Roach v. Middleton Auto Sales, Inc., Civil Action No. 08-11424-WGY.

Decision Date08 June 2009
Docket NumberCivil Action No. 08-11424-WGY.
Citation623 F.Supp.2d 139
PartiesCherise ROACH, Plaintiff, v. MIDDLETON AUTO SALES, INC., Cuna Mutual Insurance Company, Inc., Assets Recovered, LLC, and Wachovia Corporation, Defendants.
CourtU.S. District Court — District of Massachusetts

Tracy M. Conlon, Law Office of Tracy M. Conlon, P.C., Beverly, MA, Sergei Lemberg, Lemberg & Associates, Stamford, CT, for Plaintiff.

Edward C. Cooley, Giarusso, Norton, Cooley & McGlone, James F. Norton, Paven & Norton Quincy, MA, Michael Lushan, Lushan, McCarthy & Goonan, Brookline, MA, Bernard D. Posner, City of Boston Law Department, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

YOUNG, District Judge.

I. INTRODUCTION

On August 18, 2008, Cherise Roach ("Roach") brought this action under the Federal Odometer Act, 49 U.S.C. § 32701, et seq., (the "Act") against Middleton Auto Sales, Inc. ("Middleton Auto"), CUNA Mutual Insurance Company, Inc. ("CUNA"), Assets Recovered, LLC ("Assets"), and Wachovia Corporation ("Wachovia").1 See Complaint [Doc. No. 1]. The strange thing about this case is that the actual odometer reading of the subject vehicle is 37,537 miles less than the mileage erroneously represented.

Roach moved for summary judgment on the Federal Odometer Act count, claiming that Assets, acting as agent for CUNA, "made false certifications, with actual knowledge or reckless disregard, as to the truck's mileage." Roach's memorandum of law ("Roach Mem.") [Doc. No. 31] at 1. Assets and CUNA opposed her motion, and moved for summary judgment in their favor on all counts.2 [Doc. No. 33]. Their motion was denied from the bench at a hearing on April 15, 2009. The Court now reconsiders that ruling and addresses Roach's motion.

II. FEDERAL JURISDICTION

This Court has jurisdiction pursuant to the Act, which provides that individuals may bring a private cause of action to "enforce a claim under this section in an appropriate United States district court." 49 U.S.C. § 32710(b).3

III. UNDISPUTED FACTS

Prior to 2005, the vehicle at issue, a 2003 Dodge Ram 2500 truck, VIN number 3D7KU28D33G809904 (the "truck"), was owned by Kirk Tashereaux and financed by St. Mary's Bank. The truck disappeared in 2005 and Tashereaux stopped making payments on it. On March 29, 2005, St. Mary's Bank assigned its interest in the truck to CUMIS Insurance Society, Inc. ("CUMIS"), a CUNA subsidiary. See Defs.' Statement of Facts ("Defs.' Facts") [Doc. No. 34] at 1(I)(A). CUMIS then hired Assets (a Texas repossessor) to recover and title the truck. Id. at 2(1). CUMIS provided Assets with a Power of Attorney to act on its behalf. [Doc. No. 29, Attach. 7].

Assets found the truck at Stanley's Service lot ("Stanley's") in Jamaica Plain, Massachusetts in September 2005. Defs.' Facts at 2(2). It then contracted with a New Hampshire vehicle recovery service, Atlantic Recovery ("Atlantic"), to recover the truck. Id. After repossessing the truck, Atlantic forwarded to Assets a copy of a receipt created by Stanley's that indicated that the truck had 66,782 miles on its odometer. Atlantic did not actually cut a new key to unlock the truck and look at the odometer. Id. at 2(3).

Later, on September 23, 2005, Assets contracted with Auto Auction of New England ("AANE"), a New Hampshire company, to pick up the truck at Atlantic's lot. Id. at 2(4). The truck was in AANE's possession by October 6, 2005. Id. at 2(6).

First Certification

On October 5, 2005, Assets filed an application for a new Texas title for the truck, certifying that the odometer's mileage was 66,782. Defs.' Facts at 2(5). It did so even though it, in its words, had "no way to confirm the actual mileage of the vehicle." [Doc. No. 29, Attach. 16]. Instead, it relied on the receipt from Stanley's.4 At the time Assets submitted the original application, it believed it knew the correct mileage. Defs.' Facts at 1(IV)(A).

On or about October 6, 2005, AANE transported the truck to an auction facility, where it cut a key, entered the truck, and observed that the odometer on the truck registered 31,245 miles, not 66,782. Defs.' Facts at 2(6).

Second Amended Certification

In May 2006, Assets became aware that the truck's odometer actually indicated a mileage of 31,245. Defs.' Facts at 2(9). About four months later, in September 2006, Assets (acting as agent for CUNA) filed a second application for a Texas title and signed a second Odometer Disclosure Statement, certifying that the "actual mileage" of the truck was 31,245 miles. Defs.' Facts at 2(10). Based on this application, the Texas Department of Transportation issued a new title for the truck with the correct mileage. Id. at 2(11).

Three weeks after these changes, Assets, via its agent AANE, sold the truck to a Massachusetts-based wholesaler, Fedele Auto Sales ("Fedele"). Defs.' Facts at 2(12).

Sale to Roach

Fedele sold the truck to Middleton Auto, which sold it to Roach. Defs.' Facts at 2(13-14). After purchase, Roach discovered many problems (rotted tires, rust on all metal parts, extensive body work, leaking radiator hose, odometer reading inconsistent with truck's tire, brake, and belt wear,5 to name a few) and concluded that the truck was a "lemon." Roach Mem. [Doc. No. 31] at 6.

IV. ANALYSIS
A. The Summary Judgment Standard

This Court must take all inferences in favor of the nonmoving party, which, with respect to Assets' and CUNA's motion, is Roach. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)(explaining that on summary judgment motions, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor"). Whether Assets and CUNA intended to misrepresent the odometer reading or acted in reckless disregard of that reading is the main issue here. This Court must be mindful, however, that summary judgment is "rarely appropriate on the issue of intent". See Bedsworth v. G & J Automotive, Inc., 650 F.Supp. 763, 765 (E.D.Mo.1986) (citing Poller v. Columbia Broadcasting Sys., Inc., 368 U.S. 464, 472-73, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962)). Yet if the record indicates that "no showing of the requisite intent can be made," summary judgment may be appropriate. See Bedsworth, 650 F.Supp. at 765 (quoting Pepp v. Superior Pontiac GMC, Inc., 412 F.Supp. 1053, 1056 (E.D.La.1976)).6

B. The Federal Odometer Act

The Act provides, in relevant part:

(a) Findings. Congress finds that—

(1) buyers of motor vehicles rely heavily on the odometer reading as an index of the condition and value of a vehicle;

(2) buyers are entitled to rely on the odometer reading as an accurate indication of the mileage of the vehicle;

(3) an accurate indication of the mileage assists a buyer in deciding on the safety and reliability of the vehicle; and

. . . .

(b) Purposes. The purposes of this chapter are—

(1) to prohibit tampering with motor vehicle odometers; and

(2) to provide safeguards to protect purchasers in the sale of motor vehicles with altered or reset odometers.

49 U.S.C. § 32701. It requires a person transferring ownership of a vehicle to disclose the actual mileage registered on the odometer, or to disclose the fact the actual mileage is unknown, and prohibits false statements in connection with such disclosure to a transferee. Id. at sections 32703, 32704. The Act is "remedial in nature, and should be broadly construed to effectuate its [congressional] purpose." See Ryan v. Edwards, 592 F.2d 756, 760 (4th Cir.1979).7

1. Transferors Under the Act

Assets and CUNA can only be held liable under the Act if they acted as a transferor. See 49 U.S.C. § 32705(a). Pursuant to the Act, a transferor is a person or entity that transfers its ownership in motor vehicle "by sale, gift, or any means other than by creation of a security interest." Tusa v. Omaha Auto. Auction, Inc., 712 F.2d 1248, 1251 (8th Cir.1983). Congress did not intend, however, that sales agents be included within the sweep of the Act. See Coulbourne v. Rollins Auto Leasing Corp., 392 F.Supp. 1198, 1201 (D.Del.1975). For example, a sole proprietor of an auto dealership would be considered a transferor, whereas a manager would not. See Bryant v. Thomas, 461 F.Supp. 613, 618 (D.Neb.1978).

Both parties agree that because St. Mary's Bank assigned its interest to CUNA, CUNA has a security interest in the vehicle. See In re Circus Time, Inc., 641 F.2d 39, 41 (1st Cir.1981). They agree that Assets acted as the agent of CUNA and that CUNA sold the truck to Fedele.8 Defs.' Facts at 1(III)(A), (B). Assets and CUNA deny, however, that they were transferors with respect to the sale of the truck from Middleton Auto to Roach. Defs.' Facts at 1(III).

Because Assets acted as the agent of CUNA, it is shielded from liability, as it is not considered a transferor. The actions of Assets would be imputed to CUNA.

In Tusa, a defendant automobile auction that sold a car to a dealer argued that it was not a transferor or transferee under the Act because it was never the owner of the car and was simply acting as an agent when it put itself in the chain of title. See Tusa, 712 F.2d at 1251. The court rejected the argument, concluding that the defendant was an owner for purposes of the Act because its "brief retention of title of the car" made it a transferor and transferee. See Tusa, 712 F.2d at 1252.

Similar to the defendant in Tusa, CUNA is a transferor under the Act, even though it received only a security interest (the lien) from St. Mary's Bank. After it had appointed Assets and conferred its power of attorney, Assets (acting as agent) submitted an application for a new title. Assets subsequently submitted another application to change the first title, and was given the corrected title. At this point, CUNA sold the truck to Fedele. Like the defendant in Tusa, CUNA, through Assets, was briefly the titleholder of the car. Therefore CUNA was a transferor.

2. Intent Under the Act

A transferor who does not have actual knowledge can...

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