Lyles v. Santander Consumer U.S. Inc.

1

JABARI MORESE LYLES v. SANTANDER CONSUMER USA INC

No. 1459-2023

Court of Special Appeals of Maryland

October 31, 2024

Circuit Court for Baltimore City Case No. 24-C-21-000061

Graeff, Tang, Eyler, Deborah S. (Senior Judge, Specially Assigned) JJ.

OPINION

GRAEFF, J.

This appeal arises from a class action complaint filed by Jabari Lyles, appellant, in the Circuit Court for Baltimore City against Santander Consumer USA Inc. ("Santander"), appellee. The complaint alleged breach of contract and violations of the Maryland Credit Grantor Closed End Credit Provisions ("CLEC"), Md. Code Ann., Com. Law ("CL") §§ 12-1001 to 1030 (2023 Supp.), in connection with Santander's practice of collecting convenience fees from customers. Santander filed a Motion to Compel Non-Class Arbitration and Stay the Action (the "Motion to Compel Arbitration"), which the circuit court granted.

On appeal, appellant presents three questions for this Court's review,^[1] which we have consolidated into the following question:

Did the court err in granting Santander's Motion to Compel Arbitration? For the reasons set forth below, we shall affirm the judgment of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

I. Vehicle Purchase

In October 2015, Mr. Lyles purchased a Ford Escape from Liberty Ford, a Maryland automobile dealership.^[2] Mr. Lyles and Liberty Ford each signed two documents: (1) an order that established the vehicle purchase terms ("Buyer's Order"); and (2) a Retail Installment Sales Contract (the "RISC"), which established the vehicle financing terms. The documents were signed on the same day as part of one transaction.

The Buyer's Order listed the unpaid cash balance of the vehicle purchase as $20,657. There were two signatories to the Buyer's Order, the "DEALER OR AUTHORIZED REPRESENTATIVE," Wendell Fisher, a Liberty Ford salesman, and the "PURCHASER," Mr. Lyles. The Buyer's Order did not refer to Santander, or any other assignee, and it did not contain any language indicating that the obligation established in the Buyer's Order may be assigned to a third party. The Buyer's Order, a one-page document, contained the following provision, in bold, directly above the signature line on the front page:

NOTICE: SEE REVERSE SIDE AND SEPARATE ARBITRATION AGREEMENT FOR IMPORTANT INFORMATION ON YOUR RIGHTS AS TO RESOLVING DISPUTES, CONTROVERSIES OR CLAIMS ARISING FROM THIS ORDER.

The back page of the Buyer's Order contained "Additional Terms and Conditions." Paragraph 18 of these terms and conditions stated that "[t]he above and reverse side along with other documents signed by Purchaser in connection with this Order comprise the entire agreement affecting this purchase, and no other agreement or understanding of any nature concerning same has been made or entered into will be recognized." Paragraph 7 stated, in bold print, as follows:

The parties irrevocably agree that any controversy, claim or dispute arising out of or related to the purchase or the financing of this vehicle including but not limited to this Purchase Agreement or the breach thereof shall be settled by binding arbitration, pursuant to the separate Agreement to Arbitrate Disputes. However, binding arbitration will not apply to the failure of the Purchaser to provide consideration including failure to pay a note, a dishonored check, failure to provide a trade title, or failure to pay a deficiency resulting from an additional payoff on a trade. In [ ] addition, binding arbitration will not apply to Dealer's right to retake possession of the vehicle. SEE SEPARATE ARBITRATION AGREEMENT ATTACHED HERETO AND INCORPORATED BY REFERENCE HEREIN FOR SPECIFIC DETAILS.

There is no record of a separate signed arbitration agreement between Lyles and Liberty Ford. Mr. Lyles stated that he was not presented with, and never signed, a separate arbitration agreement.

The standard Arbitration Agreement to Arbitrate Disputes (the "Separate Arbitration Agreement") allegedly used by Liberty Ford at the time of Mr. Lyles' vehicle purchase, however, stated that any disputes relating to the purchase or financing of the vehicle would be subject to binding arbitration. It provided:

Purchaser and Dealer agree that if any controversy, claim or dispute arise out of or relates to the purchase and/or financing of the vehicle, including any negotiations or applications for credit or other dealing or interactions with the Dealership, the controversy, claim or dispute will be resolved by binding arbitration by a single arbitrator under the applicable rules of the alternative dispute resolution of the American Arbitration Association, with that arbitrator rendering a written decision with separate findings of fact and conclusions of law. The arbitrator shall be a person involved in the retail automotive field having no less than five (5) years experience in such field, disinterested in this purchase, lease or financing transaction, not affiliated with the parties, and recognized as ethical and reputable.

The Separate Arbitration Agreement also specified that purchasers were waiving their right to a jury trial and class action consideration for any claims subject to arbitration:

THE PARTIES UNDERSTAND THAT THEY ARE WAIVING THEIR RIGHTS TO A TRIAL, INCLUDING BUT NOT LIMITED TO A JURY TRIAL AND CLASS CONSIDERATION OF ALL DISPUTES BETWEEN THEM NOT SPECIFICALLY EXEMPTED FROM ARBITRATION.

The RISC, which was signed the same day as the Buyer's Order, established the terms of the financing agreement for the vehicle. It provided that Mr. Lyles would make monthly loan payments in the amount of $503.52 for 72 months, for a total of $36,253.44. The RISC was signed by Mr. Lyles, the "Buyer," and Deer Automotive Group LLC, the "Seller-Creditor." The RISC stated that the seller "may assign this contract and retain its right to receive a part of the Finance Charge." Underneath the seller's signature, at the bottom of the first page of the document, the RISC stated: "Seller assigns its interest in this contract to SANTANDER CONSUMER USA (Assignee) under the terms of Seller's agreement(s) with Assignee."

The RISC also contained an integration clause, which provided, in relevant part, as follows:

This contract, along with all other documents signed by you in connection with the purchase of this vehicle, comprise the entire agreement between you and us affecting the purchase.^[3] No oral agreements or understandings are binding. Upon assignment of this contract: (i) only this contract and the addenda^[4] to this contract comprise the entire agreement between you and the assignee relating to this contract; (ii) any change to this contract must be in writing and the assignee must sign it; and (iii) no oral changes are binding.

Mr. Lyles signed directly under this provision. There is no mention of arbitration in the RISC.

Pursuant to the assignment provision of the RISC, Mr. Lyles made monthly payments to Santander. The complaint alleged that, as of December 2020, Mr. Lyles had paid a total of $27,029.67 on the loan, and Santander claimed that he still owed $15,603.54.

II. Complaint and Motion to Compel Arbitration

On January 11, 2021, Mr. Lyles filed the Class Action Complaint (the "Complaint") against Santander in the Circuit Court for Baltimore City, alleging breach of contract and violations of the CLEC due to Santander's practice of collecting convenience fees from customers who made loan payments "by phone through a live representative or through an automated system or through the internet." The named class members were all persons who entered into a RISC governed by the CLEC between October 15, 2015 and October 31, 2015, were charged a convenience fee by Santander between January 1, 2016 and January 15, 2016, and "from whom Santander collected more than the principal amount of the RISC." Mr. Lyles sought civil remedies under the CLEC, actual damages equal to the amount of the convenience fees collected, and an award of pre-judgment and postjudgment interest on all sums awarded.

On March 4, 2021, Santander filed a Notice of Removal to the United States District Court for the District of Maryland pursuant to the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d)(2). On March 5, 2021, Santander filed a Motion to Compel Non-Class Arbitration and Stay Action, and Mr. Lyles filed a motion to remand the case to state court. On April 17, 2023, the United States District Court issued an order remanding the case to the Circuit Court for Baltimore City, concluding that the amount in controversy did not meet the five million dollar threshold for diversity jurisdiction under CAFA,^[5] and denying Santander's motion to compel arbitration as moot.

Following remand to the circuit court, Santander filed a Motion to Compel NonClass Arbitration and Stay Action and Request for Hearing. Santander argued that because Mr. Lyles signed the Buyer's Order, which included a "clear and conspicuous Arbitration Provision" applying to "any controversy, claim or dispute arising out of or relating to the purchase or the financing of this vehicle" and expressly incorporated the Separate Arbitration Agreement, he could not "reasonably argue that he was unaware that he agreed" to binding arbitration. Santander further argued that "the fact that the arbitration provision is contained in the Buyer's Order and not the RISC is immaterial under Maryland" law, which holds that the two documents should be read together as the entire agreement between the parties under the integration clause. Santander asserted that, based on the terms of the Separate Arbitration Agreement and the arbitration provision in the Buyer's Order, Lyles was prohibited from pursuing class-wide claims and must resolve any claims...