Antonia Rota-McLarty v. Santander Consumer USA, Incorporated
2012 U.S. App. LEXIS 24447
| 4th Cir. | 2012Background
- Rota-McLarty, Maryland resident, purchased a used car from Easterns; Santander is the successor to the original lender and took over litigation.
- Two contracts: a Buyer’s Order containing an arbitration clause and a Retail Installment Sale Contract (RISC) with no arbitration provision but an integration clause; the RISC was assigned to Santander.
- Rota-McLarty returned the car; Santander sought collection after repossession and sale at a loss.
- Rota-McLarty filed a Maryland consumer-protection class action; Santander removed to federal court and a bifurcated discovery plan was adopted.
- Santander moved to compel non-class arbitration and stay proceedings, citing Stolt-Nielsen; the district court denied, applying MUAA and reading the two contracts together.
- Issue on appeal: whether the FAA applies, whether a valid arbitration agreement exists, and whether Santander waived its arbitration right.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FAA apply to the transaction? | Rota-McLarty argues intrastate basis; MUAA governs. | Santander contends the transaction involves interstate commerce and FAA applies. | FAA applies; interstate commerce basis shown. |
| Did a valid arbitration agreement exist between the parties? | Rota-McLarty contends integration clause in RISC prevents enforcing arbitration. | Santander argues Buyer’s Order and RISC read together create an enforceable arbitration agreement. | Arbitration agreement exists when Buyer’s Order and RISC are interpreted together. |
| Is Santander bound to arbitrate as assignee of the RISC? | Rota-McLarty asserts the assignee carve-out prevents Santander from enforcing arbitration. | Santander, as assignee of the RISC, falls within arbitration obligation. | Carve-out does not defeat Santander’s ability to compel arbitration as assignee. |
| Did Santander waive its right to arbitrate? | Santander delayed seeking arbitration and engaged in discovery, prejudicing Rota-McLarty. | Delay was short and not prejudicial; actions limited and not a default. | No waiver; arbitration should proceed. |
Key Cases Cited
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (U.S. 2010) (class arbitration requires contractual basis to compel; FAA applies)
- Maxum Founds., Inc. v. Salus Corp., 779 F.2d 974 (4th Cir. 1985) (no special showing of interstate activity required to trigger FAA; default standards)
- Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (U.S. 2003) (broad scope of interstate commerce and general impact on economy)
- Wheeling Hosp., Inc. v. Health Plan of the Upper Ohio Valley, Inc., 683 F.3d 577 (4th Cir. 2012) (appealability of FAA-related orders; focus on substance of motion)
- Fraser v. Merrill Lynch Pierce, Fenner & Smith, Inc., 817 F.2d 252 (4th Cir. 1987) (prejudice factor in default/waiver analysis)
- Patten Grading & Paving, Inc. v. Skanska USA Bldg., Inc., 380 F.3d 200 (4th Cir. 2004) (prejudice and delay considerations in arbitration-default analysis)
- Forrester v. Penn Lyon Homes, Inc., 553 F.3d 340 (4th Cir. 2009) (default/ prejudice framework in FAA context)
- Maxum Founds., Inc. v. Salus Corp., 779 F.2d 974 (4th Cir. 1985) (evidence burden for interstate nature not always required)
- Jaguar Land Rover North America, LLC v. Manhattan Imported Cars, Inc., 738 F. Supp. 2d 640 (D. Md. 2010) (integration clause interpretation; reading contracts together)