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Robert Smith, An Individual, Individually and On Behalf of A Class of Similarly Situated Persons v. Americredit Financial Services

March 12, 2012

ROBERT SMITH, AN INDIVIDUAL, INDIVIDUALLY AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED PERSONS,
PLAINTIFF,
v.
AMERICREDIT FINANCIAL SERVICES, INC., D.B.A. ACF FINANCIAL SERVICES, INC., A BUSINESS ENTITY FORM UNKNOWN, DEFENDANT.



The opinion of the court was delivered by: Hon. Dana M. SABRAWUnited States District Judge

ORDER DENYING DEFENDANT'S RENEWED MOTION TO COMPEL ARBITRATION [Docket No. 61]

This case comes before the Court on Defendant's renewed motion to compel arbitration. Plaintiff filed an opposition to the motion, and Defendant filed a reply. The motion came on for hearing on March 9, 2012. John Hanson and Michael Lindsey appeared for Plaintiff, and Anna McLean and Shannon Peterson appeared for Defendant. For the reasons discussed below, the Court denies the motion.

I.

BACKGROUND

This case arises out of Plaintiff's purchase of a motor vehicle from McCune Motors in San Diego, California. Plaintiff financed his purchase of the car through McCune Motors, as evidenced by a Retail Installment Sale Contract ("the Contract"). (See Decl. of Robert Smith ("Smith Decl."), Ex. 1.) The Contract contains an Arbitration Clause, which is located at the end of the multi-page Contract. The Clause is surrounded by a border, and includes a heading that reads, "ARBITRATION CLAUSE." (Id.) Below that heading is another line that reads, "PLEASE REVIEW -IMPORTANT - AFFECTS YOUR LEGAL RIGHTS." The Clause then reads:

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this clause, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arise out of or relate to your credit application, purchase or condition of this vehicle, this contract, or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action. You expressly waive any right you may have to arbitrate a class action. You may choose one of the following arbitration organizations and its applicable rules: the National Arbitration Forum, ... the American Arbitration Association, ... or any other organization that you may choose subject to our approval. You may get a copy of the rules of these organizations by contacting the arbitration organization or visiting its website. ...

(Id.)

After execution of the Contract, McCune Motors assigned its interest under the Contract to Defendant Americredit Financial Services, Inc. Plaintiff thereafter defaulted on the loan, prompting Defendant to repossess the vehicle. (Compl. ¶ 10.) After repossession, Defendant sent Plaintiff a "Notice of Our Plan to Sell Property" ("Notice"), which reflected Defendant's intent to sell the vehicle at a private sale. (Smith Decl., Ex.2.) That Notice informed Plaintiff that he had a right to redeem the vehicle and a right to reinstate his account by paying certain amounts. (Id.) Plaintiff did not exercise either of those rights, and the vehicle was sold. (Compl. ¶ 13.)

Subsequently, Defendant sent Plaintiff a "Deficiency Calculation," which informed Plaintiff that there remained a deficiency on the account in the amount of $5,128.77, for which he was responsible. (Smith Decl., Ex. 3.) Plaintiff made some payments on the account, but there remains an outstanding balance.

On May 18, 2009, Plaintiff filed the present class action case against Defendant alleging violations of California Civil Code §§ 1788, et seq., and § 2981, California Business and Professions Code § 17200, and a claim for declaratory relief. In essence, Plaintiff alleges the Notice does not comply with the Automobile Sales Finance Act ("ASFA"), California Civil Code § 2981, et seq. Plaintiff also alleges Defendant has violated the Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788.17.

In response to the Complaint, Defendant filed a motion to compel arbitration and dismiss, or in the alternative, stay this case, which the Court granted. In the order granting Defendant's motion, the Court found the arbitration agreement was procedurally unconscionable, but not substantively unconscionable. In arguing the agreement was substantively unconscionable, Plaintiff relied primarily on Discover Bank v. Superior Court, 30 Cal. 4th 148 (2005). This Court ...


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