Opinion
6:19-cv-00630-ADA-JCM
2021-06-08
Taleisha LEWIS, Plaintiff, v. TITLEMAX OF TEXAS, INC., IVY Funding, LLC, Plate Recon, LLC § dba Plate Locate, and FCAR, LLC § dba First Call Auto Recovery § & Towing, Defendants.
Russell S. Thompson, IV, Thompson Consumer Law Group, PLLC, Scottsdale, AZ, for Plaintiff. Joe Michael Russell, Tad Allen, Harrell, Stoebner & Russell PC, Temple, TX, for Defendant FCAR, LLC.
Russell S. Thompson, IV, Thompson Consumer Law Group, PLLC, Scottsdale, AZ, for Plaintiff.
Joe Michael Russell, Tad Allen, Harrell, Stoebner & Russell PC, Temple, TX, for Defendant FCAR, LLC.
ORDER GRANTING DEFENDANT PLATE LOCATE'S MOTION FOR SUMMARY JUDGMENT AND DEFENDANT TITLEMAX OF TEXAS’ MOTION FOR SUMMARY JUDGMENT
ALAN D. ALBRIGHT, UNITED STATES DISTRICT JUDGE
Came on for consideration this date is Defendants Plate Locate's Motion for Summary Judgment as well as Defendant TitleMax of Texas’ Motion for Summary Judgment. ECF Nos. 63, 62. Plaintiff Taleisha Lewis and each Defendant filed responsive briefings. Pls.’ Resp., ECF Nos. 77, 76; Defs.’ Reply, ECF Nos. 82, 81. After careful consideration of the above briefings, the Court GRANTS Defendants’ Motions.
I. FACTUAL BACKGROUND
Defendant-Plate Locate is a "repossession forwarder," who acts as a middleman between lienholders requesting recovery and third-party towing companies. ECF No. 63, p. 2. Defendant-TitleMax of Texas ("TitleMax") is a Credit Services Organization, who arranges funds from lenders for borrowers. On March 18, 2017, TitleMax coordinated a loan for a borrower and that loan was secured by a 2007 Ford Five Hundred (the "Vehicle") as collateral, and TitleMax recorded a lien on the Vehicle's title. Id. When the borrower defaulted on the loan in July 2017, TitleMax purchased the loan from the original lender, becoming the first position lienholder. ECF No. 62, p. 2.
On September 19, 2017, Beard's Towing recovered the Vehicle at the request of the Fort Worth Police Department. ECF No. 76, p. 3. Beard's Towing sent a notice two days later to TitleMax, original lienholder, and the borrower but received no response. Id. A follow up notice was also sent. Id. Because Beard's Towing did not receive any response, the Vehicle was sent to a foreclosure auction where it was sold to Patrick Brown on November 14, 2017. Id. Mr. Brown then sold the Vehicle to the Plaintiff, Taleisha Lewis.
However, on September 22, 2017, a TitleMax employee made an internal request for repossession. TitleMax's " repossession approval team" approved the repossession after reviewing the account and vehicle information and verifying the lien's continued validity. ECF No. 63, p. 2. Then, TitleMax used its recovery management system to request repossession, making the request available to Plate Locate in order to assign the repossession request to third-party towing company which TitleMax has an independent contractor relationship with. ECF No. 62, pp. 2–3. Plate Locate forwarded the assignment to First Call Auto Recovery & Towing ("FCAR") which Plate Locate has an independent contractor relationship with. ECF No. 63, p. 2. Plate Locate did not direct FCAR as to the manner of recovery and most of FCAR's recovery assignments do not involve Plate Locate. Id. at pp. 2–3.
On July 25, 2019, the Vehicle was towed away from Lewis by FCAR. Id. at p. 3. Before the towing, FCAR assumed that Plate Locate completed a title search and verified lien history on the Vehicle. ECF 63 at p. 3. After FCAR returned the Vehicle to the Plaintiff without any damage, the Plaintiff signed a release stating she agreed "to Release and Hold Harmless First Call Auto Recovery & Towing, [and] Plate Locate ... from all claims, demands and or actions which [she] may have" against them "prior to this date." Id. at 4.
II. LEGAL STANDARD
"Summary judgment is required when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ " Trent v. Wade , 776 F.3d 368, 376 (5th Cir. 2015) (quoting Fed. R. Civ. P. 56(a) ). "A genuine dispute of material fact exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ " Nola Spice Designs, L.L.C. v. Haydel Enters. , 783 F.3d 527, 536 (5th Cir. 2015) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "The moving party ‘bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.’ " Id. (quoting EEOC v. LHC Grp., Inc. , 773 F.3d 688, 694 (5th Cir. 2014) ); see also Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
"Where the non-movant bears the burden of proof at trial, the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial." Id. at 323, 325, 106 S.Ct. 2548 (quotation marks omitted). The party moving for summary judgment must demonstrate the absence of a genuine issue of material fact but does not need to negate the elements of the nonmovant's case. Boudreaux v. Swift Transp. Co. , 402 F.3d 536, 540 (5th Cir. 2005). "A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law." Sossamon v. Lone Star State of Tex. , 560 F.3d 316, 326 (5th Cir. 2009) (quotation omitted). "If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant's response." United States v. $92,203.00 in U.S. Currency , 537 F.3d 504, 507 (5th Cir. 2008) (quoting Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)).
"Once the moving party [meets her or his initial burden], the non-moving party must ‘go beyond the pleadings and by her [or his] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.’ " Nola Spice Designs, L.L.C. , 783 F.3d at 536 (quoting LHC Grp., Inc. , 773 F.3d at 694 ). The nonmovant must identify and articulate how specific evidence in the record supports that party's claim. Baranowski v. Hart , 486 F.3d 112, 119 (5th Cir. 2007). "This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’ " Boudreaux , 402 F.3d at 540 (quoting Little , 37 F.3d at 1075 ). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Connors v. Graves , 538 F.3d 373, 376 (5th Cir. 2008) ; see also Nola Spice , 783 F.3d at 536.
III. DISCUSSION
In Defendant-Plate Locate's Motion for Summary Judgment, Plate Locate presents evidence that shows Plaintiff-Lewis signed a release agreement that applies to the claims at issue here. Plaintiff asserts two claims against Plate Locate for alleged violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692f(6)(A), and the Texas Debt Collection Act ("TDCA"), Tex. Fin. Code § 392.301(a)(1). The Plaintiff responded by attacking the validity or applicability of the release agreement she signed on several grounds. However, each of the Plaintiff's contentions about the release fail as a matter of law. Therefore, the Plate Locate's request for summary judgement is GRANTED.
Concerning Defendant-TitleMax's Motion for Summary Judgment, Lewis asserts two claims against TitleMax. The first is for an alleged violation of Tex. Bus. & Com. Code § 9.609 by TitleMax. Because the Vehicle was not collateral and the Plaintiff was not a debtor, this claim against TitleMax fails as a matter of law. The second claim is for an alleged violation of Tex. Fin. Code § 392.301(a)(1) under a theory of vicarious liability. The evidence does not establish the requisite level of control or any breach of peach to warrant holding TitleMax vicariously liable for the actions of its independent contractors. Accordingly, TitleMax's Motion is GRANTED.
A. Plaintiff released FCAR and Plate Locate from any potential claims, including the claims in this suit.
The Plaintiff makes several arguments that attempt to render the release she singed inapplicable or invalid. First, the Plaintiff argues that the release does not apply to her FDCPA or TDCA claims because the release only applies to claims "prior to" the day of the towing and should not apply day the events took place. Second, the Plaintiff contends the release lacked any requisite consideration because of FDCA's pre-existing duty to return the Vehicle. As a last resort, the Plaintiff maintains that the agreement was procured by fraud and is void. Because the agreement released FCAR and Plate Locate from liability, none of these arguments survive summary judgement.
a. The Plaintiff's interpretation of the Release agreement's language is flawed.
The Plaintiff contends that the release should only cover claims which existed on the date before she signed the release because of the language "prior to this date." This argument fails as a matter of law. For her release of the FDCPA claim against Plate Locate, federal principles of contractual interpretation apply, while Texas state law principles apply to the release of her TDCA claim. See, e.g., Smith v. Amedisys Inc. , 298 F.3d 434, 443-44 (5th Cir. 2002) "When a contract is expressed in unambiguous language, its terms will be given their plain meaning and will be enforced as written." Reliant Energy Servs., Inc. v. Enron Can. Corp. , 349 F.3d 816, 822 (5th Cir. 2003) (citation omitted). Under Texas Law, "the parties’ intent [in] a release will be construed in light of the facts and circumstances surrounding its execution." Tricentrol Oil Trading, Inc. v. Annesley , 809 S.W.2d 218, 221 (Tex. 1991) (citation omitted). Under both principles, the release covers the claims at issue here.
The form-style release was signed by the Plaintiff on the same day that the car was towed and returned. However, the unambiguous plain meaning of the release is that the Plaintiff was to hold harmless FCAR and Plate Locate to all claims which occurred prior to the return of the Vehicle. If the release is nonsensically construed as to only apply to claims which occurred just before the clock struck 12:00 A.M on July 25, 2019, the agreement would be rendered meaningless. Any claim to be released occurred on the 25
. The release covers any potential claim prior to its signing, including the claims here.
b. FCAR's obligation to return the Vehicle was subject to an honest dispute, and the Release was agreed to with sufficient consideration.
The Plaintiff also invokes the Pre-existing Duty Rule to argue that the release lacked any sufficient consideration. The rule simply states, "Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain". RESTATEMENT (SECOND) OF CONTRACTS § 73 (1981). The Fifth Circuit and Texas both follow this Restatement provision. See, e.g., Johnson v. Seacor Marine Corp. , 404 F.3d 871, 875 (5th Cir. 2005) ; Lone Star Steel Co. v. Scott , 759 S.W.2d 144, 153 (Tex. App. 1988).
Here, FCAR's obligation to return the Vehicle to the Plaintiff was doubtful and subject to an honest dispute. The evidence establishes that FCAR believed TitleMax possessed a valid lien on the Vehicle when they towed it. Upon returning it to the Plaintiff and upon agreement to the release, there is no evidence to show FCAR knew without a doubt that it had taken the car without a right to do so. Therefore, FCAR's legal obligation to return the vehicle to the Plaintiff was doubtful or subject to an honest dispute at the time it was returned and when the release was signed. Therefore, the release was supported with sufficient consideration and Plaintiff's contention fails. See RESTATEMENT ( SECOND ) OF CONTRACTS § 73, Comment b. ("In applying this Section it is first necessary to define the legal duty. The requirement of consideration is satisfied if the duty is doubtful or is the subject of honest dispute ....") (emphasis added). c. The record is devoid of material facts to find the Plaintiff's agreement to release FCAR and Plate Locate was fraudulently induced.
Finally, the Plaintiff argues that she was fraudulently induced into singing the release. The evidence in the record does not establish a genuine issue of material fact as to this claim. To prove fraudulent inducement, the Plaintiff must establish "(1) a material misrepresentation, (2) made with knowledge of its falsity or asserted without knowledge of its truth, (3) made with the intention that it should be acted on by the other party, (4) which the other party relied on and (5) which caused injury." Anderson v. Durant , 550 S.W.3d 605, 614 (Tex. 2018). The Plaintiff relies on deposition testimony of the FCAR employee who said, upon returning the Vehicle, "I need you to sign [the release] so you can get your vehicle back" as evidence of material misrepresentation. ECF No. 77, p. 6. However, the employee did not remember his exact wording to the Plaintiff. ECF Doc, No. 82, p. 6, n. 5. Nonetheless, the car was returned. While this element could be satisfied by a summary judgement standard, the fraudulent inducement claim fails on other grounds.
Plaintiff fails to indicate any record evidence demonstrating her reliance on this statement or the injury she received as a result of the alleged misrepresentation—both requisite elements to a fraudulent inducement claim. The Plaintiff's Opposition Brief to Plate Locate's Motion cites to a declaration in the record which provides no evidence as to her reliance. Nor does the Brief address any injury. Accordingly, the Plaintiff's contention that agreement to the release was procured by fraudulent inducement fails because there is no genuine issue of material fact.
B. The Vehicle was not a "collateral" and the Plaintiff was not a "Debtor" under the Tex. Bus. & Com. Code, and she cannot recover under § 9.625 for any alleged violations by TitleMax.
The Plaintiff's first claim against TitleMax is for an alleged violation of Tex. Bus. & Com. Code § 9.609(b)(2). A statutory remedial right is provided for violations of that code in § 9.625. The statute reads in relevant part:
(b) Subject to Subsections (c), (d), and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with this chapter. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.
(c) Except as otherwise provided in Section 9.628:
(1) a person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under Subsection (b) for its loss....
(d) A debtor whose deficiency is eliminated under Section 9.626 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under Section 9.626 may not otherwise recover under Subsection (b) for noncompliance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance.
The Plaintiff first argues that she is a "debtor" under the Code. ECF No. 76 pp. 4–6. The Vehicle was purchased by Patrick Brown at foreclosure auction who subsequently sold it to the Plaintiff. Under the Code, a debtor is defined as "a person having an interest, other than a security interest or other lien, in the collateral , whether or not the person is an obligor[.]" TEX. BUS. & COM. CODE § 9.102(28)(A) (emphasis added). Therefore, the Vehicle needed to be collateral for the plaintiff to be a "debtor."
In turn, the Code defines "collateral" as "property subject to a security interest." TEX. BUS. & COM. CODE § 9.102(12). The evidence shows Vehicle was sold to Patrick Brown at a "Licensed Vehicle Storage Facility Lien Foreclosure" public sale in accordance with Tex. Occ. Code § 2303.157. ECF No. 76, p. 3. The regulatory code for such foreclosure sales states, "failure of the owner or lienholder to claim the vehicle before the date of sale is ... a waiver of all right, title, and interest in the vehicle." TEX. OCC. CODE ANN. § 2303.154(c).
Here, TitleMax was notified by Beard's Towing in accordance with § 2303.154(c), and when the Vehicle was sold at the sale to Mr. Brown, the lien that TitleMax held on the Vehicle was waived because they did not respond to the notices. ECF No. 76, p. 3. Thus, under the statutory scheme, the Vehicle was no longer subject to any "security interest" when Mr. Brown sold the Vehicle to the Plaintiff. Because no security interest existed on the Vehicle when the Plaintiff owned it, it cannot be considered "collateral." See TEX. BUS. & COM. CODE § 9.102(12). This approach to lien extinguishment is supported by case law as well. Conseco Fin. Servicing Corp. v. J&J Mobile Homes Inc. , 120 S.W.3d 878, 883 (Tex. App.—Fort Worth [2d Dist.] 2003) (emphasis added) (citing Nat'l W. Life Ins. Co. v. Acreman , 425 S.W.2d 815, 817 (Tex. 1968) (concluding that property sold at foreclosure auction "discharges the security interest being foreclosed, as well as any subordinate interests and liens.")). It follows that since the Vehicle was not "collateral," the Plaintiff was not a "debtor." See TEX. BUS. & COM. CODE § 9.102(28)(A).
However, the Plaintiff further argues that she need not even be a "debtor" to recover for alleged violations of § 9.609(b)(2). She contends that any person may bring a claim because § 9.625(b) does not specify persons with a remedial right of action and § 9.625(c) only provides additional statutory damages. This is incorrect. The remedial provision Code which Plaintiff brings her claims, found in § 9.625, specifically states in comment 3, "Subsection (c) identifies who may recover under subsection (b). It affords a remedy to any aggrieved person who is a debtor or obligor." TEX. BUS. & COM. CODE ANN. § 9.625, comment 3 (emphasis added). Therefore, Plaintiff must be a "debtor" to recover for violations of § 9.609(b)(2). (Nowhere has the plaintiff asserted she is an "obligor.") Thus, the Plaintiff cannot recover under this statute because she is not a "debtor."
C. The Plaintiff's claim under the TDCA Fails as a matter of law because TitleMax is not vicariously liable for FCAR's conduct.
The Plaintiff's other claim against TitleMax a violation of Tex. Fin. Code § 392.301(a)(1), a provision of the TDCA. This provision provides:
(a) In debt collection, a debt collector may not use threats, coercion, or attempts to coerce that employ any of the following practices:
(1) Using or threatening to use violence or other criminal means to cause harm to a person or property of a person....
TEX. FIN. CODE § 392.301(a)(1)
The underlying "criminal means" alleged is that FCAR engaged in theft of the Vehicle. No evidence shows TitleMax engaged in any theft and no TitleMax employee was present when FCAR towed the Vehicle. However, the Court need not decide the theft allegation at summary judgment here because TitleMax is not vicariously liable for the FCAR's conduct.
Under Texas law, an employer is liable for the conduct of an independent contractor only if "the employer controls the details or methods of the independent contractor's work to such an extent that the contractor cannot perform the work as it chooses." Fifth Club, Inc. v. Ramirez , 196 S.W.3d 788, 792 (Tex. 2006) (citation omitted). However, the Texas Supreme Court also created an exception that a secured creditor "remains liable for breaches of the peace committed by its independent contractor." Mbank El Paso N.A. v. Sanchez , 836 S.W.2d 151 (Tex. 1992).
The Plaintiff does not point to any evidence showing that TitleMax's relationship with FCAR rises to the level of control stipulated in Fifth Club. Furthermore, the Plaintiff did not allege any breach of the peace occurred—the evidence would not support such a contention. Instead, the Plaintiff relies on non-binding rulings from the Third and Ninth Circuit's which do not apply Texas law or the TDCA, and other rulings finding vicarious liability based on agent relationships. ECF No. 76, p. 7 In its last citation on this topic, the Plaintiff cites a U.S. District Court in Texas applying the Third Circuit's approach to vicarious liability under the FDCPA to the TDCA. Id. That Court joined the "reasoning of the Third Circuit in Pollice [finding vicarious liability under the FDCPA] ... and [ ] sees no reason why the same approach should not apply to similar claims under the TDCA." Cox v. Hilco Receivables, L.L.C. , 726 F. Supp. 2d 659, 668 (N.D. Tex. 2010) (citing Pollice v. National Tax Funding, L.P. , 225 F.3d 379 (3d Cir. 2000) ). We are bound by Texas Supreme Court precedent on vicarious liability of secured creditors for the acts of their independent contractors, which requires a finding of breach of peace. The Plaintiff ignored the Mbank ruling in its Reply, and she did not challenge its application here. ECF No. 76.
The evidence record is devoid of any facts showing a breach of the peace occurred as a result of FCAR's actions or that TitleMax maintained the requisite level of control over FCAR. Thus, TitleMax cannot be found vicariously liable for the actions of their independent contractor.
IV. CONCLUSION
The Plaintiff's attempts to invalidate the release agreement she signed with FCAR and Plate Locate each fail as a matter of law. Because the claims she asserts against FCAR and Plate Locate are covered by that release, Defendant-Plate Locate's Motion for Summary Judgment is GRANTED . Accordingly, Plate Locate's liability for their alleged violation of the FDCPA and the TDCA need not be considered.
Both of the Plaintiff's claims against TitleMax fail as a matter of law. First, the Plaintiff cannot recover for any alleged violation of Tex. Bus. & Com. Code § 9.609(b)(2) because she is not a debtor. See Tex. Bus. & Com. Code § 9.625(c) & (d). Second, TitleMax the record does not present a genuine issue of material fact as to TitleMax's vicarious liability for the actions of FCAR for the Plaintiff's TDCA claim. Therefore, the Defendant's Motion of Summary Judgment is GRANTED .