United States District Court, E.D. Virginia, Richmond Division
A. Gibney, Jr., Judge
Curtis fell behind on taxes he owed to the City of Petersburg
("Petersburg"), so he entered into an agreement
with Propel Property Tax Funding, LLC ("Propel
Tax"), and Propel Financial Services, LLC ("Propel
Financial") (collectively, "Propel"). Through
this agreement, Propel paid taxes to Petersburg on behalf of
Curtis, and then Curtis repaid Propel with interest. Curtis,
on behalf of himself and other similarly situated consumers,
has sued Propel based on the terms of this and accompanying
agreements, plus the related disclosures. Specifically,
Curtis alleges that Propel violated (I) the Truth in Lending
Act ("TILA"); (II) the Electronic Funds Transfer
Act (the "EFTA"); and (III) the Virginia Consumer
Protection Act (the "VCPA").
moved to dismiss Curtis' original complaint. The Court
denied Propel's motion to dismiss Counts I and II, but
certified its ruling on Count I, the 15 U.S.C. § 1693k
claim in Count II, and Curtis' standing to proceed on
Count II for interlocutory appeal. The Court granted
Propel's motion to dismiss Count III, but allowed Curtis
to amend his complaint on this claim. Curtis filed an amended
complaint, and Propel has again moved to dismiss. Because
Curtis fails to plead the necessary elements of a VCPA claim,
and does not plead with the requisite particularity, the
Court will grant the motion to dismiss Count III.
Court set forth an in-depth background of this case in its
previous Opinion on Propel's motion to dismiss.
Curtis v. Propel Property Tax Funding, LLC,
__F.Supp.3d__, No. 3:16-cv-731, 2017 WL 3397036 (E.D.
Va. Aug. 8, 2017), appeal docketed, No. 17-2114 (4th
Cir. Sept. 25, 2017). Thus, the Court will only briefly
summarize the pertinent facts.
offers tax payment agreements to Petersburg residents
pursuant to Va. Code Ann. § 58.1-3018. This statute
permits localities to authorize third parties to offer
third-party tax payment agreements ("TPAs").
Id. § 58.1-3018(B). Under these TPAs,
authorized third parties contract with taxpayers to pay
amounts due to the locality on behalf of the taxpayers.
Id. § 58.1-3018(A). The third party must pay
the taxes subject to the agreement to the treasurer of the
locality within ten days. Id. §
58.1-3018(B)(1). This payment tolls the enforcement period
for the taxes subject to the agreement. Id. §
58.1-3018(E). If the taxes paid are for real property, this
payment from the third party to the locality does not affect
the tax lien created by state law.The taxpayer then repays the
third party in installments over a set period. Id.
taxpayer defaults on his payments to the third party, the
locality reimburses the losses the third party incurred from
the default, excluding interest and fees. Id. §
58.1-3018(C)(1). Once the locality reimburses the third
party, the locality reinstates the taxes owed by the taxpayer
in the amount of the reimbursement. Id. §
case, Curtis applied for a TPA with Propel. Propel provided
Curtis a disclosure sheet, which included the terms of the
agreement, the applicable interest rate, and the costs and
fees. (Am. Compl. Ex. B.) This document contained inaccurate
and potentially misleading information concerning fees and
Propel's rights under the agreement. At closing, Curtis
signed a tax payment agreement (the "Curtis TPA")
(Am. Compl. Ex. G), and received an updated payment terms
disclosure sheet (Am. Compl. Ex. H.). This disclosure sheet
corrected the statutory inaccuracies from the original
disclosure, but listed different dollar values for some
figures. Pursuant to these documents, Propel agreed to pay
Petersburg $14, 547.65 on Curtis's behalf for real
property taxes. The parties agreed to a $1, 454.76
origination fee (10% of the amount of taxes paid), and an
interest rate of 10.95%, with no interest accruing in the
first six months after payment. The Curtis TPA outlined
additional possible fees, including fees for recording or
insufficient funds. Under the agreement, the installment
payments would go first to fees, then to interest, then to
the principal. The Curtis TPA made clear that payment by
Propel to the locality "is not final and will not
extinguish [Curtis's] obligation" to the locality.
(Am. Compl. Ex. G, at ¶ 6(A); see also Am.
Compl. Ex. F.)
has sued Propel on behalf of himself and other similarly
situated individuals. Curtis alleges that Propel violated:
(I) TILA; (II) the EFTA; and (III) the VCPA. Propel moved to
dismiss Count III of the amended complaint for failure to
state a claim pursuant to Federal Rule of Civil Procedure
General Assembly passed the VCPA "to promote fair and
ethical standards of dealings between suppliers and the
consuming public." Va. Code Ann. § 59.1-197. To
state a claim under the VCPA, the plaintiff must allege (1) a
fraudulent act (2) by a supplier (3) in a consumer
transaction. Id. § 59.1-200(A);
Nahigian v. Juno Loudoun, LLC, 684 F.Supp.2d 731,
741 (E.D. Va. 2010). As a claim sounding in fraud, Federal
Rule of Civil Procedure 9(b) requires plaintiffs to plead
VCPA claims with particularity. Wynn 's Extended
Care, Inc. v. Bradley, 619 Fed.Appx. 216, 220 (4th Cir.
VCPA also requires proof of (1) reliance and (2) damages,
with regard to the alleged misrepresentation(s) of fact.
In re Lumber Liquidators Chinese-Manufactured Flooring
Durability Mktg. & Sales Practice Litig., No.
1:16-md-2743, 2017 WL 2911681, at *5 (E.D. Va. July 7, 2017).
A consumer may only recover under the VCPA if his loss
results from a violation of the statute, and this causal
connection cannot exist unless the consumer relied on the
misrepresentation at issue. Cooper v. GGGR Investments,
LLC, 334 B.R. 179, 188 (E.D. Va. 2005). Virginia courts
have consistently required reliance to establish VCPA claims.
Adardour v. American Settlements, Inc., l:08-cv-798,
2009 WL 1971458, at *3 (E.D. Va. July 2, 2009) (collecting
alleges that the credit terms on the final disclosure he
received, such as the origination fee, processing fee, and
third party fees, differed from those initially disclosed,
but he does not allege that he relied on any
misrepresentations in the initial disclosure to his
detriment. He does not claim that information in the initial
disclosure caused him to sign the final TPA. Moreover, even
if the initial disclosure sheet contained misleading credit
information, the final disclosure "plainly stated the
terms of the transaction." See Johnson v.
Washington, 559 F.3d 238, 245 (4th Cir. 2009) (finding
that the documents the plaintiffs signed clearly stated the
relevant terms, thereby correcting any prior misleading
statements). Curtis also alleges that the defendants falsely
represented that Propel would receive a security interest in
Curtis' property, which would have authorized it to
foreclose, and that the TPA was a binding contract. Again,
Curtis does not allege that he relied on these
misrepresentations, as required under VCPA law.
argument that he need not plead reliance is unavailing.
Curtis cites a case in which the Virginia Supreme Court
observed that VCPA claims are distinct from common law fraud.
Ballagh v. Fauber Enterprises, Inc.,773 S.E.2d 366,
368 (Va. 2015). The Ballagh court noted that the
elements of the two causes of action differ, with VCPA claims
extending beyond common law fraud. Id. Ballagh,
however, does not stand for the ...