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Campbell v. Toyota Motor Credit Corp.

United States District Court, D. Maryland, Southern Division

July 17, 2018

DELPHINE CAMPBELL, Plaintiff,
v.
TOYOTA MOTOR CREDIT CORP., Defendant.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm United States District Judge.

         Plaintiff Delphine Campbell filed a class action suit in the Circuit Court of Maryland for Montgomery County for violations of Maryland's credit grantor closed end credit provisions statute (“CLEC”), Md. Code Ann., Com. Law §§ 12-1001 - 12-1029. Compl. ¶ 1, ECF No. 2. On January 17, 2018, Defendant Toyota Motor Credit Corporation (“TMCC”) removed the case to this Court on the basis of diversity jurisdiction, 28 U.S.C. § 1332, pursuant to the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4. Not. of Removal, ECF No. 1. Plaintiff filed a Motion to Remand, arguing that removal was improper because her alleged class did not exceed one hundred people and the amount in controversy did not exceed $5, 000, 000. Pl.'s Mot. to Rem., ECF No. 23. Defendant opposed Plaintiff's motion and filed a cross motion to dismiss the Complaint for failure to state a claim. ECF No. 24.[1] Plaintiff's Motion to Remand will be denied because TMCC has provided sufficient evidence to demonstrate the alleged class of plaintiffs is at least one hundred people and the amount in controversy exceeds $5, 000, 000. Defendant's Motion to Dismiss will be granted because Plaintiff has not stated a claim for which relief can be granted and, because she has had multiple opportunities to do so (in this and a prior litigation), her Complaint is dismissed with prejudice.

         CLEC's Purpose and Structure

         CLEC, a statutory scheme intended to “‘entice creditors to do business in the State [of Maryland], '” also includes consumer protection provisions and should be “read to handle credit grantors with a relatively light touch while still protecting consumers.” Askew v. HRFC, LLC, 810 F.3d 263, 270 (4th Cir. 2016) (quoting Ford Motor Credit Co. v. Roberson, 25 A.3d 110, 117-18 (Md. 2011)). The CLEC provisions, which apply only if a credit grantor affirmatively elects for them to apply to a specific loan, impose, inter alia, “notice and other detailed procedural requirements for the repossession and sale of collateral, ” as well as “a stringent penalty for violation of the statutory scheme, ” including treble damages for knowing violations. McDaniels v. Westlake Servs., LLC, No. ELH-11-1837, 2013 WL 2491337, at *2 (D. Md. June 7, 2013) (citing Com. Law § 12-1018(a)(2), 12-1021, 12-1013.1(b)(1)). For example, if the lender sells repossessed goods at a private sale, it must make “a full accounting . . . to the borrower in writing, ” and the “accounting shall contain”

(i) The unpaid balance at the time the goods were repossessed;
(ii) The refund credit of unearned finance charges and insurance premiums, if any;
(iii) The remaining net balance;
(iv) The proceeds of the sale of the goods;
(v) The remaining deficiency balance, if any, or the amount due the buyer;
(vi) All expenses incurred as a result of the sale;
(vii) The purchaser's name, address, and business address;
(viii) The number of bids sought and received; and
(ix) Any statement as to the condition of the goods at the time of repossession which would cause their value to be increased or decreased above or below the market value for goods of like kind and quality.

Com. Law § 12-1021(j)(2).

         In litigation brought for an alleged violation of CLEC, the statute, “by its plain terms, limits a debtor's relief . . . to any amounts paid in excess of the principal amount of the loan.” Bediako v. Am. Honda Fin. Corp., 537 Fed.Appx. 183, 186 (4th Cir. 2013) (citing Com. Law § 12-1018(a)(2)); see also Gardner v. GMAC, Inc., 796 F.3d 390, 395 (4th Cir. 2015); Brown v. Capital One, N.A., No. GJH-17-3076, 2018 WL 3105768, at *3 (D. Md. June 25, 2018). In determining if the lender has received money in excess of the principal amount of the loan, the court “recharacterize[s] all of the borrower's payments during the life of the loan as payments toward principal and then subtract[s] that total and the sale proceeds from the original principal amount of the loan.” Gardner, 796 F.3d at 394 (citing Bediako, 537 Fed.Appx. at 186 & n.1). If the principal amount of the loan still has not been met, the borrower is unable to recover for a violation. See Id. Indeed, CLEC specifically allows for the lender to collect the principal amount of the loan even after a notice violation. See Com. Law § 12-1018(a)(2) (“[I]f a credit grantor violates any provision of this subtitle the credit grantor may collect only the principal amount of the loan and may not collect any interest, costs, fees, or other charges with respect to the loan.”).

         Notably, “[i]f the debtor can show that the creditor failed to abide by the requirements of CLEC in selling the collateral, the creditor may be barred from a deficiency judgment.” Gardner, 796 F.3d at 395 (quoting Gardner v. Ally Fin. Inc., 61 A.3d 817, 823 (Md. 2013)) (emphasis added by Fourth Circuit). For example, when, as here, the collateral is sold in a private sale, if “[t]he Commissioner of Financial Regulation . . . make[s] a determination . . . that the sale was not accomplished in a commercially reasonable manner, ” then “the Commissioner may enter an order disallowing any claim for a deficiency balance.”[2] Com. Law § 12-1021(j)(3). Thus, the amount in controversy for litigation purposes includes both the amount the borrower paid in excess of the principal amount of the loan and the amount of any deficiency to the total loan balance beyond the principal amount, as the creditor may have no legal recourse for collection if it violated the statute. See Sayre v. Westlake Servs, LLC, No. ELH-15-687, 2015 WL 4716207, at *7, *9 (D. Md. Aug. 7, 2015) (noting that “‘the test' to determine the amount in controversy is ‘the pecuniary result to either party which [a] judgment would produce'” and finding that the defendant had established that its “pecuniary harm” included both “refunds to borrowers who paid . . . more than the principal amount of their loan” and the defendant's “inability . . . to collect amounts owed by borrowers above the principal amount of their loan” (quoting Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002)); Com. Law § 12-1018(a)(2).

         Background

         On April 5, 2014, Ms. Campbell entered into a Retail Installment Contract (“RISC”), which the parties affirmatively elected to be governed by CLEC, to purchase a Toyota Rav 4. Compl. ¶¶ 17-19. Through TMCC, Ms. Campbell financed $26, 889.48, and the RISC also included an additional $5, 128.20 in finance charges. Id. ¶¶ 21-24. Ms. Campbell made “numerous payments”; however, ultimately, TMCC repossessed the vehicle “before June 27, 2016.” Id. ¶¶ 25, 28. After repossessing the vehicle, TMCC conducted a private sale and provided a post-sale notice to Ms. Campbell, which stated the name of the purchaser (“A 1 Imports Inc”) and the state (“MD”). Compl. ¶ 31; Repossession Accounting Statement (“RAS”), ECF No. 24-2, at 3. However, the post-sale notice lists A 1 Imports' street address, town, and zip code as “N/A.” Compl. ¶ 31; RAS, ECF No. 24-2, at 3. TMCC also sent Ms. Campbell a deficiency notice following the sale of her car and stated she still owed TMCC $3, 538.91. Compl. ¶ 32; ECF No. 24-2, at 2-3.

         Ms. Campbell initially filed a similar action against TMCC regarding the same underlying events in state court, which was removed to this Court on October 10, 2017. Campbell v. Toyota Motor Credit Corp., No. RWT-17-2976 (D. Md. Nov. 16, 2017) (“Campbell I”). In Campbell I, Ms. Campbell alleged the same claims as she does here but defined her class as “all persons whose personal property was repossessed by TMCC in connection with a credit contract governed by CLEC, whose vehicle was sold at private sale and whose post-sale notice did not include the purchaser's address.” Campbell I Am. Compl. ¶ 37, ECF No. 22 in RWT-17-2976. Her amended complaint (as well as her initial pleading) alleged that the class “consisted, at a minimum, of more than one hundred (100)” members. Id. ¶ 39; see also Compl. ¶ 39, ECF No. 2 in Campbell I. But then, in seeking remand, she argued that TMCC had not demonstrated that the potential class was greater than 100 people, ECF No. 20 in RWT-17-2976, even though she pleaded exactly that. And, in an effort to obtain “a higher level of judicial expertise . . .by seeking to have the case assigned to the Business and Technology Case Management Program, ” Ms. Campbell had informed the state court prior to removal that the class size exceeded 500 members. Campbell I Mem. Op. 2, ECF No. 30 in RWT-17-2976.[3]

         Judge Titus denied Ms. Campbell's Motion to Remand because there was sufficient evidence in the record-mainly Ms. Campbell's own statements-that demonstrated there was an adequate class size and amount in controversy for the Court to have subject matter jurisdiction over her claims. Id. at 3-4. Judge Titus observed that it was “disingenuous for Campbell to repeatedly manipulate the class size based on the interests at stake, ” stating that “Campbell cannot tell one judicial body that the class size is 500 and thus warrants specialized judicial processing, but then tell the next judicial body that the class size is only 100 . . . .” Id. Ms. Campbell's Motion to Remand was denied on November 16, 2017, and that same day, she filed a notice of voluntary dismissal, ECF No. 31 in RWT-17-2976, which was approved by a marginal order, ECF No. 32 in RWT-17-2976.

         Ms. Campbell then initiated this action in the Circuit Court for Montgomery County on November 20, 2017, and TMCC again removed it to this Court on January 17, 2018. Not. of Removal 1; Compl. 1. In her Complaint, Ms. Campbell revised the class definition she had provided in Campbell I as follows:

All persons whose personal property was repossessed by TMCC in connection with a credit contract governed by CLEC: (1) whose personal property was sold at a private sale; (2) whose post-sale notice did not include the purchaser's address; and (3) where TMCC ...

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