United States District Court, E.D. Virginia, Richmond Division
A. Gibney, Jr. United States District Judge
2018, Renee Galloway bought a new car from Priority Toyota
Richmond, LLC ("Priority"). A few weeks later,
Priority forced her to come back to the dealership and choose
between agreeing to higher interest rates or returning her
car. Galloway has sued Priority for violating federal and
state consumer protection laws. Priority has moved to dismiss
for lack of subject matter jurisdiction, or alternatively, to
compel arbitration. The Court heard argument on the motion on
August 7, 2019. Following the hearing, the Court granted the
motion in part and required the parties to attend mediation
before the Better Business Bureau ("BBB"). The
parties did not resolve the case at mediation.
December 3, 2019, the Court held a hearing on the motion to
dismiss insofar as it asks the Court to compel arbitration.
Galloway argues that the arbitration provision violates
public policy and is unenforceable because it prohibits an
arbitrator from awarding punitive damages. Galloway also asks
the Court to hold an evidentiary hearing regarding
Priority's intent for including the provision in its
contracts. Because the Court concludes that the parties
entered into a valid arbitration agreement that does not
violate public policy, the Court will grant the motion to
dismiss and declines to hold an evidentiary hearing.
FACTS ALLEGED IN THE COMPLAINT
purchased a new Toyota Camry from Priority in May, 2018. To
complete the transaction, Galloway signed a retail
installment sales contract ("Credit Contract") and
a Buyer's Order form ("Buyer's Order"). The
Credit Contract contained the financing details, and the
Buyer's Order contained the arbitration agreement. The
arbitration agreement provides:
You, as Buyer(s), and Dealer agree that if any Dispute ...
arises, except as provided in this agreement, the Dispute
will be resolved by binding arbitration by a single
arbitrator under the applicable rules of the [Greater Hampton
Roads BBB]. You agree that you will submit a Dispute
for resolution in your individual capacity only and not as a
named plaintiff or as a class member in any purported class
or representative capacity. No. claim arising from a Dispute
(known or unknown) may be adjudicated in or be the basis for
compensation as a result of any class action proceeding. The
parties understand that they are waiving their rights to a
jury trial and class consideration of all claims and disputes
between them not specifically exempted from arbitration in
this Agreement. The enforceability of this arbitration
agreement shall be governed by the Federal Arbitration Act.
The arbitrator's decision shall be binding on all parties
and may be entered in the highest local, state, or federal
court, and before any administrative body. If You are signing
a retail installment sale contract or lease in connection
with this transaction that contains an arbitration agreement,
that arbitration agreement supersedes this agreement in any
case where the retail installment sale contract or lease is
No. 11-2, at 1). The Buyer's Order also provides:
All costs and expenses of the alternative dispute agency and
the fees of the arbitrator shall be borne by the Dealer,
except if you commence arbitration then you are financially
responsible for the filing fee to the extent equal to the
amount for filing a civil action for the claimed amount the
Circuit Court of the county or city where the Dealer is
located plus the incremental amount of the filing
fee with the alternative dispute agency for any amount
claimed in excess of the purchase price of the vehicle
involved in the Dispute. Each party shall be responsible for
its own attorney, expert and other fees and costs, unless
awarded otherwise under applicable law. The arbitrator must
make a written decision with separate findings of fact and
conclusions of law. The arbitrator may not award punitive
damages. The arbitrator shall apply the substantive law of
the state of Virginia, and the arbitration shall take place
in the county or city in which the Dealer is located.
(Id. at 2.) The Buyer's Order sold and assigned
the Credit Contract to the Toyota Motor Credit Corporation
("Toyota"), which allowed Toyota to change
Galloway's financing terms.
asked Galloway to return to the dealership a few weeks later
to sign more paperwork. Galloway did not return to the
dealership. In June, 2018, Priority again asked Galloway to
return to the dealership to sign more paperwork. At the
dealership, Priority told her that the original 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 ¶¶
58-59.) Galloway refused the terms of the new contract and
returned the car.
March 26, 2019, Galloway filed this lawsuit. She alleges (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.
filed a motion to dismiss all counts for lack of subject
matter jurisdiction, invoking the mediation and arbitration
provisions of the Buyer's Order. The Court held a hearing
on the motion on August 7, 2019. The Court ordered the
parties to mediation and stayed the case for forty-five days.
The parties did not resolve the case. On December 3, 2019,
the Court held a hearing on the motion insofar as it asks the
Court to compel arbitration of Galloway's claims.
Federal Arbitration Act ("FAA") recognizes
"that arbitration is a matter of contract[, ]. ..
[a]nd... courts must 'rigorously enforce' arbitration
agreements according to their terms." Am. Exp. Co.
v. Italian Colors Rest.,570 U.S. 228, 233 (2013)
(quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S.
213, 221 (1985)). Virginia law considers arbitration
agreements "valid, enforceable[, ] and irrevocable,
except upon such grounds as exist at law or in equity for the
revocation of any contract." Va. Code Ann. §
8.01-581.01. "The validity of an arbitration agreement
is a 'question of arbitrability' and, in the normal
course, it 'is undeniably an issue for judicial
determination."' Hayes v. Delbert ...