Source One Fin. Corp. v. Dinardo Auto Sales LLC, Civil Action No. 3:13–CV–00214 (VLB).

• Citation: 2 F.Supp.3d 180
• Decision Date: 03 March 2014
• Docket Number: Civil Action No. 3:13–CV–00214 (VLB).
• Court: U.S. District Court — District of Connecticut
• Parties: SOURCE ONE FINANCIAL CORPORATION, Plaintiff, v. DINARDO AUTO SALES LLC; Pasquale M. Dinardo; and Julie Dinardo, Defendants.

2 F.Supp.3d 180

SOURCE ONE FINANCIAL CORPORATION, Plaintiff,

v.DINARDO AUTO SALES LLC; Pasquale M. Dinardo; and Julie Dinardo, Defendants.

Civil Action No. 3:13–CV–00214 (VLB).

United States District Court,

D. Connecticut.

Signed March 3, 2014.

Matthew E. Mitchell, Source One Financial Corporation, Norwell, MA, William J. O'Sullivan, Baker O'Sullivan & Bliss PC, Wethersfield, CT, for Plaintiff.

Gary A. Mastronardi, Gary Mastronardi Law Firm, Bridgeport, CT, for Defendants.

Pasquale M. Dinardo, Bridgeport, CT, pro se.

MEMORANDUM OF DECISION DENYING DEFENDANTS' MOTION TO DISMISS [Dkt. # 68]

VANESSA L. BRYANT, District Judge.

I. Introduction

The Plaintiff, Source One Financial Corporation (“Source One”), a Massachusetts corporation with a principal place of business in Norwell, Massachusetts, brings this action for breach of contract and for various torts related to the breach of contract, including unjust enrichment, conversion, and unfair and deceptive trade practices in violation of CUTPA and the equivalent Massachusetts statute, against Defendants, Dinardo Auto Sales LLC (“Dinardo”), a Connecticut limited liability company with a principal place of business in Bridgeport, Connecticut, and two of Dinardo Auto's officials: Pasquale M. Dinardo (“PMD”) and Julie S. Dinardo (“JSD”), both Connecticut residents. This action was initially brought in the District of Massachusetts where the Plaintiff was awarded default entry under Fed.R.Civ.P. 55(a) on July 16, 2012. [Dkt. # 9, Motion for Entry of Default]. On July 25, 2012, the Plaintiff moved for default judgment under Fed.R.Civ.P. 55(b), but when the court held a hearing on that motion, the Defendants contested the court's exercise of personal jurisdiction over them. [Dkt. # 12, Motion for Default Judgment]. The court at that hearing suspected without explicitly holding that it had jurisdiction, but because the Defendants were appearing pro se, the court requested a motion to transfer the matter to Connecticut. Subsequent to that hearing, the Defendants moved to set aside the default entry, but the court denied that order requiring the Defendants to comply with its request to transfer order. [Dkt. # 40, Motion to Set Aside Default; Dkt. # 42, Order on Motion to Set Aside Default]. The Defendants then so moved and the court transferred the case to this Court on February 12, 2013. [Dkt. # 51, Transfer Order]. The Defendants have now moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(2), lack of personal jurisdiction.

For the reasons that follow, the Defendants' Motion to Dismiss is DENIED.

II. Background

The following facts and allegations are taken from the Plaintiff's complaint and supporting materials to its Opposition of the Defendants' Motion to Dismiss. Source One is a licensed indirect automobile sales finance company which purchases Retail Installment Contracts (“RICs”) from used automobile dealers in Connecticut, Massachusetts, and Maine for the purpose of indirectly financing the purchase of used vehicles by consumers in those states. [Dkt. # 1, Complaint, ¶ 1]. Dinardo is a used automobile dealership, PMD is the owner of Dinardo, and JSD runs the day-to-day operations of the business and at all times relevant to the case executed documents on behalf of PMD and Dinardo. [Dkt. # 1, ¶¶ 2–4].

Around August 23, 2007, Dinardo and Source One entered into a Source One Financial Dealer Agreement (the “Agreement”) under which the Defendants and Dinardo agreed to sell, and Source One agreed to buy, certain RICs arising out of the sale of motor vehicles by the Defendants. [ Id. at ¶ 7]. The Agreement provided that Dinardo retained responsibility for the loans, but required timely payment to Source one, and PMD personally guaranteed performance under the Agreement. [ Id.].

The Defendants executed the full Recourse Assignment Provision (“RAP”) on the back of every RIC purchased by Source One. The RAPs provided that in the event of default by the consumer, Source One could assign the RIC back to the Defendants for full performance, meaning the payoff of the RIC. [Dkt. # 1, at ¶ 8]. At the time Source One purchased the RICs from Dinardo, Source One and Dinardo also entered into Partial Purchase and Assignment contracts (“PPA”) for each transaction, which explicitly set forth the amount due Source One if the RIC is paid in full. [ Id. at ¶ 9]. Essentially, when Source One purchases an RIC, it is purchasing a stream of payments over a period of time consisting of principal and interest. [ Id.]. For each RIC purchased by Source One, Source One's name was placed on the Title to the vehicle as the “First Lienholder”; Source One, therefore, holds a security interest in the vehicle until Source One receives the final installment payment due under the RICs and PPAs. [ Id.].

Upon default by the consumer on the RIC, a “jeopardy letter” is sent to the consumer advising him or her that they are past due, and unless the required payment is made, the repossession process will commence. [ Id. at ¶ 12]. If the payment is made, no repossession occurs, but if no payment is made, Source One repossesses the vehicle and generally takes it back to Dinardo's lot.” [ Id.]. The customer is given twenty-one days to redeem the vehicle by bringing the loan current and paying all towing and storage fees; if the vehicle is not redeemed within that time period, the vehicle is either put up for retail sale again or sold at auction on a wholesale basis. [ Id.]. If any deficiency remains on the RIC after the sale or auction, Dinardo is responsible to pay Source One the outstanding PPA amount and the repossession charges. [ Id.].

Pursuant to this commercial relationship, the parties were in continuous telephonic, electronic, and written communication. [ Id. at ¶ 11]. PMD and JSD also came to Source One's offices in Massachusetts on numerous occasions for in person meetings concerning individual accounts. [ Id.]. Dinardo initiated contact in Massachusetts with Source One when it, through PMD and JSD, solicited the sale of their RIC to Source One. [ Id.]. In response to the motion to dismiss, the Plaintiff provided supplemental affidavits in which the affiant averred that PMD came “to Source One's offices in Massachusetts on at least three (3) occasions. [They] met in the conference room and discussed vehicle repossessions” and other business matters directly related to the Agreement. [Dkt. # 71–3, Joseph Michael Cain Affidavit, ¶ 5]. It was also claimed that “[w]hen [PMD] came to Massachusetts, PMD stated to [Joseph Cain, Dealer Relationship Manager at Source One,] that he was also stopping by three (3) other Massachusetts finance companies to discuss Dinardo's contracts with them. The[ other companies] were Inofin Incorporated in Rockland, Persian Acceptance Corporation in Wakefield, and OnPoint Financial Corporation ... in Norwell.” [ Id. at ¶ 6]. Mr. Cain claimed that “[o]ver the course of seven (7) years, I spoke with PMD and [JSD] several times a week concerning contracts they wished to sell to Source One to finance purchases of motor vehicles by consumers from Dinardo in Connecticut.” [ Id. at ¶ 7]. Furthermore, “[o]n existing contracts purchased from Liberty [Motor Sales LLC, Dinardo's former corporate name and predecessor entity,] and Dinardo by Source One, JSD and PMD communicated with Source One on at least a weekly basis on their accounts over a period of seven (7) years, for a total of at least 364 contracts.” [ Id. at ¶ 8]. He also claims that “JSD executed numerous [RICs] on behalf of Liberty and Dinardo which were sold to Source One, some of which are the subject of the fraud claim[s] in this case.” [ Id. at ¶ 9].

Peter Papa, Sales Manager of Source One, averred that he had several in-person meetings with PMD in furtherance of the commercial relationship between the parties. “Between August 10, 2009 and August 25, 2009, [PMD] stopped into Source One's office to discuss his accounts with Source One generally, and increasing the charge for motor vehicle warranties on [RICs] sold by Dinardo to Source One.” [Dkt. # 71–2, Peter Papa Affidavit, ¶ 4]. Specifically, “[a] meeting took place in Source One's conference room between [Papa], [PMD], and Michael Parsons, Source One's CFO. [They] discussed [Dinardo's] accounts and the warranty issue extensively for approximately one (1) hour, and decided the charge would increase from $700 to $900.” [ Id. at ¶ 5]. PMD “also expressed a desire to meet and speak with Susan Clancy, a Source One employee who spoke with [PMD] on a daily basis concerning [PMD's] accounts with Source One. [PMD] and Ms. Clancy met for a short period of time in Source One's offices.” [ Id. at ¶ 6]. Papa also claimed that “[o]ver the years, [PMD] would also stop by Source One at Christmas time to drop gift baskets off to Source One's collection, asset recovery, loan processing and sales departments.” [ Id. at ¶ 8]. “Over the course of 7 years, [Papa] spoke with [PMD] several times a week concerning contracts he wished to sell to Source One to finance purchases of motor vehicles by consumers from Dinardo in Connecticut.” [ Id. at ¶ 9].

Aside from purchasing the RICs, Source One serviced the contracts in Massachusetts “by making collection calls to consumers and conducting repossessions of vehicles in Connecticut.” [ Id. at ¶ 10]. Moreover, “[e]very month, Dinardo was sent a statement of the status of each of [its] accounts,” and these statements were prepared and sent from Massachusetts. [ Id. at ¶ 11]. In all, “Source One conducted business with Dinardo[, beginning with its predecessor entity Liberty,] from December 17, 2003 until April 8, 2010, and advanced Dinardo two million eight hundred and eight thousand five hundred dollars and eighty cents ($2,808,500.80) for the purchase of approximately five hundred and forty-six (546) [RICs] presented by Dinardo to Source One in Massachusetts.” [ Id. at ¶ 3].

At issue in this case is Source One's claim that several vehicles...