New v. CitiFinancial Auto Credit, Inc. et al
MEMORANDUM OPINION AND ORDER directing that is it ORDERED that CitiFinancial's 15 Motion for Judgment on the Pleadings is GRANTED and Counts I and II of the Complaint are DISMISSED with prejudice, as further set out. Signed by Chief Judge William Keith Watkins on 8/10/11. (scn, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
CITIFINANCIAL AUTO CREDIT,
INC., et al.,
) CASE NO. 1:10-CV-905-WKW [WO]
MEMORANDUM OPINION AND ORDER
Plaintiff filed a Complaint (Doc. # 1, Attach. 2) against Defendants
CitiFinancial Auto Credit, Inc. (“CitiFinancial”), Brent Saylors (“Saylors”), and
Providence Acceptance Corporation (“PAC”). Prior to service of process against Mr.
Saylors and PAC (Docs. # 13, 14), CitiFinancial removed the case to this court.
Plaintiff’s motions for default judgment have been granted against Mr. Saylors and
PAC. (Doc. # 33.) Now pending is CitiFinancial’s Motion for Judgment on the
Pleadings (Doc. # 15) on Counts I and II of Plaintiff’s Complaint. The motion is due
to be granted.
I. JURISDICTION AND VENUE
Subject matter jurisdiction is exercised pursuant to 28 U.S.C. §§ 1331 and 1367.
Personal jurisdiction and venue are uncontested, and there are adequate allegations in
support of both.
II. STANDARD OF REVIEW
The Federal Rules of Civil Procedure provide that “[a]fter the pleadings are
closed – but early enough not to delay trial – a party may move for judgment on the
pleadings.” Fed. R. Civ. P. 12(c). A judgment on the pleadings is limited to
consideration of “the substance of the pleadings and any judicially noticed facts.”
Bankers Ins. Co. v. Fla. Residential Prop. & Cas. Joint Underwriting Ass’n, 137 F.3d
1293, 1295 (11th Cir. 1998). In considering a motion for judgment on the pleadings,
the court must accept all facts in the complaint as true. Moore v. Liberty Nat’l Life
Ins. Co., 267 F.3d 1209, 1213 (11th Cir. 2001); Ortega v. Christian, 85 F.3d 1521,
1524 (11th Cir. 1996). A judgment on the pleadings pursuant to Rule 12(c) is
appropriate when “no issues of material fact exist, and the movant is entitled to
judgment as a matter of law[,]” Ortega, 85 F.3d at 1524, or when “the complaint
lacks sufficient factual matter to state a facially plausible claim for relief that allows
the court to draw a reasonable inference that the defendant is liable for the alleged
misconduct.” Jiles v. United Parcel Serv., Inc., 413 F. App’x 173, 174 (11th Cir.
2011) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 570 (2007)).
III. FACTUAL BACKGROUND
Accepting Plaintiff’s factual allegations in the Complaint as true, the court finds
the following facts:
On August 29, 2005, Plaintiff purchased on credit a new 2006 GM Hummer
H3 (the “Hummer”). The Hummer was financed for 72 months through CitiFinancial.
(Compl. ¶ 5.) Until November 2008, Plaintiff made timely payments to CitiFinancial
as required by the promissory note that Plaintiff executed in CitiFinancial’s favor.
(Compl. ¶¶ 6, 7, 12.) However, around November 2008, Plaintiff entrusted the
Hummer to Mr. Saylors and PAC, merchants in the business of selling automobiles,
through a consignment agreement whereby Mr. Saylors and PAC would offer the
Hummer for sale to the public. (Compl. ¶ 7.) One provision of the alleged
consignment agreement was that Mr. Saylors and PAC would pay the balance of
Plaintiff’s note to CitiFinancial.1 (Compl. ¶¶ 8, 27.) Mr. Saylors and PAC tendered
to CitiFinancial a “check that was drafted on an account with insufficient funds to
cover said check.” (Compl. ¶ 8.) CitiFinancial failed to verify that the checking
It is unclear whether this was to be done immediately, eventually, or upon the sale of
account had sufficient funds, and released the Hummer’s title to Mr. Saylors and PAC,
which was then transferred to the third-party purchaser, who purchased the Hummer
from Mr. Saylors and PAC. (Compl. ¶ 9.)
In Count I of the Complaint, Plaintiff alleges that CitiFinancial breached its
contract with Plaintiff by “fail[ing] to perform all of its duties it was obligated to
perform under the contract.” (Compl. ¶ 16.) In Count II, Plaintiff alleges that
CitiFinancial “breached its duty [to use ordinary care] by negligently and/or wantonly
releasing Plaintiff’s title to [PAC] without verifying there were adequate funds
received from [PAC] . . . .” (Compl. ¶¶ 19-20.)
Count I – Breach of Contract2
“The elements of a breach-of-contract claim under Alabama law are (1) a valid
contract binding the parties; (2) the plaintiff[’s] performance under the contract; (3)
the defendant’s nonperformance; and (4) resulting damages.” Shaffer v. Regions Fin.
Corp., 29 So. 3d 872, 880 (Ala. 2009).
As the court finds below, CitiFinancial is entitled to judgment on the pleadings on
Count I, based upon Plaintiff’s own nonperformance under the contract. Even were this not the
case, Count I’s allegation that “[CitiFinancial] failed to perform all of its duties it was obligated
to perform under the contract” is inadequate under Rule 8(a)(2), which requires a “short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2); Twombly, 550 U.S. at 556, 570. Plaintiff fails to allege the specific contractual duties
CitiFinancial argues that judgment on the pleadings is appropriate because the
undisputed facts from Plaintiff’s Complaint reveal that Plaintiff himself has not
performed under the contract.
Specifically, CitiFinancial points to Plaintiff’s
allegations in the Complaint that Mr. Saylors and PAC “failed to pay off Plaintiff’s
note” and that CitiFinancial has “reported negative information on Plaintiff’s credit
reports, and ultimately charged off the balance due on Plaintiff’s note . . . .” (Compl.
¶¶ 10, 12.) Plaintiff responds that CitiFinancial was in breach of the contract by
“continu[ing] to seek payment from Plaintiff, even after accepting a payoff from a
third party and releasing the title to that third party.” (Pl.’s Resp. 4 (Doc. # 26).)
The fact that Plaintiff attempted to delegate his contractual obligations under
the promissory note to Mr. Saylors and PAC does not relieve Plaintiff of his
contractual duties under the promissory note. Alabama law is clear on this point. See
Ala. Code § 7-2-210(1) (“No delegation of performance relieves the party delegating
of any duty to perform or any liability for breach.”); see also DuPont v. Yellow Cab
Co. of B’ham, Inc., 565 So. 2d 190, 193 (Ala. 1990) (“If a party to the contract
appoints a third party to render performance under the contract, he has made a
delegation . . . . [U]pon the delegation of a contractual duty, the delegating party
remains liable under the contract . . . .”).
Thus, Plaintiff’s own admitted
nonperformance under the contract (Comp. ¶ 12 (stating that CitiFinancial “ultimately
charged off the balance due on Plaintiff’s note”)) is fatal to his breach of contract
claim, and CitiFinancial is entitled to judgment on the pleadings on Count I of the
Count II – Negligence
“To establish negligence, the plaintiff must prove: (1) a duty to a foreseeable
plaintiff; (2) a breach of that duty; (3) proximate causation; and (4) damage or injury.”
Martin v. Arnold, 643 So. 2d 564, 567 (Ala. 1994) (citation omitted).
CitiFinancial contends that Plaintiff has not alleged proximate causation.
Specifically, CitiFinancial argues that “[t]he person who purchased the Hummer from
[Mr.] Saylors and PAC was and is a ‘buyer in the ordinary course of business’ and has
and would have had full title to the Hummer regardless of any actions taken by
CitiFinancial.” (Def.’s Br. in Support 6.) Plaintiff does not contest that the purchaser
of the Hummer was a buyer in the ordinary course of business (Pl.’s Resp. Br. 5), but
appears to argue that CitiFinancial never would have released the title to the Hummer
if it had properly investigated the source of the check, and that “[o]nce title passed to
the new buyer, Plaintiff’s rights and interests in the Hummer vanished.” (Pl.’s Resp.
Br. 4.) Thus, Plaintiff attempts to draw a causal connection between the extinguishing
of his own rights in the Hummer (the alleged harm) and CitiFinancial’s decision to
release the Hummer’s title (the alleged breach).
Under Alabama’s version of Article 2 of the Uniform Commercial Code, “[a]ny
entrusting of possession of goods to a merchant who deals in goods of that kind gives
him power to transfer all rights of the entruster to a buyer in the ordinary course of
business.” Ala. Code. § 7-2-403(2). “‘Entrusting’ includes any delivery and any
acquiescence in retention of possession regardless of any condition expressed between
the parties to the delivery or acquiescence . . . .” § 7-2-403(3). Furthermore, the
Alabama Supreme Court has held that “[a person] who had entrusted used automobiles
to a merchant ‘failed in his attempt to retain title to the used automobiles by holding
the certificates of title.’” Jones v. Mitchell, 816 So. 2d 68, 71-72 (Ala. Civ. App.
2001) (quoting Crum v. SouthTrust Bank of Ala., N.A., 598 So. 2d 867, 872 (Ala.
1992)). In other words, the passing or non-passing of the certificate of title does not
prevent the buyer in the ordinary course of business from extinguishing the true
owner’s rights in the vehicle.
Thus, Plaintiff’s entrustment of the Hummer by delivering possession of the
Hummer to Mr. Saylors and PAC – merchants who deal in used automobiles (Compl.
¶ 7) – and Mr. Saylors’s and PAC’s subsequent sale of the Hummer to a buyer in the
ordinary course of business, had the effect of extinguishing Plaintiff’s rights in the
Hummer. The fact that CitiFinancial released the Hummer’s title and it passed with
the Hummer to the buyer in the ordinary course of business had no effect on the end
result: that Plaintiff’s “rights and interests” in the Hummer have now vanished.3 Thus,
any breach of a duty owed to Plaintiff by CitiFinancial did not proximately cause
Plaintiff’s harm: his loss of the Hummer. CitiFinancial is entitled to judgment on the
pleadings on Count II of Plaintiff’s Complaint.
Accordingly, it is ORDERED that CitiFinancial’s Motion for Judgment on the
Pleadings (Doc. # 15) is GRANTED and Counts I and II of the Complaint are
DISMISSED with prejudice.
DONE this 10th day of August, 2011.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
On these pleadings, it can be safely assumed that both Mr. New and the ultimate
purchaser of the Hummer were innocent victims of the dishonesty of Mr. Saylors and PAC.
Jones explains the interaction between the UCC and the automobile title act and the policies
underlying the law in this area. 816 So. 2d at 72. Put simply, the law favors less risk for
consumers in the marketplace.
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