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Marks v. MRD Corp.

United States District Court, D. Massachusetts

September 12, 2016

PAUL MARKS, Plaintiff
v.
MRD CORP. D/B/A/ ROUTE 44 HYUNDAI and AMERICREDIT FINANCIAL SERVICES, INC. D/B/A/ GM FINANCIAL, Defendants

          MEMORANDUM AND ORDER

          WOLF, D.J.

         Paul Marks has sued defendants MRD Corporation d/b/a Route 44 Hyundai, a car dealership in Raynam, Massachusetts ("MRD"), and AmeriCredit Financial Services, Inc. d/b/a GM Financial ("AmeriCredit") (collectively, the "defendants"), for violations of the Truth in Lending Act, 15 U.S.C. §1638(a) (2)- (4) ("TILA") and the Equal Credit Opportunity Act, 15 U.S.C. §1691 et seq, as well as additional state law claims. Marks alleges, in essence, that: (1) on May 23, 2014, he purchased a new 2014 Hyundai Elantra automobile from MRD; (2) MRD substituted the finance agreement Marks executed on May 23, 2014 for a second, unsigned agreement; (3) MRD assigned the second finance agreement to AmeriCredit; and (4) the defendants have improperly sought to repossess the vehicle under the second agreement. Defendants have filed a motion to dismiss, which Marks opposes. Marks has filed a motion to amend the complaint to add a claim for violation of the Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq., ("FDCPA"). against AmeriCredit, which defendants oppose. MRD has also requested a hearing to determine whether MRD may repossess the 2014 Hyundai Elantra.

         The Motion to Amend does not affect the merits of the Motion to Dismiss. It is, therefore, being allowed. For the reasons explained in this Memorandum, the Motion to Dismiss is also being allowed. The federal claims for violations of the TILA, Equal Credit Opportunity Act, and the FDCPA are being dismissed with prejudice. In essence, the central premise underlying these claims, Marks' allegations that MRD unilaterally created a second finance agreement, is implausible. The pendant state claims are being dismissed without prejudice to refiling in a court of the Commonwealth of Massachusetts. The request for hearing concerning repossession in this case is being denied without prejudice to being reinstituted in state court.

         I. PROCEDURAL HISTORY

         Marks' complaint against defendants MRD and AmeriCredit contains nine counts. Marks alleges: (1) violations of the Truth in Lending Act, 15 U.S.C. §1638(a) (2)- (4), and related regulations; (2) violations of the Equal Credit Opportunity Act, 15 U.S.C. §1691 et seq; (3) violations of Article 9 of Massachusetts' Uniform Commercial Code; (4) common law fraud; (5) breach of the covenant of good faith and fair dealing; (6) conversion; (7) violations of Massachusetts General Laws Chapter 93A and related regulations; (8) liability under the Federal Trade Commission ("FTC") Holder Rule, 16 C.F.R. §433; and (9) violation of the Massachusetts Retail Installment Sales of Motor Vehicle Act, Mass. Gen. Laws ch. 255B, §§2, 19A, by MRD for failing to be licensed as a motor vehicle finance company.

         MRD filed a Motion to Dismiss and supporting Memorandum (the "MTD Memorandum"). Americredit later joined the Motion to Dismiss. Marks filed an Opposition (the "MTD Opposition"). Marks also filed a Motion to Amend the Complaint with a proposed Amended Complaint. On July 25, 2015, defendants filed an Opposition (the "Amendment Opposition"). On January 12, 2016, the court granted Marks leave to file a reply. Marks filed the Reply on March 14, 2016, 48 days late.

         MRD subsequently filed a motion requesting the court to either hold a hearing to allow MRD to repossess the 2014 Hyundai Elantra for non-payment of the loan or, in the alternative, order Marks to make 12 past-due loan payments (the "Motion to Repossess"). Marks filed an opposition.

         II. APPLICABLE STANDARDS

         A. Motion to Amend

         A party may amend a pleading as a matter of right if the amendment is filed within 21 days of an answer or motion pursuant to Federal Rule of Civil Procedure 12(b). See Fed.R.Civ.P. 15(a)(1)(B). In all other circumstances, the court may permit a party leave to amend its pleadings, and it "should freely give leave when justice so requires." Fed.R.Civ.P. 15(a)(2); see also Foman v. Davis, 371 U.S. 178, 182 (1962). Leave to amend should be allowed unless there is an "apparent or declared reason-such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc." Foman, 371 U.S. at 182; see also Glassman v. Computervision Corp., 90 F.3d 617, 622 (1st Cir. 1996). When considering whether amendment would be futile, "the district court applies the same standard of legal sufficiency as applies to a Rule 12(b) (6) motion." Glassman, 90 at 623 ("There is no practical difference, in terms of review, between a denial of a motion to amend based on futility and the grant of a motion to dismiss for failure to state a claim.").

         B. Motion to Dismiss

         Federal Rule of Civil Procedure 8(a)(2) requires that a complaint include a "short and plain statement of the claim showing that the pleader is entitled to relief." This pleading standard does not require "detailed factual allegations, " but requires "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A court may disregard "bald assertions, unsupportable conclusions, and opprobrious epithets." In re Citigroup, Inc., 535 F.3d 45, 52 (1st Cir. 2008); see also Penalbert-Roia v. Fortuno-Burset, 631 F.3d 592, 595 (1st Cir. 2011).

         "The plaintiff's factual allegations are ordinarily assumed to be true in passing on the adequacy of the complaint, which need not plead evidence." Penalbert-Roia, 631 F.3d at 595. "But 'ordinarily' does not mean 'always': some allegations, while not stating ultimate legal conclusions, are nevertheless so threadbare or speculative that they fail to cross 'the line between the conclusory and the factual.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 n. 5 (2007)). The First Circuit has refused to "lay down a mechanical rule, " stating instead that "sometimes a threadbare factual allegation bears insignia of its speculative character and, absent greater concreteness, invites an early challenge-which can be countered by a plaintiff's supplying of the missing detail." Id.

         A motion to dismiss should be denied if a plaintiff has shown "a plausible entitlement to relief." Twombly, 550 U.S. at 559. That is, the complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. 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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "The plausibility standard is not akin to a 'probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. 556). "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quoting Twombly, 550 U.S. at 557). "The relevant inquiry focuses on the reasonableness of the inferences of liability that the plaintiff is asking the court to draw from the facts alleged in the complaint." Ocasio-Hernandez, 640 F.3d at 13.

         "Under Rule 12(b)(6), the district court may properly consider only facts and documents that are part of or incorporated into the complaint." Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009); Rodi v. Southern New England School of Law, 389 F.3d 5, 15 (1st Cir. 2004) (considering letters attached to the complaint in evaluating a motion to dismiss). However, there are "narrow exceptions for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiff['s] claim; or for documents sufficiently referred to in the complaint." Watterson v. Page, 987 F.2d 1, 3-4 (1st Cir. 1993). When "a complaint's factual allegations are expressly linked to-and admittedly dependent upon-a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6)." Beddall v. State Street Bank and Trust Co., 137 F.3d 12, 17 (1st Cir. 1998). When such documents contradict an allegation in the complaint, the document trumps the allegation. See Clorox Co. P.R. v. Proctor & Gamble Consumer Co., 228 F.3d 24, 32 (1st Cir. 2000).

         III. FACTS

         Unless otherwise indicated, the facts alleged in the Complaint are as follows. Marks purchased a 2014 Hyundai Elantra and traded-in his 2013 Hyundai Elantra on May 23, 2014. MRD induced Marks to make the purchase by representing that his new monthly loan payments would not exceed $520 and his first payment would not be due for 90 days. When Marks arrived at the dealership, the terms of the financing offer changed to $561.48 per month starting 45 days from sale. Marks agreed to the sale and financing, believing it was complete. He executed a retail installment contract setting out these terms (the "Agreement"). Approximately one month after the purchase, MRD emailed Marks stating he needed a co-signer for the loan. MRD subsequently ...


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