Hall v. Yark Auto. Grp., Inc.
| Decision Date | 15 July 2015 |
| Docket Number | Case No. 3:15-cv-00475 |
| Parties | Nicole Hall, Plaintiff, v. Yark Automotive Group, Inc., et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
Defendants Yark Automotive Group and Shane Snyder seek dismissal of Plaintiff Nicole Hall's claims against them pursuant to Rule 12(b)(6). (Doc. No.19). Hall filed a brief in opposition. (Doc. No. 20). Yark and Snyder filed a brief in reply. (Doc. No.21). Subsequently, Hall filed a motion to amend her complaint. (Doc. No. 23). Yark and Snyder oppose that motion. (Doc. No. 24). Hall did not file a reply to Yark and Snyder's opposition. For the reasons stated below, Yark and Snyder's motion to dismiss is granted, and Hall's motion to amend her complaint is denied.
A defendant may seek to dismiss a plaintiff's complaint on the ground the complaint fails to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). When ruling on a motion to dismiss, a court construes the complaint in the light most favorable to the plaintiff and accepts as true well-pleaded factual allegations. Daily Servs., LLC v. Valentino, 756 F.3d 893, 896 (6th Cir. 2014) (citing Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). Factual allegations must be sufficient to state a plausible claim for relief. Iqbal, 556 U.S. at 678. Legal conclusions and unwarranted factualinferences are not entitled to a presumption of truth. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
If a party seeks to amend its pleading more than 21 days after service of a Rule 12(b) motion, the party must obtain "the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(1)-(2). Leave should be freely given when justice so requires. Fed. R. Civ. P. 15(a)(2). "In the absence of any apparent or declared reason - such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. - the leave sought should, as the rules require, be 'freely given.'" Foman v. Davis, 371 U.S. 178, 182 (1962); see also Head v. Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th Cir. 1989).
In October 2013, Hall spoke with Snyder about purchasing a used vehicle. Though she was on a fixed income of $349 per month, Hall alleges Snyder induced her to lease a 2014 Dodge Ram, with monthly payments in excess of $500. (Doc. No. 1 at 4-5). Hall states Yark and Snyder arranged for her to obtain a loan from Defendant Chrysler Capitol to finance the transaction. (Doc. No. 1 at 4). She made the payments for several months with financial assistance from friends before informing Chrysler Capitol she would default on the loan and allowing Chrysler Capitol to repossess the vehicle. (Doc. No. 1 at 5). Hall filed suit on March 11, 2015, asserting claims under the Truth in Lending Act ("TILA") and the Credit Repair Organization Act ("CROA").
After Yark and Snyder filed their motion to dismiss, Hall filed a motion to amend her complaint. (Doc. No. 23). Hall proposes to withdraw her TILA claim, conceding it is barred by the statute of limitations, and to add claims under the Fair Credit Reporting Act ("FCRA") and the Ohio Consumer Sales Practices Act. (Doc. No. 23-1).
Yark and Snyder argue Hall's TILA claim should be dismissed because she filed it outside of the applicable limitations period. Generally, plaintiffs must bring TILA claims "within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). Hall has not complied with this provision, as she brought her claim approximately 18 months after the alleged violation occurred. (See Doc. No. 1). Hall concedes her TILA claim is untimely and is subject to dismissal. (Doc. No. 23 at 2). Yark and Snyder's motion to dismiss Hall's TILA claim is granted.
Yark and Snyder argue Hall's CROA claim should be dismissed because Yark and Snyder are not credit repair organizations under the statute. Hall alleges Yark and Snyder violated 15 U.S.C. § 1679b "by filing and inducing [her] to file untrue loan applications with respect to [her] creditworthiness to loan provider Chrysler Capital . . . ." (Doc. No. 1 at 5). Section 1679b(a) states:
No person may make any statement, or counsel or advise any consumer to make any statement, which is untrue or misleading (or which, upon the exercise of reasonable care, should be known by the credit repair organization, officer, employee, agent, or other person to be untrue or misleading) with respect to any consumer's credit worthiness, credit standing, or credit capacity to . . . (B) any person . . . (ii) to whom the consumer has applied or is applying for an extension of credit . . . .
15 U.S.C. § 1679b(a)(1). I conclude Yark and Snyder have carried their burden and grant their motion to dismiss.
15 U.S.C. § 1679a(3)(A).
Hall does not allege Yark or Snyder acted with "the express or implied purpose of . . . improving [her] credit record, credit history, or credit rating . . . ." Id. Instead, she alleges Snyder sought "to increase the amount of his commission" and that Yark and Snyder submitted "fraudulent loan documentation" for the purpose of obtaining payment and making a profit. (Doc. No. 1 at 4). Hall fails to state a plausible claim for relief under the CROA because Yark and Snyder do not meet the definition of a credit repair organization and Hall does not allege they offered credit repair services.
Hall argues the CROA does not require that Yark and Snyder qualify as credit repair organizations in order to be found liable under § 1679b(a). That subsection, Hall notes, proscribes certain conduct by a "person." Id. Hall also correctly notes "[i]t is a well-established principle that when Congress uses different terms in the same statute[,] the terms are held to have different meanings." (Doc. No. 20 at 2). Indeed, several courts have concluded the use of the broader term "person" in place of the narrower term "credit repair organization" extends liability to defendants who do not meet the definition of a credit repair organization. See, e.g., Poskin v. TD Banknorth, N.A., 687 F. Supp. 2d 530, 543 (W.D. Pa. 2009); Bigalke v. Creditrust Corp., 162 F. Supp. 2d 996, 999 (N.D. Ill. 2001); Martinez v. Freedom Mortg. Team, Inc., 527 F. Supp. 2d 827, 840 (N.D. Ill. 2007).
It does not follow, however, that Congress's use of the term "person" extends liability to anyone who makes or advises a consumer to make an untrue or misleading statement about the consumer's credit-worthiness, credit standing, or credit history. "It [also] is a fundamental canon ofstatutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." Davis v. Mich. Dep't of Treasury, 489 U.S. 803, 809 (1989) ().
As its name implies, the CROA seeks to address misconduct by actors who target consumers looking to improve their commercial credit. The explicit purposes of the CROA are "(1) to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services; and (2) to protect the public from unfair or deceptive advertising and business practices by credit repair organizations." 15 U.S.C. § 1679(b). It regulates the terms and conditions of contracts between credit repair organizations and consumers, and even mandates that consumers be given three business days to cancel a contract without penalty. 15 U.S.C. § 1679d. The CROA also requires credit repair organizations to make certain disclosures before executing a contract with a consumer. 15 U.S.C. § 1679c. Thus, the context of 15 U.S.C. § 1679b(a) implies that subsection prohibits misconduct solely in the provision of credit repair services.
Further, § 1679b(a)(1), in addition to prohibiting intentional misconduct, imposes a negligence standard on "the credit repair organization, officer, employee, agent, or other person" making an untrue or misleading statement, or counseling or advising the consumer to make an untrue or misleading statement. 15 U.S.C. § 1679b(a)(1). If Congress in fact intended this subsection to extend liability to "any 'person,'" Martinez, 527 F. Supp. 2d at 840, there would be...
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