JACQUELINE GALLOWAY, on her own behalf and on behalf of all others similarly situated, Plaintiff - Appellant,
SANTANDER CONSUMER USA, INC., Defendant - Appellee
January 28, 2016.
from the United States District Court for the District of
Maryland, at Baltimore. (1:13-cv-03240-CCB). Catherine C.
Blake, Chief District Judge.
Lev Zajdel, Z LAW, LLC, Reisterstown, Maryland, for
John Brener, LECLAIRRYAN, Newark, New Jersey, for Appellee.
von Diezelski, LECLAIRRYAN, Annapolis, Maryland, for
TRAXLER, Chief Judge, and AGEE and WYNN, Circuit Judges.
Chief Judge Traxler wrote the majority opinion, in which
Judge Agee joined. Judge Wynn wrote a dissenting opinion.
Galloway appeals a district court order dismissing her action
against Santander Consumer USA, Inc. seeking damages for
breach of contract and alleging a violation of the Maryland
Credit Grantor Closed End Credit Provisions (the "
CLEC" ), see Md. Code, Comm. Law § § 12-1001,
et seq. Finding no error, we affirm.
pertinent facts in this case are undisputed. Galloway used a
loan she obtained through a retail installment contract
(" the RISC" ) to finance her purchase of a vehicle
in March 2007. The CLEC governs the RISC's terms.
RISC contained the transaction's financing terms as well
as information concerning repossession rights and procedures.
It listed the total amount financed as $22,916.28 and
required Galloway to make 72 payments of $487.46 on the 17th
day of every month. If a payment or part thereof was more
than 15 days late, the RISC called for imposition of a late
fee of five dollars or ten percent of the part of the payment
that was late, whichever was greater. The RISC also included
a modification provision stating that " [a]ny change to
this contract must be in writing and we must sign it."
J.A. 20. The RISC was assigned to CitiFinancial Auto, Ltd.
(" CitiFinancial" ), which took a security interest
in the vehicle. Sometime before October 31, 2008, Galloway
contacted CitiFinancial requesting a reduction in the amount
of her monthly loan payment. The CitiFinancial representative
with whom Galloway spoke told her that CitiFinancial would
send her paperwork to review and sign and that, once she
returned the signed papers, the company would consider
whether to approve her request. Galloway stated that
CitiFinancial told her they would notify her in writing
concerning whether her request had been approved.
then provided Galloway with a cover page and a two-page
document. The cover page asked that she " review the
attached documents and provide the signature(s)
required." J.A. 25. It requested that after she signed
the paperwork, she " return [it] to CitiFinancial Auto
for further review, approval and consideration." J.A.
25. It also requested that she " retain a copy of this
agreement for [her] records." J.A. 25.
remaining pages constituted an amended agreement (the "
Amended Agreement" ). Under its terms, the Amended
Agreement would take effect on October 31, 2008;
Galloway's total amount due would be $20,213.50; her
monthly payment would be reduced from $487.46 to $365.57; her
first payment would be due December 14, 2008; and her last
(and seventy-second) payment would be due on November 14,
2014. The Amended Agreement also included an arbitration
agreement (the " arbitration agreement" ) under
which Galloway, CitiFinancial, and CitiFinancial's
assignees, could elect to arbitrate any dispute, "
whether in contract, tort or otherwise," rather than
proceed through a court action. J.A. 26-27. The
arbitration agreement also prohibited Galloway from serving
as a class representative or participating in a class action
if arbitration was elected. Finally, the Amended Agreement
provided that " all terms and provisions of the [RISC]
shall remain in full force and effect except as expressly
modified herein." J.A. 26.
signed the Amended Agreement on November 12, 2008, and sent a
copy of the signed agreement to CitiFinancial via fax.
record does not reflect that CitiFinancial ever specifically
sent Galloway written approval of the Amended Agreement.
Nevertheless, Galloway states in her declaration that "
sometime after November 14, 2008, CitiFinancial lowered [her]
scheduled monthly payments to $366.43," J.A. 17, an
amount just 86 cents more than the amount contemplated in the
Amended Agreement. Galloway immediately began making monthly
payments of $366.43 beginning December 13, 2008, and
continued to make payments in that amount for several years.
declaration, Galloway states that it was an " agreement
between [her] and CitiFinancial entered into sometime after
November 14, 2008" that lowered her payment amount from
$487.46 to $366.43. J.A. 17. However, the record contains no
evidence of any specific discussions between Galloway and
CitiFinancial explaining or addressing the 86-cent
discrepancy. And Galloway's declaration asserts that the
agreement that " lowered [her] payments to $366.43 each
month was not evidenced by a writing." J.A. 17.
December 2011, CitiFinancial assigned the security interest
in Galloway's vehicle to Santander Consumer USA, Inc.
After Galloway fell behind on her payments, Santander
repossessed her car, sold it, and, after failing in its
attempts to collect the outstanding deficiency, waived the
subsequently brought this action in state court, alleging
that Santander breached the RISC and violated the CLEC by
failing to provide sufficient notice before selling her
vehicle. Galloway purports to bring suit on behalf of herself
and all persons similarly situated. Santander removed the
case to federal district court. Santander also filed a motion
to compel arbitration and stay federal district court
proceedings under the Federal Arbitration Act ("
FAA" ), 9 U.S.C. § § 1 et seq., claiming
Galloway had previously agreed to arbitrate any disputes
concerning her loan. Galloway denied that the parties had an
agreement to arbitrate and alternatively claimed that any
arbitration agreement was unenforceable under the FAA because
it was not in writing. Galloway also moved to amend her
complaint, and Santander opposed the motion on the basis that
amendment would be futile.
a summary-judgment-like standard, the district court
concluded as a matter of law that Galloway had agreed to
arbitration and that the agreement to arbitrate was
enforceable under the FAA. See Galloway v. Santander
Consumer USA, Inc., Civ. No. CCB-13-3240, 2014 WL
4384641 (D. Md. Sept. 3, 2014). The district court analyzed
several alternative legal theories offered by Santander as
support for its position that the parties agreed to
arbitration. The court concluded that CitiFinancial's
sending the Amended Agreement to Galloway was a mere
invitation for Galloway to make an offer because the company
retained the right at that time to reject Galloway's
refinancing application even if Galloway signed the
agreement. See Id. at *3. However, the court
concluded that Galloway's returning a copy of the
executed agreement constituted an offer to enter into the
agreement and that CitiFinancial accepted that offer by
reducing her monthly payment to only 86 cents more than the
agreement had called for. See id.
the court concluded that CitiFinancial's proposal to
reduce the payment to $366.43 constituted a counteroffer to
make a minor modification to the dollar amounts in the
Amended Agreement, which Galloway accepted by making the
payments in the amount requested for several years without
objection. See id. The district court rejected Galloway's
argument that no new contract was formed because
Galloway's returning a signed original of the Amended
Agreement to CitiFinancial and CitiFinancial's written
assent were both conditions precedent to modifying the RISC.
See Id. at *4. The district court concluded that the
parties waived any right they may have had to such
formalities by virtue of their performance under their new
agreement. See id. The court added that, under the doctrine
of equitable estoppel, Galloway could not disclaim the
Amended Agreement, having accepted the benefit of the
agreement in the form of reduced monthly payments. See id.
determined that the parties bound themselves to the terms of
the Amended Agreement, or at least to the terms of the
Amended Agreement with the slightly modified payment amount,
the court concluded that the written arbitration agreement
was enforceable under the FAA. See Id. at *3
n.4. On that basis, the court initially granted
Santander's motion to compel arbitration and stayed the
case pursuant to 9 U.S.C. § 3. See Id. at *5.
However, on reconsideration, the court, citing Choice
Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc.,
252 F.3d 707, 709-10 (4th Cir. 2001), entered a final
judgment dismissing the case so as to allow Galloway to
pursue an immediate appeal.
We review de novo the district court's judgment
compelling arbitration, as well as any questions of state
contract law concerning the validity of the arbitration
agreement." Santoro v. Accenture ...