GALLOWAY v. SANTANDER CONSUMER USA, INC., No. 15-1392

Decided: April 8, 2016

The Fourth Circuit affirmed the district court’s order.

Jacqueline Galloway (“Galloway”) entered into a retail installment contract (“RISC”) in order to finance her purchase of a vehicle in March 2007. The RISC was assigned to CitiFinancial Auto, LTD. (“CitiFinancial”). Galloway was supposed to make 72 payments of $487.46 on the 17th day of every month. Sometime before October 31, 2008, Galloway contacted CitiFinancial about reducing the amount of her monthly loan payment. CitiFinancial sent her an amended agreement to sign and once she signed it, the company would review her request. Galloway reviewed and signed the amended agreement for the RISC, which contained terms reducing her monthly payment. The amended agreement also contained an arbitration agreement which allowed CitiFinancial to elect to arbitrate any dispute rather than passing through the court system. There is nothing in the record that CitiFinancial ever sent Galloway written approval of the amended agreement, but Galloway reported a decrease in her monthly payments sometime after November 14, 2008. There was an 86-cent discrepancy between the amount contemplated in the amended agreement and the amount Galloway reported. Galloway paid and continued to pay the lower monthly payments for several years. In December 2011, CitiFinancial assigned the security interest in the vehicle to Santander Consumer USA, Inc. After Galloway fell behind on payments, Santander repossessed her car, sold it and eventually waived the deficiency. Galloway subsequently brought this action in state court. The action was later removed to federal district court where Santander moved to compel arbitration under the Federal Arbitration Act (“FAA”) based on the amended agreement. The district court determined that Galloway was bound to the agreement and gave an order compelling arbitration. The district court entered a final judgment dismissing the case so as to allow Galloway to pursue an immediate appeal.

The Court reviewed the district court’s decision de novo. The Court stated that application of the FAA requires demonstration of four elements. The second element, a written agreement that includes an arbitration provision that purports to cover the dispute, is the only element at issue here. Galloway contended that there was a factual issue as to whether the arbitration provision was a term of any contract that she and CitiFinancial entered into. The court disagreed and found as a matter of law that the amended agreement signed and sent by Galloway to CitiFinancial constituted an offer to enter into an agreement, not an acceptance. Furthermore, the Court found that the offer was accepted when CitiFinancial lowered the amount of Galloway’s monthly payment. The court found that the 86-cent difference between the amended agreement and the payment Galloway was given constituted a counter offer that Galloway accepted by making the payments for several years. While there was no explicit acceptance, the Court found that Galloway’s conduct could be interpreted as assent to the terms of the amended agreement. The Court held that a signature was not necessary and that the writing element of the FAA was satisfied in this case. The Court also disagreed with Galloway’s argument that the arbitration agreement was not enforceable. The Court reasoned that the writing requirement was satisfied because there was a physical embodiment of the underlying legal obligations and as such the written assent was not necessary. The Court stated that all that was required was that the arbitration provision be in writing.

Accordingly, the judgment of the district court is affirmed.

Full Opinion

Michael W. Rabb

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