Opinion
Index No. 63753/2021
04-08-2022
David LOBEL, individually and on behalf of all other similarly situated New York consumers, Plaintiff, v. CCAP AUTO LEASE, LTD., Santander Consumer USA Holdings, Inc., Santander Consumer USA Inc., and Chrysler Capital Corporation, Defendants.
DENLEA & CARTON LLP, By: James R. Denlea, Esq., Attorneys for Plaintiff, 2 Westchester Park Drive, Suite 410, White Plains, New York 10604 DUANE MORRIS LLP, By: Robert J. Brener, Esq., Attorneys for Defendants, 1540 Broadway, New York, New York 10036
DENLEA & CARTON LLP, By: James R. Denlea, Esq., Attorneys for Plaintiff, 2 Westchester Park Drive, Suite 410, White Plains, New York 10604
DUANE MORRIS LLP, By: Robert J. Brener, Esq., Attorneys for Defendants, 1540 Broadway, New York, New York 10036
Gretchen Walsh, J.
The following e-filed documents, listed in NYSCEF by document numbers 5, 6, 7, 8, 9, 10, 15, 17, and 18 were read on this motion by Defendants CCAP Auto Lease, Ltd. ("CCAP"), Santander Consumer USA Holdings, Inc., Santander Consumer USA Inc. (together, "Santander") and Chrysler Capital Corporation ("Chrysler") (collectively, "Defendants") pursuant to CPLR 7503(a) for an Order compelling non-class arbitration of this putative class action lawsuit commenced by Plaintiff David Lobel, individually and on behalf of all other similarly situated New York consumers ("Plaintiff") and staying this action pending a determination of the arbitration. Upon the foregoing documents, and for the reasons stated herein, Defendants’ motion shall be granted.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff commenced this action by the filing of a Summons and Class Action Complaint (the "Complaint") on September 28, 2021. The Complaint alleges that Plaintiff has commenced this putative class action lawsuit in his individual capacity and on behalf of similarly situated consumers who: (1) leased motor vehicles from Defendants; (2) "rolled" the sales tax associated with their lease transactions into the monthly lease payments that they made thereafter; (3) extended the vehicles’ lease terms at the end of their respective original terms; and (4) have been charged sales tax in connection with their lease extensions on the same portions of their monthly lease payments which already reflect prior sales tax that had been charged, such that they paid a purported "tax upon a tax" (Complaint at ¶¶ 1-19).
Specifically, the Complaint alleges that on or about July 31, 2018, Plaintiff entered into a lease agreement (the "Lease") with Chrysler to lease a 2018 Jeep Grand Cherokee for a 36-month term ending on July 21, 2021 (Complaint at ¶¶ 20-21). It further alleges that the Lease provided for a total monthly payment of $539.97, which amount included payment for Plaintiff's proportionate share of the New York State sales tax due thereunder (id. at ¶¶ 21-22). The Complaint alleges that on or about June 22, 2021, Plaintiff executed a one-month Lease Extension Authorization, which extended the Lease to August 30, 2021, but by which Chrysler improperly added to the $539.97 monthly payment a charge of $45.22 for New York State sales taxes that had already been paid, reflecting an unlawful "tax upon a tax" (id. at ¶ 23). It further alleges that on or about August 3, 2021, Plaintiff executed a two-month Lease Extension Authorization by which the Lease was further extended to October 30, 2021, but that again Chrysler erroneously added to the $539.97 monthly payment an additional monthly charge of $45.22 for New York State sales taxes that had already been paid (id. at ¶¶ 24-25). The Complaint alleges that the requirements for class certification (i.e. , numerosity, commonality, typicality, adequacy of representation, and superiority) have all been met herein (id. at ¶¶ 27-34).
Based upon the foregoing allegations, the Complaint asserts a First Cause of Action for unjust enrichment against all Defendants, and a Second Cause of Action for violation of New York General Business Law ("GBL") § 349 against all Defendants (id. at ¶¶ 35-37; 38-43).
Notably, the Complaint alleges that although the Lease and the Extensions thereof were entered into between Plaintiff and Chrysler, all of the Defendants jointly "own and service Plaintiff's lease and lease extension, as well as the leases and lease extensions of the similarly situated lessees in this action" (Complaint at ¶ 17).
On December 10, 2021, Defendants made the instant motion (Sequence No. 1) pursuant to CPLR 7503(a) for an Order compelling non-class arbitration of this lawsuit and staying the action pending a determination of the arbitration. Plaintiff opposes the motion.
THE PARTIES’ CONTENTIONS
A. Defendants’ Contentions in Support of their Motion
In support of their motion, Defendants submit: (1) an affirmation from their counsel which annexes a copy of the Complaint ("Brener Aff."); (2) an affidavit from Santander's Senior Director of Lease End and Auction Accounts, Andrew Carlstrom, which, inter alia , annexes a copy of the Lease ("Carlstrom Aff."); and (3) a memorandum of law.
In his affidavit, Carlstrom avers that all of the Defendants are interrelated corporate entities, such that Chrysler is a trade name and not a legal entity; that Chrysler is licensed to Santander, which does business as Chrysler; and that CCAP owns the relevant lease agreements, which are serviced by Chrysler/Santander (Carlstrom Aff. at ¶¶ 2-4). He further avers that the Plaintiff's Lease has been assigned to CCAP, and that Plaintiff never notified Defendants that he was exercising his right to opt-out of arbitration pursuant to the terms of the Lease (id. at ¶¶ 6-9, Ex. A).
In their memorandum of law, Defendants contend that the Federal Arbitration Act (the "FAA") favors the enforcement of arbitration agreements (Defs’ Mem. at 5-8). Defendants assert that under the FAA, a written arbitration clause shall be valid, irrevocable and enforceable except upon such grounds as may exist at law or in equity for the revocation of a contract (id. ). Defendants further contend that the FAA overrides inconsistent provisions of arbitration acts with respect to an arbitration agreement's enforceability, preempting state law in order to accomplish the full purposes and objectives of Congress (id. ). In particular, Defendants assert that GBL § 399-c is preempted by the FAA (id. ). Defendants also contend that the FAA provides two exceptions to its general rule in favor of enforcing arbitration agreements, neither of which is applicable: (1) where contracts do not affect interstate commerce; and (2) where an arbitration agreement is unenforceable because the contract should be revoked due to, inter alia , duress, fraud or incapacity (id. ). Defendants further argue that as with the FAA, New York law similarly favors the enforcement of arbitration agreements (id. at 8-9).
GBL § 399-c provides in relevant part that "[n]o written contract for the sale or purchase of consumer goods ... to which a consumer is a party, shall contain a mandatory arbitration clause ... The provisions of a mandatory arbitration clause shall be null and void" (GBL § 399-c[2] ).
According to Defendants, under both the FAA and New York law, a court considering whether to compel arbitration pursuant to an arbitration agreement must consider whether there exists a valid agreement to arbitrate and if so, whether the specific dispute sought to be arbitrated falls within the scope of the arbitration agreement (id. at 9-11). Defendants contend that any doubts that the court may have must be resolved in favor of arbitrability (id. ).
Defendants further contend that they are entitled to arbitrate this dispute because: (1) there exists a valid agreement to arbitrate in the Lease and the particular dispute sought to be arbitrated falls within the scope of the Lease's arbitration provision; (2) the FAA exception for interstate commerce does not apply as the dispute involves interstate commerce; and (3) the FAA exception for unenforceable contracts is similarly inapplicable as there is no allegation, let alone evidence, that the Lease was entered into under duress, fraud or incapacity (id. at 11-17). Specifically, Defendants assert that the broad and unambiguous arbitration provision set forth in Article 30 of the Lease makes clear that Plaintiff agreed to arbitrate all claims and waived the right to a court action and jury trial (id. ). Defendants further contend that Article 30 of the Lease allowed Plaintiff the express opportunity to opt-out of arbitration within 30 days of execution of the Lease, but that Plaintiff never exercised such right (id. ). Defendants also assert that Article 18 of the Lease makes clear that by signing the Lease, Plaintiff acknowledged that he had read all of the terms thereof; and that as such, Plaintiff cannot reasonably argue that he was unaware that he agreed, or did not intend, to arbitrate future disputes, or that he was unaware of the rights he was waiving as a result (id. ). It is Defendants’ contention that Plaintiff does not allege—nor can he credibly allege—that there was any lack of mutual assent, duress, fraud or incapacity that would render the Lease invalid (id. ).
Defendants assert that the scope of the arbitration provision includes the Plaintiff's two causes of action (id. at 14). They claim that the broad terms of Article 30 of the Lease, which provide for the arbitration of "[a]ny controversy or claim ... arising out of or related to the Vehicle [or] this Lease," is a prototypical broad arbitration provision; and that the two causes of action in the Complaint are based on allegations concerning sales tax charged under the Lease and thus clearly "arise out of" the Lease (id. ).
Defendants further argue that the transaction at issue involves interstate commerce (id. at 14-16). According to Defendants, the Complaint alleges that Plaintiff, a New York resident, visited a New York automobile dealership and obtained lease financing from a Delaware corporation (CCAP), and that the Complaint squarely focuses upon the alleged wrongful acts of a Delaware corporation committed against a New York resident in connection with a New York vehicle lease (id. ). Defendants contend that the Complaint is replete with allegations that Defendants are engaged in interstate commerce by serving as full-time finance providers for dealers and consumers throughout the country, and that the FAA therefore clearly applies to the underlying transaction between Plaintiff and CCAP/Defendants (id. ).
Defendants also contend that Plaintiff is prohibited from pursuing class-wide arbitration (id. at 16-17). Defendants argue that Article 30 of the Lease unambiguously provides that Plaintiff agrees that "any and all claims will be resolved by individual arbitration," and that Plaintiff "waive[s] all rights to proceed in a class action or class arbitration" (id. ). Given that such class arbitration waivers are consistently held to be enforceable, Defendants contend that the Court should compel Plaintiff to arbitrate this dispute on a non-class basis (id. ).
B. Plaintiff's Contentions in Opposition
In opposition to Defendants’ motion, Plaintiff submits a memorandum of law. Plaintiff first contends that New York State tax statutes impose a duty on vendors to collect sales taxes properly on the sale or lease of property within New York State (Plf's Mem. at 4-5). Plaintiff asserts that sales taxes, and vendors’ duties to collect such taxes properly, arise uniquely out of New York State tax statutes, and not private contracts and, therefore, this is not a dispute that involves interstate commerce (id. ).
Plaintiff further argues that Defendants’ motion should be denied because they have not met their burden of proving a clear and unequivocal agreement to arbitrate claims for the imposition of an unauthorized "tax upon a tax" (id. at 5-10). Plaintiff asserts that Defendants have not shown that Plaintiff's specific sales-tax-related claims fall within the scope of Article 30 of the Lease because they do not arise out of or relate to the "Vehicle, the Lease" or "any claim based on or arising from an alleged tort" (id. ). Plaintiff argues that: (1) his sales-tax-related claims do not arise out of or relate to the vehicle; (2) he has not asserted a claim based upon or arising from an alleged tort; and (3) his claims do not arise out of or relate to the Lease (id. ). Plaintiff contends that although he may have reasonably expected arbitration of a claim for breach of the Lease or involving tortious conduct, none of which is alleged here, Plaintiff did not agree that the sales-tax-related claims asserted herein would have to be arbitrated on a standalone basis (id. ).
According to Plaintiff, Defendants’ motion should be denied because the imposition of a "tax upon a tax" on New York State consumers in New York does not affect interstate commerce as it is purely an intrastate activity, the FAA does not preempt New York law, and the Lease's arbitration provision is null and void pursuant to GBL § 399-c (id. at 10). Plaintiff contends that the FAA only preempts state statutes such as GBL § 399-c for claims involving interstate commerce, and Plaintiff's claims herein are strictly New York-based (id. ).
Plaintiff further contends that Defendants’ motion should be denied because other than CCAP, the other Defendants (Santander and Chrysler) are not parties to the Lease that contains the arbitration provision (id. at 11). Thus, Plaintiff argues that the non-CCAP Defendants cannot compel him to pursue his claims against them in arbitration and, accordingly, Defendants’ motion should be denied at least with respect to Santander and Chrysler (id. ).
C. Defendants’ Contentions in Reply
In further support of their motion, Defendants submit: (1) an affidavit from Santander's Director of Auction and Inventory Management, Eric Weber ("Weber Aff."); and (2) a reply memorandum of law.
In his affidavit, Weber avers that Santander is comprised of two related entities, by which Santander Consumer USA Inc. is a wholly-owned subsidiary of Santander Consumer USA Holdings Inc. (Weber Aff. at ¶¶ 2-3). Weber further avers that Chrysler is a trade name that is licensed to Santander (id. at ¶ 4). He avers that CCAP owns lease agreements, including the Plaintiff's Lease and both extensions thereof, and that Chrysler services all such lease agreements and extensions (id. at ¶¶ 5-6).
In their reply memorandum of law, Defendants first contend that Plaintiff's causes of action fall squarely within the scope of the Lease's arbitration provision (Defs’ Reply Mem. at 2-8). Defendants assert that Article 30 of the Lease presents a clear and unequivocal agreement to arbitrate, inter alia , all claims arising out of or relating to the Lease (id. ). Defendants argue that, notwithstanding Plaintiff's fruitless effort to frame the Complaint as being narrowly focused upon New York State sales taxes, the two related causes of action are challenging the terms and conditions of the Lease; namely, what amount of sales tax, if any, should be assessed against Plaintiff and others who have extended their respective leases (id. ). Defendants further contend that Article 30 of the Lease incorporates the Consumer Arbitration Rules of the American Arbitration Association ("AAA"), and as such, the parties in Article 30 of the Lease agreed to delegate threshold disputes over the scope of the arbitration provision or the arbitrability of Plaintiff's claims to the AAA (id. ). Defendants also assert that to the extent that Plaintiff suggests that it would be an injustice for this Court to enforce the class waiver provision of the Lease, courts routinely dismiss class allegations where, as here, the arbitration provision contains a class waiver provision in connection with a consumer contract (id. ).
Defendants reiterate their argument that the FAA applies because the underlying transaction (i.e. , Plaintiff's Lease) involves interstate commerce (id. at 8-10). Defendants argue that Plaintiff has improperly conflated the FAA's requirement that the transaction evidenced by the Lease involve interstate commerce with a non-existent requirement that the claims brought by the party must themselves implicate interstate activity (id. ).
Defendants also assert that even though they are not all signatories to the Lease they may nevertheless enforce the arbitration provision pursuant to the doctrine of equitable estoppel (id. at 10-14). According to Defendants, courts are willing to estop a signatory from avoiding arbitration with a non-signatory where, as here, the issues the non-signatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed (id. ). Accordingly, Defendants argue that Plaintiff cannot sue the non-CCAP Defendants and seek to hold them liable pursuant to the terms of the Lease, and simultaneously deny the arbitration clause's applicability because the non-CCAP Defendants are not parties to the Lease (id. ). Defendants assert that this principle is particularly salient because Plaintiff brings the exact same two causes of action against all of the Defendants, which claims are intertwined with the underlying Lease (id. ). Defendants also contend that equitable estoppel is applicable here, as the Lease expressly mentions Chrysler by name as being responsible for servicing the Lease, and Chrysler is not a separate entity but is instead merely a trade name licensed to Santander (id. ). As such, the Lease effectively mentions all other Defendants in this action—who are affiliated corporate entities—as being involved with the underlying transaction (id. ). Accordingly, Defendants reiterate their request that this action be stayed in favor of arbitration (id. ).
DISCUSSION
A. The FAA and the AAA Rules Govern The Parties’ Agreement to Submit their Disputes to Arbitration
It is undisputed that on or about July 31, 2018, Plaintiff entered into the Lease with Chrysler to lease a 2018 Jeep Grand Cherokee for a 36-month term ending on July 21, 2021 (Complaint at ¶ 20; Carlstrom Aff. at ¶ 7, Ex. A). The Lease at Article 30 contained a broad Arbitration clause entitled "ARBITRATION, stating in relevant part:
YOU AGREE THAT ANY AND ALL CLAIMS WILL BE RESOLVED BY INDIVIDUAL ARBITRATION AND NOT IN COURT IF YOU OR LESSOR REQUESTS ARBITRATION. YOU HEREBY ACKNOWLEDGE THAT YOU ARE WAIVING YOUR RIGHT TO PROCEED IN COURT, AND TO JURY TRIAL. ADDITIONALLY, YOU WAIVE ALL RIGHTS TO PROCEED IN A CLASS ACTION OR CLASS ARBITRATION. Any controversy or claim between or among you and Lessor, including, but not limited to, those arising out of or relating to the Vehicle, this Lease or any related agreement or any claim based on or arising from an alleged tort, shall at the request of either party be determined by individual arbitration except for proceedings in small claims court, self-help vehicle recovery, and other self-help such as the exercise of set-off rights. The arbitration shall be governed by the Federal Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this Lease, and under the authority and the applicable consumer rules and procedures of the American Arbitration Association ("AAA") then in effect which are available at www.adr.org or by contacting AAA at 800-778-7879 ... Neither Lessor nor you shall be entitled to join or consolidate disputes by or against others in any arbitration, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity. If this waiver of class proceedings is held to be unenforceable, the entire arbitration provision is void and the remainder of the Lease remains enforceable. You have the right to opt out of arbitration by notifying us in writing at 1501 Elm Street, Suite 800, Dallas, TX 75201 within 30 days after execution of the Lease (Carlstrom Aff., Ex. A at ¶ 30 [emphasis in original]).
Additionally, Article 17 of the Lease concerning "NOTICES" provides in relevant part as follows:
YOU AGREE THAT YOU HAVE READ THE ARBITRATION PROVISION OF THIS LEASE, INCLUDING THE METHOD FOR OPTING OUT, AND YOU AGREE TO ARBITRATE ALL CLAIMS IN ACCORDANCE WITH THE ARBITRATION PROVISION IN SECTION 30 (Carlstrom Aff., Ex. A at ¶ 17).
It is undisputed that Plaintiff executed the Lease at the bottom of page 1, above which the Lease provides that "BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE READ BOTH SIDES OF THIS LEASE AND YOU HAVE RECEIVED A COMPLETELY FILLED-IN COPY OF THIS LEASE" (Carlstrom Aff., Ex. A at ¶¶ 17-18). It is also undisputed that notwithstanding the provision in Article 30 of the Lease that expressly stated Plaintiff's "right to opt out of arbitration ... within 30 days after execution of the Lease," Plaintiff never notified Defendants that he was exercising his right to opt out of arbitration, neither during the 30-day opt out period or at any time thereafter (Carlstrom Aff. at ¶ 9).
It is well settled that courts enforce arbitration agreements which provide, as the Lease in this case expressly provides, that they are to be governed by the FAA (see Reynolds & Reynolds Co., Auto. Sys. Div. v Goldsmith Motor Corp. , 251 AD2d 312, 313 [2d Dept 1998] ). "When an agreement to arbitrate falls within the scope of the FAA, ‘[f]ederal law in the terms of the Arbitration Act governs [the] issue [of arbitrability] in either state or federal court’ " ( Blimpie Intl., Inc. v D'Elia , 277 AD2d 69, 70 [1st Dept 2000], quoting Moses H. Cone Mem. Hosp. v Mercury Constr. Corp. , 460 US 1, 24 [1983] [issues of arbitrability with respect to FAA arbitration agreements are governed by substantive federal law, which supplants inconsistent state law]; see also N.J.R. Assoc., L.P. v Tausend, 19 NY3d 597, 601-02 [2012] ). Furthermore, given that Article 30 of the Lease states that the arbitration shall be governed by "the applicable consumer rules and procedures" of the AAA, it is noteworthy that under the FAA, the court is required to enforce contract terms that specify the rules under which an arbitration will be conducted ( Patterson v Raymours Furniture Co. , 96 F Supp 3d 71, 79 [SD NY 2015], affd 659 Fed Appx 40 [2d Cir 2016], cert dismissed 138 S Ct 1975 [2018] ).
Section 2 of the FAA provides that agreements to arbitrate are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract" ( 9 U.S.C. § 2 ). The FAA strongly favors the enforcement of arbitration agreements, and the United States Supreme Court has described the FAA as being "designed to promote arbitration," " ‘embod[ying] [a] national policy favoring arbitration,’ " and reflecting " ‘a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary’ " ( AT & T Mobility LLC v Concepcion , 563 US 333, 345-46 [2011] [citations omitted] [emphasis added]; see also Hall St. Assocs., L.L.C. v Mattel, Inc. , 552 US 576, 581 [2008] ; Buckeye Check Cashing, Inc. v Cardegna , 546 US 440, 443 [2006] ; Moses H. Cone Memorial Hosp. , 460 US at 24 ). As with the FAA, New York law also has a "long and strong public policy" favoring the enforcement of arbitration agreements ( American Intl. Specialty Lines Ins. Co. v Allied Capital Corp., 35 NY3d 64, 70 [2020] ; see also Maross Constr., Inc. v Central New York Regional Transp. Auth. , 66 NY2d 341, 345 [1985] [stating that arbitration "is now well recognized as an effective and expeditious means of resolving disputes between willing parties desirous of avoiding the expense and delay frequently attendant to the judicial process"]; Wilson v PBM, LLC , 193 AD3d 22, 25 [2d Dept 2021] [citations omitted] [citing New York's " ‘longstanding public policy favoring the arbitration of disputes, particularly with respect to broad arbitration clauses....’ "]; Matter of New Brunswick Theol. Seminary v Van Dyke , 184 AD3d 176, 178 [2d Dept 2020]lv dismissed 36 NY3d 937 [2020] [citations omitted] [stating that " ‘arbitration is a creature of contract’ " and " ‘is a favored method of dispute resolution in New York’ "]; Ferrarella v Godt , 131 AD3d 563, 565 [2d Dept 2015], lv denied 26 NY3d 913 [2015] [citations omitted] [noting that " ‘the announced policy of this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties’ "]).
With respect to any state policy to the contrary, GBL § 399-c provides in relevant part that "[n]o written contract for the sale or purchase of consumer goods ... to which a consumer is a party, shall contain a mandatory arbitration clause ... The provisions of a mandatory arbitration clause shall be null and void" ( GBL § 399-c[2] ). However, and contrary to Plaintiff's argument that the Lease's arbitration provision is null and void pursuant to GBL § 399-c, this provision of the GBL has expressly been held to be preempted by the FAA by both New York and federal courts (see, e.g., Marino v Salzman , 51 Misc 3d 131[A], 2016 NY Slip Op 50410[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2016] [holding that a motion to compel arbitration was improperly denied and stating that GBL § 399-c "was preempted by the [FAA]" in a case involving interstate commerce]; Williams v Roman Catholic Diocese of Brooklyn & Queens , 73 Misc 3d 1033, 1040 [Sup Ct, Queens County 2021] [holding that GBL § 399-c is preempted by the FAA and noting that "the case law is clear that conflicting state legislation attempting to carve out exceptions to [FAA] arbitration has been unsuccessful"]; Oceana Home Owners Assoc., Inc. v Statewide Disaster Restoration, Inc. , 2015 NY Slip Op 30073[U], 2015 WL 298633 at *4 [Sup Ct, Kings County 2015] [stating that "even if the court had found that GBL § 399-c applied it would have been preempted by the FAA"]; DeOliveira v Custom Made , 48 Misc 3d 1204[A], 2015 NY Slip Op 50956[U] at *3 [Civ Ct, Queens County 2015] [holding that "the agreement, with its arbitration clause, clearly affects interstate commerce. Consequently, GBL § 399-c is preempted by the [FAA]"]; see also Andersen v Walmart Stores, Inc. , 2017 WL 661188 at *8 [WD NY 2017] [stating that "the Court finds that Plaintiff's argument concerning GBL § 399-c lacks merit, because that provision of New York law is pre-empted by the [FAA] in cases, such as this one, involving interstate commerce"]).
The plain text of the FAA sets forth two exceptions to the general rule that arbitration clauses are uniformly enforceable. First, pursuant to statute, the FAA only applies where there is "a contract evidencing a transaction involving commerce" ( 9 U.S.C. § 2 ). Second, the FAA is applicable except "upon such grounds as exist at law or in equity for the revocation of any contract" ( 9 U.S.C. § 2 ). This second exception is wholly inapplicable where, as here, Plaintiff has not alleged that the Lease was entered into in connection with, inter alia , any alleged fraud, duress, or unconscionability (Complaint at ¶¶ 20-26; see also AT & T Mobility LLC , 563 US at 339 [noting generally that "[t]his saving clause permits agreements to arbitrate to be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’ but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue"]).
The FAA defines "commerce" as meaning, inter alia , "commerce among the several States," which language the United States Supreme Court has construed to be the "functional equivalent" of the term "affecting commerce," which "ordinarily signal[s] the broadest permissible exercise of Congress’ Commerce Clause power" ( 9 U.S.C. § 1 ; Citizens Bank v Alafabco, Inc. , 539 US 52, 56 [2003] [noting that "[b]ecause the statute provides for ‘the enforcement of arbitration agreements within the full reach of the Commerce Clause,’ it is perfectly clear that the FAA encompasses a wider range of transactions than those actually ‘in commerce’—that is, ‘within the flow of interstate commerce’ "] [citations omitted]; Circuit City Stores v Adams , 532 US 105, 112 [2001] [stating that the FAA's reference to "involving commerce" reflects "Congress’ intent ‘to exercise [its] commerce power to the full’ "] [citations omitted]; Allied-Bruce Terminix Cos. v Dobson , 513 US 265, 274 [1995] [noting that "the Act's legislative history, to the extent that it is informative, indicates an expansive congressional intent" such that the FAA's "control over interstate commerce reaches not only the actual physical interstate shipment of goods but also contracts relating to interstate commerce"]).
As the United States Supreme Court made clear in Citizens Bank (539 US 52 ), courts in applying the FAA need not identify any specific effect upon interstate commerce as long as "in the aggregate the economic activity in question would represent ‘a general practice subject to federal control’ " ( Citizens Bank , 539 US at 56-57 ). It further explained:
were there any residual doubt about the magnitude of the impact on interstate commerce caused by the particular economic transactions in which the parties were engaged, that doubt would dissipate upon consideration of the "general practice" those transactions represent. No elaborate explanation is needed to make evident the broad impact of commercial lending on the national economy or Congress’ power to regulate that activity pursuant to the Commerce Clause ( id. at 57 [internal citations omitted]).
As asserted by Defendants, even a cursory review of the Complaint reflects that it centrally alleges that Plaintiff, a New York resident, visited a New York automobile dealership and obtained lease financing from CCAP, which is a Delaware corporation (Brener Aff., Ex. A at ¶¶ 20-26). The Complaint further alleges that Defendants are engaged in interstate commerce by serving as full-time finance providers for automobile dealers and consumers throughout the country and the allegations focus upon the alleged wrongful conduct of CCAP, a Delaware corporation, committed against Plaintiff, a New York resident who leased his vehicle in New York (Brener Aff., Ex. A at ¶¶ 12-17; 20-26).
As such, and particularly given the aforementioned broad and highly inclusive standards for construing whether a transaction involves interstate commerce in connection with the FAA ( Citizens Bank , 539 US at 56-57 ; Circuit City Stores , 532 US at 112 ; Allied-Bruce Terminix Cos. , 513 US at 274 ), the Court concludes that the Plaintiff's Lease involves interstate commerce such that the validity of the arbitration clause is governed by the FAA (see, e.g. , Rota-McLarty v Santander Consumer USA, Inc. , 700 F3d 690, 697-98 [4th Cir 2012] [holding that interstate commerce is involved so as to trigger application of the FAA where "[t]he underlying transaction here is simply a consumer credit arrangement between a citizen of one state and a financing company in another"]; Jenkins v First Am. Cash Advance of Georgia , 400 F3d 868, 874-75 [11th Cir 2005], cert denied 546 US 1214 [2006] [holding that a "payday loan" completed by a Georgia consumer in the Georgia office of a loan company involved interstate commerce where the funds were approved and disbursed by a national bank based in South Dakota]; see also Fletcher v Kidder, Peabody & Co. , 81 NY2d 623, 630-31 [1993], cert denied 81 NY2d 623 [1993] [holding that "the provisions of the FAA are controlling even though the dispute itself may arise under State law"]). Accordingly, the Court concludes that interstate commerce is involved in this dispute so as to trigger application of the FAA where, as here, the Complaint acknowledges that Plaintiff obtained lease financing from a Delaware corporation and that Defendants actively participate in interstate commerce by providing financing for automobile dealers and consumers throughout the United States (Brener Aff., Ex. A at ¶¶ 12-17; 20-26).
The Court also agrees with Defendants that Plaintiff has erroneously conflated the FAA's requirement that the transaction evidenced by the Lease involve interstate commerce with a non-existent requirement that the "sales-tax-related claims" brought by the party must themselves implicate interstate activity (see Plf's Mem. at 10; see also Gilbert v Indeed, Inc. , 513 F Supp 3d 374, 400 [SD NY 2021] [holding that "[u]nder the plain language of Section 2 of the FAA, the relevant question is not whether the claim arises from a transaction involving commerce, but rather whether the contract containing the arbitration clause ‘evidences a transaction involving commerce’ "] [quoting 9 U.S.C. § 2 ]).
In the very recent and factually similar case of Harrison v Revel Tr. Inc. (2022 NY Slip Op 30430[U], 2022 WL 356988 [Sup Ct, Kings County 2022] ), the Court held that interstate commerce was involved so as to apply the FAA where a New York plaintiff entered into a rental agreement for a moped with a vehicle dealership that was also in New York. The Harrison Court explained:
an agreement to rent a Revel moped sufficiently affects interstate commerce because Revel's service relies on a host of out-of-state and international partners and suppliers. As stated by Revel, the company rents mopeds in Florida, California, and Washington D.C. in addition to New York. The mopeds themselves are manufactured in China and leased to Revel by companies located in Minnesota and Massachusetts. The fact that, theoretically, plaintiff's moped was meant to be solely operated within New York City does not alter this finding, as Revel has a multi-state presence, and its service relies on multiple out-of-state partners. Accordingly, this matter involves interstate commerce and thus triggers application of the FAA ( Harrison , 2022 NY Slip Op 30430[U] at *8).
Similarly, in Williams (73 Misc 3d 1033 ), the court rejected the plaintiff's claim that his rental agreement for a moped, which was executed in New York with a New York dealership, did not affect interstate commerce as per the FAA. Noting that "the mopeds are manufactured in China, then distributed in the U.S. by an Illinois company and leased to [defendant] from two Minnesota companies," the court held that defendant's "reliance on partners and suppliers outside the state is sufficient to demonstrate the interstate commerce involved when a customer rents a moped" ( id. at 1039 ).
Based upon the foregoing, because the FAA applies, the FAA preempts the contrary GBL provision exempting consumer transactions from the reach of mandatory arbitration clauses.
B. The Parties’ Dispute is Subject to Arbitration
It is well settled that under the FAA, a court that is considering whether to compel arbitration pursuant to an arbitration agreement must determine: (1) whether a valid arbitration agreement exists between the parties; and if so, (2) " ‘whether the dispute falls within the scope of the arbitration agreement’ " ( Meyer v Uber Techs., Inc. , 868 F3d 66, 74 [2d Cir 2017], quoting Specht v Netscape Communications Corp. , 306 F3d 17, 26 [2d Cir 2001] ). As the Second Circuit stated in Gaul v Chrysler Fin. Servs. Ams. LLC (657 Fed Appx 16 [2d Cir 2016] ):
"[i]n deciding whether a dispute is arbitrable, we must answer two questions: (1) whether the parties agreed to arbitrate, and, if so, (2) whether the scope of that agreement encompasses the claims at issue" ... Arbitration agreements contained in consumer contracts are enforceable ( id. at 17 [emphasis added and citations omitted] [because claims concerned disputes over lease payments, they arose out of or related to the lease agreement and were subject to arbitration]).
New York law requires the same considerations as the FAA. Thus, "on a motion to compel or stay arbitration, a court must determine, ‘in the first instance whether parties have agreed to submit their disputes to arbitration and, if so, whether the disputes generally come within the scope of their arbitration agreement’ " ( Revis v Schwartz , 192 AD3d 127, 134 [2d Dept 2020], affd ––– N.E.3d ––––, 2022 NY Slip Op 01867, 2022 WL 801429 [2022], quoting Sisters of St. John the Baptist, Providence Rest Convent v Phillips R. Geraghty Constructor, Inc. , 67 NY2d 997, 998 [1996] ; accord Mozzachio v Schanzer , 188 AD3d 873, 874 [2d Dept 2020] ).
(i) There is a Valid Arbitration Clause Between Plaintiff and CCAP
The Court addresses infra why the nonparties to this arbitration agreement may nevertheless enforce the arbitration clause against Plaintiff.
Turning to the first consideration, the Court has already determined that the FAA trumps the contrary GBL provision. Furthermore, under the FAA and New York law, where, as here, an agreement includes a broad and unambiguous arbitration provision such as set forth in Article 30 of the Lease, courts consistently hold that a valid arbitration agreement exists between the parties. For example, in the recent case of Lebovits v Cavalry Portfolio Servs., LLC (2021 WL 1198967 [SD NY 2021] ), which involved a putative class action lawsuit in the context of a consumer contract, the relevant arbitration provision stated in relevant part: "You or we may arbitrate any claim, dispute or controversy between you and us arising out of or related to Your Account ... all Claims are subject to Arbitration...." ( id. at *2 ). In Lebovits , the Court flatly rejected the plaintiff's claim that this provision should be deemed unenforceable because "the provision is ‘extremely broad,’ and that ‘no reasonable person would have agreed to binding arbitration over virtually any claim’ " ( id. at *5 ) with the defendant, holding that the "Agreement is a valid contract and that Plaintiff is bound by it and the Arbitration Clause" ( id. at *6 ).
Similarly, in Love v BMW Fin. Servs. NA, LLC (2016 WL 259710 [ED NY 2016] ), the Court granted the defendant's motion to compel arbitration pursuant to a motor vehicle lease agreement where, much like the Lease at issue in this action, "[t]he scope of the arbitration provision in the lease agreement ... is broad, and covers ‘any claim or dispute ... arising out of or relating to plaintiff's credit application, lease, purchase or condition of this Vehicle’ " ( id. at *2 ).
Courts enforce broad arbitration agreements where, as here, the agreement includes a waiver of the right to participate in a class action. As noted above, Article 30 states in part: "YOU WAIVE ALL RIGHTS TO PROCEED IN A CLASS ACTION OR CLASS ARBITRATION ... Neither Lessor nor you shall be entitled to join or consolidate disputes by or against others in any arbitration, or to include in any arbitration any dispute as a representative or member of a class" (Carlstrom Aff., Ex. A at ¶ 30). Such class action waiver agreements are enforceable. In AT & T Mobility LLC (563 US at 333 ), the United States Supreme Court held that the FAA preempted a California law regarding the unconscionability of class arbitration waivers in consumer contracts, stating that "[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA" ( id. at 344 ). This holding was subsequently affirmed in DIRECTV, Inc. v Imburgia (577 US 47, 51-59 [2015] ), in which the Court held that class arbitration waivers were enforceable even where the operative state law governing the contract renders a class action waiver unenforceable.
As such, the broad arbitration agreement set forth in Article 30 of the Lease, including the class waiver provision therein, is a valid and enforceable agreement between the parties under both the FAA and New York law ( Andersen , 2017 WL 661188 [enforcing a broad arbitration agreement in a consumer contract encompassing "any claim, dispute or controversy" and a related provision waiving the right to participate in a class action]; accord Lebovits , 2021 WL 1198967 ; Marcario v Midland Credit Mgmt. , 2017 WL 4792238 [ED NY 2017] [compelling arbitration and enforcing a class action waiver provision which stated that "if you or we require arbitration of a particular Claim, neither you, we, nor any other person may pursue the Claim in any litigation, whether as a class action, private attorney general action, other representative action or otherwise"]; see also Matter of Meisels v Uhr , 79 NY2d 526, 538-39 [1992]lv dismissed 79 NY2d 1036 [1992] [stating that "we consider it appropriate to reaffirm that broad arbitration agreements are permissible. We have never required that arbitration agreements identify with specificity those disputes which are being submitted"]; Markowits v Friedman , 144 AD3d 993, 997 [2d Dept 2016] [enforcing the validity of a "broad" arbitration clause and noting that "a broad arbitration provision is separable from the substantive provisions of a contract such that the agreement to arbitrate is valid even if the substantive provisions of the contract were induced by fraud"]). Based on the foregoing, there is a valid arbitration agreement between, at a minimum, Plaintiff and CCAP.
(ii) Whether This Lawsuit Falls Within the Scope of the Arbitration Agreement Should be Resolved by the Arbitrator
The Court next turns to whether the second requirement (i.e., whether the dispute comes within the scope of the arbitration clause) is satisfied. " ‘Arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he [or she] has not agreed so to submit’ " (Matter of Monarch Consulting, Inc. v National Union Fire Ins. Co. of Pittsburgh, PA , 26 NY3d 659 [2016] [citations omitted]; see also Matter of County of Rockland v Primiano Constr. Co. , 51 NY2d 1, 9 [1980] ["[T]he entire arbitration process is a creature of contract, the parties by explicit provision of their agreement have the ability to place any particular requirement in one category or the other, to make it a condition precedent to arbitration or to make it a condition in arbitration"]). As the Court of Appeals stated in Matter of Monarch :
The Supreme Court has also held that arbitration agreements must be enforced according to their terms, and that "parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability’ " ( Rent-A-Center, West, Inc. , 561 US at 68-69 ; see Nitro-Lift Technologies, L.L.C. , 568 US at ––––, 133 S Ct at 503 ; Buckeye Check Cashing, Inc. , 546 US at 445 ). Such "delegation clauses" are enforceable where "there is ‘clea[r] and unmistakabl[e]’ evidence" that the parties intended to arbitrate arbitrability issues ( First Options of Chicago, Inc. , 514 US at 944, quoting AT & T Technologies, Inc. , 475 US at 649 ). "When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally ... should apply ordinary state-law principles that govern the formation of contracts" ( First Options of Chicago, Inc. , 514 US at 944 ) ( Matter of Monarch Consulting, Inc. , 26 NY3d at 675 ).
In short, whether a dispute is arbitrable is generally an issue for the court to decide unless the parties clearly and unmistakably provide otherwise (id. ; Matter of Smith Barney Shearson Inc. v Sacharow , 91 NY2d 39, 45-46 [1997] ). Thus, where the terms of the parties’ agreements incorporate rules of an alternative dispute resolution tribunal, "the issue of whether the dispute is arbitrable should be resolved by the arbitrator" ( Garthon Bus. Inc. v Stein , 30 NY3d 943, 944 [2017] [agreements incorporating rules of the London Court of International Arbitration]).
In the context of contracts incorporating the AAA rules, New York courts have held that where there is a broad arbitration clause and the parties’ agreement specifically incorporates by reference the AAA rules, courts will "leave the question of arbitrability to the arbitrators" ( Life Receivables Trust v Goshawk Syndicate 102 at Lloyd's , 66 AD3d 495, 496 [1st Dept 2009], affd 14 NY3d 850 [2010] ["[a]lthough the question of arbitrability is generally an issue for judicial determination, when the parties’ agreement specifically incorporates by reference the AAA rules, which provide that ‘[t]he tribunal shall have the power to rule on its own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement,’ and employs language referring ‘all disputes’ to arbitration, courts will ‘leave the question of arbitrability to the arbitrators’ "]); see also Lake Harbor Advisors, LLC v Settlement Serv. Arbitration and Mediation, Inc. , 175 AD3d 479, 480 [2d Dept 2019] [same]; Matter o f WN Partner, LLC v Baltimore Orioles Ltd. Partnership , 179 AD3d 14, 17 [1st Dept 2019] [same]; Matter of Flintlock Const. Serv., LLC. v Weiss , 122 AD3d 51, 54 [1st Dept 2014], lv dismissed 24 NY3d 1209 [2015] [same]; Matter of Calvert Props. LLC v AMEC, LLC , 70 Misc 3d 295 [Sup Ct, Westchester County 2020] [same]). Here, Rule 9 of the Consumer Arbitration Rules and Mediation Procedures specifically provides that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim."
In any event, even if this issue should be resolved by a court and not an arbitrator, this lawsuit falls squarely within the scope of the Lease's arbitration provision (see generally Meyer , 868 F3d at 74 ; Revis , 192 AD3d at 134 ). Indeed, it cannot be credibly disputed that the broad terms of Article 30 of the Lease, which provide for the arbitration of "[a]ny controversy or claim ... arising out of or related to the Vehicle [or] this Lease," is a "prototypical broad arbitration provision" ( Oldroyd v Elmira Sav. Bank, FSB , 134 F3d 72, 76 [2d Cir 1998] [where an arbitration agreement covered "any dispute, controversy or claim arising under or in connection with" plaintiff's employment agreement, holding that "this is precisely the kind of broad arbitration clause that justifies a presumption of arbitrability"]; accord Collins & Aikman Prods. Co. v Building Sys. , 58 F3d 16, 20 [2d Cir 1995] [holding that a clause "submitting to arbitration ‘[a]ny claim or controversy arising out of or relating to the agreement,’ is the paradigm of a broad clause"]; Klein v Experian Info. Solutions, Inc. , 2020 WL 6365766 [SD NY 2020] [finding that a broad arbitration provision in a credit card member agreement covering "any current or future claim, dispute or controversy relating to Your Account(s) [or] this Agreement" readily encompassed plaintiff's claims therein]; see also Bridger v Fourth Ave. Capital Partners, L.P. , 174 AD3d 450, 451 [1st Dept 2019] [holding that "[c]ontrary to plaintiff's contention, his claims clearly arose under the terms of his agreement as related to his employment, and thus fell within the scope of the arbitration clause"]; Huntsman Intl. LLC v Albemarle Corp. , 163 AD3d 420, 421 [1st Dept 2018], lv dismissed in part, denied in part 32 NY3d 1040 [2018] [where a broad arbitration provision covers "any disputes between" the parties regarding the terms, conditions, and/or obligations under a contract, holding that "Plaintiff's claims are within the scope of the arbitration clause"]).
Moreover, it is equally clear that the two related causes of action in the Complaint are entirely grounded in allegations concerning the sales tax charged under the Lease, and thus "arise out of" the Lease (see Matter of Weinrott v Carp , 32 NY2d 190, 199 [1973] [stating that "[a] broad arbitration clause should be given the full effect of its wording in order to implement the intention of the parties," and rejecting the notion that an arbitration agreement must "specifically name" the precise issues and/or claims that the parties "wish to go to arbitration"]; Zafar v Fast Track Leasing, LLC , 162 AD3d 1100, 1101-02 [2d Dept 2020] [holding that all causes of action fell within the scope of "a broad arbitration provision which, in relevant part, mandated that ‘any dispute, controversy or claim arising out of or relating to the 2014 agreement shall be settled promptly by arbitration’ "]; accord Mozzachio , 188 AD3d at 875 (finding that "the plaintiff's claims come within the scope of the broad arbitration clause."]).
The Court does not agree with Plaintiff's assertion that because the Complaint focuses upon the collection of New York State sales taxes, the two causes of action are not "arising out of or related to the Vehicle [or] this Lease," and thus do not fall within the scope of Article 30 of the Lease (Plf's Mem. at 5-10). A plain reading of the Complaint reflects that its two related causes of action challenge the terms and conditions of the Lease, namely what amount of sales tax, if any, should be assessed against Plaintiff and others who have extended their respective leases, and thus those claims fall within the scope of the Lease's broad arbitration clause (see Brener Aff., Ex. A; Carlstrom Aff., Ex. A).
Furthermore, the cases upon which Plaintiff relies are inapposite and/or readily distinguishable. Anima Group, LLC v Emerald Expositions, LLC (2020 NY Slip Op 31736[U], 2020 WL 2933634 [Sup Ct, NY County 2020] ) was reversed on appeal, with the Appellate Division, First Department holding that the relevant arbitration provisions "demonstrate the parties’ clear and unmistakable intent to delegate the threshold arbitrability question to the AAA" ( Anima Group, LLC v Emerald Expositions, LLC , 191 AD3d 572, 573 [1st Dept 2021] ). In any event, the trial court's holding in Anima Group is factually distinguishable because that case involved an arbitration clause covering a specific fashion and jewelry trade show event. But the parties’ dispute had nothing to do with the trade show event, and instead first arose "after the exhibition was over, [when] defendant engaged in a course of conduct that interfered with plaintiffs [sic] business" ( Anima Group, LLC , 2020 NY Slip Op. 31736[U] at *2). Howard v Greenbriar Equity Group, LLC (20 Misc 3d 1140[A], 2008 NY Slip Op 51806[U] [Sup Ct, Westchester County 2008)] is similarly inapposite and does not support Plaintiff's argument. In Howard , Justice Scheinkman held that the defendant could not rely upon an arbitration provision in a partnership agreement that was merely incorporated by reference in the plaintiff's employment letter, where the lawsuit solely involved the plaintiff's services as an employee and not his rights and obligations as a limited partner. Accordingly, even if this issue should be resolved by the Court and not the arbitrator, the Court finds that the two causes of action in the Complaint "arise out of" the Lease and thus fall within the scope of the arbitration agreement (see Oldroyd , 134 F3d at 76 ; Zafar , 162 AD3d at 1102 ).
C. Santander and Chrysler May Compel Plaintiff to Arbitration on the Claims Against Them
As a final matter, the Court does not agree with Plaintiff's argument that because CCAP is the only Defendant that is a party to the Lease, the non-signatory Defendants (Santander and Chrysler) cannot compel Plaintiff to pursue his claims in arbitration (see Plf's Mem. at 11). The sole case cited by Plaintiff in support of this proposition, Matter of Miller ( 40 AD3d 861, 862 [2d Dept 2007] ) is inapposite. In Miller , the Court held that arbitration provisions in a partnership agreement "do not apply to claims regarding the promissory notes" that were separately entered into more than one year after execution of the partnership agreement ( id. at 862 ). This holding, which the Appellate Division, Second Department noted to be only applicable "[u]nder the circumstances of this case," has no bearing on this case, where the only agreement at issue is the Lease and its arbitration provision set forth in Article 3 (id. ). Nor is Miller apposite where, as here, Plaintiff asserted the exact same two causes of action against all of the Defendants, which interrelated entities have unambiguously expressed their desire to enforce the arbitration provision by jointly moving to compel arbitration of this dispute (see Brener Aff., Ex. A at ¶¶ 35-37; 38-43; Carlstrom Aff. at ¶¶ 2-4; Weber Aff. at ¶¶ 3-6; see also Doe v Trump Corp. , 6 F4th 400, 413 [2d Cir 2021] [noting that cases in the Second Circuit "which have applied estoppel against a party seeking to avoid arbitration have tended to share a common feature in that the non-signatory party asserting estoppel has had some sort of corporate relationship to a signatory party; that is, this Court has applied estoppel in cases involving subsidiaries, affiliates, agents, and other related business entities"]).
Defendants are entitled to enforce Article 30 of the Lease pursuant to the doctrine of equitable estoppel because Plaintiff cannot seek to hold non-signatories Santander and Chrysler liable pursuant to obligations owed under the Lease, while simultaneously denying the application of Article 30 because Santander and Chrysler are not parties to the Lease (see Defs’ Reply Mem. at 10-14). As noted in Hoffman v Finger Lakes Instrumentation, LLC (7 Misc 3d 179 [Sup Ct, Monroe County 2005] ), "[t]he doctrine of estoppel, as applied to cases like this one, will bind ‘a signatory ... to arbitrate with a nonsignatory at the nonsignatory's insistence because of the close relationship between the ... [protagonists] involved, as well as the relationship of the alleged wrongs to the nonsignatory's obligations and duties in the contract ... and [the fact that] the claims were ‘intimately founded in and intertwined with the underlying contract obligations’ " ( id. at 184 [citations omitted]). As such, it is well settled that courts "are willing to estop a signatory from avoiding arbitration with a nonsignatory" where, as here, "the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed" ( id. at 185 ; see Merrill Lynch Intl. Fin., Inc. v Donaldson , 27 Misc 3d 391, 396 [Sup Ct, NY County 2010] [stating that "[o]ne circumstance that warrants estoppel is when the signatory to the contract containing an arbitration clause raises allegations of substantially interdependent and concerted conduct by both the non-signatory and the other signatory to the contract"]). Thus, pursuant to New York law, Plaintiff cannot "have it both ways" such that "he ‘cannot, on the one hand, seek to hold the nonsignatory liable pursuant to duties imposed by the agreement, which contains the arbitration provision, but, on the other hand, deny the arbitration's applicability because the defendant is a nonsignatory’ " ( Hoffman , 7 Misc 3d at 185 [citations omitted]; see also Matter of Berger v Signac Investments, Ltd. , 194 AD3d 402 [1st Dept 2021] ; Revis , 192 AD3d 127 ; Gol v TNJ Holdings, Inc. , 68 Misc 3d 1216[A], 2020 NY Slip Op 50975[U] [Sup Ct, NY County 2020]). This is precisely what Plaintiff has attempted to do in this case. Indeed, Plaintiff asserted two causes of action in the Complaint seeking to hold all of the Defendants jointly liable for the same alleged conduct pursuant to the obligations set forth in the Lease, of which only CCAP is a signatory. And at the same time, Plaintiff is attempting to deny that Article 30 of the Lease is applicable to Santander and Chrysler because they are not signatories. Such an inconsistent position is not supported by New York law and will not be countenanced by this Court.
Defendants correctly note that the Lease expressly mentions Chrysler by name as being responsible for servicing the Lease; and Chrysler is not a separate entity but is instead merely a trade name licensed to Santander (see Carlstrom Aff., Ex. A at ¶¶ 1, 14; Weber Aff. at ¶ 4). As such, the Lease effectively mentions all other Defendants in this action—who are affiliated with CCAP—as being involved with the underlying lease transaction.
Federal law similarly supports the notion that Defendants are entitled to enforce Article 30 of the Lease pursuant to the doctrine of equitable estoppel, because Plaintiff cannot seek to hold Santander and Chrysler liable pursuant to obligations owed under the Lease, while denying Article 30's application because Santander and Chrysler are non-signatories (see, e.g., Cho v JS Autoworld 1 Ltd. , 97 F Supp 3d 351, 357 [ED NY 2015] [holding that "the Plaintiff is nevertheless equitably estopped from resisting such enforcement" of the arbitration agreement because she "elected to group the Defendants together in the complaint as an interchangeable unit based on various alleged agency relationships"]; Carroll v Leboeuf, Lamb, Greene & MacRae, L.L.P. , 374 F Supp 2d 375, 378 [SD NY 2005] [finding that because the signatory plaintiffs "specifically and repeatedly allege" that the signatory defendant "acted at all relevant times [as] the agent" of non-signatory defendants, plaintiffs were equitably estopped from avoiding arbitration with those non-signatory defendants]; accord JLM Indus. v Stolt-Nielsen SA , 387 F3d 163, 178 [2d Cir 2004] [holding that plaintiffs could not avoid arbitration of "undeniably intertwined" allegations in connection with a conspiracy claim and rejecting the plaintiffs’ argument that arbitration was inappropriate for non-signatory parent companies even if arbitration were proper for their signatory subsidiaries]; Smith/Enron Cogeneration Ltd. Partnership v Smith Cogeneration Intl, Inc. , 198 F3d 88, 97 (2d Cir 1999], cert denied 531 US 815 [2000] [applying equitable estoppel to compel plaintiff to arbitration where it "treated a group of related companies as though they were interchangeable, but now it asks for strict adherence to the corporate form in its opposition to arbitration"]; cf. Denney v Jenkens & Gilchrist , 412 F Supp 2d 293, 298-99 [SD NY 2005] [denying equitable estoppel where the plaintiffs’ claims against a non-signatory defendant "are not intimately founded in or intertwined with the BDO Agreements" and where the plaintiffs "expressly exclude[d]" such non-signatory defendant from their breach of contract claims]).
Accordingly, based upon the foregoing, Defendants are entitled to enforce Article 30 of the Lease pursuant to the doctrine of equitable estoppel.
CONCLUSION
For all the foregoing reasons, it is hereby
ORDERED that the motion by Defendants pursuant to CPLR § 7503(a) for an Order compelling non-class arbitration of this action and staying this action is granted; and it is further
ORDERED that the parties are directed to proceed to arbitration in accordance with the operative provisions of Plaintiff's lease agreement; and it is further
ORDERED that all further proceedings in this action are stayed pending the determination of the arbitration.
The foregoing constitutes the Decision and Order of this Court.