Grant v. Santander Consumer USA, N.A.

Background

Jeffrey Grant challenged the manner in which defendants repossessed his car. Defendant PAR, Inc. moved to compel arbitration under an arbitration provision in Grant’s Retail Installment Sale Contract.

PAR acknowledged that it had no direct contract with Grant and was not a signatory to an arbitration agreement with him. PAR nevertheless argued that it could enforce the arbitration provision as Santander Consumer USA’s agent.

The contract identified Grant as a co-buyer and Daly City Mitsubishi as the seller-creditor. The contract allowed arbitration of claims between Grant and the seller-creditor, its agents, or its assigns. The parties submitted copies showing that Daly City Mitsubishi had assigned its interest in the contract to Santander Consumer USA.

Court’s Analysis

The court first rejected PAR’s agency argument. PAR’s agreement with Santander stated that PAR was an independent contractor and that the agreement did not create an agency relationship. The court also said that, even assuming PAR were Santander’s agent, the arbitration provision did not show that Grant agreed to arbitrate with an agent of Santander’s assignee. The court concluded that the contract’s plain language did not give PAR the right to enforce the provision against Grant.

The court also rejected PAR’s equitable-estoppel argument. Equitable estoppel can allow a nonsignatory to enforce an arbitration provision when the plaintiff’s claims against that nonsignatory depend on or are closely tied to the contract containing the provision. The court found that Grant’s claims against PAR and Daybreak Metro concerned whether the repossession was peaceful and lawful. The claims included claims under a California practices statute, California Commercial Code § 9609, and the common-law tort of conversion. The court concluded that these claims did not rely on the Retail Installment Sale Contract’s terms and were not dependent on or closely tied to its contractual obligations.

PAR also briefly argued in its reply brief that it was a third-party beneficiary of the arbitration agreement. The court said it did not need to consider an argument raised for the first time in a reply. It added that the argument failed on the merits because PAR had not shown that the parties intended the contract to benefit PAR.

Disposition

The court denied Defendant PAR, Inc.’s motion to compel arbitration, Docket No. 42. The order did not decide the merits of Grant’s underlying repossession claims.