Acker v. Admiralty Developments Corp. et al

Filing 20

ORDER (1) DENYING 8 DEFENDANTS MOTION TO DISMISS AND (2) REQUIRING DEFENDANT ADMIRALTY DEVELOPMENT CORPORATION TO OBTAIN LEGAL COUNSELON OR BEFORE APRIL 22, 2019 OR FACE ENTRY OF A DEFAULT. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JUSTIN ACKER,
Plaintiff,

Case No. 18-cv-10920

v.

Paul D. Borman
United States District Judge

ADMIRALTY DEVELOPMENT
CORP. and JAMES ZIMMER,
Defendants.
_____________________________/
ORDER (1) DENYING DEFENDANTS’ MOTION TO DISMISS (ECF NO. 8)
AND (2) REQUIRING DEFENDANT ADMIRALTY DEVELOPMENT
CORPORATION TO OBTAIN LEGAL COUNSEL
ON OR BEFORE APRIL 22, 2019 OR FACE ENTRY OF A DEFAULT
On June 13, 2018, Defendants filed a motion to dismiss certain counts of
Plaintiff’s Complaint. (ECF No. 8.) Plaintiff filed a Response on July 2, 2018. (ECF
No. 9.) Defendants did not file a Reply. The motion to dismiss, which has been fully
briefed, is ready for resolution by the Court. The Court finds that the briefing
adequately addresses the issues in contention and dispenses with a hearing. See E.D.
Mich. L. R. 7.1(f)(2). For the reasons that follow, the Court DENIES the motion to
dismiss.
Further, the Court ORDERS Defendant Admiralty Development Corp.
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(“Admiralty”) to obtain counsel or face entry of a default. On October 3, 2018, after
the pending motion to dismiss had been fully briefed, Plaintiff’s counsel filed a
motion to withdraw, which the Court granted on October 29, 2018, after holding a
hearing. (ECF No. 15.) As discussed infra, a corporate entity cannot proceed without
counsel in this Court. Although instructed to do so by the Court on numerous
occasions, Admiralty has refused to obtain new counsel.
I.

BACKGROUND
Plaintiff filed a Complaint on March 21, 2018, alleging a host of claims related

to Defendants’ alleged tampering with the odometer on an automobile that Plaintiff
purchased from the Defendants in 2016. The Complaint alleges that on or about
September 24, 2016, a certain Saturn Astra XR, VIN W08AT671485073960 (“the
Vehicle”) was inspected in the State of Texas pursuant to that state’s motor vehicle
code and on that date the Vehicle’s odometer read 64,589. (Complaint ¶ 8-9.) Prior
to and on February 1, 2018, Defendants advertised the Vehicle for sale and expressly
represented in written advertisements that the vehicle had mileage of 64,251. (Compl.
¶ 10.) On or about February 15, 2018, Plaintiff purchased the Vehicle from
Defendants for $6,339.00. (Compl. ¶ 11.) Plaintiff alleges that this representation as
to the mileage was false and Defendants knew it was false at the time it was made.
Plaintiff alleges that Defendants made the same misrepresentation on the Application
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for Title dated February 15, 2018, that was provided to the Plaintiff and certified to
the State of Michigan. (Compl. ¶¶ 12-14.) Plaintiff alleges that Defendants submitted
a different Application for Title to the State of Michigan with no actual mileage listed.
(Compl. ¶ 14.) Plaintiff also alleges that Defendants breached certain express
warranties related to the Vehicle. (Compl. ¶¶ 15-17.)
Plaintiff’s Complaint alleges violations of the Federal and Michigan Odometer
Acts (Counts I and II), the Michigan Consumer Protection Act (Count III),
Misrepresentation (Count IV), Breach of Contract (Count V), Breach of Warranties
(Count VI), and Violation of the Michigan Motor Vehicle Code (Count VII).
On June 13, 2018, Defendants filed a motion to dismiss a portion of Counts I
and II of the Complaint, specifically seeking to dismiss Plaintiff’s claim that
Defendants violated the disclosure requirements of the Federal and Michigan
Odometer Acts, relying on an exemption granted as to vehicles that are ten (10) years
or older. The Defendants do not seek dismissal of Plaintiff’s claims relating to
allegations that Defendants tampered with the vehicle’s odometer. (ECF No. 8,
Motion to Dismiss 4, PgID 33.) For the reasons that follow, the motion is DENIED.
II.

LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows for the dismissal of a case

where the complaint fails to state a claim upon which relief can be granted. When
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reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe the
complaint in the light most favorable to the plaintiff, accept its allegations as true, and
draw all reasonable inferences in favor of the plaintiff.” Handy-Clay v. City of
Memphis, 695 F.3d 531, 538 (6th Cir. 2012). Sixth Circuit “precedent instructs that,
for a complaint to survive such motions, it must contain ‘either direct or inferential
allegations respecting all material elements necessary for recovery under a viable legal
theory.’” Buck v. City of Highland Park, Michigan, 733 F. App’x 248, 251 (6th Cir.
2018) (quoting Philadelphia Indem. Ins. Co. v. Youth Alive, Inc., 732 F.3d 645, 649
(6th Cir. 2013)). “[T]he complaint ‘does not need detailed factual allegations’ but
should identify ‘more than labels and conclusions.’” Casias v. Wal–Mart Stores, Inc.,
695 F.3d 428, 435 (6th Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007)). The court “need not accept as true a legal conclusion couched as a
factual allegation, or an unwarranted factual inference.” Handy-Clay, 695 F.3d at 539
(internal citations and quotation marks omitted). In other words, a plaintiff must
provide more than “formulaic recitation of the elements of a cause of action” and his
or her “[f]actual allegations must be enough to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555-56. The Sixth Circuit has reiterated that
“[t]o survive a motion to dismiss, a litigant must allege enough facts to make it
plausible that the defendant bears legal liability. The facts cannot make it merely
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possible that the defendant is liable; they must make it plausible.” Agema v. City of
Allegan, 826 F.3d 326, 331 (6th Cir. 2016) (citing Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)).
In ruling on a motion to dismiss, the Court may consider the complaint as well
as (1) documents that are referenced in the plaintiff’s complaint and that are central
to plaintiff’s claims, (2) matters of which a court may take judicial notice (3)
documents that are a matter of public record, and (4) letters that constitute decisions
of a governmental agency. Thomas v. Noder-Love, 621 F. App’x 825, 829 (6th Cir.
2015) (“Documents outside of the pleadings that may typically be incorporated
without converting the motion to dismiss into a motion for summary judgment are
public records, matters of which a court may take judicial notice, and letter decisions
of governmental agencies.”) (Internal quotation marks and citations omitted);
Armengau v. Cline, 7 F. App’x 336, 344 (6th Cir. 2001) (“We have taken a liberal
view of what matters fall within the pleadings for purposes of Rule 12(b)(6). If
referred to in a complaint and central to the claim, documents attached to a motion to
dismiss form part of the pleadings. . . . [C]ourts may also consider public records,
matters of which a court may take judicial notice, and letter decisions of governmental
agencies.”). Where the claims rely on the existence of a written agreement, and
plaintiff fails to attach the written instrument, “the defendant may introduce the
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pertinent exhibit,” which is then considered part of the pleadings. QQC, Inc. v.
Hewlett-Packard Co., 258 F. Supp. 2d 718, 721 (E.D. Mich. 2003).
III.

ANALYSIS
A.

Plaintiff’s Odometer Act Disclosure Claim

Plaintiff alleges that Defendants intentionally and knowingly tampered with the
odometer on the Vehicle sold to him in 2016. The goals of the Federal Odometer Act
are at least twofold:
In passing the Odometer Act, and its predecessor, Congress sought “(1)
to prohibit tampering with motor vehicle odometers; and (2) to provide
safeguards to protect purchasers in the sale of motor vehicles with
altered or reset odometers.” 49 U.S.C. § 32701(b). To accomplish these
express goals, the Act imposes various requirements on persons
transferring motor vehicles. In addition to flat prohibitions on tampering
with odometers, a transferor “of a motor vehicle [must] give the
transferee a written disclosure (A) of the cumulative mileage registered
by the odometer; or (B) that the mileage is unknown if the transferor
knows that the mileage registered by the odometer is incorrect.” 49
U.S.C. § 32705(a)(1). Transferors are prohibited from making false
statements in these disclosures. See 49 U.S.C. § 32705(a)(2).
Furthermore, Congress provided for criminal and civil penalties for
violations of the Act, including a private civil action. See 49 U.S.C. §§
32709-32710. Section 32710 states: “A person that violates this chapter
or a regulation prescribed or order issued under this chapter, with intent
to defraud, is liable for 3 times the actual damages or $1,500, which ever
is greater.” 49 U.S.C. § 32710(a) (emphasis added).
Nabors v. Auto Sports Unlimited, Inc.475 F. Supp. 2d 646, 649-50 (E.D. Mich. 2007).1

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The Michigan Odometer Act contains parallel provisions, as to both disclosure and
tampering, and authorizes a private damages action, upon proof of “an intent to
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Defendants move to dismiss only those claims related to Defendants’ alleged
failure to disclose the actual mileage on the Vehicle, and argue that Defendants were
exempt from the disclosure requirements because the Vehicle was more than ten (10)
years old when sold to the Plaintiff. Regulations promulgated pursuant to the Federal
Odometer Act, and the Michigan Odometer Act, provide an exemption from the
disclosure requirements of the Acts for vehicles that are over ten years old on the date
of sale. See 49 U.S.C. § 32705(a)(5) and 49 C.F.R. § 580.17(a)(3); Mich. Comp.
Laws § 257.233a(5)(c). See Beam v. Domani Motor Cars, Inc., 922 F. Supp. 2d 1338,
1343 (S.D. Fla. 2013) (“Because the car at issue in this case was older than ten years
at the time of sale, the Secretary’s regulation exempts Defendant from the disclosure
requirements, and the portion of Count I alleging a violation of Section 32705 must
be dismissed.”).2

defraud.” Mich. Comp. Laws §§ 257.233a(1), (15). For purposes of this motion to
dismiss, both the federal and state claims are resolved under the same standard. “Both
the federal and state statutes require an intent to defraud.” Woodger v. Taylor
Chevrolet, Inc., No. 14-cv-11810, 2015 WL 5026176, at *4 (E.D. Mich. Aug. 25,
2015).
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Both parties rely on Beam – Defendants for the proposition that the Vehicle is
exempt because it was more than ten years old at the time of sale and Plaintiff for the
proposition that the exemption for the age of the vehicle does not apply to the
tampering provisions of the Federal or State acts. Beam does clearly support the
proposition that the ten year age exemption “is immaterial to Plaintiff’s claim that
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There appears to be no dispute in this case regarding the age of the Vehicle and
Beam clearly supports the Defendants’ position that the age exemption would apply
here to exempt the Vehicle from the disclosure requirements of the Act. However, in
response to Defendants’ motion to dismiss, Plaintiff cites authority for the proposition
that where, as here, the seller of a vehicle that is more than 10 years old, and is
otherwise exempt from the disclosure requirements of the Act, does make a statement
regarding the mileage of the vehicle, although not required to do so, and that statement
is false, the age exemption is waived and the seller is liable for the misrepresentation
(assuming that the purchaser establishes an intent to defraud as required for any
private damages action under the Act). The court addressed this very issue in Coleman
v. Lazy Days RV Center, Inc., No. 05-cv-00930, 2006 WL 889736 (M.D. Fla. March
31, 2006), concluding that although not obligated to do so, when a seller of an age
exempt vehicle elects to disclose a mileage, it must do so accurately and truthfully:
Even though it had no legal obligation to disclose an odometer reading
to Coleman, Lazy Days did so. It seems clear to the Court that while the
statutory exemption contained in 49 C.F.R. § 580.17 does not mandate
that sellers of certain vehicles provide odometer disclosure statements to

Defendants rolled back the odometer.” (Pl.’s Resp. 6, PgID 35). “[T]he language of
the regulation exempting cars older than ten years from the disclosure requirements
clearly limits the applicability of the regulation to the disclosure requirements.”
Beam, 922 F. Supp. 2d at 1344. However, because Defendants do not seek to dismiss
Plaintiff’s claims related to tampering, the Court need not delve into that issue at this
stage.
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purchasers, when a seller does nevertheless voluntarily disclose, the
statement must be accurate and truthful. Lazy Days has not met its
burden under FED. R. CIV. P. 12(b)(6) to show that Coleman has failed
to state a claim upon which relief may be granted.
2006 WL 889736, at *4. Defendants did not file a Reply and have not addressed this
issue at all in their briefing. Therefore, Defendants have not demonstrated that they
are entitled to dismissal of Plaintiff’s disclosure claim at this stage of the proceedings.
Defendants will not be precluded from raising this issue at a later stage of the
proceedings.
B.

Defendant Admiralty Cannot Proceed Without Counsel

It is well established that a corporate defendant must be represented by an
attorney in federal court proceedings and cannot be represented by one of its officers.
WB Music Corp. v. Port City Cruise Line, Inc., No. 09-cv-742, 2009 WL 3066663, at
*1 (W.D. Mich. Sept. 22, 2009) (“‘It has been the law for the better part of two
centuries . . . that a corporation may in appear in court only through licensed
counsel.’”) (quoting Rowland v. Calif. Men’s Colony, 506 U.S. 194, 201-02 (1993))
(collecting cases). Nor is there any authority permitting this Court to appoint counsel
for Admiralty in this civil case. Id. (“The defendants are further advised that there is
no authority allowing this court to appoint counsel for a corporation in a civil
matter.”). It is also well established that this Court has the power to sua sponte direct
the clerk of the court to enter a default against a corporation that refuses to obtain
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counsel and the Plaintiff may subsequently move for a default judgment. Flagstar
Bank, FSB v. A-1 Mortgage Services, Inc., No. 10-cv-11219, 2011 WL 282427, at *23 (E.D. Mich. Jan. 25, 2011) (court entered default following corporate defendant’s
failure to obtain counsel after being warned that a failure to obtain counsel would
result in the entry of a default and subsequently granted plaintiff’s motion for default
judgment).
This Order acts as this Court’s notice to Defendant Admiralty that Admiralty
must obtain new counsel who must file an appearance in this Court on or before April
22, 2019, or a default will be entered.
IV.

CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss (ECF No. 8) is

DENIED.
Further, Defendant Admiralty is ORDERED to obtain counsel who must file
an appearance in this Court on or before April 22, 2019, or a default will be entered
against Admiralty.
IT IS SO ORDERED.

s/Paul D. Borman
PAUL D. BORMAN
UNITED STATES DISTRICT JUDGE
Dated: March 22, 2019
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