VW Credit Leasing Ltd. v. The City of San Mateo
| Docket Number | 23-cv-02884-DMR |
| Decision Date | 07 November 2023 |
| Parties | VW CREDIT LEASING LTD, Plaintiff, v. THE CITY OF SAN MATEO, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
ORDER ON CITY OF SAN MATEO'S MOTION TO DISMISS RE: DKT. NO. 18
In this action, Plaintiff VW Credit Leasing LTD (“VWCL”) challenges Defendant City of San Mateo's (“San Mateo”) alleged practice of turning over control of seized vehicles to private tow companies, including Defendant Red Line Towing (“Red Line”), without providing due process. San Mateo now moves to dismiss the claims asserted against it pursuant to Federal Rule of Civil Procedure 12(b)(6). [Docket No. 18.] This matter is suitable for resolution without a hearing. Civ. L.R. 7-1(b). For the following reasons, the motion is denied.
VWCL makes the following allegations in the first amended complaint (“FAC”), all of which are taken as true for purposes of the motion to dismiss.[1] VWCL is the titled owner of a 2020 Volkswagen bearing VIN 3VWCB7BUXLM068420 (the “vehicle”). It was a party to a vehicle lease agreement with Anna Paley. Starting in May 2021, Paley failed to make her monthly car payments. As a result, VWCL became entitled to immediate possession of the vehicle under the terms of the lease agreement. FAC ¶¶ 12, 13.
On September 15, 2021, San Mateo took custody of the vehicle and instructed Red Line to tow it from the roadway, store it, and “not to release it without prior approval from San Mateo.” Id. at ¶ 16. VWCL alleges that Defendants' seizure of the vehicle was without a warrant and “was unaccompanied by any legitimate exception to the warrant requirement.” Id. at ¶¶ 49, 50. It further alleges that “to the extent the initial seizure was accompanied by any arguably legitimate exception to the warrant requirement, it was carried out in an unreasonable manner of execution insofar as the seizure exceeded the scope necessary to complete any legitimate task associated with the purported warrant exception for which the vehicle was seized.” Id. at ¶ 50.
VWCL alleges that it first discovered that the vehicle had been impounded on November 4, 2021, when it received a “Notice of Stored Vehicle” advising it of charges for storage, towing, and a title search. Id. at ¶ 18, Ex. C. The Notice of Stored Vehicle lists total charges of $1,510 and states, Id.
When VWCL contacted Red Line to recover the vehicle, Red Line demanded payment of $4,400 in towing and storage charges before it would release the vehicle to VWCL and claimed a lien on the vehicle for the outstanding charges. FAC ¶¶ 19-21. Red Line claimed that it was not permitted to release the vehicle “unless or until San Mateo authorized Red Line to do so.” Id. at ¶ 22. VWCL did not pay the fees that Red Line demanded. It alleges upon information and belief that Red Line sold the vehicle and kept the sale proceeds. Id. at ¶¶ 24, 25. San Mateo did not compensate VWCL for the extinguishment of its property rights in the vehicle. Id. at ¶ 72. Further, “[n]either San Mateo nor Red Line provided VWCL an opportunity to be heard in relation to either Defendants' actions in relation to the Vehicle in any venue at any time.” Id. at ¶ 59.
VWCL alleges that San Mateo benefited from Red Line's detention of the vehicle “in that San Mateo obtained Red Line's impound storage services, as well as Red Line's towing services to clear the roadway, with no payment (or reduced payment) of money from San Mateo to Red Line. Id. at ¶ 26. VWCL further alleges that “[t]o the extent San Mateo or Red Line seek to rely on any California State law or local ordinance to justify their conduct, these laws are unconstitutional as applied to the circumstances.” Id. at ¶ 23.
VWCL alleges that Defendants' regular policy and custom is to not obtain a warrant for their actions, including initially seizing a vehicle; turning over possession of a vehicle to Red Line; the decision to continue to detain vehicles after the initial reason for the seizure has passed; the decision by Red Line to assert a possessory lien in vehicles and then terminate all property interests in vehicles; and the eventual sale of vehicles. Id. at ¶ 39. It alleges that even if the initial warrantless seizure of vehicles is pursuant to an valid exception to the Fourth Amendment's warrant requirement, Defendants' “subsequent actions render the seizures unreasonable in their manner of execution[.]” Id. at ¶ 40. Additionally, VWCL alleges that Defendants' regular policy and custom is to not provide any form of constitutionally adequate notice or any hearing whatsoever with respect to the foregoing actions. Id. at ¶ 41. According to VWCL, San Mateo benefits from these actions “by avoiding the costs of preserving the seized vehicles and towing services by permitting the towing company to keep the vehicle as compensation,” while Red Line “benefits by using its control over the vehicle (created under mantle of authority from San Mateo) to profit by conditioning release of the vehicle upon payment of money . . . or by selling the vehicle in the absence of payment.” Id. at ¶ 2.
VWCL asserts the following claims for relief: 1) a 42 U.S.C. § 1983 claim for unreasonable seizure in violation of the Fourth Amendment against both Defendants; 2) a section 1983 claim for deprivation of property without due process in violation of the Fourteenth Amendment against both Defendants; 3) a section 1983 claim for taking of property without just compensation in violation of the Fifth Amendment against San Mateo; 4) declaratory relief against both Defendants; 5) replevin against Red Line; 6) conversion against Red Line; and 7) tortious interference with contractual relations and/or prospective economic advantage against Red Line.
San Mateo now moves to dismiss all of VWCL's claims against it (claims one through four).
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).
When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all of the factual allegations contained in the complaint,” Erickson, 551 U.S. at 94, and may dismiss a claim “only where there is no cognizable legal theory” or there is an absence of “sufficient factual matter to state a facially plausible claim to relief.” Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (quotation marks omitted) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)) (citing Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009)). A claim has facial plausibility when a plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citation omitted). In other words, the facts alleged must demonstrate “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007). Taken together, Iqbal and Twombly require well-pleaded facts, not legal conclusions, that “plausibly give rise to an entitlement to relief. Whitaker v. Tesla Motors, Inc., 985 F.3d 1173, 1176 (9th Cir. 2021) (quotations and internal citations omitted).
As a general rule, a court may not consider “any material beyond the pleadings” when ruling on a Rule 12(b)(6) motion. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (citation and quotation marks omitted). However, “a court may take judicial notice of ‘matters of public record,'” id. at 689 (citing Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may also consider “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading,” without converting a motion to dismiss under Rule 12(b)(6) into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith, 307 F.3d at 1125-26. The court need not accept as true allegations that contradict facts which may be judicially noticed. See Mullis v. U.S. Bankr. Court, 828 F.2d 1385, 1388 (9th Cir. 1987).
San Mateo asks the court to take judicial notice of a California Highway Patrol Vehicle Report dated September 15, 2021. It asserts that the document memorializes the San Mateo Police Department's “investigation of the report of a stolen vehicle and the recovery of that vehicle.” It contends that the subject of the Vehicle Report is the same vehicle at issue in the FAC.
Pursuant to Federal Rule of Evidence 201, a court may take judicial notice of “an adjudicative fact if it is ‘not subject to reasonable dispute.'” Khoja v Orexigen Therapeutics, Inc., 899 F.3d 988, 999 (9th Cir. 2018) (quoting Fed.R.Evid. 201(b)). A fact is “not subject to reasonable dispute” if it is “generally known,” or “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). VWCL does not dispute the authenticity of the Vehicle Report and does not object to the court's taking judicial notice of the document. See Opp'n 3...
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