] to arbitrate the dispute.” Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 84 (4th Cir. 2016) (internal quotation marks omitted). The parties only dispute the existence of the second element-whether the arbitration agreement is a term of the contract between Graham and Santander. To answer that question, the court must consider Maryland contract law. Id. at 85.

         A. Assignment

         First, Santander cannot enforce the arbitration agreement, according to Graham, because it was not a party to the original agreement. But Graham's view is fatally undermined by the assignment of Darcars' rights to Santander. An assignment allows a third party to “stand in the shoes” of an original party to the contract, Miller v. Pacific Shore Funding, 224 F.Supp.2d 977, 996 (D. Md. 2002) (applying Maryland law), “transfer[ing] all interests in the property from the assignor to the assignee, ” Roberts v. Total Health Care, Inc., 709 A.2d 142, 148 (Md. 1998). Thus, in effect an assignment replaces the name of the assignor in the contract with that of the assignee, removing any need for a contract to anticipate an assignee by, for example, specifically naming him as a ...

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