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Johnson v. Santander Consumer USA Inc.

United States District Court, D. Arizona

November 25, 2015

Eric Johnson, et al., Plaintiffs,
Santander Consumer USA Incorporated, Defendant.



Before the Court is Defendant Santander Consumer USA Inc.’s Motion to Compel Arbitration. (Doc. 11.) The issues are fully briefed, and neither party requested oral argument. For the reasons stated below, the motion is granted.


In October 2007, Plaintiffs Eric and Valerie Johnson purchased a vehicle and entered into a Retail Installment Sale Contract (“RISC”) with the dealer. (Doc. 17 at 3.)[1]The RISC contains a provision requiring arbitration of all disputes, including those based on “contract, tort, statute or otherwise (including the interpretation and scope of this clause, and the arbitrability of the claim or dispute) . . . which arise out of or relate to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship[.]” (Doc. 11 at 3.) It also provides that the Federal Arbitration Act (“FAA”) governs the provision. (Id.)

Thereafter, the dealer assigned the RISC to CitiFinancial Auto Credit, Inc. On March 15, 2010, Plaintiffs signed an Amendment Agreement (the “Amendment”) with CitiFinancial, which permitted Plaintiffs to make a reduced monthly installment payment on the loan. (Id.) Like the RISC, the Amendment contains an arbitration provision that provides, in relevant part:

“Any claim or dispute, except as provided below, whether in contract, tort or otherwise (including, without limitation, interpretation and the scope of the provision, the arbitrability of any issue and matters relating to the consummation, servicing, collection or enforcement of this contract or note) between you and us or our employees, agents, successors, or assigns which arise out of or relate to this contract or note or any resulting transaction or relationship . . . shall . . . be resolved by neutral, binding arbitration and not by court action . . . . The [FAA] governs this Arbitration Provision.

(Doc. 12-1 at 6.) In March 2011, CitiFinancial assigned the account to Santander for servicing. (Doc. 11 at 4; Doc. 17 at 3.)

In August 2012, Plaintiffs filed a lawsuit against Santander in Texas federal court alleging violations of the Telephone Consumer Protection Act. (Doc. 17 at 3.) The case was settled in January 2013. (Id.) As part of the settlement, Santander agreed to “pay-off the entire remaining balance on the [loan] and [ ] discharge Plaintiff from any and all payment obligations in connection with the [loan].” (Id.) In late 2014, Plaintiffs discovered that Santander reported the account to several credit reporting agencies (“CRAs”) as “charged-off” with an unpaid balance of $22, 469. (Id. at 4.) Plaintiffs disputed the report with the CRAs, but Santander confirmed the accuracy of the reports to the CRAs. (Id.)

On May 22, 2015, Plaintiffs filed an amended complaint in this Court alleging three causes of action: (1) breach of the settlement agreement for failing to pay off the underlying debt, (2) violation of the Fair Credit Reporting Act (“FCRA”) for failing to reasonably investigate Plaintiffs’ disputes, and (3) violation of FRCA for reporting inaccurate information. (Doc. 6.) Santander now moves for the Court to dismiss or stay this action and compel Plaintiffs to submit to binding arbitration. (Doc. 11.)


The FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an agreement has been signed.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in original). The court must compel arbitration where: (1) a valid agreement to arbitrate exists, and (2) the agreement encompasses the dispute at issue. Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). “Where a contract contains an arbitration clause, courts apply a presumption of arbitrability as to particular grievances, and the party resisting arbitration bears the burden of establishing that the arbitration agreement is inapplicable.” Wynn Resorts, Ltd. v. Atlantic–Pacific Capital, Inc., 497 F. App’x 740, 742 (9th Cir. 2012) (internal citations omitted); see also AT&T Mobility, LLC v. Concepcion, 563 U.S. ---, 131 S.Ct. 1740, 1745 (2011) (“We have described [§ 2 of the FAA] as reflecting . . . a ‘liberal federal policy favoring arbitration[.]’”).


Santander argues Plaintiffs’ claims must be arbitrated pursuant to the provisions in the RISC and the Amendment. Plaintiffs do not dispute that a valid agreement to arbitrate exists, nor do they dispute that the provision is governed by the FAA. Instead, they argue that their claims fall outside the scope of the arbitration agreement. The Court need not address this ...

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