United States District Court, W.D. Virginia, Lynchburg Division
K. MOON, UNITED STATES DISTRICT JUDGE
Harold (“Plaintiff”) filed this action against
TMC Enterprises, LLC (“JD Byrider” or
“Defendant”) and TMC Finance, LLC
(“CNAC” or “Defendant”) pursuant to
the Truth in Lending Act (“TILA”), 14 U.S.C.
§ 1601, et seq., the Credit Repair Organization
Act (“CROA”), 15 U.S.C. § 1679, et
seq., and the Magnuson-Moss Warranty Act, 15 U.S.C
§ 2301, et seq. This Court has jurisdiction
over her federal question claims pursuant to 28 U.S.C. §
1331 and 15 U.S.C. § 1640(e). Plaintiff brought
supplemental state and common law claims, pursuant to 28
U.S.C. § 1367, for violation of the Virginia Consumer
Protection Act (“VCPA”), Va. Code §
59.1-201, et seq., fraud, constructive fraud, and
unconscionability. The case centers on Plaintiff's
purchase and financing of a 2007 Chevrolet Cobalt from JD
Byrider and CNAC, respectively, in May 2015.
matter is before the Court upon Defendants' motion to
dismiss pursuant to Rule 12(b)(6) for failure to state a
claim. (Dkt. 8). Taking Plaintiff's factual allegations
as true at this stage, I find that Plaintiff has adequately
pled all her claims, and Defendants' Motion to Dismiss
will be denied.
motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the
legal sufficiency of a complaint to determine whether the
plaintiff has properly stated a claim; “it does not
resolve contests surrounding the facts, the merits of a
claim, or the applicability of defenses.”
Republican Party of North Carolina v. Martin, 980
F.2d 943, 952 (4th Cir. 1992). Although a complaint
“does not need detailed factual allegations, a
plaintiff's obligation to provide the ‘grounds'
of his entitle[ment] to relief requires 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. 544, 555 (2007) (internal citations
omitted). A court need not “accept the legal
conclusions drawn from the facts” or “accept as
true unwarranted inferences, unreasonable conclusions, or
arguments.” Eastern Shore Markets, Inc. v. J.D.
Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.
2000). “Factual allegations must be enough to raise a
right to relief above the speculative level, ”
Twombly, 550 U.S. at 555, 127 S.Ct. 1955, with all
allegations in the complaint taken as true and all reasonable
inferences drawn in the plaintiff's favor. Chao v.
Rivendell Woods, Inc., 415 F.3d 342, 346 (4th Cir.
2005). Rule 12(b)(6) does “not require heightened fact
pleading of specifics, but only enough facts to state a claim
to relief that is plausible on its face.”
Twombly, 550 U.S. at 570. Consequently, “only
a complaint that states a plausible claim for relief survives
a motion to dismiss.” Ashcroft v. Iqbal, 556
U.S. 662, 679 (2009).
2015, Plaintiff visited JD Byrider to inquire about
purchasing a vehicle. Compl. ¶ 14. Based upon her credit
history, Plaintiff was told that she would need a co-signor
in order to finance and purchase a vehicle, which she
obtained. Id. ¶¶ 16-17. Plaintiff was also
told by sales personnel that there were only three cars
available for her to purchase. Id. ¶ 18.
Because Plaintiff required a four-door vehicle, she was
limited to only two vehicles available at JD Byrider.
Id. ¶¶ 20-21. Personnel at JD Byrider
informed Plaintiff that they offer a plan, which accompanies
any vehicle, to help purchasers build credit on a credit
report. Id. ¶ 36.
selected a 2007 Chevrolet Cobalt (“the vehicle”)
with 103, 724 miles, a history of front-end damage, and a
price of $14, 995.00. Id. ¶¶ 22, 25, 35.
The MSRP for the vehicle when it was new in 2007 was $14,
295.00, and the NADA and Kelley Blue Book retail prices for
the vehicle when purchased by Plaintiff ranged $5, 000 to $6,
000. Id. ¶¶ 26-27. Plaintiff agreed to an
interest rate of 24.989%, and she was required to make
bi-weekly payments of $206.25. Id.
¶¶31-32. Plaintiff has remained current on her
payments. Id. ¶ 55.
signed a retail installment sales contract
(“RISC”) that stated, “Any holder of this
consumer credit contract is subject to all claims and
defenses which the debtor could assert against the seller of
goods or services obtained pursuant hereto or with the
proceeds hereof. Recovery hereunder by the debtor shall not
exceed amounts paid by the debtor hereunder.” (Dkt. 2-1
at 5). JD Byrider immediately assigned the RISC to CNAC, as
it does with all of its RISCs. Compl. ¶ 23.
vehicle has had persistent problems with the front-end. The
vehicle shakes when driving, and it wears out tires
prematurely. Id. ¶ 43. Plaintiff has asked JD
Byrider to repair the vehicle, but these attempts have been
unsuccessful. Id. ¶ 45. On at least one
occasion, Plaintiff was forced to pay for the attempted
repairs, and she missed work while waiting for the vehicle.
Id. ¶¶ 48, 52. The most recent repair
attempt required Plaintiff to leave the vehicle with JD
Byrider for seven days. Id. ¶ 53. In addition,
JD Byrider has failed to provide Plaintiff with any service
or plan to build her credit. Id. ¶ 37.
Byrider and CNAC have a pattern and practice of selling and
financing used vehicles at prices at or above the MSRP, their
sale prices are typically within a narrow range, and they
disclose nearly identical interest rates for most vehicle
financing transactions. Id. ¶¶ 30, 33, 34.
First Cause of Action: Violation of the Truth in Lending
upon the facts above, Plaintiff asserts that Defendants
violated the TILA by failing to disclose all financing
charges as required. Compl. ¶ 63-65; 15 U.S.C. §
1638 (requiring that all financing charges be disclosed prior
to the extension of credit). Plaintiff claims that, although
a rate of 24.989%-which amounts to a financing charge of $11,
811.05-was disclosed to Plaintiff, the price of the vehicle
was inflated to hide additional financing fees buried within
the sales price. Id. ¶ 61; (Dkt. 2-1 at 1).
argue that Plaintiff has failed to state a claim upon which
relief can be granted because a financing charge does not
include the sales price of the vehicle. (Dkt. 9 at 2). They
argue that an inflated sales price alone, absent proof that
the financing price is higher than the cash price, is
insufficient to state a claim under the TILA. See Poulin
v. Balise Auto Sales, 2010 U.S. Dist. Lexis 33456, at
*14-15 (D. Conn. Apr. 5, 2010). To support this position,
Defendants provided an affidavit from JD Byrider stating that
the same price would have been quoted to a customer seeking
to pay cash rather than finance the purchase. (Dkt. 9 at 2).
Thus, they argue that their disclosure of the interest rate
and finance charge in the RISC was sufficient to satisfy the
TILA, because TILA was not intended to require fair pricing,
only proper disclosure.
responds by citing Limitiaco v. Auction Cars.com,
LLC, No. 2:11-cv-370, 2012 WL 4911726, at *3 (D. Nev. Oct.
15, 2012) for the proposition that “[a]
‘hidden' finance charge may exist where the price
is above true market value.” Furthermore, Plaintiff
asserts that a “cash sales price might be meaningless
if the vast majority of the seller's business is credit
sales.” In re Russell, 181 B.R. 6161. 621
(M.D. Ala. 1995). Plaintiff alleges in her brief that JD
Byrider has a practice of selling only cars that are financed
by CNAC, so there may be little or no history of cash sales,
and discovery will be needed in order to investigate further.