Garcia v. U.S. Bank
| Decision Date | 13 October 2015 |
| Docket Number | Civil Action No. 2:15cv394. |
| Citation | 141 F.Supp.3d 490 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | Danilo GARCIA and Teresa Garcia, Plaintiffs, v. U.S. BANK, Defendant. |
John Edwin Bedi, John E. Bedi, Attorney at Law, Virginia Beach, VA, for Plaintiffs.
Timothy James St. George, Troutman Sanders LLP, Richmond, VA, for Defendant.
This matter comes before the court on the Motion to Dismiss ("Motion"), ECF No. 5, and Memorandum in Support, ECF No. 6, filed by the Defendant, U.S. Bank, on September 10, 2015. The Plaintiffs, Danilo Garcia and Teresa Garcia, filed their Response, ECF No. 7, and Memorandum in Opposition, ECF No. 8, on September 24, 2015. The Defendant filed its Reply on September 30, 2015. ECF No. 9. This matter has been fully briefed and is ripe for review.1
Because this matter arises from a motion for dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6), the sparse facts alleged in the Complaint are assumed to be true and viewed in the light most favorable to the Plaintiffs.2 In February 2004, the Plaintiffs entered into a loan agreement ("Agreement") with the Defendant to finance the purchase of a boat. Compl. ¶ 4, ECF No. 1–1. The Plaintiffs borrowed $87,000, plus financing fees, and granted the Defendant a security interest in the boat as collateral for the loan. Id. ¶ 6, Ex. A, ECF No. 1–2. Under the terms of the Agreement, the Plaintiffs were to make set monthly payments for 180 months, beginning April 4, 2004. Id.
Ex. A. The Plaintiffs would be in default on the contract if (1) they failed to perform any obligation undertaken in the contract, or (2) the Defendant, in good faith, believed the Plaintiffs could not, or would not, pay or perform the obligations undertaken in the contract. Id. The Agreement further stipulated that the Defendant could not accelerate payment or repossess the secured property because of late payment or non-payment of an installment if the Plaintiffs made full payment within ten days of the date on which the installment was due. Id.
The Agreement also specified the remedies available to the Defendant if the Plaintiffs were in default. One remedy was to take immediate possession of the secured property by legal process or self-help. Mem. Supp. Ex. A, ECF No. 6–1.3 The Defendant could then sell the property and apply the proceeds to the costs of the sale and the Plaintiffs' outstanding obligations. Id. If notice of an intended sale of the property was required, the parties agreed notice would be reasonable if mailed to the Plaintiffs' address, as reflected in the Defendant's records, at least ten days prior to the date of the intended sale. Id. Finally, the Defendant was authorized to take possession of any personal property left on the secured property when the secured property was taken into possession, subject to the Plaintiffs' right to recover such property. Compl. Ex. A.
On October 31, 2014, the Defendant repossessed the Plaintiffs' boat from a storage facility. Id. ¶¶ 7, 9. The Defendant then sold the boat on November 19, 2014. Id. ¶ 11. Personal property stored on the boat was also taken and never returned to the Plaintiffs. Id. ¶¶ 14, 22. The Plaintiffs allege this repossession was wrongful because they were not in default on the loan and had made all monthly payments due. Id. ¶¶ 8, 9, 11, 16.
The Plaintiffs filed a Complaint in the Circuit Court for the City of Norfolk, Virginia, on August 4, 2015, alleging four claims arising from the repossession of the boat and the property stored thereon. The Defendant removed the case to this court on September 9, 2015, based upon 28 U.S.C. § 1332 (diversity jurisdiction). Notice of Removal, ECF No. 1. On September 10, 2015, the Defendant filed the instant Motion, arguing that the Complaint fails to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). ECF No. 5.
Pursuant to Rule 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint; it does not resolve contests surrounding the facts of the case, the merits of a claim, or the applicability of any defense. Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Facial plausibility means that a "plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ).
The Supreme Court, in Twombly and Iqbal, offered guidance to courts evaluating a motion to dismiss:
In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.
Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. That is, the court accepts facts alleged in the complaint as true and views those facts in the light most favorable to the plaintiff. E.g., Venkatraman v. REI Sys., Inc., 417 F.3d 418, 420 (4th Cir.2005). After so doing, the court should not grant the Defendant's Motion if the Plaintiffs "demonstrate more than ‘a sheer possibility’ " that the Defendant has acted unlawfully, by "articulat[ing] facts, when accepted as true, that ‘show’ that the [Plaintiffs have] stated a claim entitling [them] to relief." Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.2009) (quoting Iqbal, 556 U.S. at 677–78, 129 S.Ct. 1937 ).
The court may consider the facts alleged on the face of the complaint, as well as "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint." Silverman v. Town of Blackstone, 843 F.Supp.2d 628, 631 (E.D.Va.2012) (citations omitted). The court may also look to documents incorporated by reference in the complaint without converting a Rule 12(b)(6) motion into a Rule 56 motion for summary judgment. See id. (citing Pueschel v. United States, 369 F.3d 345, 353 n. 3 (4th Cir.2004) ).
In Count I, the Plaintiffs allege that the Defendant breached the Agreement by repossessing the boat when the Plaintiffs had not defaulted. Compl. ¶¶ 16–17. The elements of a breach of contract claim under Virginia law are "(1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach." Ramos v. Wells Fargo Bank, N.A., 289 Va. 321, 770 S.E.2d 491, 493 (2015). The Defendant argues that the second element, a violation or breach, was not adequately pled. Mem. Supp. at 5–6. The Defendant contends the Plaintiffs have not pled that they made timely payments throughout the life of the loan, only that they were current as of the date of the repossession. Id. at 6. The Defendant implies that there was a prior default by the Plaintiffs that authorized the repossession, even if the Plaintiffs had become current by the date of the repossession.
The Plaintiffs state in the Complaint that they "had not defaulted" and "were not in default" when the boat was repossessed. Compl. ¶¶ 16, 17. The court must accept these factual statements alleged by the Plaintiffs as true and view them in the light most favorable to the Plaintiffs.4 The statement that the Plaintiffs "had not defaulted" prior to the repossession date, id. ¶ 16, can naturally be read to mean they were not in default at any time prior to this date, not just that they were current on payments as of the date of the repossession. Therefore, the Plaintiffs have adequately alleged that they had not, at any time, defaulted on the Agreement. Taking this as true, the repossession of the boat by the Defendant was not authorized under the Agreement and constituted a breach. The other two elements of a breach of contract claim are not contested. Accordingly, the Plaintiffs have sufficiently stated a claim for breach of contract. The Defendant's Motion is DENIED with respect to Count I of the Complaint.
In Count II, the Plaintiffs allege the Defendant did not provide them with any notice prior to the sale of the repossessed boat, in violation of the notice requirements of the UCC and the Code of Virginia. Compl. ¶ 19.5 A secured party may take possession of the collateral after default by the debtor and sell or otherwise dispose of the property in a commercially reasonable manner. Va.Code § 8.9A–609 to –610. However, a secured party that intends to sell or otherwise dispose of the collateral must provide a notification of such disposition to the debtor. Id. § 8.9A–611. Notice sent ten days or more before the earliest time of disposition set out in the notification is considered to be sent within a reasonable time before disposition. Id. § 8.9A–612.6 A debtor has a claim under the UCC, as adopted into Virginia law, if such notice was not provided in the appropriate time frame and with the necessary content. See Barnette v. Brook Road, Inc., 457 F.Supp.2d 647, 657–59 (E.D.Va.2006) ; Padin v. Oyster Point Dodge, ...
To continue reading
Request your trial
-
SunTrust Bank v. Howard, 2017–00654
...v. Brook Rd., Inc., 457 F. Supp. 2d 647, 659 [E.D. Va.], citing VA Code Ann §§ 8.9A–609, 8.9A–611 – 8.9A–614 ; see Garcia v. U.S. Bank, 141 F. Supp. 3d 490, 495 [E.D. Va.] ; Cappo Mgt. V, Inc. v. Britt, 282 Va. 33, 40, 711 S.E.2d 209, 212 ). "Notice sent to an incorrect address is insuffici......