United States District Court, E.D. Virginia, Richmond Division
A. Gibney, Jr.United States District Judge.
after Renee Galloway bought a new car from Priority Toyota
Richmond, the dealership forced her to choose between
agreeing to higher interest rates or returning her car.
Galloway has sued Priority for violating various federal and
state consumer protection statutes. Priority has moved to
dismiss for lack of subject matter jurisdiction, citing the
mediation and arbitration agreements in Galloway's
contract. The Court heard argument on the motion on August 7,
2019. Following the hearing, the Court granted in part the
motion insofar as it seeks to require the parties to attend
mediation before the Better Business Bureau, and stayed the
case for forty-five (45) days pending mediation. The parties
shall file a status report by the end of the 45-day period.
The Court now issues this Opinion to explain its reasoning.
FACTS ALLEGED IN THE COMPLAINT
18, 2018, Renee Galloway, an African-American woman,
purchased and took possession of a 2018 Toyota Camry from
Priority following a car accident. Galloway signed a retail
installment sales contract ("Credit Contract") and
a Buyer's Order form ("Buyer's Order").
Galloway agreed to pay a $3, 000 down payment and 72 monthly
payments of $572.68 at 8.49% interest. The Credit Contract
contained the financing details and the Buyer's Order
contained the mediation and arbitration agreements. The
mediation agreement in the Buyer's Order provides:
The Purchaser(s) and Dealer, (collectively, the
"Parties") agree that should any Dispute (as
defined below) arise between the Parties, the Parties
will first attempt to resolve the Dispute through nonbinding
mediation conducted by a neutral third party prior to
instituting any other legal action. Either of the Parties may
initiate the mediation by contacting the organization named
here [Better Business Bureau].
The organization's Rules of Mediation then in effect
shall determine the costs of the mediation services to be
borne by each Party. Each Party will be responsible for its
own expenses incurred in conjunction with the mediation,
including any attorneys' fees. The mediation will be held
in the locality where the Dealer is located unless the
Parties agree otherwise.
(Dk.No. 11-2, at 1).
Buyer's Order also sold and assigned the Credit Contract
to the Toyota Motor Credit Corporation ("Toyota")
and allowed Toyota to change Galloway's financing terms.
weeks later, Priority asked Galloway to return to the
dealership to sign more paperwork, but Galloway did not go to
the dealership. On June 6, 2018, Priority called Galloway
again and asked her to return to the dealership to sign
additional paperwork. When Galloway arrived, Priority told
her that the Credit Contract was invalid and that "she
could not drive her Camry off the lot unless she agreed to a
much higher interest rate and higher payments." (Dk. No.
11, at ¶ 59.) Galloway refused the terms and returned
the car to Priority.
March 26, 2019, Galloway filed this suit alleging (1) a
violation of the Truth in Lending Act ("TILA"), 15
U.S.C. § 1638(a); (2) a violation of the Equal Credit
Opportunity Act ("ECOA"), 15 U.S.C. § 1691(d);
(3) fraud; (4) a violation of the Virginia Consumer
Protection Act ("VCPA"), Va. Code. § 59.1-200;
(5) a claim under 42 U.S.C. § 1983; (6) conversion; and
(7) a violation of the Uniform Commercial Code
("UCC"), Va. Code § 8.9A-625. Priority has
filed a motion to dismiss all counts for lack of subject
matter jurisdiction, invoking the mediation and arbitration
provisions of the Buyer's Order.
motion under Rule 12(b)(1) tests the Court's subject
matter jurisdiction. Priority argues that the Court lacks
subject matter jurisdiction because Galloway failed to
proceed to mediation, a condition precedent to filing suit
under the Buyer's Order.
Priority challenges the Court's "very power to hear
the case," the Court may "weigh the evidence to
determine the existence of jurisdiction." Dominion
Transmission, Inc. v. Precision Pipeline, Inc., No.
3:13cv442, 2013 WL 5962939, at *2-3 (E.D. Va. Nov. 6, 2013).
In Precision Pipeline, the Court held that "[a]
plaintiffs failure to comply with the terms of a contract
prior to bringing suit may affect the plaintiffs ability to
bring the suit, but it does not affect whether the district
court possesses the power to hear the case."
Id. at *3. The Court, therefore, has jurisdiction to
hear the case regarding the mediation provision, but must
decide whether Galloway failed to satisfy a condition
precedent to attend mediation, and if so, whether to stay or
dismiss the case.