Case Information
*0 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 1/21/2015 9:02:50 AM JEFFREY D. KYLE Clerk No. 03-14-00782-CV THIRD COURT OF APPEALS 1/21/2015 9:02:50 AM JEFFREY D. KYLE 03-14-00782-CV AUSTIN, TEXAS *1 ACCEPTED [3837772] CLERK ____________________________ IN THE THIRD COURT OF APPEALS AT AUSTIN, TEXAS
____________________________ SANTANDER CONSUMER USA, INC.
Appellant,
V .
MARIO A. MATA, CENTROPLEX AUTOMOBILE RECOVERY, INC.,
BLAKE THORNTON VANDUSEN, JOHN F. THOMPSON D / B / A CENTROPLEX AUTOMOBILE RECOVERY, INC., AND REDSHIFT
INVESTIGATION, INC.
Appellees. ____________________________ Appealed from the
353 rd Judicial District Court Travis County, Texas
Cause No. D-1-GN-13-000677 ____________________________ JOINT BRIEF OF APPELLEES ____________________________ *2 KAREN C. BURGESS State Bar No. 00796276 STACY ROGERS SHARP State Bar No. 24052109 Email: kburgess@richardsonburgess.com Email: ssharp@richardsonburgess.com Richardson + Burgess LLP 221 West 6 th Street, Suite 900 Austin, Texas 78701-3445 Telephone: (512) 482-8808 Facsimile: (512) 499-8886 ATTORNEYS FOR APPELLEES CENTROPLEX AUTOMOBILE RECOVERY, INC. AND JOHN F. THOMPSON
JOHN S. KENEFICK State Bar No. 24006294 Email: jkenefick@macdonalddevin.com JOHN R. SIGETY State Bar No. 24083853 Email: jsigety@macdonalddevin.com Macdonald Devin, PC 1201 Elm Street, Suite 3800 Dallas, Texas 75270-2130 Telephone: (214) 744-3300 Facsimile: (214) 747-0942 ATTORNEYS FOR APPELLEE BLAKE THORNTON VANDUSEN ii
CHRISTOPHER A. LOTZ State Bar No. 24031630 Email: clotz@lstlaw.com DAVID L. TREAT State Bar No. 20205300 Email: dlt@lstlaw.com Lindow ▪ Stephens ▪ Treat LLP One Riverwalk Place 700 North St. Mary’s Street, Suite 1700 San Antonio, Texas 78205 Telephone: (210) 227-2200 Facsimile: (210) 227-4602 ATTORNEYS FOR APPELLEE REDSHIFT INVESTIGATION INC. iii
TABLE OF CONTENTS TABLE OF CONTENTS ...................................................................................... iv
INDEX OF AUTHORITIES ................................................................................... v
STATEMENT OF THE CASE ............................................................................... 1
ISSUE PRESENTED ............................................................................................... 2
STATEMENT OF FACTS ...................................................................................... 2
SUMMARY OF THE ARGUMENT ..................................................................... 4
ARGUMENT ............................................................................................................ 5
I. Santander and Cross-Defendants have executed no arbitration agreement. ................................................................................................ 5 II. Cross-Defendants cannot be compelled to arbitrate under the agreement between Mata and Santander. .................................................................. 7 A. Arbitration cannot be compelled because Cross-Defendants are not parties to the Sale Contract. .......................................... 7 B. None of the exceptions that would allow nonsignatories to be compelled to arbitration applies here. ...................................... 9 III. Plaintiff never served the Centroplex Defendants, so only cross-claims exist against them, and Santander agrees those are not arbitrable. ....... 15 IV. The Court Should Award Reasonable Fees to Cross-Defendants. ........ 16 PRAYER ................................................................................................................. 18
CERTIFICATE OF COMPLIANCE .................................................................. 22
CERTIFICATE OF SERVICE ............................................................................ 22
APPENDIX ............................................................................................................. vi
iv *5 INDEX OF AUTHORITIES Cases
Bob Montgomery Chevrolet, Inc. v. Dent Zone Co. , 409 S.W.3d 181 (Tex. App.—
Dallas 2013, no pet.). ............................................................................................ 12
Bridas S.A.P.I.C. v. Gov’t of Turkm. , 345 F.3d 347 (5th Cir. 2003) .......... 10, 11, 14
Carr v. Main Carr Dev. , LLC , 337 S.W.3d 489 (Tex. App.—Dallas 2011, pet.
denied). .................................................................................................................. 11
E. Tex. Med. Ctr. Reg’l Healthcare Sys. v. Slack , 916 F. Supp. 2d 719 (E.D. Tex.
2013) ..................................................................................................................... 14
Gililland v. Taylor Inv. , No. 11-03-00175-CV, 2004 WL 2126755 (Tex. App.—
Eastland Sep. 23, 2004, pet. denied). ............................................................. 16, 17
Hunt v. CIT Grp./Consumer Fin., Inc. , 03-09-00046-CV, 2010 WL 1508082 (Tex.
App.—Austin Apr. 15, 2010, pet. denied) (mem. op.) ............................ 19, 20, 21
In re Kellogg Brown & Root, Inc. , 166 S.W.3d 732 (Tex. 2005) (orig. proceeding)
.......................................................................................................................... 6, 10
In re Merrill Lynch Trust Co. FSB , 235 S.W.3d 185 (Tex. 2007) ........... 6, 8, 14, 15
Jenkens & Gilchrist, P.C. v. Riggs , 87 S.W.3d 198 (Tex. App.—Dallas 2002, no
pet.) ....................................................................................................................... 16
Keytrade USA, Inc. v. AIN Temouchent M/V , 404 F.3d 891 (5th Cir. 2005) .......... 13
Kvaerner ASA v. Bank of Tokyo-Mitsubishi, Ltd ., 210 F.3d 262 (4th Cir. 2000). ... 13
McMillan Comp. Translation Sys. , 66 S.W.3d 477 (Tex. App.—Dallas 2001, no
pet.) ....................................................................................................................... 16
One Beacon Ins. Co. v. Crowley Marine Servs., Inc ., 648 F.3d 258 (5th Cir. 2011)
........................................................................................................................ 11, 12
v
SEB Inc. v. Campbell , No. 03-10-00375-CV, 2011 WL 749292 (Tex. App.—
Austin Mar. 2, 2011, no pet.)(mem. op). ....................................................... 16, 17
Smith v. Brown , 51 S.W.3d 376 (Tex. App.—Houston [1st Dist.] 2001, pet. denied)
............................................................................................................................... 20
Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ ., 489 U.S. 468
(1989). ..................................................................................................................... 6
Statutes
T EX . C IV . P RAC . & R EM . C ODE A NN . § 16.003(a). ................................................... 17
vi *7 STATEMENT OF THE CASE Mario Mata claims he was injured during the repossession of his Chevrolet Suburban when he grasped hold of the rear bumper of the vehicle. ( See
CR 6 at ¶11.) Mata brings tort, contract, and DTPA claims, alleging the
repossession should not have occurred because he paid off the Suburban in full.
( Id. ¶¶ 10–11.) Mata financed his purchase of the Suburban through a Sale
Contract he executed with Appellant–Defendant Santander’s predecessor. ( See CR
71-72.) The Sale Contract had an arbitration agreement. (CR 76-80.)
Mata filed suit against and served Santander, Redshift Investigation, Inc. (“Redshift”), and repossession agent Blake Vandusen. Mata did not serve the
remaining named Defendants. After the limitations period expired on Mata’s
claims, Santander brought Centroplex Automobile Recovery, Inc. (“Centroplex”)
and Centroplex’s president, John Thompson, into the case by asserting cross-
claims for contribution and indemnification against Centroplex, Thompson,
Redshift, and Vandusen (collectively, “Cross-Defendants”). (CR 47-54.)
Santander then moved to compel both Plaintiff and Cross-Defendants to
arbitration. (CR 65.) The Cross-Defendants opposed the motion on the grounds
that they had not signed an arbitration agreement with any party to the case. The
trial court granted Santander’s motion to compel as to Mata and ruled that the
Cross-Defendants could not be forced to arbitrate. (CR 251-55 . )
ISSUE PRESENTED Under the Federal Arbitration Act as applied in Texas, arbitration requires consent of all parties. An auto-finance company contracted with independent
repossession agents without an arbitration provision. Years later, it added an
arbitration clause to its contracts with car buyers. The repossession agents never
signed or saw the consumer contracts. In a car buyer’s suit against the auto
company and repossession agents, can the auto-finance company compel the
repossession agents to arbitration?
STATEMENT OF FACTS I. The Service and Recovery Agreements
Santander, under the assumed name of Drive Financial (collectively, “Santander”) contracted with Redshift’s predecessor, Bay City, (collectively,
“Redshift”) to handle repossession of vehicles Santander financed. (CR 70.) This
Service Agreement was executed in early December 2002 and expressly
designated Redshift an independent contractor of Santander. (CR 81 at ¶ 2.)
Redshift later executed a Collateral Recovery Agreement to outsource some of its repossession assignments to Centroplex. (CR 140-52.) When
Santander ordered repossession of Mata’s Suburban, Redshift tasked Centroplex
with the job, and Centroplex sent Mr. Vandusen to pick it up. (CR 119 at ¶ 6.)
It is undisputed that neither the Service Agreement nor the Recovery Agreement contains an arbitration provision. (1 RR 10; see CR 81-85; 140-52.)
II. The Sale Contract between Mata and Santander Mata financed the purchase of his Chevrolet Suburban through a Sale Contract with Capitol Chevrolet (now Santander). The two parties executed the
agreement for sale and financing of the vehicle on December 28, 2002. (CR 71-
72.) They amended the Sale Contract in June 2009, adding an arbitration
agreement governed by the Federal Arbitration Act (“FAA”). (CR 75-80.)
It is undisputed that no Cross-Defendant was party to the original or amended Sale Contract, or even saw it. ( See Appellant’s Br. at 8; 1 RR 15.)
III. The Arbitration Provision
The Sale Contract is the only contract between any of the parties that includes an arbitration provision, and it is undisputed that none of the Cross-
Defendants were party to the Sale Contract. ( See Appellant’s Br. at 8.) Indeed,
Santander has stipulated that the Cross-Defendants had never seen the Sale
Contract before Santander brought them into this suit. (1 RR 15 (“I can stipulate
that these co-defendants had never seen the contract between my client and Mr.
Mata.”).)
Neither the Service Agreement nor the Recovery Agreement contains a reference to the Sale Contract. (CR 81-85; 140-52.)
SUMMARY OF THE ARGUMENT The right to trial by jury requires that arbitration not be ordered against a litigant without the litigant’s consent. The Cross-Defendants have never
waived this right, so the trial court correctly denied Santander’s motion to compel
arbitration as to the Cross-Defendants. The relevant facts in this appeal are
undisputed: The only contracts signed by any Cross-Defendant in this case contain
no arbitration provision, and the Cross-Defendants neither saw nor consented to
the Sale Contract between Mata and Santander that did contain an arbitration
provision.
Settled law requires that a party sign an arbitration agreement in order to be compelled to arbitrate, and the Cross-Defendants were not signatories to the
Sale Contract. Santander seeks to circumvent this rule by citing two of the rule’s
narrow exceptions—but even the case law Santander cites proves that neither
exception applies. First, the “incorporation by reference” exception requires
language incorporating the arbitration contract. Santander cites no provision in
either the Service Agreement or Recovery Agreement that makes any reference to
the Sale Contract, original or amended. Second, the “agency” exception applies
only when an agent signs an arbitration agreement on behalf of a principal, and
Santander does not claim that it is an agent for the Cross-Defendants. It instead
tries to avoid this problem by relying on a body of cases that do not involve
compelling a nonsignatory to arbitration .
Santander executed no arbitration agreement with the Cross- Defendants. When contracting for the outsourcing of repossession services,
Santander did not even include an arbitration provision in that contract. Indeed,
Santander conceded to the trial court that it could not compel arbitration as to the
cross-claims in this case. Yet, after losing at the trial court, Santander now renews
its meritless attempt to compel the Cross-Defendants to arbitrate. Like its trial
brief, its appellate brief is void of any support in the facts or law that would allow,
much less persuade, a court to order arbitration against nonparties to an arbitration
agreement.
The trial court correctly applied the law and facts and declined to order the Cross-Defendants to arbitrate. The holding should be affirmed, and fees
should be assessed against Santander.
ARGUMENT
I. Santander and Cross-Defendants have executed no arbitration
agreement.
Because Santander and Cross-Defendants have never entered into an arbitration agreement, Santander cannot compel them to arbitration. A party
seeking to compel arbitration under the FAA bears the burden of proving that: “(1)
there is a valid arbitration agreement, and (2) the claims raised fall within that
agreement’s scope.” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737
(Tex. 2005) (orig. proceeding). “However, the presumption arises only after the
party seeking to compel arbitration proves that a valid arbitration agreement
exists[.]” Id. at 737 (internal quotations omitted). Under the FAA, ordinary
principles of state contract law determine whether there is a valid agreement to
arbitrate, and the Texas Supreme Court has clarified that these principles mean that
the FAA generally “does not require parties to arbitrate when they have not agreed
to do so.” Id. at 738 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford
Junior Univ., 489 U.S. 468, 478 (1989)).
This rule protects litigants’ constitutional right to trial by jury, which is shared by plaintiffs and defendants alike. T EX . C ONST . art. V, § 10 (“In the trial
of all causes in the District Courts, the plaintiff or defendant shall, upon application
made in open court, have the right of trial by jury”) . Cross-Defendants intend to
try this case before a jury, and have at no point waived their right to do so.
Santander seeks to compel Cross-Defendants to arbitration simply because it contracted with the Plaintiff to arbitrate. “But the right to a jury trial is
not discretionary. . . . If the parties have not agreed to arbitration, no trial court has
discretion to make them go. . . .” In re Merrill Lynch Trust Co. FSB , 235 S.W.3d
185, 193 (Tex. 2007). There is no arbitration agreement between Santander and
Cross-Defendants. Only one contract between Santander and any Cross-Defendant
is in the record — the Service Agreement — and it contains no arbitration provision.
If Santander sought to arbitrate suits involving repossession with its repossession
contractors, it could have contracted for arbitration rights in the Service
Agreement — or it could have included language expressly incorporating its sale
and financing contracts. When given the opportunity, Santander chose not to
include or incorporate an arbitration provision in the Service Agreement.
Without an agreement to arbitrate between Santander and the Cross- Defendants, binding contract principles prevent Santander from compelling Cross-
Defendants to arbitrate this suit.
II. Cross-Defendants cannot be compelled to arbitrate under the
agreement between Mata and Santander.
Lacking an agreement to arbitrate with Cross-Defendants, Santander attempts to compel arbitration based on the Sale Contract it executed with Plaintiff.
The Sale Contract is the sole document in the record that contains an arbitration
agreement, but Cross-Defendants are not signatories to it. And no exception to the
rule against compelling nonsignatories to arbitration applies here.
A. Arbitration cannot be compelled because Cross-Defendants are not parties to the Sale Contract.
Cross-Defendants cannot be bound by the arbitration agreement in the Sale Contract between Plaintiff and Santander because they did not agree to it.
Under the FAA, the United States Supreme Court “has repeatedly emphasized that
arbitration is a matter of consent, not coercion.” In re Merrill Lynch Trust , 235
S.W.3d at 187 (internal citations omitted). The FAA “does not require parties to
arbitrate when they have not agreed to do so.” Id.
The mere fact that some parties must arbitrate has never permitted the court to steer the remaining parties into arbitration, too. See id. Where a plaintiff
asserted claims against both a company’s employees and its corporate affiliates and
all defendants moved to compel arbitration, the Texas Supreme Court held that
claims against the former could be compelled, but that the claims against the
affiliates could not . Id. at 187. Recognizing the inefficiency that is “inherent in
resolving these related issues in two different places,” the Court nonetheless ruled
that “interdependent” conduct of corporate defendants was not sufficient for
compelling arbitration. Id. at 192. Despite their relationship, “a contract with one
corporation—including a contract to arbitrate disputes—is generally not a contract
with any other corporate affiliates.” Id. at 191. 1
The Texas Supreme Court has thus refused to create an exception simply for convenience’s sake. See id. at 192 (“efficiency and convenience cannot
override either a signatory’s arbitration agreement or a nonsignatory’s right to a
*15 jury trial.”). Santander has now conceded that the Cross-Defendants were not
parties to the Sale Contract. (Appellant’s Br. at 8.) It has even stipulated that
Cross-Defendants had never seen the Sale Contract before this lawsuit
commenced. (1 RR 15.) The Cross-Defendants cannot be forced to arbitrate based
on an agreement between two outside parties , especially when Cross-Defendants
did not even know that agreement existed.
B. None of the exceptions that would allow nonsignatories to be compelled to arbitration applies here.
There are six exceptions to the rule that nonsignatories cannot be bound to an arbitration agreement—none of which apply here. These exceptions
are: (1) incorporation by reference, (2) assumption, (3) agency, (4) alter ego, (5)
equitable estoppel, and (6) third-party beneficiary. Kellogg Brown & Root , 166
S.W.3d at 739 (citing Bridas S.A.P.I.C. v. Gov’t of Turkm. , 345 F.3d 347, 356 (5th
Cir. 2003)). On appeal, Santander argues that two of these exceptions apply. But
the Cross-Defendants did not sign a contract incorporating the Sale Contract by
reference, and the agency exception to compelling nonsignatory arbitration is
inapposite.
1. Santander waived the incorporation-by-reference exception and, in any event, the exception does not apply to the Agreements here. Santander raises the “incorporation by reference” doctrine for the first time on appeal. Despite Cross-Defendants’ briefing enumerating the six
exceptions above, Santander never invoked the incorporation exception to the trial
court, either in its briefing or at the hearing. Accordingly, the trial court had no
opportunity to rule on this basis, and the ground for appeal is waived. See T EX . R.
A PP . P. 33.1(a)(1); e.g. Bridas , 345 F.3d at 356 (holding party failed to preserve
incorporation-by-reference and assumption arguments); Carr v. Main Carr Dev.,
LLC, 337 S.W.3d 489, 494 (Tex. App.—Dallas 2011, pet. denied)(when
considering nonsignatory exception to arbitration, holding that “[b]ecause Carr did
not raise the agency issue in the court below, it has not been preserved for our
review.”)
The incorporation-by-reference exception, even if preserved, would not apply. Cross-Defendants executed no agreement that incorporated the Sale
Contract between Plaintiff and Santander, or that incorporated any other arbitration
agreement. Terms are incorporated by reference only if “it is clear that the parties
to the agreement had knowledge of and assented to the incorporated terms.” One
Beacon Ins. Co. v. Crowley Marine Servs., Inc. , 648 F.3d 258, 268 (5th Cir. 2011).
“The language in the signed document must show the parties intended for the other
document to become part of the agreement.” Bob Montgomery Chevrolet, Inc. v.
Dent Zone Cos. , 409 S.W.3d 181, 189 (Tex. App.—Dallas 2013, no pet.). But
Santander stipulates that the Cross-Defendants had never seen the Sale Contract.
(1 RR 15.) They could not possibly have “ha[d] knowledge of” or “assent[ed]” to
the Sale’s Contract terms, see One Beacon Ins. Co. , 648 F.3d at 268, and Santander
has not argued that they did. ( Cf. 1 RR 17) (describing Cross-Defendant’s
knowledge as “irrelevant”). Neither the Service Agreement nor the Recovery
Agreement contains the barest mention of the Sale Contract, so the Agreements’
“language” cannot even arguably “show the parties intended for the [Sale Contract]
to become part of” those Agreements. See Bob Montgomery Chevrolet, Inc. , 409
S.W.3d at 189.
The provisions Santander quotes from the Service and Recovery Agreements do not, explicitly or implicitly, incorporate or even reference the Sale
Contract. The Service Agreement’s quoted provisions specify an intent to perform
recovery services for Santander’s accounts, and the Recovery Agreement’s quoted
provisions state the intent for Centroplex to receive recovery assignments from
Redshift. ( See Appellant’s Br. at 15.) In stark contrast, the agreements in the two
cases Santander relies upon do contain incorporation provisions. In the first case,
the nonsignatory’s contract specified that “all terms and conditions, liberties and
exceptions . . . including the Law and Arbitration Clause, are herewith
incorporated .” Keytrade USA, Inc. v. AIN Temouchent M/ V, 404 F.3d 891, 896–
97 (5th Cir. 2005) (emphasis added). In the second case, the nonsignatory’s
contract explicitly “guaranteed . . . each and every obligation” and adopted “the
same rights and remedies” as under the specific contract containing the arbitration
provision. See Kvaerner ASA v. Bank of Tokyo-Mitsubishi, Ltd. , 210 F.3d 262,
264–65 (4th Cir. 2000). In both cases, the nonsignatory’s contract explicitly
incorporated the contract containing the arbitration provision by name.
The Agreements Cross-Defendants signed are not even arguably analogous to the contracts in Keytrade or Kvaerner . No intent to incorporate the
Sale Contract is reflected in this record. The incorporation-by-reference exception
was not preserved for appeal and, in any event, is inapplicable here.
2. Santander’s use of the agency exception has no basis in law or fact.
Santander cannot — and does not — argue that it was an agent of Cross- Defendants, so the agency exception does not apply. And none of the authority
cited by Santander involved compelling a nonsignatory to arbitration, so its novel
reverse-agency theory, even if adopted, would not change the result here.
a. The agency exception would only apply if Santander were an agent of Cross-Defendants, which it has not alleged to be.
The agency exception binds a nonsignatory only when a party to the arbitration agreement signed as the agent of the nonsignatory. See Bridas , 345
F.3d at 356–57. The authority to bind the nonsignatory must exist at the time of
signing. See id. at 358. An ongoing relationship is not sufficient; Santander “has
the burden of proving [the signatory] signed the Agreement as an agent of [the
nonsignatory] and not for themselves alone.” See, e.g. , E. Tex. Med. Ctr. Reg’l
Healthcare Sys. v. Slack , 916 F. Supp. 2d 719, 722 (E.D. Tex. 2013) (“Defendants
. . . argue that [the nonsignatory] has an agency relationship [because it is] a
wholly owned subsidiary [of the signatory]. A corporate relationship alone,
however, is generally not sufficient to bind a non-signatory to an arbitration
agreement.”)
To satisfy the agency exception, Santander would have to show that, while executing the sale and financing of Mata’s vehicle, Santander signed the Sale
Contract as an agent of one of the past or future entities handling repossession
services for Santander’s vehicles. Santander had no authority to bind any of the
Cross-Defendants while financing Mata’s vehicle . Accordingly, even Santander
does not argue that it acted as an agent for Cross-Defendants.
b. Santander’s authority is inapposite.
Instead, in an attempt to shoehorn this case into the one doctrine that it preserved for appeal, Santander makes a mirror-image agency argument.
Santander’s inverted logic urges that its vicarious liability for Cross-Defendants’
conduct made Cross-Defendants “agents” of Santander for purposes of the
nonsignatory arbitration exception. But agency law has never overridden the
constitutional requirement that all parties consent to arbitration. Whether Cross-
Defendants acted as agents of Santander when repossessing the Suburban in 2011
cannot retroactively and forcibly make Cross-Defendants parties to an arbitration
agreement executed two years earlier. “If the parties have not agreed to arbitration,
no trial court has discretion to make them go.” Merrill Lynch Trust , 235 S.W.3d at
192.
Santander cites several nonbinding cases in an attempt to advance its agency argument. But none of these cases even involves compelling a
nonsignatory to arbitration. Instead, Santander’s cases all involve the reverse — a
nonsignatory who seeks to invoke an arbitration agreement. 2 SEB and Gililland ,
for example, both held a nonsignatory employee of its signatory employer could
compel arbitration against the other signatory to the agreement. SEB , 2011 WL
749292 at *4; Gililland , 2004 WL 2126755 at *3–4. They did not hold that the
employee could be forced to arbitrate against his will. See id.
“Arbitration agreements apply to nonsignatories only in rare circumstances.” Bridas , 345 F.3d at 358. If an arbitration agreement applied to
every nonsignatory who contracted to perform services for a signatory company,
the exception would swallow the rule. And it plainly would not satisfy the basic
*21 consent requirement of an arbitration agreement. See In re Merrill Lynch Trust ,
235 S.W.3d at 187. No case has so curtailed the right to jury trial.
The agency exception only operates to compel a party to arbitration when the signatory was acting, at the time of signing, as an agent of a principal.
Because Santander plainly — and undisputedly — did not sign the Sale Contract on
behalf of the Cross-Defendants, the exception does not apply. There is nothing in
the record showing that Cross-Defendants intended to consent to arbitration. They
cannot now be compelled to arbitrate this suit under either of the two proffered
exceptions.
III. Plaintiff never served the Centroplex Defendants, so only cross-claims
exist against them, and Santander agrees those are not arbitrable. Centroplex and Thompson (collectively, “the Centroplex Defendants”) cannot be compelled to arbitration because, even if the Court
accepted Santander’s novel arguments, there are no arbitrable claims against them.
Santander concedes that the cross-claims in this case cannot be compelled to
arbitration. (1 RR 7 (“I don’t believe that my client can compel arbitration as to
the cross-claims. It’s only those claims that are asserted by the plaintiff against all
of the defendants.”).) Its motion to compel therefore never sought to compel the
cross-claims to arbitration. (CR 65 (moving to compel only Plaintiff’s claims
against the Defendants); 1 RR 34 (“If we were seeking to have the cross-claims
arbitrated, yes, then that would be at issue today.”).)
As to the Centroplex Defendants, though, cross-claims are the only claims pending because Plaintiff has never served the Centroplex Defendants with
any claims against them. The limitations period has passed in this case. The
repossession Plaintiff complains of occurred on February 23, 2011, (CR 6 at ¶ 11,)
so the two-year statute of limitations for personal injury expired on February 23,
2013. See T EX . C IV . P RAC . & R EM . C ODE A NN . § 16.003(a). The record reflects
that Plaintiff has never served the Centroplex Defendants with any claims, and
Santander waited until after limitations expired to serve the Centroplex Defendants
with its claims . There are not now, and never will be, claims by Plaintiff against
the Centroplex Defendants in this case.
The cross-claims are the only live claims against the Centroplex Defendants, and Santander correctly chose not move to compel the cross-claims to
arbitration because of the lack of any arbitration agreement between Santander and
the Cross-Defendants. For all the reasons above, and specifically because there are
no arbitrable claims by or against the Centroplex Defendants, the trial court’s
ruling as to the Centroplex Defendants should be affirmed.
IV. The Court Should Award Reasonable Fees to Cross-Defendants.
The frivolous nature of this appeal warrants, at a minimum, a fee award. The rules provide for damages when “the court of appeals determines that
an appeal is frivolous.” T EX . R. A PP . P. 45. To determine whether to award
damages, this Court considers whether the appellant has “reasonable grounds to
believe the case could be reversed.” Hunt v. CIT Grp./Consumer Fin., Inc ., 03-09-
00046-CV, 2010 WL 1508082, at *8 (Tex. App.—Austin Apr. 15, 2010, pet.
denied) (mem. op.) (citing Smith v. Brown , 51 S.W.3d 376, 381 (Tex. App.—
Houston [1st Dist.] 2001, pet. denied)).
Santander has no reasonable basis for curtailing the Cross- Defendants’ federal Seventh Amendment and state constitutional rights to jury in
this case, particularly as to the Centroplex Defendants. Santander’s appeal lacks a
single basis in law or fact for overturning the trial court’s decision. The relevant
facts are undisputed and only one of two briefed issues was preserved for appeal.
The sole preserved issue is whether Cross-Defendants, though nonsignatories, can
be compelled to arbitrate on the basis of agency. On this issue, Santander fails to
cite a single case that involves compelling a nonsignatory to arbitration, and cites
no binding authority at all. See Hunt , 2010 WL 1508082 at *8 (awarding fees as
damages because of appellant’s “unsupported factual statements (and
misstatements), repeated failures to preserve error for appeal, and the absence of
legal merit in his arguments.”).
A reasonable attorney could not fail to conclude that the trial court’s ruling would be upheld. See id; Smith , 51 S.W.3d at 381 (awarding $5000 in fees
because “[n]o reasonable attorney could fail to conclude this court would uphold
the trial court’s summary judgment”). Indeed, Santander’s counsel conceded on
the record to the trial court that it could not compel the cross-claims to arbitration,
(1 RR 7), yet it persisted in arguing the motion to the trial court and then pursuing
the issue on appeal. Cross-Defendants have had to spend unnecessary time and
expense defending against, first, Santander’s groundless motion, and now its
meritless appeal. Santander has thus unnecessarily forced the Cross-Defendants to
expend considerable resources — all to simply defend their constitutional right to be
heard in court.
Consequently, Cross-Defendants seek as damages an award of attorneys’ fees and costs associated with those efforts, and have attached an
affidavit establishing the amount of reasonable and necessary fees. See T EX . R.
A PP . P. 45; Hunt , 2010 WL 1508082, at *9 (identifying attorneys’ fees as the
typical damages award and noting that “proof by affidavit is a proper method of
establishing the appropriate sanction for the filing of a frivolous appeal”). A fee
award is appropriate as damages in this case because of the objectively groundless
nature of this appeal.
PRAYER For the foregoing reasons, Cross-Defendants Centroplex Automobile Recovery, Inc., John F. Thompson, Redshift Investigation, Inc., and Blake
Vandusen respectfully request that this Court affirm the trial court’s holding that
denied Santander’s Motion to Compel Arbitration and Stay of Case. Cross-
Defendants further ask this Court to impose damages upon Santander for this
frivolous appeal based on the attached affidavit for reasonable attorneys’ fees, and
grant the Cross-Defendants any additional relief, at law or in equity, to which they
are entitled.
Respectfully submitted, RICHARDSON + BURGESS LLP 221 West 6 th Street, Suite 900 Austin, Texas 78701-3445 Telephone: (512) 482-8808 Facsimile: (512) 499-8886 Email: kburgess@richardsonburgess.com Email: ssharp@richardsonburgess.com /s/ Stacy Rogers Sharp By: ______________________________ Karen C. Burgess State Bar No. 00796276 Stacy Rogers Sharp State Bar No. 24052109 ATTORNEYS FOR APPELLEES CENTROPLEX AUTOMOBILE RECOVERY, INC. AND JOHN F. THOMPSON
MACDONALD DEVIN, PC 1201 Elm Street, Suite 3800 Dallas, Texas 75270-2130 Telephone: (214) 744-3300 Facsimile: (214) 747-0942 Email: jkenefick@macdonalddevin.com Email: jsigety@macdonalddevin.com /s/ John S. Kenefick By: ______________________________ John S. Kenefick State Bar No. 24006294 John R. Sigety State Bar No. 24083853 ATTORNEYS FOR APPELLEE BLAKE THORNTON VANDUSEN *27 LINDOW ▪ STEPHENS ▪ TREAT LLP One Riverwalk Place 700 North St. Mary’s Street, Suite 1700 San Antonio, Texas 78205 Telephone: (210) 227-2200 Facsimile: (210) 227-4602 Email: clotz@lstlaw.com Email: dlt@lstlaw.com /s/ Christopher A. Lotz By: ______________________________ Christopher A. Lotz State Bar No. 24031630 David L. Treat State Bar No. 20205300 ATTORNEYS FOR APPELLEE REDSHIFT INVESTIGATION INC.
CERTIFICATE OF COMPLIANCE I certify that this document was produced on a computer using Microsoft Word 2010 and contains 3,670 words, as determined by the computer software’s
word-count function, excluding the sections of the document listed in T EX . R. A PP .
P. 9.4(i)(1).
/s/ Stacy Rogers Sharp _________________________________ Stacy Rogers Sharp CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing instrument has been served upon the following parties either electronically through an electronic
filing manager or in the alternative served by fax prior to 5:00 p.m., in person, by
mail, commercial delivery service, or email, on this 20 th day of January, 2015, as
follows:
Donald L. Turbyfill
Deborah C. S. Riherd
Vicki W. Hart
Devlin, Naylor & Turbyfill, PLLC
4801 Woodway Drive, Suite 420-West
Houston, Texas 77056-1884
Facsimile: (713) 586-7053
ATTORNEYS FOR APPELLANT
SANTANDER CONSUMER USA, INC.
Mario A. Mata
Mario A. Mata, PLLC
111 Congress Avenue, Suite 400
Austin, Texas 78701-4143
Facsimile: (214) 276-7305
APPELLEE, pro se
/s/ Stacy Rogers Sharp _________________________________ Stacy Rogers Sharp *29 No. 03-14-00782-CV
____________________________ IN THE THIRD COURT OF APPEALS AT AUSTIN, TEXAS
____________________________ SANTANDER CONSUMER USA, INC.
Appellant,
V .
MARIO A. MATA, CENTROPLEX AUTOMOBILE RECOVERY, INC.,
BLAKE THORNTON VANDUSEN, JOHN F. THOMPSON D / B / A CENTROPLEX AUTOMOBILE RECOVERY, INC., AND REDSHIFT
INVESTIGATION, INC.
Appellees. ____________________________ Appealed from the
353 rd Judicial District Court Travis County, Texas
Cause No. D-1-GN-13-000677 ____________________________ APPELLEES’ APPENDIX ____________________________ LIST OF DOCUMENTS T EX . C IV . P RAC . & R EM . C ODE A NN . § 16.003(a) ............................................. TAB 1
Service Agreement ............................................................................................ TAB 2
Collateral Recovery Agreement ........................................................................ TAB 3
Affidavit of Karen C. Burgess .......................................................................... TAB 4
vi *30 TAB 1
§ 16.003. Two-Year Limitations Period, TX CIV PRAC & REM § 16.003
Vernon's Texas Statutes and Codes Annotated
Civil Practice and Remedies Code (Refs & Annos)
Title 2. Trial, Judgment, and Appeal
Subtitle B. Trial Matters
Chapter 16. Limitations
Subchapter A. Limitations of Personal Actions (Refs & Annos) V.T.C.A., Civil Practice & Remedies Code § 16.003 § 16.003. Two-Year Limitations Period Effective: September 1, 2005
Currentness
(a) Except as provided by Sections 16.010, 16.0031, and 16.0045, a person must bring suit for trespass for injury to the estate
or to the property of another, conversion of personal property, taking or detaining the personal property of another, personal
injury, forcible entry and detainer, and forcible detainer not later than two years after the day the cause of action accrues.
(b) A person must bring suit not later than two years after the day the cause of action accrues in an action for injury resulting
in death. The cause of action accrues on the death of the injured person.
Credits
Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended by Acts 1995, 74th Leg., ch. 739, § 2, eff. June 15, 1995; Acts
1997, 75th Leg., ch. 26, § 2, eff. May 1, 1997; Acts 2005, 79th Leg., ch. 97, § 3, eff. Sept. 1, 2005.
Editors' Notes
REVISOR'S NOTE
2002 Main Volume
(1) The revised law omits the reference to firms and public and private corporations in the source law. The
Code Construction Act (V.A.C.S. Article 5429b-2) includes business entities and governmental entities within the
definition of “person.”
(2) The revised law omits the source law material that provides for suits to be brought within two years of the
effective date of V.A.C.S. Article 5526a (March 7, 1934) because the two-year period has expired.
Notes of Decisions (2559)
V. T. C. A., Civil Practice & Remedies Code § 16.003, TX CIV PRAC & REM § 16.003
Current through the end of the 2013 Third Called Session of the 83rd Legislature
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 *32 TAB 2 *33 ,·~vv.J.uh.m..li.'"n"'' • Agerioy .a·J ~re~~s.~~?:?<U:U< ·the coUe6~ion 0t,aH ·inJQ'&unt$ decides to· place withAgencyandJu$e:· due diligence and employ such means, methods, and procedures as in its judgment, discretion, and experience it believes will best effect the r~qovexyqf such accounts, provided such means, methods, and procedures are lawful and conducted by persons qualified to make such said judgment.
2. Independent. This agreement shall not be deemed a joint venture or partnership between Client and Agency. Agency shall only act in the capacity of an independent contractor of Client.
3. Invoicing. Agency wilJ remit invoice within 24 hours of repossession, or the following business day if repossession occurs on holiday or weekend. Invoice should detail by individual account: service provided, agency fee, and all applicable taxes. Repossession agents will invoice Client directly, at no cost to . the Agency.
4. Compliance. Agency agrees their services herein shall be provided in accordance with all applicable laws, ordinances, regulations, the Fair Debt Collections Practices Act, Graham-Leach-Bliley Act- 15 USC 6802-6827, similar state debt collection laws, and rules of federal, state, and local authorities and in a manner so as not to reflect unfavorably upon Client, and S"!JCh services will be provided in a professional and workmanlike matmer.
5. Legal Accounts. In the event Client or Agency requests legal action on an account, Client will advance all court costs, attorney's fees, mediation feesjmd other costs ~ricurred during the legal process. Agency is required to submit request for legal action in writing and Client will submit such authorization in writing.
81 *34 accoutit is. · ,.., ... V;f.'""""
·enforceable, ·client will immediately notify Agency. On6e ·Agency of a bankruptcy filing, Agency will cease all investli$iH~ri a.l\(Jiif,el~lM~~if~~,, efforts, and Client will pull the loan back in~hous.e to se~t.~e · [1] action. In the event the Agency receives notification krt~pt)iiy'fiUr!;g;·~1~:~t~~y . will obtain bankruptcy information: case numoer) chapt~t filed; attorney name and phone number; and immediately carieel acco.unt.:-and ·l'.I."''"P•'V''P· Client of cancellation in writing.
11. Indemnity Obligations. Agency will indemnify and hold the Client and its
employees, officers, directors, agents, and affiliates harmless from and against any and all costs, losses, damages (including court costs and reasonable attomey's fees), or other liabilities or expenses by reason of or in consequence of any claim arising out of any breach or violation by Agency of any provision oftf.li~ Agreement and/or applicable law, or by reason of the acts 0r omissions ofAgf:lncy in connection with the services perfonned by Agency pursuant to this Agr~ef11e.Q.t .. Client will indemnify and hold Agency and its employees, officers; dir~C,t9rs., ·: · agents, and affiliates harmless from any and all· costs, J:asS'es; damllg~s~t.i~~ci,~iJgt · court costs arid reasonable attomey's fees), or other liabilities Agency may S.U:ffer by reason of the acts or omissions of Client or any other collection agency with respect to any account. These indemnity obligations shaH survive the terminat'i'on ofthis Agreement.
82 *35 . ~-·;~·. ~_.,
14. Use of Cli~nt's Df~m~. A:gerroy,agr¢eslt wtlt·nt~l~tis~~;''t%Mi'i1 promotiJnal material or media, Client,s name or logo. or the affiliate of Client, or otherwise identify Client as 3;·cli¢nt ef A;gen~y 1 ~W:i!CljW:l(E~ Client's prior written consent. · , · . '~:.'" ·1s. Non-Exclusive Agreement. It is agreed that nothing herein.c;ontainec.t~hli1.Lbe construed as obligating Client to place accounts with Agency f~r in¥estt~g~tft;li.1:cu: \• recovery or as an exclusive arrangement between Agency and·CUerit. · 16. Insurance. Agency shall maintain commercial general public liability and professional liability insurance in minimum amounts of $1 ,000;000 for any ().ne occurrence and in the aggregate. Upon client's request, Agency shalkprovide appropriate certificates showing such insurance coverage is in effect. Agency shaH name Drive Financial Services, LLP, and Drive Servicing, I;;LC, as · Certificate Holder on General Liability Policy. A $1,000,000 Errors and Omissions Policy will be required, inclusive of Third Pm,y :Q.}.sclq~y.r.,e, .. Misrepresentation, and Wrongful Repossession. Agency shall...nam~.. · .. ::, . .. ~~jj;;;f~·' · Financi-al Services, LLP, and DriveBervieing;LLC, as~.Ue'rB!ft&dt&;;i_·: Errors and Qmissions Policy. Agency shall be required to (;)btain $TQ;trqo sijt"¢:ty bond per Texas Finance Code for Debt Collection, Subchapter B., Section 392.101.
~·
...... ..., ··-· ~ ·v= •.. . ...
83
· 23. Approved R~poss~ssi2n Agent. Agency shall expressly use Client-appr.e:v.¢(1
repossession agents. Client shall provide agent list upon signing Agreetnt1P.t Client will provide Agency with any and all revisions to the repossession ag~nt list. Agency shall notify Client of any additional charge& to be. ~Sl?~St?ed qn . . repossession; Client must authorize any additional charges in wr'iting; prlnr"to Repossession Agent taking action.
84
.;.-.
By: --------~~~----
85
TAB 3
COLLATERAL RECOVERY AGREEMENT This COLLATERAL RECOVERY AGREEMENT (this "Agreement") is hereby entered into effective as of the date set .forth below, by and between REDSHIFT
INVEST GATION, a artornia Corporation . ("Redshift lnvP.::tim=ttinn"L and .J Cc,ll!.putrA(-;Y'v' . .ll?...::7. • ~ , " l..:-"7 t ( Recove Agency') (collectively referred (o as the "Partie.-s,:::-)-. -~'-'-'-~""-----
RECITALS:
A. Redshift Investigation contracts with various financial institutions ("Client" or
".Clients") to recover secured collateral ("Property") on behalf of the Client. Due to the
location of the Property to be recovered, Redshift Investigation subcontracts physical
recovery of the Property to third party recovery agencies;
B. Recovery Agency is in the busine.ss of recovering personal property and wishes
to establish a relationship with Redshift Investigation in order to receive recovery
assignments ("Assignments") from Redshiftlnvestigation;
C. For good and valuable consideration, receipt of which is hereby acknowledged,
Redshift Investigation and Recovery Agency hereby enter into the following non
exclusive Agreement:
AGREEMENT:
I. Term and Termination.
l.l. This Agreement shall continue in full force and effect until terminated by either of the Parties as set forth below.
1.2. This Agreement may be terminated without cause by Recovery Agency upon thirty (30) days prior written notice to Redshift Investigation.
1.3. Redshift Investigation may cancel this Agreement and/or any Assignment at any given time for any reason. Redshift Investigation will provide notification of a
cancelled Assignment to Recovery Agency via telephone or other method as designated
by Redshift Investigation. An Assignment shall be deemed cancelled as of the date of
such notice. Recovery Agency will cease performance of services on the Assignment(s)
as soon as possible, but no greater than twenty-four (24) hours after notification has
been given; provided, however, if cancellation is due to breach by Recovery Agency of
this Agreement as determined in Redshift Investigation's sole discretion, then such
cessation of services must occur within one (1) hour of such notice. Redshift
Investigation will determine the appropriate fees and costs to be paid to Recovery
Agency on a case-by-case basis, depending on the services performed at the time of
cancellation.
I .4. Upon termination of this Agreement, Recovery Agency shall return all Property, account data .and all Client information in its possession, or in the possession
45868417.3 09803765
Redshift 075 Exhibit D 140 *40 of its subcontractors, to Redshift Investigation within seven (7) days after the effective
date of t~e termi~ati~n o~ this Agreement .. Recovery Agency shall return such Property
to Redsh1ft lnvest1gat1on tn the same cond1t1on as when such Property was recovered by
or delivered to Recovery Agency.
2. Policies And Procedures.
Redshift Investigation's policies and procedures are attached hereto as Exhibit A and are hereby incorporated into this Agreement. From time to time, Redshift
Investigation may amend its policies and procedures, which, when initialed by Redshift
Investigation and Recovery Agency, will become a part of this Agreement. Damaged Property.
3. 3.1. Recovery Agency will obtain the prior approval of Redshift Investigation
before securing any Property with major, visible, or known damage that may result in a
significantly reduced sale price at Auction ("Damaged Property"). Visible damage will
include, but not be limited to, the following:
(a) Major collision or comprehensive damage; (b) Missing mechanical or body parts;
(c) Altered Property; Property that requires repairs (i.e. no tires, motor, windshields, etc.);
(d) or Property that appears to be worth less than $2,000.
(e) 3.2. If Recovery Agency disc.overs Damaged Property during an Assignment and Redshift Investigation advises Recovery Agency not to arrange for the recovery of
such Damaged Property, Redshift Investigation will decide on a case-by-case basis
whether payment of fees and costs for the Assignment is appropriate ("Attempted
· Recovery"), based on services performed.
3.3. Recovery Agency is required to submit pictures to Redshift Investigation that clearly demonstrate damage ("Substantiating Pictures") in order for Attempted
Recovery fee to be approved.
3.4. Redshift Investigation, in its sole and absolute discretion, will determine on a ease-by-case basis whether payment is appropriate if Recovery Agency arranges for
the recovery of Damaged Property without the prior approval of Redshift Investigation or
without submitting Substantiating Pictures for Damaged Property.
45868417.3 09803765
Redshlft 076 141 *41 4. Liability for Loss or Damage.
4.1. Recovery Agency has full responsibility for the Property while it is in Recovery Agency's possession and will exercise commercially reasonable caution to
prevent the Property from being damaged, lost or stolen. · ·
4.2. If the Property is damaged, lost or stolen While under Recovery Agency's control, Recovery Agency will notify Redshift Investigation within twenty-four (24) hours
and will pay for all costs of repair or replacement.
5. Notification of Repossession.
5.1. Time for Reporting.
(a) Recovery Agency will report all repossessions that occur during normal business hours to Redshift Investigation within six (6) hours of repossession.
Normal business hours are Monday through Friday, 9 a.m. to 5 p.m., Pacific Standard
Time ("PST").
(b) If the repossession occurs outside of normal business hours, Recovery Agency will submit a Notification of Repossession via facsimile, via email or
online to Redshift Investigation before 10:00 a.m. PST on the next calendar day.
5.2. Procedure for Reporting. Reporting shall be by a Notification of
Repossession, in the form attached hereto as Exhibit B, and shall be sent to Redshift
Investigation online (see Policies and Procedures attached hereto as Exhibit A) or by
facsimile or email.· Redshift Investigation wil.l fax or email Recovery Agency a
confirmation of Notification of Repossession within six· (6) business hours of Redshift
Investigation's receipt of Notification of Repossession.
5.3. Liability for Late Reporting. Recovery Agency acknowledges that some of Redshift Investigation's Clients have default insurance which will pay the unpaid
balance of a contract upon repossession, but only if the fact of repossession is reported
to the insurance company within fifteen (15) days of repossession. If Recovery Agency
fails to timely report a repossession, and therefore causes Redshift Investigation's
Client(s) to lose any default insurance coverage, Recovery Agency shall be liable for the
amount which such default insurance would have paid if the repossession had been
timely reported. Relationshig Between the Parties.
6.
6.1. Recovery_ Agency is an independent contractor, and nothing contained
herein shall be construed as creating any relationship between Redshift Investigation
and Recovery Agency other than that of independent contractor. Without limiting the
generality of the foregoing, Recovery Agency shall have no authority to enter into any
contract on behalf of Redshift Investigation or to otherwise make any representations,
agreements or covenants on its behalf. Recovery Agency has the exclusive right to
establish the work hours of its personnel providing the services and to control and di~ect
45868417J 09803765
Redshift 077 142 *42 the methods, means, manner and details of performing its obligations under this
Agreement. Recovery Agency also agrees to inform debtors, consumers, . its
employees, agents, representatives and subcontractors, and all other persons and
entities involved in the performance of the services under this Agreement, that it is an
independent business with no affiliations to Redshift Investigation.
6.2. If any c9urt or administrative tribunal or agency with appropriate jurisdiction determinations that any employment relationship has been or will be
established by the performance of this Agreement, notwithstanding anything to the
contrary set forth in this Agreement, Recovery Agency will reimburse and indemnify
Redshift Investigation for costs and expenses of any nature arising out of or relating to
such a determination and/or Redshift Investigation's defense of such a determination,
including, but not limited to, tax withholding and insurance claims in the nature of
unemployment compensation and/or workers' compensation imposed by any level of
government and reasonable attorneys' fees and costs of suit. Confidential Information: Recovery Agency Obligations.
7.
Recovery Agency will maintain the confidentiality of all of the information disclosed by Redshift Investigation ("Confidential Information") and· agrees to use
Confidential Information solely for the tasks and purposes for which it is disclosed.
Recovery Agency must use a closed computer operating system that does not allow
third parties to access Confidential Information on any account referred to Recovery
Agency by Redshift Investigation. Redshift Investigation may examine and audit
Recovery Agency's records and processes pertaining to this Section 8 at any
reasonable time and upon advance notice. Insurance.
8.
8.l. Recovery Agency must maintain at all times the following minimum
insurance requirements; provided, however that such minimum insurance requirements
shall in no way limit the liability assumed elsewhere in this Agreement:
(a) Commercial General Liability
(1) Commercial · General Liability Form. Including Premises/Operations, Independent Contractors, Products/Completed Operations,
Personal Injury, Broad Form Property Damage (including Completed Operations).
(2) Contractual Liability: Blanket basis insuring the liability assumed under this Agreement.
(3) Limits of Liability: $1,000,000 Each Occurrence for Bodily Injury and/or Property Damage and $2,000,000 General Policy Aggregate. Business Automobile Liability
(b)
45868417.3 09803765
Redshift 078 143 *43 8 usiness Automobile Liability Form covering physical . (1) damage of Redsh1ft Investigation's Property, including all owned, non-owned and hired
vehicles, aircraft and other vehicles subject to repossession pursuant to this Agreement
(2) Limits of Liability: $2,000,000 Combined Single Limit for Bodily Injury and Property Damage. . .
(c) Garage Keepers Direct Primary Coverage $300,000 limit. (d) Drive-Away and On-Hook Physical Damage $100,000 limit. (e) In the event of repossession of Property that must be transported over water, Marine coverage of $1 ,000;000. Such insurance shall provide replacement
cost coverage for physical damage to all Property traveling over water. Deductible may
not exceed $1,000 per occurrence. . . ·
8.2. All insurance coverage required as herein set forth, including deductible
requirements, shall be at the sole cost and expense of Recovery Agency.
8.3. Except where prohibited by law, all insurance policies shall contain
provisions that the insurance companies waive the rights of recovery or subrogation
against Redshift Investigation, its agents, servants, invitees, employees, contractors,
subcontractors and insurers. Such insurance must be primary and noncontributory to
any insurance maintained by Redshift Investigation.
8.4. A Certificate of Insurance evidencing all of the above (the "Certificate")
must be presented to Redshift Investigation. The Certificate must name "Redshift
Investigation, Inc., a California corporation" as an additional insured and must also show
that Redshift Investigation must receive thirty (30) days notice pri9r to cancellation or
material change. Recovery Agency must submit the Certificate to Redshift Investigation
on the date this Agreement is signed and then on an annual basis based upon the
renewal date.
8.5. All of the insurance policies required to be obtained pursuant to this
Agreement shall be with companies licensed to do business in the state and/or country
where the Assignments will be performed and rated no less than Standard and Poor's
AMato Claims Paying Ability or BBq to Qualified Solvency Rating as to financial rating
and no less than A- as to Policy Holder's Rating in the current edition of Best's
Insurance Guide (or with an association of companies each of the members of which are
so rated).·
9. Records.
9.1. Recovery Agency shall maintain, for three (3) years, work or repair orders
and billings in connection with the services performed by Recovery Agency, or its
agents or subcontractors, under the terms of this Agreement. Recovery Agency shall
make all such records available for audit and inspection by Redshift Investigation during
45868417.3 5
Redshift 079 144 *44 reasonable business hours, and any discrepancies found as a result of such inspection
shall be promptly adjusted. . ·
9.2. Recovery Agency shall be responsible for maintaining an accurate inventory of . Property in its possession, and in the· possession of its agents or
subcontractors, and shall report to Redshift Investigation, upon request from Redshift
Investigation and at reasonable intervals, the status of said inventory by model and
model year of such Property.
IO. Audit.
Redshift Investigation, or a third party acting .as agentfor Red shift Investigation, may, at any reasonable time and with advance notice, .examine· or audit Recovery
Agency's records pertaining to work efforts, activities or transactions relating to services
provided by Recovery Agency under this Agreem.ent as well as the security, protection
and confidentiality of Redshift Investigation's ·Confidential Information, as that term is
defined in this Agreement. .. In the event Redshift Investigation identifies a control
weakness or risk that could adversely impact Recovery Agency's ability to perform
under the terms and conditions of this Agreement, Redshift Investigation will promptly
inform Recovery Agency in writing of such Weakness or risk. Recovery Agency will
have ten (10) business days to respond to this written notice, and thirty (30) days to
remedy the identified problem. ·
11. Representations And Warranties of Redshift Investigation:
11.1. Redshift Investigation represents and warrants to Recovery Agency that: To the best of its knowledge, Client has the legal right to repossess (a) the Property described in the Assignments. · The information provided regarding any account has been prepared
(b) in good faith based upon Redshift Investigation's books and records.
(c) Redshift Investigation is authorized to enter into this Agreement. 12. Representations And Warranties of Recovery Agenc~. ·
12.1. Recovery Agency represents and warrants to Redshift Investigation that: It is operating as the business entity described under the signature (a) line of Recovery Agency and that such business entity possesses all licenses and
permits in the State, County or other jurisdiction in which Recovery Agency operates in
order to allow Recovery Agency to repossess the Property described in the
Assignments from Redshift Investigation to Recovery Agency.
(b) Recovery Agency and its subcontractors are duly licensed, bonded, insured and qualified to do business as may be required in the jurisdiction(s) where the
services hereunder will be performed and other applicable law.
45868417.3 09803765
Redshift 080 145 *45 ~ecovery Ag~ncy Vfill comply with all !nstructions given by Redshift . • (c) lnvestrgation and wtll comply With all laws and regulatrons applicable to Recovery
Agency in recovering the Property.
(d) To the best of Recovery Agency's knowledge, its computing environment(s), and the computing environmerit(s) of its subcontractors, used to provide
services under this -Agreement, are free from all generally-known viruses, worms,
Trojans and other "malware," and that Recovery Agency and its subcontractors have
deployed antivirus software. · lndem11ification.
!3.
13.1. Recovery Agency hereby agrees to indemnify and hold Redshift Investigation, together with its agents, employees and clients, harmless from any and all
damages, liability, cause.s of action, costs, expenses, contingent or liquidated damages
(including attorney's fees), resulting directly or indirectly from the breach of any
provision of this Agreement, or the acts, omissions, negligence, wrongful acts or
repossession, or wrongful operation of Recovery Agency's business not in accordance
with applicable laws and regulations, or errors by Recovery Agency, or any of its
employees, agents, representatives, officers or subcontractors. This indemnification
includes but is not limited to any liability Recovery Agency may incur due to the use of
unlawful means of obtaining property.
13.2. Recovery Agency expressly indemnifies Redshift Investigation against any
third party claims arising out of its services under this Agreement, including wrongful
repossession, wrongful operation of business not in accordance with laws and
regulations and' all wrongful acts by repossession agents or investigators hired by or
contracted to Recovery Agency. ·
13.3. Recovery Agency agrees to assume all liability, and indemnify Redshift
Investigation, for any employee or independent contractor's failure to abide by state and
federal laws and failure to maintain insurance as required pursuant to Section 8 of this
Agreement.
14. Prohibition On Assignment.
14.1. Without Redshift Investigation's prior written consent, Recovery Agency
will not assign or transfer to any other person or company this Agreement or" any
Assignments made by Redshift Investigation hereunder. All persons used by Recovery
Agency to carry out and perform the repossession, transport or storage with respect to
any Assignment under this Agreement shall be insured under Recovery Agency's
insurance policy described in Section 13. Without limiting the generality of the
· foregoing, Recove1y Agency shall not use independent contractors who are not covered
under Recovery Agency's insurance policy.
14.2. Recovery Agency agrees and warrants that its subcontractors will not
subcontract any of Redshift Investigation's Assignments to recovery agencies or
subcontractors/agents without the prior written consent of Redshift Investigation. Any
458634\7.3 09803765
Redshift 081 146 *46 such subcontracting by Recovery Agency's agents/subcontractors will be deemed a
material breach of this Agreement.
15. Prohibition on Pretexting
Recovery Agency agrees that neither it nor its subcontractors or agents shall engage in the practice of pretexting. Broadly defined, without limitation, pretexting is an
investigatory action that disguises the identity of a caller, the true nature of a
communication, or the purpose of the contact in order to obtain personal information
about another. It would also include-the use of false, fictitious, or fraudulent statements
to obtain (or purchase) non-public information of an account debtor.
16. Interpretation and Enforcement.
16.1. This Agreement contains all· of the agreements, understandings,
representation, conditions, warranties and covencmts made between the Parties, and all
modifications and amendments must be in a writing signed by the Parties.
16.2. This Agreement will be binding upon the Parties, their successors and
assigns.
16.3. This Agreement will be governed by the laws of the State of California. 16.4. This Agreement may be executed in one or more counterparts which,
when taken together, shall constitute the entire Agreement.
16.5. In the event legal action is necessary to enforce or interpret the provisions of this Agreement, the Parties agree to be· subject to jurisdiction in Sacramento,
California; any claim will be submitted and heard in Sacramento. The prevailing party
will be entitled to recover reasonable attorneys' fees.
458684 I 7.3 09803765
Redshift 082 147 *47 Exhibit A
Polic~$ and ;Procedures
I. Acceptance of Assignment
a. Rec()gnize Redshift Investigation as its clienti.agent shall not contact legal owner in connection to assignments reeeived by RSI during or upon completion .of said assignment.
b. Acknowledge receipt of assignment via first update either faxed or emailed within 24 hours ofacceptance.
c. Assignments will include: date of assignm~nt, client name, registered.ownerts name, complete vehicle infonnation, and paymenthist;ory.
d. Fir$t update should .sive complete description of property checked, including other vehicles on the property, neighborhood description, whether able to check garage If present. · e. Subseq1,1er1t updates. should in.clude ability to make contact with residents or property owners. Ifcontact.isnot w~teci it \yill be defined in the assignment. f. Most clients require skip assignments to be accepted on a contingent basis only. In some cases weare able to get close f~ of$75.()0;.acceptance of.assignment will clearly adV:is.e either contingent. or close. fee $75;00 · g. All f~s are agreed upon by R~dshi.ft Investigation and Contractor as written in Fee.Schedule. Any additional funds or fees must be pre-approved. Deviation from this may resultin non~payment of unapproved activit}-.
ll. ReportingRepossession
a. Report repossession viafacsimileor email with. (24) hours of effecting repossession. Fax notice to 707~452 .. 8650 or email to info@redshiftinye§tigation.com;.we require. the following infonnation: i. Date. and .time of repossession
ii. Address,collateral was.seoured from iii. Police Department notific::ation if required in your state iv. Mileage of vehicle ifava:ilable
v, License: plate and tag expiration ·
vi. Storage address of collatend
vii. Personal property (yes or no) b. Prepare and forward to R~I, within twenty..,four (24) hours ofrepossessing a condition report ofthe collateral recovered. The condition report should be an objective evaluation ofthephysical appearance of the recovered property and wilJ not be deemed an evaluation ofthe mechanical conditiQn. All collision .and comprehensive damage must be aocumented at the time of the report.
c. Prepare andforward.to RSI a list of personal property in accordance. with applicable state Jaws.
d. Store aU personal property found in or with recovered property in accordance with applicable state .laws.
e. Dispose of all personal prc:>perty in accordancewithapplicable state. laws.
4S8684!B. 09803765
Redshift 083 148 *48 III. Impounds
a. Vehicles located at Tow Company with bailout fees must be approved before pickup.
b. It is always appreciated if bailout fees can be fronted for prompt recovery, . however if agents policies do not comply then RSI will next day air bailout amount.
c. All authorized fees are required to have a bailout receipt that matches the amount approved and billed.
IV. Keys
a. Regular keys are included in the standard repossession fee, unless agents key charge is pre~approved. Security keys are only made with client's approval. b. Keys charges of any kind will not be paid ifnot pre-approved. V. Mileage a. Mileage can only be paid if pre-approved with name and date or representative in writing; email is an acceptable fonnat.
VI. Finders Fees
a. Finders fees are sometimes an effective way to recover a vehicle however they can only be approved by the client. · b. Finders fee.s will not be paid if not pre-approved
VII. Releasing Vehicles
a. Agent can only release/redeem a vehicle to the debtor with written permission from RSI or its client. ·
VIII. Transport and Storage
a. RSI will send transpoti instructions. {See line XL Fee Schedule for rates). b. If vehicle is on agent's lot for more than 30 days without instructions to trnnsport or hold then agent must notify RSI in an email of stored vehicle. Email address: info{a)Jedshi ftinvesti gation.com.
c. Storage agent approves 1 0 free days of storage to all clients.
d. Storage fee to client is $8.00 per day starting on the (11) eleventh day. i. Exception
L VW Credit/ Audi Financial is $7.00 per day starting on the (11) eleventh day.
IX. Closing Assignments
a. Only when approved by RSl- most assignments are on a contingent basis however if close fee has been approved the amount is $75.00 unless pre-approved for a higher amount.
b. If you have reached a dead end and want to close the assignment it still must be approved by RSI or client. ·
c. If not authorized then the assignment can only be suspended in your system and RSI will advise when the client has authorized the close for billing.
d. Close fees of any kind will not be paid if not approved.
X. Accounting Procedures
a. Invoice RSI immediately following the repossession within 24 hours. Invoices should be sent either fax or scanned and emailed. DO NOT MAIL INVOICES. i. Fax number: 707-452-8650
ii. Email address: info@redshiftinvestigation.com A-2
45868417.3 09803765
Redshift 084 149 *49 b. lnyoices should. include: RSI.accountnwnber •. full debtor name; vehicle information, and last.six.ofVIN#. · · c. Subini.t Invoices :ih a tirtiely.m~~er. AnY invoice sent oyer 9.0 days from the time of~pqssession cannot and willnot be paid.
XI. Fee Schedtile:
a. Standar:tfRepossession F.ee .............................. $350.00 L Exceptions ·
1. Carmax ................ ~ ........................ $·325.00 2, VW Credit/Aqdi Finan,ciaJ., . : ~ .....• .. $325. .00 b. Close Fee ......... "'" .............. ·.·.·~·~~.··· ....... ~ .. ~ ··11:·· '·~ ~ .... i •. :.:.~ '!;!';.• ~·~C<:>ntingent · i. Exceptions ·
L VW Credit/Audi Pinimqial .................. $75.00 2. Pre-approved.Close·Fee .................. more than $75.00
c. Transpe>I1!Delivery Fee ......... ~ ........ , ................. pre-approved only .i. Exceptions .
I.. Carmax (within 50 miles) ............... up to $75.00 2. Carmax (oyer 50 miles) ....•..... ~ .• 1 ..... ,pre~~pp:rQv~d only
d.. Miletige Fee .................................... ;, ............. pre-approved only .e. Key_ Fee .. ".~· •:•· ".~ ......... a, .. ~ ..... •·.t: ~ -:;.,:., !' .. • olio, ................. ,.~ ~····" •• • . . . . . . . . II' . . . . . . . . • ·pre-approved Otily f.. Finders: Fee ............................................ ·~ . ~ ...... pre-approved only A:-3
4S868417.3098Q3765 Redshift 085
150
Exhibit B
Notification Report
Recovery Company: Client: Debtor:
Recovered by: _____ Recovery Address: ____ --"-_______ _
Recovery Date: Account#: W/0# -------- ----~---------
Year:_____ Make:_______ Model: _________ _
Color: _ ___ _ Runs: _______ ..,... Keys: _ _ _ __ _ __ _ _ _
Tags: License: _______ Property in Vehicle: _____ _
Tow Dolly
Agency: ___ _____ ______ Phone: _____ __ __ _
Notification Date & Time: Badge#: ____ __ __ _ _
Storage ,_,v.._, .... ~'"·----------------···-----------
Notes: __ __ ~-----------,---~------------- B-1
458684173 09803765
Redshift 086 151 *51 get_fi le _secure.php
https:/iwww.masterqueue.com/get_file:_secure.php"type=osa&id=JO ... lN. WJTNESS WHEREOF, \he Parties hereto hava executed this .Agreement <m the date written ba'ow .
.cREDSHIFr \NVEST!GAT10N"
{EftecUve Date ot Agn:,.,Jment) Redshift 087 l of]
3/25/2013 5:24PM 152 *52 TAB 4
AFFIDAVIT OF KAREN C. BURGESS Before me, the undersigned notary, on this day personally appeared, Karen C. Burgess, the affiant, a person whose identity is known to me. After I
administered an oath to affiant, affiant testified:
“My name is Karen C. Burgess. I am over 18 years of age, of sound mind, and capable of making this affidavit. The facts stated in this affidavit are within
my personal knowledge and are true and correct.
I am an attorney licensed to practice in the State of Texas. I have practiced law for eighteen years. I am Board Certified in Civil Trial Law and I have an AV
Preeminent rating by Martindale-Hubbell.
I represent Appellees Centroplex Automobile Recovery, Inc. and John F.
Thompson (“Appellees”) in this case and I have personal knowledge of the case
and the work performed.
It was necessary for Appellees to retain an attorney to represent them in this matter. I have agreed to be compensated for my work based on an hourly rate plus
costs. The other attorney and paralegal assigned to this case (1) are qualified by
education, experience, and training to perform the services required, (2) have
knowledge of the legal system, principles, and procedures, (3) performed tasks that
are traditionally done by an attorney, (4) performed services that were reasonable
and necessary, and (5) were under my supervision.
Appellant Santander Consumer USA, Inc.'s ("Appellant") brief required approximately 44.4 hours of attorney time and 10.0 hours of paralegal time, for a
total of$11,000.00, to defend.
The attorney services and fees charged in this case were reasonable and necessary under Texas State Bar Rule of Professional Conduct, Rule 1.04(b ), and
were incurred in defending Appellant's brief. The fees I have charged in this case
are significantly lower than those customarily charged in this area for the same or
similar services for an attorney with my experience, reputation, and ability,
considering the type of controversy, the time limitations imposed, and the results
obtained."
Sworn to and subscribed before me by Karen C. Burgess on this the 20th day of
January, 2015.
\11111/ft ~t~\~.v ef';~ ERIC JOHN BOUCHE RON Notary Public in and for the State of Texas f~i!:,{\:,::::.t'\ Notary Public, State of Texas '-~~~·:{.>/ My Commission Expires ~,.,~r,;;,\~~ .... .:- September 22, 2015
[1] As described in Section B(2), the case at bar lacks an additional key requirement for arbitration: consent. Cross-Defendants are not nonsignatories seeking to enforce an arbitration agreement; they are nonsignatories that Santander seeks to compel to arbitration without their consent.
[2] See SEB Inc. v. Campbell , No. 03-10-00375-CV, 2011 WL 749292, *4 (Tex. App.—Austin Mar. 2, 2011, no pet.)(mem. op); Jenkens & Gilchrist, P.C. v. Riggs , 87 S.W.3d 198, 202–03 (Tex. App.—Dallas 2002, no pet.); McMillan Comp. Translation Sys. , 66 S.W.3d 477, 481 (Tex. App.—Dallas 2001, no pet.) (holding agents of signatory “were entitled to the benefit of the arbitration agreement for these claims”); Gililland v. Taylor Inv. , No. 11-03-00175-CV, 2004 WL 2126755, *3–4 (Tex. App.—Eastland Sep. 23, 2004, pet. denied). Moreover, Jenkens & Gilchrist held the law firm seeking to enforce its client’s agreement was not an “agent” of its client because the firm was an independent contractor. 87 S.W.3d at 202. Similarly, in the case at bar, the sole contract Santander executed with any of the Cross-Defendants expressly designated Redshift an independent contractor. (CR 81.)
Page
[2] AFFIDAVIT OF KAREN C. BURGESS