Martin v. Q&A Enters. Inc.
| Decision Date | 06 February 2012 |
| Docket Number | Civil Action No. 3:11CV654—HEH |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | ZACHARY ALLEN MARTIN, Plaintiff, v. Q&A ENTERPRISES, INC., t/a GLOBAL SELECT AUTO, et al., Defendants. |
(Granting in Part and Denying in Part Defendants' Motions to Dismiss)
This action arises from the sale and financing of a used vehicle by an automotive dealership. It is presently before the Court on two motions to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure—one filed by Defendant Crescent-Virginia Loan Production, Inc. ("Crescent"), and the other by Defendant JPMorgan Chase Bank, N.A. ("Chase"). For the reasons set forth herein, the motions will be granted in part and denied in part.
Plaintiff's First Amended Complaint (the "Complaint") contains the following factual allegations. On April 20, 2011, Plaintiff Zachary Allen Martin ("Plaintiff" or "Martin") submitted an online credit application to Defendant Q&A Enterprises, Inc., t/a Global Select Auto ("Global"), a car dealership, in order to purchase a 2004 Porsche Cayenne. That same day, Global conducted a credit inquiry and notified Martin that he qualified for financing.
In an effort to assign Martin's prospective loan, Global used Dealer Track, an online interface, to circulate applications on Martin's behalf to various finance companies, including Defendants Crescent, Chase, and Consumer Portfolio Services, Inc. ("CPS"). Plaintiff alleges that each submission complied "with the procedures used by the [respective] creditor for the type of credit requested." (Pl.'s Am. Compl. at ¶ 14.) Two lenders responded favorably. Upon review of Martin's personal information, Chase indicated that it would provide financing at an interest rate between 9.75% and 12.25%. (Id. at ¶ 15.) CPS also approved the application. However, neither company directly notified Plaintiff of their actions. (Id. at ¶ 17.) Aside from soliciting offers, it does not appear that Global was directly involved in setting the terms of any lender's proposed financing package.
Martin went to the dealership on April 23, 2011 to finalize his purchase. After negotiating with a Global representative, he agreed to make a $5000.00 down payment in exchange for a reduced purchase price of $18,500.00. Once again, Global advised Martin that his loan had been approved. (Id. at ¶ 19.) Hours later, however, Plaintiff was informed that a rate of 12.49% was the "best" financing Global could obtain, yielding a total cost of $24,765.70. (Id. at ¶ 21.) Plaintiff alleges that "Global intentionally concealed" the fact that his "car purchase and loan request had been approved by lenders on terms lower than what was presented to him." (Id. at ¶ 25.) He further claims that "[t]he [lender] Defendants did not approve [his] request for credit on the terms [originally proposed by Global] after making credit inquiries into [his] credit report on April 21, 2011, but never provided [him] written notice of this adverse action." (Id. at 18.)
Martin signed various documents pertaining to the sale of the car. In addition to a Buyer's Order reflecting his unpaid balance (id. Ex. 2.), Martin executed a Retail Installment Sales Contract (RISC) setting forth financing terms. Neither document explicitly conditioned the sale of the vehicle upon receipt of financing from a third-party lender, and a box on the face of the Buyer's Order asking whether the "transaction involves dealer-arranged financing" appears unmarked. (Id.) Plaintiff alleges, however, that the Buyer's Order should have included a notice of conditional dealer-arranged financing, as required by Va. Code. Ann. § 46.2-1530. (Id. at ¶ 22.)
Nor did either form expressly state whether Global itself intended to finance the sale. However, the contract identified Global as the "Creditor-Seller" and provided that Martin would be required "to pay the Creditor-Seller ... the Amount Financed and Finance Charge in U.S. funds according to the payment schedule" set forth therein. The RISC also notified Martin of Global's right to assignment, and in fact indicated that Global had assigned its interest "without recourse" to Wells Fargo Dealer Services ("Wells Fargo"). (Id. Ex. 3.) After completing the requisite paperwork and providing Global with proof of insurance, Martin left the dealership in possession of the vehicle.
One week later, Martin received a phone call from Global's finance manager informing him "that his loan had not gone through," and that the sale would be cancelled unless he agreed to sign a "second batch of backdated purchase documents." (Id. at ¶¶ 32-33.) Plaintiff alleges that, contrary to the finance manager's assurances, the later RISC listed a higher purchase price than the one he originally signed on April 23. (Id. at ¶ 34.) It also contained the following caveat, which did not appear in the first RISC:
If you are financing this vehicle, please read this notice. You are proposing to enter into a Retail Installment Sales Contract with the dealer. Part of your contract involves financing the purchase of your vehicle. If you are financing this vehicle and the dealer intends to transfer your financing to a finance provider such as a bank, credit union or other lender, your vehicle purchase depends on the finance provider's approval of your proposed [RISC]. If your [RISC] is approved without a change that increases the cost or risk to you or the dealer, your purchase cannot be cancelled. If your [RISC] is not approved, the dealer will notify you verbally or in writing. You can then decide to pay for the vehicle in some other way or you or the dealer can cancel your purchase....
(Id. Ex. 4, at 3.) However, the revised materials again listed Wells Fargo as "the [a]ssignee ... under the terms of a separate agreement," and indicated that no "conditional delivery" provision was incorporated into the contract of sale. Martin refused to execute the new set of documents, and immediately stopped payment on the check tendered as part of his down payment. He also contacted Wells Fargo, as the purported assignee of both his original and revised RISC, but was surprised to learn that the bank "had no record of a vehicle loan in his name." (Id. at ¶ 36.)
Initially, Global demanded that Martin return the car. But when he attempted to do so on May 2, 2011, Global allegedly retracted its cancellation of their agreement. A manager at the dealership further advised Martin that "he did not care what Wells Fargo said about the loan because 'Global is the bank.'" (Id. at ¶ 38.) As Martin had not yet tendered his full down payment in cash, Global repossessed the Porsche.
Based on the foregoing facts, Martin filed suit in this Court on September 30, 2011. Only Counts One and Two of his Complaint are now at issue. In Count One, Plaintiff asserts that Defendants Global, Crescent, Chase, and CPS violated their duty as "creditors" under the Equal Credit Opportunity Act (the "ECOA" or "the Act"), 15 U.S.C. §§ 1691 et seq., to provide notice of their approval or denial of his credit application. Count Twoalleges that, in failing to advise him of their actions, Defendants also violated the Fair Credit Reporting Act, 15 U.S.C. § 1691m. Plaintiff seeks actual and punitive damages as permitted by statute.
Defendants Chase and Crescent filed the present motions on January 6,2012.1 Based on the arguments contained therein, and in light of this Court's decision in Bourdelais v. J.P. Morgan Chase Bank, N.A., 2011 U.S. Dist. LEXIS 35507, *21 (E.D. Va. April 1, 2011), Plaintiff has agreed to voluntary dismissal of Count Two. (Pl.'s Mems. Opp. 7, ECF Nos. 30-31.) Defendants' motions as to Count One are now ripe for decision.
Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). To survive Rule 12(b)(6) scrutiny, a complaint must contain sufficient factual information to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Fed. R. Civ. P. 8(a)(2) (). Mere labels and conclusions declaring that the plaintiff is entitled to relief are not enough. Twombly, 550 U.S. at 555. Thus, "naked assertions of wrongdoing necessitate some factual enhancement within the complaint to cross the line between possibility andplausibility of entitlement to relief." Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (internal quotation marks omitted).
A complaint achieves facial plausibility when the facts contained therein support a reasonable inference that the defendant is liable for the misconduct alleged. Twombly, 550 U.S. at 556; see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). This analysis is context-specific and requires "the reviewing court to draw on its judicial experience and common sense." Francis, 588 F.3d at 193. The court must assume all well-pleaded factual allegations to be true and determine whether, viewed in the light most favorable to the plaintiff, they "plausibly give rise to an entitlement to relief." Iqbal, 129 S. Ct. at 1950; see also Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993).
Generally, the district court does not consider extrinsic materials when evaluating a complaint under Rule 12(b)(6). The court may, however, consider "documents incorporated into the complaint by reference." Tellabs, Inc. v. Makor Issues & Rights, Ltd, 551 U.S. 308, 322 (2007); see also Blankenship v. Manchin, 471 F.3d 523, 526 n.l (4th Cir. 2006).
One of the "most significant" elements of the ECOA is the duty it imposes upon creditors to furnish...
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