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Philibotte v. Nisource Corporate Services Co.

United States District Court, D. Massachusetts

December 9, 2014

KIM PHILIBOTTE, individually and as a representative of other persons similarly situated, Plaintiff,
v.
NISOURCE CORPORATE SERVICES COMPANY, d/b/a Nisource Services Inc., d/b/a Bay State Gas Company, d/b/a Northern Utilities, Inc., d/b/a Columbia Gas of Massachusetts, and AGL RESOURCES INCORPORATED, d/b/a Nicor Energy Services Company, d/b/a Columbia Home Solutions, Defendants.

MEMORANDUM AND ORDER REGARDING DEFENDANTS' MOTION TO DISMISS (Dkt. No. 18)

MARK G. MASTROIANNI, District Judge.

I. INTRODUCTION

Kim Philibotte ("Plaintiff") brings this putative class action against Nisource Corporate Services Company and AGL Resources Incorporated ("Defendants").[1] Plaintiff's claims arise out of a purported lease of a water heater through Defendants. Plaintiff asserts that the "lease" was actually a disguised credit sale and, therefore, Defendants were required to make certain disclosures under the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., the Massachusetts Consumer Credit Cost Disclosure Act ("CCCDA"), M.G.L. c. 140D § 1 et seq. (Count I), and the Massachusetts Retail Installment Sales and Services Act ("RISSA"), M.G.L. c. 255D § 1, et seq. (Count III). Plaintiff also asserts claims for unjust enrichment (Count II) and violations of Mass. Gen. Laws ch. 93A (Count IV).

Defendants have filed a motion to dismiss asserting that Plaintiff's complaint fails to state a claim upon which relief may be granted. For the following reasons, the court will grant Defendants' motion to dismiss.

II. BACKGROUND

The following facts come directly from Plaintiff's amended complaint and the attachment thereto. In January, 2011, Plaintiff returned home from a vacation and discovered that her hot water heater was not working. (Dkt. No. 14, Am. Compl. ¶ 6.) She then called Columbia Gas, which sent agents to her home who explained that the best and cheapest way to proceed was for her to sign a "lease" of a Ruud 40 gallon regular vent water heater Model P2-40SF Serial #0610A00398. (Id.) The lease called for monthly payments of $17.00 for a minimum term of twelve months, with "Total Payments" at the end of the minimum term of $204. (Id. ¶¶ 6-7; Dkt. No. 14, Exhibit A ¶ 2.) The lease terms were not explained to her, and she was not provided any truth-in-lending disclosures. (Dkt. No. 14, Am. Compl. ¶ 6.) At the time, the Ruud water heater had a full retail market value, including installation, of $400 to $500 with a maintenance free life expectancy of at least ten years and a six-year manufacturer's warranty. (Id. ¶¶ 6, 10.) After the minimum term of twelve monthly payments, the lease automatically renewed unless Columbia Gas or Plaintiff terminated it by providing thirty days' written notice. (Id. ¶ 7; Dkt. No. 14, Exhibit A ¶ 2.)

The lease provided that "[t]he Appliance is and shall at all times during the term of this Lease remain the personal property of the Company.... By leasing the Appliance, the Customer obtains no property interest in the Appliance." (Dkt. No. 14, Exhibit A ¶ 15.) Moreover, the lease provided that the "Customer agrees to surrender the Appliance to the Company upon demand in the event of termination of this Lease... and the Company shall have the right to enter the premises for the purpose of removing the Appliance." (Id. ¶ 12.) The lease did not, however, require that the water heater ever be returned; in fact, Plaintiff alleges, Defendants do not want the water heater returned and only take it back "if specifically requested to do so by the homeowner" because it will cause them to incur the cost of removal and a disposal fee of $50. (Dkt. No. 14, Am. Compl. ¶¶ 7, 13, 16.)

The lease included an "option to purchase, " which required a payment of "the greater of $75.00 or an amount equal to the Total Installed Price [$761.57], less 50% of the total Monthly Lease Payments paid through the purchase date... plus any sales tax (the Buyout Price')." (Dkt. No. 14, Exhibit A ¶ 6.) In addition, the lease provided an early termination and default option under which Plaintiff could terminate the lease before the end of the minimum term by paying "the Monthly Lease Payments due for the entire Minimum Term [$204] less lease payments made through termination, plus any applicable tax." (Id. ¶ 13.) Again, this option did not explicitly require the return of the water heater. (Dkt. No. 14, Am. Compl. ¶ 13.) The lease also required Plaintiff to "notify the Company 30 days in advance of any sale or transfer of the Premises, and [to] notify in writing any prospective purchaser or tenant that the title to the Appliance is with the Company." (Dkt. No. 14, Exhibit A ¶ 7.) Furthermore, the lease provided that if the new purchaser of the premises "does not promptly assume the Lease, then the Customer shall pay the Company the Buyout Price" in accordance with the "option to purchase" provision. (Id.)

In February of 2014, "[a]fter realizing that she was being ripped off, " Plaintiff exercised her option to purchase. (Dkt. No. 14, Am. Compl. ¶ 18.) In response, Columbia Gas sent her correspondence requiring that she sign an "appliance sales agreement, " even though that was not required under the terms of the lease. (Id.) The appliance sales agreement represented that "[a]ny remaining warranty is automatically transferred to you at the time of purchase, " even though the warranty always ran to the owner of the property. (Id.) Columbia Gas required Plaintiff to pay a buyout price of $491.06 after having paid three years of monthly lease payments, for a total cost of $1, 067.60. (Id. ¶ 18.)

III. STANDARD OF REVIEW

When confronted with a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court must accept the well-pleaded allegations of the complaint as true, drawing all reasonable inferences in favor of the plaintiff. See Cooperman v. Individual, Inc., 171 F.3d 43, 46 (1st Cir. 1999). A complaint that states a plausible claim for relief, on its face, will survive a motion to dismiss. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Supreme Court has explained that "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

IV. ANALYSIS

In seeking dismissal, Defendants argue that Plaintiff's claims pursuant to CCCDA, TILA, RISSA, and Mass. Gen. Laws ch. 93A fail as a matter of law because the water heater lease was not a "credit sale" for purposes of CCCDA and TILA or a "retail installment sale" for purposes of RISSA. Defendants also argue that the claim under TILA is barred by the statute of limitations in any event, that Plaintiff's unjust enrichment claim is not viable because of the existence of a contract, and that issue preclusion bars all of Plaintiff's claims because summary judgment entered in favor of Defendants last year in a similar action brought ...


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