Krajewski v. American Honda Finance Corp.

• Decision Date: 02 May 2008
• Docket Number: Civil Action No. 07-1793.
• Citation: 557 F.Supp.2d 596
• Parties: Rosemary KRAJEWSKI, Plaintiff, v. AMERICAN HONDA FINANCE CORP. et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

557 F.Supp.2d 596

Rosemary KRAJEWSKI, Plaintiff, v. AMERICAN HONDA FINANCE CORP. et al., Defendants.

Civil Action No. 07-1793.

United States District Court, E.D. Pennsylvania.

May 2, 2008.

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Robert P. Cocco, Law Offices Of Robert P. Cocco PC, Philadelphia, PA, for Plaintiff.

William J. Winning, Whitney N. Whisenhunt, Cozen and O'Connor, Timothy P. Creech, Kogan Trichon & Wertheimer PC, Philadelphia, PA, Bruce J. Warshawsky, Cunningham & Chernicoff, P.C., Harrisburg, PA, for Defendants.

Memorandum and Order

YOHN, District Judge.

Plaintiff Rosemary Krajewski filed this action in response to the allegedly wrongful repossession of a car, the purchase of which she and her ex-husband¹ financed through a Retail Installment Contract ("the Contract") with defendant American Honda Finance Corporation ("AHFC"). The car was physically repossessed at the request of AHFC by defendant Richard & Associates, and the repossession was subsequently, and allegedly wrongfully, reported to defendant Trans Union, LLC, a consumer reporting agency, which then documented it on plaintiffs credit report.

Against AHFC, plaintiff alleges in Count I that it violated the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. ("FCRA"); in Count IV that it violated the Pennsylvania Uniform Commercial Code, 13 Pa. Cons. Stat. § 9601 et seq. ("UCC"); in Count V that it breached the terms of the Contract and wrongfully repossessed the car; and in Count VI that it converted the car and the personal property therein. In Count VII, plaintiff also seeks a judgment against AHFC declaring that plaintiff was not in default under the Contract, that AHFC was not entitled to repossess the car, that plaintiff does not owe any deficiency, and that any adverse credit reporting must be corrected. Against Trans Union, plaintiff alleges in Count II that it violated the FCRA. Against Richard & Associates, plaintiff alleges in Count III that it violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), and in Count VI that it converted the car and the personal property therein. Each defendant has moved for summary judgment as to each count against it. AHFC also counterclaimed against plaintiff for breach of contract, alleging that plaintiff failed to pay the deficiency owed to AHFC after the repossession and sale of the car; AHFC has moved for summary judgment on this claim, as well.

I. Factual and Procedural Background²

A. Repossession of Plaintiffs Car

On May 29, 2004, plaintiff and her exhusband purchased a new Honda Civic. (AHFC's Facts ¶ 12; AHFC's Facts Ex. C.) They financed the purchase through AHFC, and both signed the Contract, which gives AHFC a security interest in the car. (AHFC's Facts ¶ 14; AHFC's Facts Ex. C.) In relevant part, the Contract provides that "Buyer will not expose the Vehicle to misuse, seizure, or confiscation, or other involuntary transfer, even if the Vehicle was not the subject of judicial or administrative action." (AHFC's Facts Ex. C.) "Buyer will be in default under this Contract if Buyer violates any of the terms and conditions of this Contract including (but not limited to) Buyer's duty to make payments when due; ... if Buyer uses the Vehicle or allows the Vehicle to be used for illegal purposes;³ or if Buyer defaults in any of Buyer's other obligations," including the obligation not to "expose the Vehicle to ... seizure." (Id. (footnote added).) "In the event of default, Seller may ... obtain possession of the Vehicle with or without process of law." (Id.) "Buyer authorizes Seller to ... take possession of the Vehicle after an event of a default." (Id.) Upon repossession, "Seller may store personal property found in the Vehicle at Buyer's expense." (Id.) The seller must provide to the buyer, upon repossession, notice of the repossession and notice of the "the earliest date on which Seller may make a private sale." (Id.) After sale of the vehicle,

Seller will apply the proceeds ... first to the reasonable expenses of sale, then to any reimbursable expenses of retaking, repairing and storing the Vehicle, then to late charges, then to any other charges permitted by law, and then to the balance due under this Contract.... To the extent permitted by law, Buyer will be liable for any deficiency.

(Id.)

Plaintiff and her ex-husband agreed that plaintiffs ex-husband would register the ear in his name and keep it at his home for his daily use. (AHFC's Facts ¶ 15.) Plaintiff had her own car, and plaintiff did not intend to use the new car for her own personal use. (Id. ¶¶ 17-18.) In fact, plaintiff drove the car only once. (R. Krajewski Dep. 22:3-8.)

After purchasing the car, plaintiff and her ex-husband did not discuss who could use the car; no limitations or restrictions were agreed to with respect to who could use the car. (Id. at 19:1-7.) More specifically, plaintiff did not discuss with her exhusband whether their sons could use the car; plaintiff, however, believed that one of their sons, Joseph, an adult who sometimes lived with his father, occasionally used the car. (Id. at 20:4-17; AHFC's Facts ¶¶ 25-26.) Plaintiff was aware that Joseph had been charged with driving under the influence in the recent past. (R. Krajewski Dep. 46:3-6.)

On April 14, 2006, Buckingham Township police arrested Joseph in a school parking lot where he, his girlfriend, and another friend had parked the car.⁴ (AHFC's Facts ¶ 27.) The police seized the car and the personal property inside the car. (AHFC's Facts ¶¶ 30, 32; AHFC's Facts Ex. D.) None of the personal property inside the car belonged to plaintiff, and she had no personal knowledge of the vehicle's contents. (AHFC's Facts ¶¶ 33-34.) The car was then transferred to an impoundment lot. (Id. ¶ 35.)

On June 23, 2006, a representative of the Bucks County Detectives sent a letter to AHFC, notifying AHFC that Bucks County had seized the car pursuant to Pennsylvania's Controlled Substance, Drug, Device and Cosmetic Act, 35 Pa. Cons.Stat. § 780-101 et seq. (Id. ¶ 38.) AHFC then submitted internally a request for authorization to repossess the car, and the repossession was authorized. (Id. ¶¶ 41-42.) The authorization was based on an AHFC representative's belief that seizure represented a default under the Contract, a conclusion that plaintiff contests. (Id. ¶ 42; Pl.'s Facts ¶ 42.)

Richard & Associates removed the car (still containing the personal property that was inside it when the car was seized) from the impoundment lot on behalf of AHFC on or about July 17, 2006. (AHFC's Facts ¶ 43.) AHFC then sent to plaintiff and her ex-husband a "Notice of Repossession—Redemption" and a "Notice of Our Plan to Sell Property—Private." (Id. ¶ 45; AHFC's Facts Exs. K, L.) The repossession notice explained that the car had been repossessed because "[y]ou are in default by reason of your failure to pay the installment(s) due."⁵ (AHFC's Ex. K.) It further provided that plaintiff had the right to redeem the vehicle by August 5, 2006; the notice of sale explained that, if not redeemed, the car would be sold some-time after August 5, 2006. (Id.; AHFC's Ex. L.)

After the car was repossessed, AHFC reported the repossession to Trans Union, which in turn included on plaintiffs consumer report the remark "RPO," meaning "repossession." (See Laura Henry Dep. 8:11-19, Oct. 30, 2007.) AHFC never reported to Trans Union that plaintiff had failed to make payments. (AHFC Facts ¶ 56.)

Meanwhile, at the request of plaintiffs attorney and based on his representation that plaintiff was in the process of securing financing to redeem the car, AHFC agreed to extend the sale date specified in the repossession notice to August 18, 2006. (AHFC's Facts ¶ 49.) As part of plaintiffs attempts to secure financing, she requested that a representative of AHFC speak with representatives of the financial institutions from which she sought funding. (Id. ¶ 50.) AHFC's representative informed these institutions that AHFC repossessed plaintiffs car because of its seizure by the authorities and not for reasons related to any failure by plaintiff to make payments. (Id. ¶ 51.) Plaintiff asserts, however, that lenders—specifically Household Finance—would not give her a loan to redeem the car because of the repossession entry on her credit report. (Krajewski Dep. 105:14-106:3.)

Plaintiff was unable to secure financing and failed to redeem the car by August 18, 2006; thus, it was sold at a private sale. (Id. ¶ 52.) AHFC then notified plaintiff and her ex-husband by letter of the $7,048.80 deficiency remaining after AHFC applied the sale proceeds to the costs incurred in repossessing the car, selling the car, and the balance due under the Contract. (Id. ¶¶ 52-53; AHFC's Facts Ex. M.) Neither plaintiff nor her ex-husband has made any payments toward this deficiency. (AHFC's Facts ¶ 53.)

B. Plaintiffs Disputes of the Repossession Remark on Her Credit Report

1. October 2006 Notice of Dispute

On October 10, 2006, Trans Union received a "Request for Investigation" from plaintiff. (TU's Facts ¶ 9.) On the form, under "[t]he reason I disagree," plaintiff checked "I have never paid late." (AHFC's Facts Ex. O.) In the additional comments area of the form, plaintiff wrote: "Never late paying.... This is not a real repossession. Please investigate. Honda put the adverse on my credit report. [Household Finance] would have given me a loan to pay Honda off, but it was already put on the credit report as repossession." (Id.) To the request, plaintiff attached the notice of repossession and notice of sale received from AHFC. (Id.)

In response to plaintiffs request, Trans Union sent AHFC an automated consumer dispute verification form ("ACDV"). (TU's Facts ¶ 12; AHFC's Facts ¶ 57.) ACDVs are generated by Trans Union when a consumer disputes an entry on a credit report; in response to the dispute, Trans Union reviews all the documentation sent in by the consumer and enters that...