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Galloway v. Priority Imports Richmond, LLC

United States District Court, E.D. Virginia, Richmond Division

September 10, 2019



          John A. Gibney, Jr.United States District Judge.

         Weeks 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.


         On May 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)[1] 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).

         The 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.

         Two 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.

         On 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.


         A 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.[2]

         Because 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.

         A. ...

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