Chamberlain v. American Honda Fin. Corp.

• Decision Date: 02 August 2007
• Docket Number: No. 05-CV-755.,05-CV-755.
• Citation: 931 A.2d 1018
• Court: D.C. Court of Appeals
• Parties: Daniel CHAMBERLAIN, et al., Appellants, v. AMERICAN HONDA FINANCE CORPORATION, Appellee.

931 A.2d 1018

Daniel CHAMBERLAIN, et al., Appellants, v. AMERICAN HONDA FINANCE CORPORATION, Appellee.

No. 05-CV-755.

District of Columbia Court of Appeals.

Argued October 10, 2006.

Decided August 2, 2007.

Martin E. Wolf, with whom Mark H. Steinbach was on the brief, Towson, MD, for appellants.

Laurie A. Hand, with whom Stephen M. Colangelo was on the brief, Washington, D.C., for appellee.

Before REID and FISHER, Associate Judges, and PRYOR, Senior Judge.

FISHER, Associate Judge:

Appellants Daniel Chamberlain and Lisa and Earl Hicks claim that appellee American Honda Finance Corporation ("AHFC") violated the District of Columbia Municipal Regulations and the Consumer Protection Procedures Act after it repossessed their automobiles. The trial court concluded that Maryland law applied and dismissed the amended complaint for failure to state a claim because it only cited District of Columbia statutes and regulations as a basis for relief. Appellants contend that the trial court erred by (1) applying Maryland law and (2) relying on material outside the amended complaint when granting AHFC's motion to dismiss under Superior Court Civil Rule 12(b)(6). We affirm the trial court's decision.

I. The Allegations

According to the first amended complaint, Daniel Chamberlain, a District resident, purchased a new Honda on August 23, 2003. Appellants Lisa and Earl Hicks, also District residents, purchased a new Honda on October 13, 2000.¹ The complaint does not allege that appellants purchased their cars from dealerships located within the District. In fact, the record clearly indicates, and appellants acknowledge, that they purchased their vehicles from dealerships located in Maryland. Both cars were registered in the District and financed through American Honda Finance Corporation.

During the summer of 2004, appellant Daniel Chamberlain notified AHFC that he could not make the payments on his vehicle and wished to return it. Following AHFC's instructions, Mr. Chamberlain returned the car to the dealer, Pohanka Honda. On July 15, 2004, AHFC offered to reinstate the sales contract if Mr. Chamberlain would pay, among other sums, the cost of repossession ($300.00) and storage charges at the rate of $20.00 per day beginning July 12, 2004. After Mr. Chamberlain returned the car to the dealer, it was stored at a lot in Annapolis, Maryland. AHFC sold the car at auction and mailed notices to Mr. Chamberlain on October 12, 2004, and January 14, 2005, demanding payment of a deficiency balance. The "debt" as of January 14 was $9,186.37, including the fees associated with repossession and storage of the vehicle prior to re-sale.

In January 2005, AHFC repossessed the Hicks' vehicle from outside their home in the District.² On January 20, AHFC offered to return the vehicle, but only if Mr. and Mrs. Hicks paid the full balance due, including expenses. After the repossession, AHFC did not disclose the storage location of the vehicle. As of the date the amended complaint was filed, Lisa and Earl Hicks were not aware of any sale of their vehicle at auction or of any resulting deficiency balance.

On April 26, 2005, appellants filed their amended complaint in the Superior Court alleging violations of the District of Columbia Consumer Protection Procedures Act ("DCCPPA"), D.C.Code § 28-3901 et seq. (2001), and the District of Columbia Municipal Regulations, 16 DCMR §§ 341.5 and 342.2.³ Specifically, appellants alleged that AHFC: (1) violated § 342.2 of Title 16 of the Municipal Regulations by assessing storage fees at $20.00 per day, thus exceeding the regulation's limit of $3.00 per day; (2) violated § 342.2 by charging total repossession expenses in excess of the $100.00 limit; and (3) violated § 341.5 by storing the repossessed vehicles in Annapolis, Maryland, although the regulation requires that vehicles be stored in the District for fifteen days if they are repossessed in the District. Finally, appellants claimed that the violations of §§ 341.5 and 342.2 constituted unfair and deceptive trade practices which violated the DCCPPA. See D.C.Code § 28-3904(dd).⁴ Appellants sought punitive damages, restitution damages, and injunctive and other equitable relief, including orders to vacate any judgments entered in favor of AHFC for deficiency balances. Appellants attached to their amended complaint post-repossession letters from AHFC advising appellants of their rights to recover their vehicles, including the October 12, 2004 and January 14, 2005, letters to Mr. Chamberlain. However, appellants did not attach the sales contracts.

AHFC moved to dismiss the amended complaint under Superior Court Civil Rule 12(b)(6), arguing that it failed to state a claim upon which relief could be granted and attaching the retail installment contracts signed by Mr. Chamberlain and Mr. and Mrs. Hicks. Appellants opposed the motion, asserting, among other things, that it would be improper for the trial court to consider the contracts when ruling on the 12(b)(6) motion.⁵

The trial court dismissed the complaint, concluding that Maryland law applied to these transactions but that appellants had only attempted to allege violations of District of Columbia law. The court rested its conclusion on two alternative grounds. First, "[c]onsidering only the facts within the pleadings," the court determined that "it is uncontested that plaintiffs bought the vehicles at Maryland car dealerships, negotiated the sales contracts in Maryland, and agreed to make payments in Maryland." The court therefore was persuaded that Maryland law should apply. Second, the court looked outside the complaint to the retail installment contracts, both of which contained a choice of law provision stating that Maryland law would apply.⁶ Appellants timely filed their notice of appeal.

Appellants argue that the trial court erred by applying Maryland law and by considering the provisions of the retail installment contracts attached to AHFC's motion to dismiss. For the reasons explained below, we agree that the complaint failed to state a claim upon which relief may be granted. We do not find it necessary to analyze the contracts or to engage in a choice of law analysis. Examining only the facts alleged in (or omitted from) the complaint, and considering the undisputed facts that both cars were purchased in Maryland, we conclude as a matter of law that §§ 341.5 and 342.2 of Title 16 of the Municipal Regulations do not apply to the facts presented.

II. Statutory and Regulatory Framework

On October 20, 1960, acting pursuant to authority conferred by Congress, the Commissioners of the District of Columbia promulgated "Regulations Governing the Businesses of Buying, Selling and Financing of Motor Vehicles in the District of Columbia." Order No. 60-2219 (codified as amended at 16 DCMR § 300 et seq. (2007)).⁷ The regulations controlled among other things, the manner of repossessing cars in the District and the terms of retail installment contracts. Although the regulations have been amended over time, the provisions at issue in this case remain much the same as they were in 1960.⁸

Section 341 of the regulations is titled "Holder's Duties on Repossession." The current version of § 341.5 states:

For fifteen (15) days after the notice [of the buyer's right to redeem the vehicle] required by § 341.4 has been delivered personally or mailed, the holder shall retain or store the repossessed motor vehicle in the District or the state and county in which the consumer resides or the state and county where it was located and repossessed. During this period the buyer may redeem the motor vehicle and become entitled to take possession of it.

See D.C. Law 4-90, § 4(k)(3) (codified at 16 DCMR § 341.5) (emphasis added); see also Commissioners' Order No. 60-2219, § 502(b). Sections 342.1(c) and 342.2 state:

342.1 To redeem the motor vehicle the buyer shall do the following . . .

(c) If the notice provided for in §§ 341.1 and 341.2 was given, pay the actual and reasonable expenses of retaking and storing the goods.

342.2 Charges under § 342.1(c) shall not exceed three dollars ($3) per day, and the total ordinary expenses of retaking shall not exceed one hundred dollars ($100).

See D.C. Law 4-90, § 4(k)(4) (codified at 16 DCMR §§ 342.1, 342.2).⁹ Failure to comply with either of these requirements precludes any "holder" from collecting a deficiency balance from the buyer. 16 DCMR § 340.5. Furthermore, a violation of either of these provisions "constitutes an unfair trade practice," remedies for which are included in the UNIFORM COMMERCIAL CODE ("U.C.C.") and chapters 38 and 39 of Title 28 of the D.C.Code. Id. §§ 340.6, 340.7, 346.2, 346.3.

The regulations define a "holder" as "any person legally or beneficially entitled to the proceeds of the instrument of security." 16 DCMR § 399.1. "Instrument of security" is in turn defined as including a "retail installment contract," which by definition must be "a contract entered into in the District . . . ." D.C.Code § 50-601(5)(9) (2001), formerly § 40-1101(5)(9) (1981), incorporated by reference in 16 DCMR § 399.1.¹⁰

III. Standard of Review — Rule 12(b)(6) Motion to Dismiss

This court reviews de novo the trial court's dismissal of the complaint pursuant to Rule 12(b)(6). See, e.g., Darrow v. Dillingham & Murphy, LLP, 902 A.2d 135, 137 (D.C.2006) (citing Wallace v. Skadden, Arps, Slate, Meagher & Flom, 715 A.2d 873, 877 (D.C.1998)). In reviewing the complaint, the court must accept its factual allegations and construe them in a light most favorable to the non-moving party. Jordan Keys & Jessamy, LLP v. St. Paul Fire & Marine Ins. Co., 870 A.2d 58, 62 (D.C.2005). However, "[f]actual allegations must be enough to raise a right to relief above the speculative level. . . ." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007). Furthermore, dismissal under Rule 12(b)(6) is appropriate where the complaint fails to allege...