The Fifth District Appellate Court reversed St. Clair County
Circuit Judge Andrew Gleeson’s order denying a defendant’s motion to compel
arbitration, noting that the parties did not provide enough information and
further discovery is needed to make an appropriate decision.
Defendant Santander Consumer USA Inc.’s motion to compel arbitration, involving a man’s case alleging he did not receive the title to his vehicle as promised, is remanded to the St. Clair County Circuit Court for a third hearing following additional discovery.
Justice Judy Cates delivered the opinion on Jan. 22 with
justices S. Gene Schwarm and James Moore concurring.
According to the opinion, plaintiff Franklin Sturgill
executed a retail sales installment contract with Tri Ford Mercury, Inc., on
May 12, 2006, to buy a Ford F-150 pickup truck for $19,037.
Sturgill agreed to make payments of $433.65 per month for
six years at an interest rate of 17.95 percent.
The contract was for June 2006 until June 2012.
Tri Ford Mercury assigned all of its rights, title and
interest in Sturgill’s purchase to Triad Financial Corporation.
In June 2009, Triad agreed to extend over-due payments on
the plaintiff’s contract. In exchange, Sturgill agreed to release Triad from
any and all claims that may have accrued under the installment contract.
Included in the Extension Agreement between the parties was an arbitration
Then in September 2009, Santander entered into an Interest
Purchase Agreement with Triad Financial Holdings LLC and its subsidiary, Triad
Financial Corporation, which did not contain an arbitration clause.
Sturgill was not a signatory to the Interest Purchase
Agreement and had nothing to do with the transfer of the interests set forth in
that agreement, but he began making his payments to Santander instead of Triad.
In June 2013, Sturgill and Santander reached an agreement to
settle the plaintiff’s installment contract for less than the amount originally
owed. Santander provided a letter addressed to Sturgill titled “Settled in Full
Santander stated that Sturgill’s title would be released in
June 2013. However, when the title didn’t come, Sturgill sent the defendant a
letter requesting his title the next month.
Nothing in the record shows that Santander responded to the
By August 2013, Sturgill filed a one-count putative class
action complaint against Santander in the St. Clair County Circuit Court. He sought
a statutory award of $150 for himself and each class member, plus attorney’s
fees and costs.
In October 2013, Santander filed a motion to compel
individual arbitration and to dismiss or stay the judicial proceedings.
A hearing was held before the trial court in December 2013,
where the court agreed that the central issue was whether an enforceable
arbitration clause existed between the parties.
The court denied Santander’s motion to compel arbitration
without prejudice but indicated that the defendant could raise its motion again
after more discovery.
Santander filed a renewed motion to compel in January 2014, but did not appear to conduct additional discovery.
Sturgill objected a second time in February 2014, arguing
that he never agreed to arbitrate any dispute with Santander and that there was
no valid arbitration agreement in any contract with the defendant.
On July 11, 2014, Gleeson issued an order denying the
defendant’s motion. Santander appealed.
When addressing the issues at hand, the appellate court
noted that simply denying Santander’s renewed motion to compel arbitration
without providing an explanation “leaves this court without any basis for
understanding the trial court’s reasons for its ruling.”
“In other words, the court has not substantiated the
existence or truth of any fact that would allow for the denial of the motion.
Because there was no substantive disposition of the multitude of issues raised
by Santander’s renewed motion to compel arbitration, we cannot say that there
was a sufficient showing to sustain the trial court’s order denying the motion
to compel arbitration,” Cates wrote.
“Accordingly, we must reverse the order and remand the case
to the trial court with instructions to proceed summarily, to resolve those
issues that can properly be decided by the court under the [Federal Arbitration
Act], and to render a disposition with some explanation or substantiation of
the facts or rules of law that allow for the order entered,” she continued.
Cates wrote that the case is complex and requires more
“In these types of cases, the trial court is at a
significant disadvantage when the parties do not clearly define the issues.
“On the two occasions when the court heard arguments in this
case, the court indicated to the parties that it did not have sufficient
information, that certain documents had been submitted in a format that was
incapable of being read, and that further discovery should be conducted.
“The record reveals, however, that no additional discovery
was conducted to further define the issues, and no evidentiary basis was
offered for many of the contractual issues and defenses raised, thus leaving
the court without the clarity it had requested,” Cates wrote.
As a result, the appellate court remanded the case for more discovery and a third hearing.
Shari Murphy of The Law Offices of Shari Murphy in Wood
River represents the plaintiff
Michael Dahlen of Feirich, Mager, Green & Ryan in
Carbondale and Michael Richman of Henry Pietrkowski, Reed & Smith in
Chicago represent the defendant