Polanco v. Spartan Auto Group LLC d/b/a Victory Mitsubishi
Joel S. Polanco, et al. v. Spartan Auto Group LLC d/b/a Victory Mitsubishi, et al.
- Lewis Liman
- 1:25-cv-02410
- U.S. District Court · Southern District of New York
- 12
In Polanco v. Spartan, Judge Liman granted arbitration of Plaintiffs’ claims against the Spartan Defendants but denied arbitration against Capital One.
The plaintiffs’ claims against Spartan Auto Group LLC and the Spartan Individual Defendants were ordered into arbitration. Capital One was not required to arbitrate under the sales contract.
What happened
Joel S. Polanco and Mauricio A. Balbuena Jiminez sued Spartan Auto Group LLC, its employees, and Capital One over the financing and repossession of a vehicle and related credit-report inquiries. The Spartan Defendants asked the court to require arbitration under the sales contract, and the plaintiffs joined that request as to all parties. Capital One opposed arbitration.
Judge Liman found that the plaintiffs and Spartan had agreed to an arbitration provision covering disputes related to the vehicle purchase and contract. That provision also covered claims against Spartan’s employees and agents. But Capital One did not sign the contract, did not accept its assignment, and did not receive a direct benefit from it, so the court found no basis to require Capital One to arbitrate.
In Joel S. Polanco, et al. v. Spartan Auto Group LLC d/b/a Victory Mitsubishi, et al., Judge Lewis J. Liman granted the motion to compel arbitration as to the plaintiffs’ claims against the Spartan Defendants and denied it as to Capital One.
The detailed version
- Polanco v. Spartan Auto Group LLC d/b/a Victory Mitsubishi · No. 1:25-cv-02410
- Lewis Liman
- Nov. 6, 2025
Background
Plaintiffs Joel S. Polanco and Mauricio A. Balbuena Jiminez purchased a used vehicle from Spartan Auto Group LLC d/b/a Victory Mitsubishi on credit and signed a Retail Installment Sales Contract. Their amended complaint asserted claims under the Fair Credit Reporting Act, the Truth in Lending Act, and the Equal Credit Opportunity Act, along with claims for common-law fraud and conversion and violations of the Uniform Commercial Code and New York General Business Law § 349.
The complaint alleged that Spartan attempted to assign the sales contract to Capital One, but Capital One did not accept the assignment. It also alleged that Spartan obtained credit reports, demanded new deal documents, sought return of the vehicle, and caused the vehicle to be seized. The Spartan Defendants moved under Section 4 of the Federal Arbitration Act to compel arbitration and stay the proceedings. The plaintiffs joined the motion as to all parties. Capital One opposed the motion as to itself.
Arbitration Agreement with the Spartan Defendants
The sales contract contained an arbitration provision allowing either side to require arbitration of disputes arising from or relating to the credit application, vehicle purchase, vehicle condition, contract, or resulting relationship. The provision also covered disputes involving the seller’s employees and agents and barred class arbitration.
The court determined that the plaintiffs and Spartan were parties to the arbitration provision and that the plaintiffs’ claims against Spartan and the Spartan Individual Defendants fell within its scope. The court therefore granted the motion to the extent Spartan sought to arbitrate all claims against it and the Spartan Defendants.
Capital One
Capital One was not a signatory to the sales contract. Although the contract stated that the seller assigned its interest to Capital One Auto Finance, the court held that Spartan’s unilateral statement could not impose contractual obligations on Capital One. The evidence showed that Capital One did not accept the assignment, did not agree to succeed to Spartan’s rights and obligations, and had not received payments or held a security interest or other ongoing legal or financial interest in the vehicle.
The Spartan Defendants also argued that Capital One should be required to arbitrate under equitable estoppel, a doctrine that can sometimes bind a non-signatory that directly benefits from a contract containing an arbitration clause. The court rejected that argument because Capital One had not received a direct benefit traceable to the sales contract. The court therefore denied the motion to compel arbitration as to Capital One.
Disposition
The court’s conclusion states: “The motion to compel arbitration is GRANTED as to Plaintiffs and DENIED as to Capital One.” The Clerk of Court was directed to close the motion docket entry. The opinion does not state a separate disposition of the requested stay beyond these rulings. Judge Lewis J. Liman signed the order on November 6, 2025.
Read the full 12-page opinion on CourtListener, the free public archive maintained by the Free Law Project.