Pereira v. Santander Consumer USA, Inc.

Filing 23

WRITTEN Opinion signed by the Honorable Charles P. Kocoras on 4/2/2012: Santander's motion (Doc 16 ) to compel arbitration and stay the proceedings is denied. Status hearing set for 4/18/2012 at 9:30 a.m. (For further details see minute order.)Mailed notice(sct, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Charles P. Kocoras

CASE NUMBER

11 C 8987

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

April 2, 2012

Pereira vs. Santander Consumer USA, Inc.

DOCKET ENTRY TEXT

Santander’s motion (Doc [16]) to compel arbitration and stay the proceedings is denied. Status hearing set
for 4/18/2012 at 9:30 a.m.

O[ For further details see text below.]

Docketing to mail notices.

ORDER

This matter comes before the Court on Defendant Santander Consumer USA, Inc.’s
(“Santander”) motion to compel arbitration and stay the proceedings. For the reasons set forth
below, Santander’s motion is denied.
In April 2006, Prisco Fazio (“Fazio”) obtained a loan from HSBC Auto Finance, Inc. to
purchase an automobile. The loan agreement, which was subsequently assigned to Santander,
contained an arbitration provision. Plaintiff Tercia Pereira (“Pereira”) was Fazio’s wife at the time
he executed the loan but was not a party to the loan agreement.
Sometime thereafter, Fazio defaulted on his loan obligations. Pereira alleges that on
multiple occasions in 2010, Santander called her mobile phone in an effort to collect payments due
under the loan agreement. On December 19, 2011 Pereira filed a complaint against Santander
alleging that Santander’s unauthorized phone calls violated the Telephone Consumer Protection
Act (“TCPA”), 47 U.S.C. § 227. Santander now moves to stay the proceedings and compel
arbitration.
In analyzing a motion to compel arbitration, a court may only consider the issues relating
to arbitrability and must not reach the merits of the underlying claim. Hawkins v. Aid Ass’n for
Lutherans, 338 F.3d 801, 807 (7th Cir. 2003) (citation omitted). “Arbitration is contractual by
nature,” and a party may not be compelled to arbitrate a dispute absent an agreement to do so. Id.
(citing Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64 F.3d 773, 776 (2d Cir. 1995). However,
11C8987 Pereira vs. Santander Consumer USA, Inc.

Page 1 of 2

ORDER

the obligation to arbitrate a dispute is not limited to those who have personally signed a written
agreement. Id. Rather, a non-signatory can be bound by an arbitration agreement under one of five
doctrines: (1) assumption; (2) agency; (3) estoppel; (4) veil piercing; and (5) incorporation by
reference. Id.
Santander maintains that although Pereira was not a signatory to the arbitration agreement,
she is nevertheless equitably estopped from challenging it. A non-signatory is estopped from
refusing to arbitrate “if [she] knowingly seeks the benefits of the contract containing the arbitration
clause.” Zurich, 417 F.3d at 688 (citations omitted). Santander contends that Pereira directly
benefitted from the loan agreement because she drove the automobile acquired through the loan.
This benefit is legally insufficient to compel arbitration. Estoppel bars a party who claims the
direct benefit of a contract from asserting that she is not bound by the arbitration clause contained
in that contract. Zurich, 417 F.3d at 688. In other words, a party will be estopped from refusing
to arbitrate while simultaneously seeking to enforce another provision in the contract containing
the arbitration provision. See id.; In re Humana Inc. Managed Care Litig., 285 F.3d 971, 976 (11th
Cir. 2002); Hughes Masonry Co. v. Greater Clark Cnty. Sch. Bldg. Corp., 659 F.2d 836, 838-39
(7th Cir. 1981); Gersten v. Intrinsic Tech., LLP, 442 F. Supp. 2d 573, 579 (N.D. Ill. 2006). In
every case relied upon by Santander, the non-signatories sought to enforce one provision of a
contract while seeking to avoid enforcement of the arbitration clause. Here, Pereira is not seeking
to enforce any provision of Fazio’s loan agreement. Her complaint, which alleges a violation of
the TCPA, makes no mention of Fazio, the automobile, or the loan agreement. The alleged use of
Fazio’s automobile is a benefit far too removed from the agreement for this Court to compel
arbitration. “Sometimes I’ve believed as many as six impossible things before breakfast.” Lewis
Carroll, Through the Looking Glass 45 (1st Edition Media 2009). Not today.
For the foregoing reasons, Santander’s motion to compel arbitration and stay the proceedings
is denied.

Date: April 2, 2012
CHARLES P. KOCORAS
U.S. District Judge

11C8987 Pereira vs. Santander Consumer USA, Inc.

Page 2 of 2