Modica v. American Suzuki Financial Services Company LLC et al

Filing 86

ORDER granting in part and denying in part 69 Motion for Summary Judgment. The Court will set a final pretrial conference by separate order. Signed by Judge David G Campbell on 2/22/2013.(NVO)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

Ilene Modica,

No. CV11-02183-PHX DGC
Plaintiff,

10
11

v.

12

ORDER

American Suzuki Financial Services
Company,

13

Defendant.

14
15

Defendant American Suzuki Financial Services Company (“ASFS”) filed a motion

16

for summary judgment on its counterclaim for breach of contract and Plaintiff’s claims

17

under the federal Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(b), and Arizona

18

Consumer Reporting Agencies and Fair Credit Reporting Act, A.R.S. § 44-1694 and

19

§ 44-1695. Doc. 69. Plaintiff Ilene Modica filed a response on December 17, 2012

20

(Doc. 78), and ASFS filed a reply on January 7, 2013 (Doc. 85). For the reasons that

21

follow, the Court will grant Defendant’s motion in part and deny it in part.1

22

I.

Background.

23

On December 8, 2005, Plaintiff and her daughter Jacklyn Modica executed an

24

agreement for a lease of a Suzuki Grand Vitara with ASFS. Doc. 75 ¶¶ 2, 6. The lease

25

named Plaintiff and her daughter as co-lessees for a 30-month term, and ASFS as the

26

assignee. Doc. 75 ¶ 6. The lease was scheduled to end on June 8, 2008, and the lease

27
28

1

The request for oral argument is denied because the issues have been fully
briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b)

1

document contained this provision:

2

29. LEASE END DAILY EXTENSION. At scheduled
lease end, if you keep the vehicle and do not buy it, you elect
to extend the lease and pay a daily extension charge
beginning on the eighth day after the scheduled lease end
date. The Charge is shown on the front [of the form]. We
may limit the number of days you extend the lease. During
the daily extension period, you agree to comply with the
terms of this lease, other than terms that apply to monthly
payments and early end. The total allowed mileage will not
increase.

3
4
5
6
7
8

Doc. 75 ¶ 8.

9

The car was not returned to ASFS on the lease end date of June 8, 2008, but

10

Plaintiff’s daughter had negotiated a lease extension with ASFS before that date. Doc. 70

11

¶ 12; see Doc. 75-2. The new maturity date was advanced several times, first until July 8,

12

2008, then until August 8, 2008 (an extension for which two forms are attached), and

13

finally until September 8, 2008. Doc. 75-2 at 2-5. The lease extension agreements state

14

that they are available “only to the original lessee(s)” and that “[n]one of the terms or

15

conditions of [the] existing lease, including but not limited to the payment amount or

16

residual value, are modified by granting this extension.” Doc. 75-2 at 2-5. Plaintiff

17

claims that she did not know about or authorize the lease extension agreements and her

18

signature does not appear on them. Doc. 75 ¶ 30; Doc. 75-2 at 2-5. Plaintiff also claims

19

that the lease was extended beyond the dates listed on the extension forms until

20

January 2009, six months beyond the original end date, and that her daughter made all of

21

scheduled payments during the six-month extension.

22

maintains that her daughter returned the vehicle to a Suzuki dealership on January 8,

23

2009, the end of the six-month extension period. Doc. 75 ¶ 38.

Doc. 75 ¶¶ 31-32.

Plaintiff

24

ASFS argues that it only extended the lease until September 8, 2008, and that

25

Plaintiff and her daughter kept the car outside the terms of the lease and its extensions

26

from that date until January 8, 2009. It claims that Plaintiff was in breach of contract

27

during that time period and moves for summary judgment on that claim.

28

Following the return of the vehicle, ASFS reported the incident to credit reporting

-2-

1

agencies as a “current and paid/paying as agreed.” Doc. 75 ¶ 52. Plaintiff disputed the

2

charge with the credit agencies several times, and each time the credit reporting agencies

3

contacted ASFS to notify them of the dispute and confirm the charge. Doc. 75 ¶¶ 51-61.

4

Eventually, ASFS changed the report to an unpaid balance with a loss (a “charge-off”).

5

Doc. 75 ¶ 57. Plaintiff alleges that Defendants did not complete their duty to fully

6

investigate the charges in violation of the federal and state Fair Credit Reporting Acts, 15

7

U.S.C. § 1681s-2(b) and A.R.S. § 44-1694 and § 44-1695. Doc. 46 at 9-12. Defendant

8

moves for summary judgment on those claims because they maintain that their charges

9

were investigated and correct. Doc. 69 at 7-9.

10

II.

Legal Standard.

11

A party seeking summary judgment “bears the initial responsibility of informing

12

the district court of the basis for its motion, and identifying those portions of [the record]

13

which it believes demonstrate the absence of a genuine issue of material fact.” Celotex

14

Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the

15

evidence, viewed in the light most favorable to the nonmoving party, shows “that there is

16

no genuine dispute as to any material fact and the movant is entitled to judgment as a

17

matter of law.” Fed. R. Civ. P. 56(a). Summary judgment is also appropriate against a

18

party who “fails to make a showing sufficient to establish the existence of an element

19

essential to that party’s case, and on which that party will bear the burden of proof at

20

trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome

21

of the suit will preclude the entry of summary judgment, and the disputed evidence must

22

be “such that a reasonable jury could return a verdict for the nonmoving party.”

23

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Ninth Circuit has held

24

that there is no genuine issue “where the only evidence presented is ‘uncorroborated and

25

self-serving’ testimony.” Villiarimo v. Aloha Island Air, Inc., 281 F. 3d 1054, 1061 (9th

26

Cir. 2002) (quoting Kennedy v. Applause, Inc., 90 F.3d 1477, 1481 (9th Cir. 1996)).

27
28

-3-

1

III.

Analysis.

2

A.

Breach of Contract.

3

ASFS moves for summary judgment on its counterclaim for breach of contract. It

4

maintains that Plaintiff breached her lease agreement by failing to return the vehicle on

5

the date the last documented extension expired, September 8, 2008.

6

Plaintiff acknowledges that the car was not returned until January 8, 2009

7

(Doc. 75 ¶ 38), but argues that the return date did not breach the lease agreement for three

8

reasons. First, she argues that the lease was extended through January 2009 and that all

9

of the payments were made through that date. Second, she argues that the terms of the

10

original lease were fulfilled because all of the payments were made and she was not a

11

party to any of the lease extensions executed by her daughter. Finally, she argues that

12

ASFS waived its contractual rights when it mailed Plaintiff a letter in January 2009

13

informing her that the lease had been terminated and that she did not have an outstanding

14

balance with ASFS.

15

Plaintiff attached the extension agreements to her statement of facts as Exhibit B.

16

Doc. 75-2. Those extensions show that the lease was extended through September 8,

17

2008. Doc. 75-2 at 5. With respect to the period from September 2008 to January 2009,

18

Plaintiff offers the deposition of her daughter Jacklyn. Doc. 75-4. During the deposition,

19

Jacklyn was asked: “Is it your recollection, Jackie, that you signed six lease extension

20

forms?” She responded: “I believe so.” Doc. 75-4 at 7. The questioner continued: “Do

21

you remember the fourth one you signed?” Jacklyn responded: “I remember that, you

22

know, that there were at least four – that there were four, five, six. I don’t remember

23

specifically what the fourth one – if there were any issues in receiving the fax or who I

24

had talked to.” Doc. 75-4 at 7. Jacklyn also stated that she believed she made all the

25

payments during the extension period, and when asked if the same checking account was

26

used for all payments, she responded: “It should be through that account. I know

27

throughout the lease there were a couple times where my then boyfriend/ now husband

28

made a couple payments.” Doc. 75-4 at 11-12. Shortly thereafter she reaffirmed that no

-4-

1

one made payments for her during the lease extensions. Doc. 75-4 at 12 (“Q: Did anyone

2

else make payments for you during the lease extensions? A: No, they did not.”).

3

In addition to her daughter’s testimony, Plaintiff introduces a letter she received

4

from ASFS dated January 15, 2009. Doc. 75-7 at 24. ASFS sent the letter after it

5

regained possession of the car, and sent an identical letter to Plaintiff’s daughter on the

6

same day. Doc. 75-7 at 25. Both letters state that the recipients are in breach of contract,

7

but they also both list “Past due payments” as “$.00.” Doc. 75-7 at 24-25. The letter

8

also states that the recipients will be responsible for any balance owing under the lease

9

agreement after the vehicle is sold, but the balance owing appears to be a reference to the

10

itemized list of charges in the letter. Id. That list purported to show what the recipients

11

were required to pay “as of the date of [the] letter.” Id.

12

In response to Plaintiff’s daughter’s contention that she made all payments

13

through January, ASFS seeks to introduce the statements from Jacklyn Modica’s

14

checking account with Desert Schools Federal Credit Union (“DSFCU”). Doc. 85-1.

15

ASFS contends that the statements are admissible under the residual exception to the

16

hearsay rule, Federal Rule of Evidence 807, because of Jackie’s statement at her

17

deposition that no payments were made for her and that all payments came from her

18

checking account. Without deciding whether the statements will be admissible under

19

Rule 807 at trial, the Court notes that they are consistent with the itemized list of

20

payments received by ASFS during the lease period – both records show 33 payments.

21

Doc. 70-1; Doc. 85-1.

22

contention that the lease was only renewed through September 8, 2008, and that no

23

payment was received after September despite the fact that the car was not returned until

24

January.

The payment information is also consistent with ASFS’s

25

While Plaintiff’s daughter’s statement might be construed as self-serving, it is

26

corroborated by the letter ASFS sent to both Plaintiff and her daughter. Villiarimo, 281

27

F. 3d at 1061. The Court concludes this evidence, when contrasted with evidence ASFS

28

seeks to introduce to undermine Plaintiff’s daughter’s testimony, presents a genuine issue

-5-

1

of material fact that precludes summary judgment.

2

B.

3

ASFS also moves for summary judgment on Plaintiff’s claims under the Fair

4

Credit Reporting Act (“FCRA”). 15 U.S.C. 1681s-2(b). The FCRA requires entities that

5

furnish information to credit reporting agencies to investigate disputed charges upon

6

notice of the dispute. The investigation must be reasonable. Gorman v. Wolpoff &

7

Abramson, LLP, 584 F. 3d 1147, 1157 (9th Cir. 2009). Furthermore, the requirement to

8

investigate consumer disputes is “procedural,” meaning that no particular outcome

9

necessarily makes the investigation unreasonable even if that outcome turns out to be

10

Fair Credit Reporting Act.

inaccurate. Id. at 1161.

11

Plaintiff contends that ASFS did not engage in a reasonable investigation. She

12

proffers the deposition of Kathleen Perry in which Ms. Perry states on behalf of ASFS

13

that she did not know what steps ASFS took to investigate the disputed items on

14

Plaintiff’s credit report. Doc. 75-6 at 12-14. The same deposition acknowledges ASFS’

15

receipt of Plaintiff’s complaints from the credit reporting agency and raises questions

16

regarding the change in the account’s status from “closed” to “charged off.” Id. at 16-22.

17

As noted above, Plaintiff has also introduced a letter sent to Plaintiff that said she had

18

“$.00” in past due payments.

19

investigation explained that letter, and, when asked about the letter in a deposition,

20

Matthew Dickey, on behalf of ASFS, stated that he agreed with the questioner that the

21

form indicates that the past due payments are $0. Doc. 75-5 at 19.

Doc. 75-7 at 24.

ASFS does not show how their

22

Defendant moves for summary judgment on this claim because it engaged in an

23

investigation and the item on Plaintiff’s credit report was correct. Under the statute

24

Defendant had a duty to reasonably investigate the disputed charge even if it happened to

25

be correct.2 Here, ASFS does nothing to show that its investigation was reasonable. Ms.

26
2

27
28

The accuracy of the charge may be relevant to Plaintiff’s ability to show actual
damages, but 15 U.S.C. § 1681n contemplates statutory damages against those who
“willfully fail to comply with any requirement imposed under this subchapter.”
Furthermore, as the contract claim is still in dispute, ASFS has not yet established that the
charge was correct.
-6-

1

Perry went so far as to say she did not know what the investigation entailed. Without

2

more, the Court cannot conclude the investigation was reasonable. Accordingly, the

3

Court will deny ASFS’ motion for summary judgment on the FCRA claim.

4

C.

Arizona Consumer Reporting Agencies and Fair Credit Reporting Act.

5

Count two of the complaint alleges violations of A.R.S. § 44-1694 and § 44-1695.

6

A.R.S. § 44-1694 applies to credit reporting agencies and the credit reporting agencies

7

named in the initial complaint are no longer part of this litigation. Doc. 51, 74. As

8

written, A.R.S. § 44-1695 would impose additional duties on ASFS, but in Loomis v. U.S.

9

Bank Home Mortg., No. CV-11-00735-TUC-CKJ, 2012 WL 6200635 (D. Ariz. Dec. 12,

10

2012), the district court found that A.R.S. § 44-1695 related to “the responsibilities of

11

persons who furnish information to consumer reporting agencies” and was expressly

12

preempted.

13

Because A.R.S. § 44-1695 is preempted, the Court will grant summary judgment with

14

respect to this claim.

See 15 U.S.C. § 1681t(b)(1)(F).

The Court agrees with that analysis.

15

IT IS ORDERED that Defendant’s motion for summary judgment (Doc. 69) is

16

granted in part and denied in part. Summary judgment is granted with respect to the

17

state law claim in count two, but denied with respect to the federal claim in count one and

18

Defendant’s breach of contract counterclaim.

19

conference by separate order.

20

Dated this 22nd day of February, 2013.

21
22
23
24
25
26
27
28

-7-

The Court will set a final pretrial