Order Form (01/2005)

United States District Court, Northern District of Illinois

Name of Assigned Judge

or Magistrate Judge

Charles P. Kocoras Sitting Judge if Other

than Assigned Judge

CASE NUMBER 11 C 8987 DATE April 2, 2012

CASE

TITLE

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,

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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 seeksthe 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

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