Crespo v. Wfs Financial Inc., No. 1:07 CV 430.

• Decision Date: 30 September 2008
• Docket Number: No. 1:07 CV 430.
• Citation: 580 F.Supp.2d 614
• Parties: Omar CRESPO, et al., Plaintiffs v. WFS FINANCIAL INC., Defendant.
• Court: U.S. District Court — Northern District of Ohio

580 F.Supp.2d 614

Omar CRESPO, et al., Plaintiffs v. WFS FINANCIAL INC., Defendant.

No. 1:07 CV 430.

United States District Court, N.D. Ohio, Eastern Division.

September 30, 2008.

John J. Roddy, Roddy Klein & Ryan, Boston, MA, Mark A. Chavez, Chavez & Gertler, Mill Valley, CA, Ronald I. Frederick, Law Office of Ronald Frederick, Cleveland, OH, for Plaintiffs.

James R. McGuire, Morrison & Foerster LLP, Frances F. Goins, Max W. Thomas, Ulmer & Berne, Cleveland, OH, Michael J. Agoglia, Wendy M. Garbers, Morrison & Foerster, San Francisco, CA, for Defendant.

ORDER

SOLOMON OLIVER, JR., District Judge.

Plaintiffs Omar Crespo and his wife Lorna Crespo (together, "Plaintiffs" or "Crespo") filed the above-captioned lawsuit, on behalf of themselves and all others similarly situated, alleging that Defendant WFS Financial Inc.¹ ("Defendant" or "WFS") violated the Ohio Uniform Commercial Code ("Ohio UCC") and the Retail Installment Sales Act ("RISA") by not providing all required information in their post-repossession notice. Now pending before the court are Defendant's Motion to Dismiss (ECF No. 12) and Defendant's Motion for Costs Under Federal Rule of Civil Procedure Rule 41(d) ("Motion for Costs") (ECF No. 13). For the reasons stated below, the court grants both Motions.

I. FACTS AND PROCEDURAL HISTORY

It is undisputed that on or about January 8, 2001, Plaintiffs entered into a purchase money loan with WFS to finance the purchase price of a used car. Plaintiffs do not dispute that, at some point thereafter, WFS was entitled to repossess, and did lawfully repossess, the car.

On July 26, 2001, WFS sent a notice to Plaintiffs, which included a two-page "Notice of Our Plan to Sell Property" and a one-page "Notice of Intention to Dispose of Motor Vehicle." (Pls.' Ex. C to Am. Compl., ECF No. 29-4.) The court will refer to this combined notice as a "postrepossession notice" or the "Notice." The first page of the Notice stated that WFS would sell the repossessed car at a public sale beginning on August 16, 2001, at 8:00 a.m. at Adesa Cleveland. (id. at 1.) The second page of the Notice stated that WFS would sell the car at a private sale sometime after August 16, 2001. (Id. at 2.) The third page of the Notice stated that the estimated Total Repossession Charges Assessed were $350.00 and that the estimated Required Minimum Repossession Payment was $25.00. (id. at 3.) Plaintiffs allege that WFS sold the car on a different date than stated in the Notice, without informing Plaintiffs of the actual sale date. It is undisputed that, after the car was sold, there was a deficiency balance purportedly owed by Plaintiffs. Plaintiffs argue that they do not owe this deficiency balance because the Notice violated the Ohio UCC and RISA.

On February 15, 2007, Plaintiffs filed the instant lawsuit, and on December 19, 2007, Plaintiffs filed an Amended Complaint. Plaintiffs allege the following individual and class action claims: (1) Defendant violated O.R.C. §§ 1317.12 and 1317.16, which regulate a secured party's right to dispose of collateral following a default, by issuing a post-repossession notice to Plaintiffs that does not contain mandatory statutory disclosures and which states an improper amount due to redeem the repossessed vehicle; (2) Defendant violated O.R.C. § 1309.47(B)(2)(c), (d) (for Notices issued prior to July 1, 2001)² and/or O.R.C. §§ 1309.613, 1309.614, and/or 1309.626(D) (for Notices issued after July 1, 2001) by failing to list, in the post-repossession notice, a street address of the place of sale, and also simultaneously stating that the vehicle would be sold by public auction and by private sale; and (3) Defendant was unjustly enriched by wrongfully collecting monies to which it is not entitled due to its noncompliance with the above-mentioned notice requirements. (Compl., ECF No. 1; Am. Compl., ECF No. 29.) Plaintiffs seek declaratory and injunctive relief, compensatory and statutory damages, and restitution.

Defendant filed the pending Motion to Dismiss (ECF No. 12), arguing that Plaintiffs have failed to state a claim upon which relief may be granted because Plaintiffs' state law claims are preempted by federal law. Defendant also filed the pending Motion for Costs (ECF No. 13), seeking reimbursement of costs that it incurred in defending an allegedly identical state action that Plaintiffs filed against Defendant, and which Plaintiffs voluntarily dismissed two years prior to filing the instant case.

II. DISMISSAL STANDARD

The court examines the legal sufficiency of the plaintiffs claim under Federal Rule of Civil Procedure 12(b)(6). See Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993). The Supreme Court in Bell Atlantic Corporation v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007), recently clarified what the plaintiff must plead in order to survive a Rule 12(b)(6) motion. When determining whether the plaintiff has stated a claim upon which relief can be granted, the court must construe the Complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the Complaint contains "enough facts to state a claim to relief that is plausible on its face." Id. at 1974. The plaintiffs obligation to provide the grounds for relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 1964-65. Additionally, even though a Complaint need not contain "detailed" factual allegations, its "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the Complaint are true." Id.

III. MOTION TO DISMISS

A. General Preemption Principles

Under the Supremacy Clause, federal law preempts state law where Congress so intends. U.S. Const, Art. VI, cl. 2; Fid. Fed. Savs. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 152, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). Here, Defendant argues that federal law has implicitly preempted Ohio law by indicating "an intent to occupy exclusively an entire field of regulation." Bibbo v. Dean Witter Reynolds, Inc., 151 F.3d 559, 562 (6th Cir.1998). Specifically, Defendant contends that 12 C.F.R. § 560.2 preempts the state laws under which Plaintiffs' claims are pled. The Supreme Court has held that "federal regulations have no less pre-emptive effect than federal statutes." de la Cuesta, 458 U.S. at 153-54, 102 S.Ct. 3014. To determine whether federal regulations preempt state law, the court inquires "whether the agency intended to pre-empt state law, and, if so, whether the agency possessed the power to do so." Bibbo, 151 F.3d at 563 (citing de la Cuesta, 458 U.S. at 154, 102 S.Ct. 3014). Here, the parties disagree as to whether the relevant agency intended to preempt state law, but neither party challenges the agency's authority to do so.

B. General HOLA Principles

HOLA was enacted in the 1930s to create a system of federal savings and loan associations³ in order to provide emergency relief for the widespread home mortgage indebtedness at that time. See de la Cuesta, 458 U.S. at 159-60, 102 S.Ct. 3014. HOLA is currently regulated by the Office of Thrift Supervision ("OTS"), which has authority to promulgate regulations that "provide for the organization, incorporation, examination, operation, and regulation of associations to be known as Federal savings associations (including Federal savings banks)." 12 U.S.C. § 1464(a)(1).

OTS regulations indicate that the agency has "preempt[ed] state laws affecting the operations of federal savings associations" and that OTS "occupies the entire field of lending regulation for federal savings associations." 12 C.F.R. § 560.2(a). OTS has defined "the field of lending regulation" as "encompass[ing] all laws affecting lending by the federal thrifts, except certain specified areas such as basic real property, contract, commercial, tort, and criminal law." 61 Fed.Reg. 50951, 50,965.

12 C.F.R. § 560.2 provides, in pertinent part:

(a) Occupation of field. Pursuant to sections 4(a) and 5(a) of the HOLA, 12 U.S.C. 1463(a), 1464(a), OTS is authorized to promulgate regulations that preempt state laws affecting the operations of federal savings associations when deemed appropriate to facilitate the safe and sound operation of federal savings associations, to enable federal savings associations to conduct their operations in accordance with the best practices of thrift institutions in the United States, or to further other purposes of the HOLA. To enhance safety and soundness and to enable federal savings associations to conduct their operations in accordance with best practices (by efficiently delivering low-cost credit to the public free from undue regulatory duplication and burden), OTS hereby occupies the entire field of lending regulation for federal savings associations. OTS intends to give federal savings associations maximum flexibility to exercise their lending powers in accordance with a uniform federal scheme of regulation. Accordingly, federal savings associations may extend credit as authorized under federal law, including this part, without regard to state laws purporting to regulate or otherwise affect their credit activities, except to the extent provided in paragraph (c) of this section or § 560.110 of this part. For purposes of this section, "state law" includes any state statute, regulation, ruling, order or judicial decision.

(b) Illustrative examples. Except as provided in § 560. 110 of this part, the types of state laws preempted by paragraph (a) of this section include, without limitation, state laws purporting to impose requirements regarding:

...

(4) The terms of credit, including amortization of loans and the deferral and capitalization of interest and adjustments to the interest rate, balance, payments due, or term to maturity of the loan, including the circumstances under which a loan may be called due and...