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Andrew v. Herring

United States District Court, E.D. Virginia, Richmond Division

July 11, 2018

COLIN ANDREW, Plaintiff,
v.
MARK HERRING, et at, Defendants.

          MEMORANDUM OPINION

          M. Hannah Lauck United States District Judge

         This matter comes before the Court on Defendants[1] Amended Motion to Dismiss.[2] (ECF No. 27.) Plaintiff Colin Andrew responded, and Defendants replied. (ECF Nos. 34, 35.) The matter is ripe for disposition. The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. For the reasons that follow, the Court finds that Andrew lacks standing and will remand the case to the Superior Court of the District of Columbia.

         I. Procedural and Factual Background

         A. Procedural History

         In 2008, Andrew filed a claim in the Superior Court of the District of Columbia (the "D.C. Superior Court") against a Virginia-based motor vehicle dealer alleging fraud related to the purchase of a vehicle.[3] In 2015, Andrew obtained a default judgment against the dealer. Because the dealership was no longer in business, Andrew filed a claim with the Virginia Motor Vehicle Dealer Board (the "Board") seeking compensation for the unpaid judgment from the Virginia Motor Vehicle Transaction Recovery Fund (the "Fund"), which the Board administers. The Board denied the claim after determining that Andrew did not meet the Fund's statutory requirements.

         In June 2016, Andrew filed a second suit in D.C. Superior Court, this time as a purported class action. (2016 D.C. Superior Ct. R., 88-103, ECF No. 3.) Andrew, on behalf of himself and others similarly situated, challenged the Board's interpretation of the statutory scheme governing the Fund as unconstitutional. On September 2, 2016, Defendants timely removed the case to the D.C. District Court. (ECF No. 1.)

         On September 8, 2016, Andrew filed an Amended Complaint. (ECF No. 4.) In his Amended Complaint, Andrew alleges that "Defendants incorrectly interpret a statutory scheme so as to favor judgments of the Commonwealth of Virginia over judgments of other states" in violation of the Constitution's Full Faith and Credit Clause.[4] (Am. Compl. 1, ECF No. 4.) Andrew argues that the statute should be interpreted to treat Virginia and non-Virginia judgments identically in order to avoid an unconstitutional application.

         On May 5, 2017, the D.C. District Court transferred the case to this Court because the legally relevant events-particularly, the Board's denial of Andrew's claim-would take place in Virginia. Defendants seek dismissal of Andrew's Amended Complaint.

         B. Factual Background

         Because Andrew's claim relies on the manner in which the Fund operates, a description of the Fund and relevant aspects of its operation follows. The Court limits this description to facts that neither party disputes.

         The Fund is part of a Virginia statutory scheme designed to protect consumers from fraudulent business practices related to the purchase or lease of a motor vehicle. Va. Code § 46.2-1527.3.[5] Claims must meet certain requirements to be eligible for compensation from the Fund: a claimant must have a valid, final judgment for fraud related to the purchase or lease of a motor vehicle; the claimant can only request payment for the unpaid balance on the judgment; and the judgment must be awarded by a "court of competent jurisdiction in the Commonwealth." Id. The statutory scheme outlines additional procedures for eligibility. Va. Code §§ 46.2- 1527.1-46.2-1527.8. The Board manages the Fund and determines whether claims are approved or denied. Va. Code §§ 46.2-1527.1-46.2-1527.8.

         1. In 2016, Andrew Obtained a Default Judgment in the D.C. Superior Court Against American Import Center, a Virginia Motor Vehicle Dealer

         On December 2, 2008, Andrew filed a complaint in the D.C. Superior Court against American Import Center, a Virginia motor vehicle dealer (the "2008 D.C. Complaint"). (ECF No. 28-2.) The 2008 D.C. Complaint accused American Import Center of fraud in violation of the District of Columbia's consumer protection laws. Andrew alleged that he agreed to be the co-signer on loan for a vehicle his friend intended to purchase. Andrew claimed the auto dealer understood this, but nevertheless prepared and induced Andrew to sign paperwork naming Andrew as the vehicle owner. Further, according to Andrew, the auto dealer inaccurately reported Andrew's income and expenses to ensure the bank approved Andrew's loan. Andrew alleged a bank would not have approved the car loan if accurate data had been submitted. Because Andrew was the legal owner, his friend could not to register the vehicle and subsequently failed to make any payments on the vehicle. The car ultimately was repossessed and Andrew claims the damage to his credit score negatively affected his employment opportunities and existing lines of credit, with lingering effects.

         The case was continued repeatedly until July 2015. During a July 2015 Status Hearing, the D.C. Superior Court orally entered a default judgment against American Import Center. Counsel for American Import Center, during that same hearing, stated on the record that he did "not think that the Defendant's [sic] have an interest in participating in litigating this matter because the dealership (American Import Center) has not been a business entity for about three years now." (D.C. Docket 6, ECF No. 28-1.) Approximately one month later, in August 2015, Andrew testified as the only witness in an ex parte hearing, submitting a motion for attorney's fees and related documentation. During a December 11, 2015 Status Hearing, the D.C. Superior Court orally awarded Andrew $3, 000 in statutory damages and $25, 205 in attorney's fees. On January 5, 2016, the D.C. Superior Court issued a judgment to that effect. The D.C. Superior Court Judgment does not reference fraud.

         2. In 2017, the Fund Denied Andrew Compensation Because the D.C. Superior Court Judgment Was Not Obtained in Virginia and Did Not Rest on a Finding of Fraud

         In January 2017, after obtaining the D.C. Superior Court Judgment, Andrew filed a claim with the Board. The claim requested payment for the unpaid judgment from the Fund, which the Board administers.

         In a letter dated March 17, 2017 (the "Board Denial"), the Board denied Andrew's claim on two separate grounds: "(1) the final judgment was not awarded in a court of competent jurisdiction in the Commonwealth of Virginia and (2) the final judgment was not for fraud." (Board Denial 2, ECF No. 28-9.) The Board noted that "the reasoning of the Court's decision needs to be evident from the judgment itself because the Fund is limited to compensating fraud judgments related to the sale or lease of a vehicle. (Id. at 2.) The Board Denial described Andrew's right to appeal in state court and the procedure, including applicable deadlines to do so. Although Andrew submitted a Notice of Appeal, he never perfected his appeal. The time to do so expired.

         II. Analysis

         Defendants seek dismissal of Andrew's class action Amended Complaint on either of two grounds: (1) for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1);[6] or (2) for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).[7] The Court begins, as it must, by addressing Defendants' motion to dismiss for want of subject-matter jurisdiction.[8] Because Andrew has no valid judgment for fraud, the Court finds that he lacks standing to proceed in federal court.[9] Therefore, the Court will remand this case to the D.C. Superior Court.[10]

         A. The Three-Part Test Used to Evaluate ...


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