Mitchell v. Ford Motor Credit Co.

• Decision Date: 25 November 1998
• Docket Number: Civil Action No. 98-CV-2012-TWT.
• Citation: 68 F.Supp.2d 1315
• Parties: Lequisha MITCHELL, and all persons similarly situated, Plaintiff, v. FORD MOTOR CREDIT COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

68 F.Supp.2d 1315

Lequisha MITCHELL, and all persons similarly situated, Plaintiff, v. FORD MOTOR CREDIT COMPANY, et al., Defendants.

Civil Action No. 98-CV-2012-TWT.

United States District Court, N.D. Georgia, Atlanta Division.

November 25, 1998.

Don C. Keenan, Keenan Law Firm, Atlanta, GA, Mark D. Fischer, phv, Rawlings & Associates, Louisville, KY, for plaintiff.

Thomas M. Byrne, Sutherland Asbill & Brennan, Atlanta, GA, for defendants.

ORDER

THRASH, District Judge.

This is a consumer fraud action which the Plaintiff seeks to prosecute as a class action. It is before the Court on Defendants' Motions to Dismiss [Doc. Nos. 2 and 3], Defendants' Motions to Dismiss Amended Complaint [Doc. Nos. 15 and 16], and Plaintiff's Motion to File a Second Amended Complaint [Doc. No. 18]. For the reasons set forth below, the Court grants Defendants' Motions to Dismiss and denies Plaintiff's Motion to File the Second Amended Complaint.

I. BACKGROUND

This case involves a dispute between Lequisha Mitchell, the lessor of a new vehicle, and two finance companies, Ford Motor Credit Company and Primus Automotive Financial Services. The later is a wholly owned subsidiary of the former. Ford Motor Credit finances domestic-made vehicles, and Primus finances vehicles manufactured abroad. Ms. Mitchell entered into a lease for a new automobile with Ford Motor Credit. She seeks to assert claims on behalf of herself and all individuals and businesses in Georgia who leased vehicles through these two companies before 1998. She seeks a panoply of relief including compensatory and punitive damages based upon her allegations of unconscionability, fraud and breach of contract.

Plaintiff leased a new Ford Explorer from Gene Evans Ford in August, 1997. She leased the vehicle primarily for personal or household use. Ms. Mitchell financed the lease through Defendant Ford Motor Credit.¹ According to the lease, she financed a capitalized cost of $23,846.83 minus reductions for rebates and cash paid. The lease specified depreciation of $6,761.46 over the lease term resulting in a residual value of $15,376.20. Ms. Mitchell's lease disclosed "lease charges" of $2,258.22. As with most leases, the monthly payments are based upon the depreciation plus tax and lease charges. Over twenty-four months, Ms. Mitchell agreed to pay $394.61 per month for a total of $9,470.64. She alleges that Ford Motor Credit charged her an "acquisition fee" as part of the "lease charges" that were not disclosed in the lease. She alleges that Ford Motor Credit and Primus routinely include acquisition fees in "lease charges" unbeknownst to their customers. As alleged by Ms. Mitchell, Defendants charge acquisition fees of $425.00 or a fixed percentage of the capitalized cost of a vehicle.

In July, 1998, Plaintiff filed this suit in the Superior Court of Fulton County, Georgia. She asserted four claims: violation of the Georgia Fair Business Practice Act, O.C.G.A. § 10-1-390 et seq.; unconscionability; fraud; and breach of contract. Defendants removed the case to this Court on the basis of diversity jurisdiction. The amount in controversy exceeds $75,000.00 when the claims of Ms. Mitchell and the putative class are aggregated. Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1357 (11th Cir.1996). Defendants then filed separate Motions to Dismiss under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief could be granted. Subsequent to the filing of those motions, Ms. Mitchell filed an Amended Complaint dismissing her Georgia Fair Business Practice Act claim but maintaining her other claims. Defendants then filed Rule 12(b)(6) Motions to Dismiss the Amended Complaint. Ms. Mitchell has also filed a Motion to File a Second Amended Complaint in which she alleges the existence of fiduciary duties between the parties and seeks to add a second class representative.

II. MOTION TO DISMISS STANDARDS

A complaint should be dismissed under Rule 12(b)(6) only where it appears beyond doubt that no set of facts could support the plaintiff's claims for relief. Fed.R.Civ.P. 12(b)(6); see Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Linder v. Portocarrero, 963 F.2d 332 (11th Cir.1992). In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construes them in the light most favorable to the plaintiff. See Quality Foods de Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir.1983). Notice pleading is all that is required for a valid complaint. See Lombard's, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir.1985), cert. denied, 474 U.S. 1082, 106 S.Ct. 851, 88 L.Ed.2d 892 (1986). Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiff's claim and the grounds upon which it rests. Id.

III. DISCUSSION

This case concerns Plaintiff's lease of a vehicle from Ford Motor Credit Company. Plaintiff did not attach a copy of the lease agreement to her Complaint. A copy of the lease agreement is attached to the Motion to Dismiss of Defendant Ford Motor Credit Company. In deciding Defendants' motions, the Court will consider the copy of the lease in question which Defendants attached to their motions. Where a plaintiff relies on a document in the complaint and the document is central to the claim, the Court may consider the document as part of the pleadings for purposes of a Rule 12(b)(6) motion. Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364, 1369 (11th Cir.1997). The Defendants' attachment of such document does not require the motions to be converted into motions for summary judgment. Id. In her response to the Motions to Dismiss, Plaintiff does not object to consideration of the lease agreement or ask that the motions be considered as summary judgment motions. In this diversity action, Georgia law applies to Ms. Mitchell's claims as they are state causes of action arising from a contract entered into in Georgia.

A. UNCONSCIONABILITY

Ms. Mitchell raises as her first cause of action a claim of unconscionability. Georgia has codified the doctrine of unconscionability as applied to consumer leases in its Uniform Commercial Code at O.C.G.A. § 11-2A-108. Subsections (1) and (2) of this statute are its only substantive provisions; the other two subsections are procedural. As provided in Subsection (1), a finding of unconscionability in a lease contract allows the Court three options. It may refuse to enforce the lease, enforce the remainder of the lease without the unconscionable clause, or limit the application of any unconscionable clause to avoid unconscionable results. Subsection (1) does not provide for the recovery of damages. In the next paragraph, Section 11-2A-108(2) allows the Court to grant "appropriate relief" if the Court finds a consumer lease has been induced by unconscionable conduct or that unconscionable conduct occurred in collecting payments from a lease.

The Court finds that Plaintiff has failed to state a claim upon which relief can be granted in her claim for damages for unconscionability. First, Section 11-2A-108 does not provide a cause of action. It codifies the common law defense of unconscionability to the enforcement of a contract. Cowin Equip. Co. v. General Motors Corp., 734 F.2d 1581, 1582 (11th Cir.1984) (construing similar language in Alabama and Ohio's UCC). In its review of the statute and relevant cases, the Court finds no authority that the doctrine of unconscionability provides a basis for affirmative relief. Ms. Mitchell argues that language in Section 11-2A-108(4)(c) provides support for her recovery. This procedural sub-section provides that "[i]n determining attorney's fees, the amount of the recovery on behalf of the claimant under subsections (1) and (2) is not controlling." The Court finds this argument unconvincing. If the Georgia Legislature intended to spin a new cause of action from the wool of a traditional contracts defense, the innovative provision would surely appear in the substantive language of the statute.

Secondly, even if the Court were inclined to embrace a new cause of action Ms. Mitchell's allegations describe neither unconscionable contracts nor conduct. Georgia courts have described unconscionable contracts as those that "no sane man not acting under a delusion would make and that no honest man would take advantage of." Stefan Jewelers, Inc. v. Electro-Protective Corp., 161 Ga.App. 385, 288 S.E.2d 667 (1982). Unconscionable conduct must "shock the conscience." BMW Financial Services, N.A. v. Smoke Rise Corp., 226 Ga.App. 469, 486 S.E.2d 629 (1997). Determining whether a contract is unconscionable is a question of law for the Court. Zepp v. Mayor & Council of Athens, 180 Ga.App. 72, 348 S.E.2d 673 (1986).

The basis of Ms. Mitchell's claim is that "a substantial and hidden charge for alleged lease acquisition fees was added to all of the class members' leases without disclosure." Amended Complaint, ¶ 34 [Doc. No. 9]. Ms. Mitchell does not, however, allege that the total amount of the lease payments was unconscionable — and clearly it was not. In essence, her complaint is the failure to disclose a fee that was included within a total amount she agreed to pay. The total amount that she financed included a lease or rent charge of $2,258.22. The lease charge was disclosed in clear terms on the front of the lease. The lease charge included the dealer's profit, overhead, and the administrative fee.² Itemizing the lease charge is not required by the federal law governing leases. The Consumer Leasing Act, 15 U.S.C. § 1667, et seq. (CLA) is part of the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq. The CLA seeks "to assure meaningful disclosure of the terms of leases ... so as to enable the lessee to compare more readily the various lease terms available to him." 15 U.S.C. § 1601(b). Toward that end, the CLA requires specific disclosures. It...