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Ware v. Santander Consumer Usa, Inc.

United States District Court, S.D. West Virginia, Huntington Division

September 29, 2017

JEFFERY WARE, individually and in his capacity as Administrator of the Estate of LAURANNA WARE, Plaintiff,
SANTANDER CONSUMER USA, INC., a Texas corporation, Defendant.



         Pending before the Court is Defendant Santander Consumer USA Inc.'s Motion for Partial Summary Judgment (ECF No. 62), and a Motion to File Surreply by Plaintiff Jeffrey Ware, Individually and in his capacity as Administrator of the Estate of Lauranna Ware. ECF No. 89. For reasons appearing before the Court, the Court GRANTS Plaintiff's motion and, for the following reasons, the Court GRANTS, IN PART, Defendant's motion.


         This action was filed by Plaintiff and his mother Lauranna Ware on April 9, 2015.[1] In the Complaint, Plaintiff asserts he and his mother obtained a $19, 000 loan to purchase a vehicle around September 2007 from Citifinancal Auto Credit, Inc. (Citifinancial).[2] Defendant later acquired the loan and the servicing rights from Citifinancial in or around 2010. In the Complaint, Plaintiff claims, inter alia, that Defendant repeatedly charged illegal late fees in excess of $15.00 and charged fees within the ten-day statutory grace period.[3]

         Initially, Defendant filed a Motion to Dismiss or to Compel Arbitration pursuant to 9 U.S.C. § 3. ECF No. 7. In its motion, Defendant asserted Plaintiff was bound by an arbitration provision contained in a Modification Agreement for the loan. However, this Court denied Defendant's motion on December 10, 2015, finding Defendant failed to establish the parties ever entered into the Modification Agreement. Ware v. Santander Consumer USA, Inc., Civ. Act. No. 3:15-4285, 2015 WL 8492762 (Dec. 10, 2015).

         In its current motion, Defendant now argues the original loan documents contained an enforceable arbitration agreement. Defendant concedes, however, that the documents containing the arbitration provision cannot be found by either party. Nevertheless, Defendant argues it can prove through extrinsic evidence that the original loan documents contained an arbitration provision. In support, Defendant attached a Declaration of James Hart. ECF No. 62-10.

         In his Declaration, Mr. Hart states he has worked for Defendant since 2010 and currently serves as the Senior Vice President of Call Center Operations. Prior to that time, he was employed by Citifinancial, and he worked as its Director of Operations. Based upon his experience, Mr. Hart asserts he is familiar with Citifinancial's records and practices during the time Plaintiff originated his loan. He further states that, based upon his personal knowledge and review of Defendant's business records relating to Plaintiff's loan and other loans made in West Virginia, it was Citifinancial's regular practice to use “Form Contracts” containing Note and Security Agreements. Mr. Hart contends that the Form Contracts given to consumers contained “substantially identical arbitration provisions, class action waivers, and choice of law provisions selecting either Texas or Nevada law.” Decl. of James Hart, at ¶ 8.[4]

         Based upon his experience and review of the documents related to Plaintiff's loan, Mr. Hart asserts Plaintiff and his mother “would have had to execute a Form Contract as part of the process for obtaining their loan, and that the Form Contract would have included an arbitration provision, class action waiver, and Nevada choice of law provision.” Id. at ¶12. According to Mr. Hart, Plaintiff's Form Contract would have contained the following arbitration provision:

ARBITRATION: This arbitration provision significantly affects your rights in any claim or dispute with us. Please read this arbitration provision carefully, before signing and negotiation your Check.
Either you or we may choose to have any dispute between you and us, except as provided below, decided by arbitration. If arbitration is chosen, you and we will each give up the right to a trial by the court and/or a jury trial. If arbitration is chosen, you may not serve as a class representative or participate as a class member in any class action against any party entitled to compel arbitration under this provision.
Any claim or dispute, except as provided below, whether in contract, tort or otherwise (including, without limitation, interpretation and the scope of this provision, the arbitrability of any issue and matters relating to the consummation, servicing, collection or enforcement of this loan) between you and us or our employees, agents, successors or assigns which arise out of or relate to this loan or any resulting transaction or relationship including any such relationship with third parties who do not sign the Check shall, at your or our election (or the election of any such third party) be resolved by neutral binding arbitration and not by court action. Any claim or dispute is to be arbitrated on an individual basis and not as a class action and you expressly waive rights you may have to arbitrate a class action. The Federal Arbitration Act governs this arbitration provision.
. . . This Arbitration provision is binding upon and inures to the benefit of our respective heirs, successors and assigns.

Id. at ¶13 (ellipsis in Mr. Hart's Declaration).

         Although an executed copy of the Note and Security Agreement cannot be located in Plaintiff's case, Defendant attached a letter it sent to Plaintiff and his mother congratulating them on being approved for their auto loan. The letter details the amount of the loan, the term of the loan, and the interest rate. Ltr. from Citifinancial to Lauranna and Jeffery Ware (June 29, 2007), ECF No. 62-2. The letter also specifically provides that a borrower's “endorsement of the Check indicates agreement with the Note and Security Agreement included herein. . . . [and the] Check will not be activated until all of the Conditions for Approval set forth in this package have been met and verified. . . . Citifinancial Auto will only activate one Check, subject to the terms and conditions stated.” Id. In addition, Defendant submitted a copy of the Check used to pay for the vehicle. The front of the Check specifically states, in part, that “[b]y endorsing, using, or accepting the proceeds of this Check, I, the Borrower(s) . . . agrees to the terms of the Note & Security Agreement (including . . . the Arbitration Provision)[.]” Check, ECF No. 62-3. Immediately beside this language, appears the signatures of Plaintiff and his mother. Id. Defendant also attached to its motion the Security Agreement for State Specific Titling Requirements, which Plaintiff and his mother both signed. This document ...

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