Lambert v. National Motors, Inc.

Filing 10

MEMORANDUM. Signed by Judge William M Nickerson on 5/4/11. (bmh, Deputy Clerk)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Baltimore Division

CHRISTOPHER JAMES LAMBERT

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v.
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Civil Action WMN-10-3522
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NATIONAL MOTORS, INC.
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MEMORANDUM
Before the Court is a motion to dismiss filed by Defendant,
National Motors, Inc. (National).
ripe for review.

ECF No. 7.

The motion is

Upon review of the pleadings and the

applicable case law, the Court determines that no hearing is
necessary, Local Rule 105.6, and that the motion will be denied.
I. FACTUAL AND PROCEDURAL BACKGROUND
This action arises from the purchase of a motor vehicle by
Plaintiff Christopher Lambert.

As set forth in Plaintiff’s

response, on October 22, 2010, Lambert entered into a retail
purchase agreement with National for a 2009 Chevrolet HHR for
$13,091.94.

Shortly thereafter, Lambert and National entered

into a Retail Installment Sales Contract (installment contract)
as a final agreement to purchase the vehicle and finance the
sale.

After the purchase, Lambert experienced some problems

with the vehicle and obtained a Carfax vehicle history report.
In that report, Lambert discovered that the vehicle was a former

rental vehicle.

That fact was not disclosed in the installment

contract.
After discovering the undisclosed prior use, Lambert filed
a complaint in this Court on December 16, 2010, asserting
violations of the Truth in Lending Act, 15 U.S.C. §§ 1601 et
seq, and the Maryland Consumer Protection Act, Md. Code Ann.,
Com. Law §§ 13-101 et seq, and two counts of fraud.
Specifically, Lambert argued that National failed to disclose
required information in the installment contract and
misrepresented the value of the vehicle.

On January 11, 2011,

the owner of National, Gabriela Doroudian, communicated to
Lambert’s attorney that Lambert had entered into an arbitration
agreement with National at the time of the purchase.
faxed to Lambert a copy of the agreement.

Doroudian

Subsequently, Lambert

amended his complaint to include a fifth count for forgery.
That count alleges that Lambert never saw or signed the standalone arbitration agreement.
with a sworn affidavit.

Lambert supported this allegation

Pl.’s Ex. 2.

On January 30, 2011, National filed a motion to dismiss,
arguing that Lambert is bound by the arbitration agreement.

In

support of its motion, National included a sworn affidavit from
Doroudian stating that he provided the arbitration agreement to
Lambert and witnessed him signing it.

Def.’s Ex. 3.

did not, however, submit a brief with its motion.

National

On February

16, 2011, Lambert filed a response to National’s motion to
dismiss, arguing that the arbitration agreement is void for
forgery, and even if it were validly signed, it was not binding
under the requirements for vehicle sales contracts in the Code
of Maryland Regulations.

Md. Code Regs. 11.12.01.15 (2010).

National has not submitted a reply.
II. DISCUSSION
To survive a Rule 12(b)(6) motion to dismiss, “a complaint
must contain sufficient factual matter . . . to ‘state a claim
to relief that is plausible on its face.’”

Ashcroft v. Iqbal,

---- U.S. ----, ----, 129 S. Ct. 1937, 1949 (2009) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“[O]nce a

claim has been stated adequately,” however, “it may be supported
by showing any set of facts consistent with the allegations in
the complaint.”

Twombly, 550 U.S. at 563. In considering such

a motion, the court is required to accept as true all well-pled
allegations in the Complaint, and to construe the facts and
reasonable inferences from those facts in the light most
favorable to the plaintiff.

Ibarra v. United States, 120 F.3d

472, 474 (4th Cir. 1997).
The Code of Maryland Regulations provides that “every
vehicle sales contract or agreement shall be evidenced by an
instrument in writing containing all of the agreements of the

parties.”1

Md. Code Regs. 11.12.01.15 (2010).

This provision

requires a single instrument containing every agreement
applicable to the sale of the motor vehicle.

See Smith v.

Rosenthal Toyota, Inc., 573 A.2d 418, 422 n.3 (Md. 1990)
(finding an integration clause contained in a separate
contemporaneously signed agreement invalid).

This requirement

is reflected in the motor vehicle and retail installment
contract laws of numerous states.

See, e.g., Wash. Rev. Code

Ann. § 63.14.020 (West 2011); Mich. Comp. Laws § 566.302 (West
2011)(requiring “an instrument” containing “all of the
agreements of the parties”); Cal. Civ. Code § 2985.8 (West
2011).

These statutes proliferated as legislatures attempted

“to protect ignorant and unwary buyers from oppressive business
practices that were becoming more apparent with the rising
quantity of consumer credit.” Associated Acceptance Corp. v.
Bailey, 174 A.2d 440, 443 (Md. 1961) (finding certain
requirements of the Retail Installment Sales Act, Md. Code.

1

Section 12-604 of the Retail Installment Sales Act of Maryland
contains similar language. Md. Code. Ann., Com. Law § 12-604
(“An installment sale agreement shall be evidenced by an
instrument in writing which contains all of the agreements of
the parties.”). The legislature enacted this statute in order
to protect Maryland consumers from the abuses of sellers. Brown
v. Doug Griffith Dodge City, Inc., 452 A.2d 984, 989 (Md. Ct.
Spec. App. 1982). This Act does not apply to the instant matter
due to language in the contract electing to apply the Creditor
Grantor Closed End Credit Provision, Md. Code Ann., Com. Law §
12-1001 et seq., Pl.’s Ex. 3 at 4, but its language and the
legislative intent are instructive.

Ann., Com. Law § 12-604 to be “explicit and mandatory”).2
Clearly, the requirement of a single instrument is intended “to
protect buyers from the deception and ambiguities which arise
when more than one document is utilized to express the
contract.”

Kenworthy v. Bolin, 564 P.2d 835, 838 (Wash. Ct.

App. 1977).
National did not include the arbitration clause within the
installment contract.
other agreements.

The installment contract superseded all

Tokarski v. Castle Auto Outlet, LLC, No. 09-

509, slip op. at 2 (D. Md. Sep. 24, 2009) (finding plaintiff not
bound by arbitration clause in earlier buyer’s agreement).
Moreover, National has failed to file any briefing or assert any
arguments to the contrary.

The agreements within the four

corners of the installment contract are the only agreements that
apply to the transaction, and the arbitration clause is not one

2

 In addition to a single instrument, the vehicle sales contract
regulations also require the seller to provide the buyer with
his own “exact copy” of the contract. Md. Code Regs.
11.12.01.15 (2010). Lambert argues that he was not provided a
copy of the arbitration agreement along with the copy of the
installment contract given to him. Pl.’s Resp. at 3. This
failure alone would give Lambert the right to cancel the sale.
Md. Code Regs. 11.12.01.15 (2010). Moreover, if the arbitration
agreement were part of the single instrument containing the
entire agreement between the parties, it would have been
provided to Lambert along with the rest of the contract.

of them.

Therefore, National’s motion to dismiss will be

denied.3

_______________/s/________________
William M. Nickerson
Senior United States District Judge
DATED: May 4, 2011

3

As the Court will deny National’s motion to dismiss because
National failed to comply with the Code of Maryland Regulations,
the Court need not consider the alleged forgery of the
arbitration agreement at this time.