Pierre v. Planet Automotive, Inc. et al

Filing 72

MEMORANDUM & ORDER DECLINING TO ADOPT REPORT AND RECOMMENDATION. For the reasons set forth in the attached Memorandum and Order, the Court declines to adopt 67 Magistrate Judge James Orenstein's report and recommendation. The Court denies Suzuki's motion for summary judgment as to Plaintiffs TILA claim and state law claims. The Court grants Suzuki's motion for summary judgment as to Plaintiff's MMWA claim. Ordered by Judge Margo K. Brodie on 6/21/2016. (Reyneri, Rafael)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------------------------------GHISLAINE PIERRE,
Plaintiff,
v.

MEMORANDUM & ORDER
13-CV-675 (MKB) (JO)

PLANET AUTOMOTIVE, INC. and AMERICAN
SUZUKI FINANCIAL SERVICES,
Defendants.
--------------------------------------------------------------MARGO K. BRODIE, United States District Judge:
Plaintiff Ghislaine Pierre filed the above-captioned action against Defendants Planet
Automotive, Inc. (“Planet”) and American Suzuki Financial Services (“Suzuki”) on February 6,
2013, alleging violations of the Truth in Lending Act (“TILA”) and the Magnuson–Moss
Consumer Warranty Act (“MMWA”), and asserting claims of common law fraud and false
advertising under New York state law. (Compl. ¶¶ 49–86, Docket Entry No. 1.) Plaintiff’s
claims arise from her purchase of a vehicle from Planet, a car dealership, and from Suzuki’s
financing of that purchase. On December 18, 2014, Suzuki moved for summary judgment.1
(Suzuki Mot. for Summ. J. (“Suziki Mot”), Docket Entry No. 41.) On February 4, 2015, the
Court referred Suzuki’s motion to Magistrate Judge James Orenstein for a report and
recommendation. (Order dated Feb. 4, 2015.) By report and recommendation dated September
11, 2015 (“R&R”), Judge Orenstein recommended that the Court dismiss Plaintiff’s TILA and
MMWA claims against Suzuki and decline to exercise supplemental jurisdiction over Plaintiff’s
common law fraud and false advertising claims. (R&R 1, Docket Entry No. 67.) Plaintiff timely

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Planet did not move for summary judgment.

filed objections to the R&R. (Pl. Objs. to R&R (“Pl. Objs.”), Docket Entry No. 69.) By
Memorandum and Order dated September 30, 2015 (the “September 2015 Order”), the Court
declined to adopt the R&R as to the Court’s exercise of supplemental jurisdiction and reserved
decision as to whether to adopt the R&R regarding the merits of Plaintiff’s TILA and MMWA
claims against Suzuki. Pierre v. Planet Auto., Inc., No. 13-CV-675, 2015 WL 5793319, at *1
(E.D.N.Y. Sept. 30, 2015). For the reasons discussed below, the Court denies Suzuki’s motion
for summary judgment as to Plaintiff’s TILA claim and state law claims. The Court grants
Suzuki’s motion for summary judgment as to Plaintiff’s MMWA claim.
I.

Background
On or about May 5, 2012, Plaintiff purchased a vehicle from Planet. (Compl. ¶ 11;

Pl. Revised Rule 56.1 Counter-Statement of Material Facts in Controversy (“Pl. 56.1”) ¶ 1,2
Docket Entry No. 64; Suzuki Revised Rule 56.1 Statement in Support of Mot. (“Suzuki
56.1”) ¶ 1, Docket Entry No. 63.) Plaintiff and Planet agreed on a price of $25,629.00.
(Pl. 56.1 ¶ 1; Decl. of Kinney Galani (“Galani Decl.”) ¶ 2(d), Docket Entry Nos. 43-1–43-4;
Purchase Order 1, annexed to Suzuki 56.1 as Ex. A.) Plaintiff signed a Retail Installment
Contract (“RIC”), which lists the vehicle’s cash price as $33,877.89, or $31,123.25 without sales
tax, and includes various disclosures required by TILA. (RIC 1, annexed to Suzuki Mot. as
Ex A.) Plaintiff contends that in order to secure financing for the purchase, she was required to
“buy down” the interest rate of her loan by purchasing additional products for the car, which
unlawfully increased the price of the car. (Pl. 56.1 ¶ 1.) According to Plaintiff, the cost of the

2

Plaintiff’s revised Rule 56.1 statement consists of eight non-sequentially numbered
paragraphs. The Court refers to the sequential numbering of each paragraph.
2

items she was required to purchase as a condition of her financing were included in the cash
price listed on the RIC rather than disclosed separately as finance charges. (Pl. 56.1 ¶ 2.)
Plaintiff’s loan was subsequently assigned to Suzuki. (Pl. 56.1 ¶ 3; Suzuki 56.1 ¶ 3.)
Plaintiff contends that six specific documents that were part of the assignment of the loan to
Suzuki reflect Planet’s illegal increase in the price of the car and also reflect inaccurate TILA
disclosures. (Pl. 56.1 ¶¶ 3–8.) Plaintiff identifies these documents as: (1) a purchase order with
a sales price of $25,629, a subtotal of $31,038.25 with certain fees and extra features, and a total
price of $34,129.39, including sales tax and more fees, (Purchase Order 1); (2) a sales invoice
with a sales price of $31,038.25 and a total price with taxes and fees of $34,129.39, (Sales
Invoice 1, annexed to Decl. of Daniel Schlanger (“Schlanger Decl.”) as Ex. A, Docket Entry
No. 42); (3) a theft deterrent product certificate with a vehicle purchase price of $25,629 (the
“Theft Deterrent Certificate”), (Theft Deterrent Cert. 1, annexed to Schlanger Decl. as Ex. E);
(4) a “GWC Warranty” contract application with a vehicle price of $25,629 (the “Warranty
Application”), (Warranty Appl. 1, annexed to Schlanger Decl. as Ex. F); (5) a manufacturer’s
invoice with a retail amount of $27,549 and a total retail amount with various upgrades totaling
$29,069, (Mfr. Invoice 1, annexed to Schlanger Decl. as Ex. C); and (6) the RIC, listing a cash
price of $33,877.89 or $31,123.25 pre-sales tax, (RIC 1).
II. Discussion
a.

Standards of review
i.

Report and recommendation

A district court reviewing a magistrate judge’s recommended ruling “may accept, reject,
or modify, in whole or in part, the findings or recommendations made by the magistrate judge.”
28 U.S.C. § 636(b)(1)(C). When a party submits a timely objection to a report and

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recommendation, the district court reviews the parts of the report and recommendation to which
the party objected under a de novo standard of review. Id.; see also United States v. Romano,
794 F.3d 317, 340 (2d Cir. 2015). The district court may adopt those portions of the
recommended ruling to which no timely objections have been made, provided no clear error is
apparent from the face of the record. John Hancock Life Ins. Co. v. Neuman, No. 15-CV-1358,
2015 WL 7459920, at *1 (E.D.N.Y. Nov. 24, 2015).
ii.

Summary judgment

Summary judgment is proper only when, construing the evidence in the light most
favorable to the non-movant, “there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Cortes v. MTA New
York City Transit, 802 F.3d 226, 230 (2d Cir. 2015); Tolbert v. Smith, 790 F.3d 427, 434 (2d Cir.
2015); Zann Kwan v. Andalex Grp. LLC, 737 F.3d 834, 843 (2d Cir. 2013). The role of the court
“is not to resolve disputed questions of fact but only to determine whether, as to any material
issue, a genuine factual dispute exists.” Rogoz v. City of Hartford, 796 F.3d 236, 245 (2d Cir.
2015) (first quoting Kaytor v. Elec. Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010); and then citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50 (1986)). A genuine issue of fact exists
when there is sufficient “evidence on which the jury could reasonably find for the plaintiff.”
Anderson, 477 U.S. at 252. The “mere existence of a scintilla of evidence” is not sufficient to
defeat summary judgment. Id. The court’s function is to decide “whether, after resolving all
ambiguities and drawing all inferences in favor of the non-moving party, a rational juror could
find in favor of that party.” Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir. 2000).
b.

TILA claim

Judge Orenstein recommended that the Court dismiss Plaintiff’s TILA claim against

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Suzuki. (R&R 8.) He determined that, as an assignee, Suzuki was not liable under TILA
because there was no TILA violation apparent on the face of the RIC. (Id.) Plaintiff argues in
opposition to the adoption of the R&R that there is a genuine dispute of material fact regarding
whether Suzuki should have known, by comparing the RIC to the other assigned documents, that
there was a TILA violation because “the amount financed, APR and/or finance charge listed on
[the] RIC [were] not clear, conspicuous and materially accurate.” (Pl. Objs. 3.)
“TILA seeks to ‘protect . . . consumer[s] against inaccurate and unfair credit billing and
credit card practices’ and promote ‘the informed use of credit’ by ‘assur[ing] a meaningful
disclosure’ of credit terms.” Vincent v. The Money Store, 736 F.3d 88, 105 (2d Cir. 2013)
(alterations in original) (quoting 15 U.S.C. § 1601(a)). “Together with its implementing
Regulation Z, and under specified circumstances, TILA requires disclosure by the ‘creditor’ of,
inter alia, the ‘amount financed,’ the ‘finance charge,’ and the ‘number, amount, and due dates
or period of payments scheduled to repay the total of payments,’ as well as rescission rights.”
Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473, 491 (2d Cir. 2014) (internal quotation
marks omitted) (first quoting 15 U.S.C. § 1638(a); then citing 15 U.S.C. § 1635; and then citing
12 C.F.R. § 226.23(b)(1)); see also Midouin v. Downey Sav. & Loan Ass’n, F.A., 834 F. Supp. 2d
95, 102 (E.D.N.Y. 2011) (“In general, TILA requires creditors to provide borrowers clear,
conspicuous, and accurate disclosures of the loan terms and other material information.” (citing
15 U.S.C. § 1632)). “In order to be considered a finance charge, a charge must be incident to, or
a condition of, the extension of credit.” Pechinski v. Astoria Fed. Sav. & Loan Ass’n, 345 F.3d
78, 80 (2d Cir. 2003) (citing 15 U.S.C. § 1605(a)); see also Poulin v. Balise Auto Sales, Inc., 647
F.3d 36, 39 (2d Cir. 2011) (“Based on the language of 15 U.S.C. § 1605(a), Regulation Z, and
the official staff interpretation, courts have concluded that a creditor is obligated under

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§ 1638(a)(3) to disclose as a finance charge any costs charged to customers buying on credit, but
not charged to customers buying with cash, in comparable transactions.”).
TILA also requires a “lender or creditor to provide ‘a written itemization of the amount
financed,’ including ‘each amount that is or will be paid to third persons by the creditor on the
consumer’s behalf, together with an identification of or reference to the third person.’” Gibson v.
Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 285 (7th Cir. 1997) (alteration omitted) (quoting
15 U.S.C. § 1638(a)(2)(B)(iii)); see also Jones v. Bill Heard Chevrolet, Inc., 212 F.3d 1356,
1360 (11th Cir. 2000) (“The language of TILA’s section 1638(a)(2)(B)(iii) is clear and
straightforward. Section 1638(a)(2)(B)(iii) explicitly requires that creditors ‘shall disclose’ in
writing ‘each amount that is . . . paid to third persons by the creditor on the consumer’s behalf,
together with an identification of . . . the third person’ . . . .” (first and second alterations in
original) (quoting 15 U.S.C. § 1638(a)(2)(B)(iii))), overruled on other grounds by Turner v.
Beneficial Corp., 242 F.3d 1023 (11th Cir. 2001).3 Although federal courts “have not been
pressed to clarify what types of payments are those made ‘on the consumer’s behalf,’” the Sixth
Circuit has held that a “payment is made to a third party ‘on the consumer’s behalf’ when it
creates a contractual obligation between the third party and the consumer.” Cornist v. B.J.T.
Auto Sales, Inc., 272 F.3d 322, 330 (6th Cir. 2001); see also Ramadan v. Chase Manhattan
Corp., 156 F.3d 499, 500 (3d Cir. 1998) (stating that 15 U.S.C. § 1638(a)(2)(B)(iii) mandated
that the retail installment contract at issue “itemize[] the $998 charge for the warranty as being
paid to a third party”).

3

“District courts in the Second Circuit have relied on authorities in other circuits with
regards to claims arising under [TILA] due to the general absence of applicable decisions in this
Circuit.” Diaz v. Paragon Motors of Woodside, Inc., 424 F. Supp. 2d 519, 543 n.17 (E.D.N.Y.
2006) (citing Ringenback v. Crabtree Cadillac–Oldsmobile, Inc., 99 F. Supp. 2d 199 (D. Conn.
2000)).
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The statute “imposes general liability only on creditors and greatly circumscribes the
liability of assignees.” Vincent, 736 F.3d at 105 (citing 15 U.S.C. §§ 1640(a), 1641(e)). An
assignee is liable for a TILA violation “only if the violation for which such action or proceeding
is brought is apparent on the face of the disclosure statement.” 15 U.S.C. § 1641(a); Vincent,
736 F.3d at 107 (quoting Taylor v. Quality Hyundai, Inc., 150 F.3d 689, 692 (7th Cir. 1998)).
“[A] violation apparent on the face of the disclosure statement includes, but is not limited to . . .
a disclosure which can be determined to be incomplete or inaccurate from the face of the
disclosure statement or other documents assigned . . . .” 15 U.S.C. § 1641(a).
The Second Circuit has not addressed when a violation of TILA is apparent on the face of
the disclosure statement based on discrepancies between the disclosure statement and “other
documents assigned.” See Vincent, 736 F.3d at 107 (discussing the legislative history regarding
TILA’s limitation on assignee liability and noting that “[w]hat types of violations are covered is
unclear” (quoting S. Rep. No. 96-73, at 18 (1979), 1980 U.S.C.C.A.N. 280, 296)). Other circuit
courts, including the Seventh Circuit, have examined the issue. See Taylor, 150 F.3d 689. In
Taylor, cited by the Second Circuit in Vincent, the Seventh Circuit held that “[o]nly violations
that a reasonable person can spot on the face of the disclosure statement or other assigned
documents will make the assignee liable under the TILA.” Id. at 694. Thus, where the
disclosure statement or other loan documents fail to include required disclosures or are obviously
incorrect, courts have found assignees liable for violations of TILA. See, e.g., Marquette v. Bank
of Am., N.A, No. 13-CV-2719, 2015 WL 461852, at *8 (S.D. Cal. Feb. 4, 2015) (holding
assignee liable for violation of TILA where the notice of the right to cancel a loan listed
“incorrect dates and blank lines for the date of expiration of the right to cancel”); LeFoll v. Key
Hyundai of Manchester LLC, 829 F. Supp. 2d 44, 47 (D. Conn. 2011) (holding assignee liable

7

for violation of TILA where the payment due date of a loan was “not clear or conspicuous” on
the disclosure statement); Vaden v. IndyMac Bank, F.S.B., No. 02-CV-1150, 2003 WL
22136306, at *3 (N.D. Ill. Sept. 16, 2003) (holding assignee liable for violation of TILA where
the disclosure statement did not properly disclose the security interest by failing to list the
address of the property); Shepeard v. Quality Siding & Window Factory, Inc., 730 F. Supp. 1295,
1302 (D. Del. 1990) (holding assignee liable for violation of TILA where the credit contract was
missing several required terms, including “the amount of [the] plaintiff’s monthly payments” and
the security interest). In addition, where on the face of the disclosure statement and other
assigned documents there are discrepancies that reveal a TILA violation, courts have found
TILA assignee liability. See Nunez v. Aurora Loan Servs., No. 11-CV-1121, 2011 WL 5078778,
at *4 (S.D. Cal. Oct. 25, 2011) (finding that a discrepancy between disclosure statement and loan
document regarding interest rate “was apparent on the face of the[] two documents,” resulting in
liability to the assignee); In re Washington, No. 04-CV-30492, 2007 WL 846658, at *6 (E.D. Pa.
Mar. 19, 2007) (finding that a discrepancy between disclosure statement and mortgage note
regarding the non-disclosure of the security interest “arguably could have [been] discovered” by
comparing the documents, resulting in liability to the assignee); Brown v. Mortgagestar, Inc.,
194 F. Supp. 2d 473, 477 (S.D.W. Va. 2002) (finding that discrepancies between disclosure
statement, deed of trust, and note regarding principal amount and APR were “apparent on the
face of the documents . . . sufficient to hold the assignee liable for TILA violations”); England v.
MG Investments, Inc., 93 F. Supp. 2d 718, 725 (S.D.W. Va. 2000) (finding that discrepancies
between the note and the disclosure statement regarding principal amount, APR, and finance
charge “may be sufficient to trigger assignee liability under this provision”).
Relying on Taylor and other circuit court decisions, Judge Orenstein noted that, in

8

general, “inconsistencies between various assigned documents” are not sufficient to trigger
assignee liability under TILA. (R&R 6–7 (citing Ramadan v. Chase Manhattan Corp., 229 F.3d
194, 198 (3d Cir. 2000); Green v. Levis Motors, Inc., 179 F.3d 286, 295 (5th Cir. 1999); Ellis v.
GMAC, 160 F.3d 703, 709 (11th Cir. 1998); Taylor v. Quality Hyundai, Inc., 150 F.3d 689, 694
(7th Cir. 1998)).)4 However, in all of these cases, the plaintiffs relied on documents that were
not assigned, and therefore failed to establish any TILA violations that were apparent “from the
face of the disclosure statement or other documents assigned.” See Taylor, 150 F.3d at 694
(relying on “common industry practices”); Ramadan, 229 F.3d at 198 (relying on documents
“transferred but not assigned”); Green, 179 F.3d at 295 (relying on publicly available
information); Ellis, 160 F.3d at 709 (relying on “related loan documents”).
Judge Orenstein concluded that, assuming TILA assignee liability may be established
based on inconsistencies between loan documents, the various assigned documents “are not so
inconsistent as to make it apparent to an assignee that any discrepancies are the result of a
violation of [Plaintiff’s] rights to truthful financing disclosures under TILA.” (R&R 5.) In
opposing the R&R, Plaintiff argues that “Suzuki should have known . . . that the amount

4

Taylor, Ramadan, Green and Ellis reaffirm the general principles that, when
determining whether a TILA violation is apparent on the face of the disclosure statement, only
the disclosure statement and other documents assigned can be considered by the court, and an
assignee has no duty to inquire. See Taylor v. Quality Hyundai, Inc., 150 F.3d 689, 694 (7th Cir.
1998) (holding that “§ 1641(a) does not impose a duty of additional inquiry on assignees” and
rejecting the plaintiffs’ argument that “the apparentness (or lack thereof) of a violation should be
ascertained” by taking into account “common industry practices”); see also Ramadan v. Chase
Manhattan Corp., 229 F.3d 194, 198 (3d Cir. 2000) (holding that documents “transferred but not
assigned” may not be considered when determining whether a violation is apparent on “the face
of the disclosure statement or other documents assigned” (citing Green v. Levis Motors, Inc., 179
F.3d 286, 295 (5th Cir. 1999))); Green, 179 F.3d at 295 (concluding that publicly available
information, such as state license fee tables, did not qualify as “documents assigned” and noting
that the “only ‘assigned’ document that the [plaintiffs] point[ed] to [wa]s the RIC”); Ellis v.
GMAC, 160 F.3d 703, 709 (11th Cir. 1998) (holding that the plaintiffs could not rely on “related
loan documents” in order to establish assignee liability).
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financed, APR and/or finance charge listed on [Plaintiff’s] RIC was not clear, conspicuous and
materially accurate” by comparing the RIC with any of the following four sets of documents, all
of which were assigned to Suzuki: (1) the sales invoice; (2) the purchase order; (3) the
manufacturer’s invoice; or (4) the Theft Deterrent Certificate and the Warranty Application. (Pl.
Objs. 3–4.) The Court considers each below.
i.

Sales invoice

The sales invoice lists the following figures: a sale price of $31,038.25, a license and title
fee of $239.00, a tire disposal fee of $12.50, a sales tax of $2754.64, an inspection fee of $10.00,
a dealer’s optional fee “for processing application for registration and/or certification of title” of
$75.00, a total price of $34,129.39, a down payment of $9500.00, and an amount financed of
$24,629.39. (Sales Invoice 1.) The RIC lists a total cash price of $33,877.89, which amount
includes a sales tax of $2754.64, resulting in a cash price of $31,123.25 without sales tax; a
down payment of $9500.00; a license and registration fee of $239.00; a tire fee of $12.50; and an
amount financed of $24,629.39. (RIC 1–2.) Thus, both documents identify the same amount
financed, but the RIC’s cash price, without the sales tax, and the sales invoice’s sale price differ
by $85.5
Plaintiff argues that comparing the RIC and the sales invoice “provides demonstrable
proof that the RIC materially misstates the amount to be financed” because the $75 dealer’s
optional fee was incorporated into the RIC’s cash price rather than disclosed as a third-party
charge, as required by TILA. (Pl. Objs. 5–7.) Plaintiff contends that the dealer’s fee was not a

5

Plaintiff suggests that this difference can be explained by the inclusion of the $10
inspection fee and the $75 dealer’s fee in the cash price listed on the RIC. (Pl. Objs. 5.) Plaintiff
alleges that these additional costs should have been separately itemized on the RIC. (Id. at 5–6.)

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“bona fide government fee[],” which “can permissibly be excluded from the finance [charge],”
but rather was a third-party charge. 6 (Pl. Objs. 5–6.)
The RIC and the sales invoice are not sufficiently inconsistent as to the sale price to make
it apparent to Suzuki that the $85 discrepancy between the two documents was a dealer’s
optional fee that was paid to a third party on Plaintiff’s behalf and therefore required to be
separately itemized. The sales invoice specifically states that the dealer’s optional fee was “for
processing application for registration and/or certificate of title” and notes that the consumer
could “avoid this fee by submitting [her] own application for registration and/or certificate of
title.” (Sales Invoice 1.) Although the dealer’s fee could have been paid to a third party to
process the application, this is not apparent from the face of the sales invoice. Thus, the sales
invoice did not put Suzuki on notice of any potential TILA violation.
ii.

Purchase order

The purchase order lists the following figures: a sales price of $25,629.00, dealer
acquisition fees of $895, a bronze package of $3749.25, a destination fee of $765, a subtotal of
$31,038.25, a sales tax of $2767.14, a dealer’s optional fee of $75.00,7 title fees of $239.00, an
inspection fee of $10.00, a total price of $34,129.39, a down payment of $9,500.00, and an
amount financed of $24,629.39. (Purchase Order 1.) The amount financed listed on the

6

Plaintiff also appears to argue that even if the dealer’s fee was a government fee and
therefore not required to be disclosed on the RIC, the $75 dealer’s fee was an “upcharge[]” and
an “overcharge” that had to be disclosed as a finance charge on the RIC. (Pl. Objs. 6–7.)
Plaintiff’s argument is not supported by the record. The sales invoice explicitly states that the
“dealer’s application processing fee is not a New York State or Department of Motor Vehicles
fee.” (Sales Invoice 1.) Therefore, an assignee reviewing the sales invoice would have no
reason to believe that the fee was a government fee or that Planet overcharged Plaintiff.
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The purchase order, like the sales invoice, states that this fee is “for processing
application for registration and/or certificate of title” and “is not a New York State or
Department of Motor Vehicles fee.” (Purchase Order 1.)
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purchase order is consistent with the amount financed on the RIC.
Plaintiff asserts that comparing the RIC and the purchase order “demonstrates that the
RIC, on its face, violates TILA.” (Pl. Objs. 9.) Plaintiff argues that the $3749.25 cost of the
bronze package listed on the purchase order included a third-party vehicle warranty and a
third-party anti-theft insurance. (Id.) Plaintiff further argues that, because the vehicle warranty
and anti-theft insurance are amounts that must be paid to third parties, the cost of the bronze
package should have been separately itemized on the RIC rather than incorporated into the cash
price listed on the RIC. (Id.)
Because there is nothing on the face of the purchase order to suggest that the bronze
package included a third-party vehicle warranty or a third-party anti-theft insurance, it is not
apparent from comparing the RIC and the purchase order that these documents violated TILA by
failing to separately itemize third-party services. The purchase order states “BRONZE
PKG/ETCH/ET” and makes no reference to a third-party vehicle warranty or a third-party
anti-theft insurance. (See Purchase Order 1.) Moreover, although the Warranty Application and
the Theft Deterrent Certificate were documents assigned to Suzuki, neither refers to a “bronze
package” or identifies a cost for the services. (See Warranty Appl. 1; Theft Deterrent Cert. 1.)
Thus, Suzuki could not have determined that the Warranty Application or the Theft Deterrent
Certificate was part of the bronze package or that the cost associated with these services totaled
$3749.25, the cost of the bronze package. Suzuki therefore could not have determined from
reviewing and comparing the assigned documents that the bronze package consisted of thirdparty services that should have been itemized on the RIC.
iii. Manufacturer’s invoice
The manufacturer’s invoice lists the following figures: a retail amount of $27,549.00 and

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a total retail amount of $29,069.00. (Mfr. Invoice 1.) Plaintiff argues that because the retail
amount and the total retail amount listed on the manufacturer’s invoice are both lower than the
RIC’s cash price, this is “highly suggestive of hidden/undisclosed additional charges” and is a
“red flag that would put a reasonable assignee on notice that the disclosures hid significant
charges.” (Pl. Objs. 7.)
As Plaintiff concedes, comparing the cash price of the car listed on the RIC, $31,123.25,
with the $27,549.00 retail amount and the $29,069.00 total retail amount listed on the
manufacturer’s invoice does not reveal a TILA violation because the fact that a vehicle sells for a
price higher than the manufacturer’s suggested price, “standing alone,” is insufficient to “trigger
assignee liability.” (Id.) Plaintiff argues that the fact that a vehicle sells for a price higher than
the manufacturer’s suggested price is a “red flag,” however, requiring Suzuki to inquire into this
discrepancy would be contrary to the requirements of section 1641(a) of TILA. See Taylor,
150 F.3d at 694 (“[Section] 1641(a) does not impose a duty of additional inquiry on assignees.”).
Thus, Suzuki was not put on notice of a potential TILA violation based on the RIC’s cash price,
the retail amount and the total retail amount listed on the manufacturer’s invoice.
iv. Theft Deterrent Certificate and Warranty Application
The Theft Deterrent Certificate and the Warranty Application both list the vehicle price
as $25,629.00, (GWC Appl. 1; Theft Deterrent Cert. 1), compared to the RIC cash price of
$31,123.25. Plaintiff argues that by comparing these documents with the RIC, Suzuki should
have been on notice that the RIC was not accurate because the price listed on each of these
documents is “irreconcilable with the figures provided in the RIC” and because these documents
relate to third-party services that should have been itemized on the RIC. (Pl. Objs. 8.)
The difference in price between the $31,123.25 cash price listed on the RIC and the

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$25,629.00 price listed on the Theft Deterrent Certificate and the Warranty Application would
not have put Suzuki on notice that the RIC was not in compliance with TILA. As discussed
above, the purchase order details the various fees, optional features and sales tax that increased
the cash price listed on the RIC.
However, Plaintiff has raised a genuine issue of material fact as to whether it is apparent
from comparing the RIC with these documents that the Theft Deterrent Certificate and the
Warranty Application should have been listed on the RIC as third-party charges. The Theft
Deterrent Certificate and the Warranty Application, both documents assigned to Suzuki, refer to
third-party services. The Theft Deterrent Certificate states that it is a contract for an anti-theft
insurance policy provided by the “Virginia Surety Company.” (Theft Deterrent Cert. 1.) The
Warranty Application states that it is a contract for a vehicle warranty provided by the “GWC
Warranty Corporation.” (GWC Appl. 1). However, these third-party services are not listed on
the RIC. (See RIC 1–2 (listing under “Other Charges Including Amounts Paid to Others on Your
Behalf” only a $239.00 government license fee and a $12.50 tire management fee).) Construing
the evidence in the light most favorable to Plaintiff, based on the face of the RIC, the Theft
Deterrent Certificate and the Warranty Application, a reasonable jury could conclude that Suzuki
should have noticed that the RIC failed to disclose these third-party services, making it
inaccurate and in violation of 15 U.S.C. § 1638(a)(2)(B)(iii). See Ramadan, 156 F.3d at 500
(stating that a warranty paid to a third party had to be itemized on the retail installment contract
(citing 15 U.S.C. § 1638(a)(2)(B)(iii))). The Court therefore denies Suzuki’s motion for
summary judgment as to Plaintiff’s TILA claim as it relates to the failure to separately itemize
the Theft Deterrent Certificate and the Warranty Application on the RIC.

14

c.

Magnuson–Moss Warranty Act claim

Judge Orenstein recommended that the Court dismiss Plaintiff’s MMWA claim for lack
of subject-matter jurisdiction because Plaintiff failed to satisfy the MMWA’s
amount-in-controversy requirement. 8 (R&R 9–10.) Judge Orenstein further held that the
MMWA’s amount-in-controversy requirement implicitly negated the Court’s authority to
exercise supplemental jurisdiction over Plaintiff’s MMWA claim, and he therefore
recommended that the Court decline to exercise supplemental jurisdiction over Plaintiff’s
MMWA claim. (Id.) Plaintiff argues that, like the majority of courts to consider whether the
MMWA permits the exercise of supplemental jurisdiction, the Court should find that it does. (Pl.
Objs. 16.)
“In order to improve the adequacy of information available to consumers, prevent
deception, and improve competition in the marketing of consumer products,” the MMWA
requires warrantors to “fully and conspicuously disclose in simple and readily understood
language the terms and conditions” of written warranties. 15 U.S.C. § 2302(a); Wilbur v. Toyota
Motor Sales, U.S.A., Inc., 86 F.3d 23, 26 (2d Cir. 1996); Stark v. Maserati N. Am., Inc.,
No. 10-CV-1243, 2010 WL 4916981, at *2 (E.D.N.Y. Oct. 13, 2010); see also Motor Vehicle
Mfrs. Ass’n of U.S., Inc. v. Abrams, 899 F.2d 1315, 1317 (2d Cir. 1990) (“The thrust of the Act is

8

The MMWA provides that “[n]o claim shall be cognizable in a suit brought under” the
statute “if the amount in controversy of any individual claim is less than the sum or value of $25”
or “if the amount in controversy” of “all claims to be determined in this suit” is “less than the
sum or value of $50,000 (exclusive of interests and costs).” 15 U.S.C. § 2310(d)(3). Plaintiff’s
actual and statutory damages do not meet the required amount-in-controversy without including
her punitive damages. (R&R 9.) Judge Orenstein concluded that the MMWA does not permit
the inclusion of punitive damages in order to meet the amount-in-controversy requirement. (Id.)
Because the Court finds that it may exercise supplemental jurisdiction over Plaintiff’s MMWA
claim even if Plaintiff cannot meet the amount-in-controversy requirement, the Court declines to
determine whether Plaintiff may include punitive damages in calculating the amount in
controversy.
15

disclosure. . . . The Act does not require that a warranty be provided, but mandates that, if one is
given, it not be misleading.” (citing 15 U.S.C. § 2302(a))).
i.

Subject-matter jurisdiction

“Jurisdiction under Magnuson–Moss is concurrent with the state courts, but federal court
jurisdiction is restricted to those suits that can satisfy two relevant elements (1) the amount in
controversy of any individual claim must be at least $25; and (2) the overall amount in
controversy must be at least $50,000, excluding interest and costs.” Wood v. Maguire Auto.,
LLC, 508 F. App’x 65, 65 (2d Cir. 2013) (citing 15 U.S.C. § 2310(d)(3)); see also Abraham v.
Volkswagen of Am., Inc., 795 F.2d 238, 241 (2d Cir. 1986). The issue raised by Plaintiff’s claim
is whether the Court can exercise supplemental jurisdiction, assuming Plaintiff cannot meet the
amount in controversy requirement.
1.

The Court can exercise supplemental jurisdiction

“Under 28 U.S.C. § 1367(a), district courts ‘shall have supplemental jurisdiction over all
other claims that are so related to claims in the action within such original jurisdiction that they
form part of the same case or controversy.’” Montefiore Med. Ctr. v. Teamsters Local 272,
642 F.3d 321, 332 (2d Cir. 2011) (quoting 28 U.S.C. § 1367(a)). However, “[i]n order to
exercise supplemental jurisdiction, a federal court must first have before it a claim sufficient to
confer subject matter jurisdiction.” Id. (citing United Mine Workers of Am. v. Gibbs, 383 U.S.
715, 725 (1966)). In addition, the claim conferring subject matter jurisdiction and the
supplemental claim “must stem from the same ‘common nucleus of operative fact’; in other
words, they must be such that the plaintiff ‘would ordinarily be expected to try them all in one
judicial proceeding.’” Id. (quoting Gibbs, 383 U.S. at 725).
The Second Circuit has not considered whether the MMWA’s amount-in-controversy

16

requirement prevents district courts from exercising supplemental jurisdiction over MMWA
claims that do not meet the required amount in controversy. The Seventh and Third Circuit
Courts of Appeal have considered the issue, and both concluded that district courts may exercise
supplemental jurisdiction over MMWA claims that do not meet the amount-in-controversy
requirement. See Burzlaff v. Thoroughbred Motorsports, Inc., 758 F.3d 841, 845 (7th Cir. 2014)
(stating that the district court could “properly exercise supplemental jurisdiction over the
Magnuson–Moss Act claim” (first citing 28 U.S.C. § 1367(a); and then citing Voelker v. Porsche
Cars North America, Inc., 353 F.3d 516, 522 (7th Cir. 2003))); Suber v. Chrysler Corp., 104
F.3d 578, 589 (3d Cir. 1997) (“[T]he [district] court can exercise supplemental jurisdiction over
the Magnuson–Moss Act claim.” (citing 28 U.S.C. § 1367(a))), as amended (Feb. 18, 1997).
Several district courts have considered the issue and have reached differing results.
Many of the district courts that have considered this issue have concluded that federal
courts can exercise supplemental jurisdiction over such claims. See Chambers v. King Buick
GMC, LLC, 43 F. Supp. 3d 575, 614 (D. Md. 2014) (citing Barnes v. West, Inc., 249 F. Supp. 2d
737, 739 (E.D. Va. 2003)); Johansson v. Cent. Garden & Pet Co., 804 F. Supp. 2d 257, 265 n.4
(D.N.J. 2011) (citing Chavis v. Fid. Warranty Servs., Inc., 415 F. Supp. 2d 620, 623 (D.S.C.
2006)); McWhorter v. Elsea, Inc., No. 00-CV-473, 2007 WL 1101249, at *10 (S.D. Ohio Apr.
11, 2007) (first citing Chavis, 415 F. Supp. 2d at 624–25; and then citing Barnes,
249 F. Supp. 2d at 739); Diaz v. Paragon Motors of Woodside, Inc., 424 F. Supp. 2d 519, 527
(E.D.N.Y. 2006); Chavis, 415 F. Supp. 2d at 623–25 & n.3 (collecting cases); Wetzel v. Am.
Motors Corp., 693 F. Supp. 246, 251 (E.D. Pa. 1988); Seybold v. Francis P. Dean, Inc., 628 F.
Supp. 912, 916–17 (W.D. Pa. 1986). These courts have reasoned that, although Congress is
generally free to limit the jurisdiction of federal courts, “any such limitation must be imposed by

17

a clear expression of Congressional intent.” Wetzel, 693 F. Supp. at 250 (citing Frost v. Wenie,
157 U.S. 46, 58 (1895)). Relying on the statute’s legislative history, which noted that “[t]he
purpose of [the MMWA’s] jurisdictional provisions is to avoid trivial or insignificant actions
being brought as class actions in the federal courts,” several of these courts have concluded that
the MMWA’s amount-in-controversy requirement does not express a “congressional intent
opposing the exercise of pendent jurisdiction.” Seybold, 628 F. Supp. at 916 (quoting H.R. Rep.
No. 93-1107 (1974), 1974 U.S.C.C.A.N. 7702, 7724); see also Wetzel, 693 F. Supp. at 251
(citing H.R. Rep. No. 93-1107 (1974), 1974 U.S.C.C.A.N. 7702, 7724). The court in Seybold
explained that, because Congress’ purpose in enacting the amount-in-controversy requirement
was to avoid “trivial” class actions being brought in federal court, Congress’ intent would “not
be frustrated” by the court exercising supplemental jurisdiction over an MMWA claim where an
action “was already pending before the court.” Seybold, 628 F. Supp. at 916. The court in
Seybold noted that “no additional evidence would be required due to the addition of this claim”
and, therefore, “[j]oinder of this claim [would] not lengthen the trial nor affect th[e] court’s
ability to function efficiently.” Id. In reaching its conclusion, the court noted that Congress did
not intend for the court to “remand[] one integrally involved claim to state court, thereby creating
the unfavored situation of piecemeal litigation.” Id. (quoting Brummett v. Skyline Corp.,
38 Fed. R. Serv. 2d 1443, 1444–45 (W.D. Ky. 1984)).
In reaching the opposite conclusion, Judge Orenstein relied on Alkhatib v. N.Y. Motor
Grp. LLC, No. 13-CV-2337, 2015 WL 3507340 (E.D.N.Y. June 3, 2015). (R&R 9–10 (citing
Alkhatib, 2015 WL 3507340, at *24).) In Alkhatib, the magistrate judge concluded that “[i]n
enacting Magnuson–Moss, Congress implicitly negated pendent jurisdiction of claims made
under the statute that amount to less than $50,000.” Alkhatib, 2015 WL 3507340, at *24

18

(alteration in original) (first quoting Lieb v. Am. Motors Corp., 538 F. Supp. 127, 140 (S.D.N.Y.
1982); and then citing Jager v. Boston Road Auto Mall, 2015 WL 235342, at *4 (S.D.N.Y.
Jan. 16, 2015))). The court in Alkhatib noted that “the cases holding that supplemental
jurisdiction is not available [were] more convincing, at least in part because 28 U.S.C. § 1367
itself provides for supplemental jurisdiction ‘[e]xcept . . . as expressly provided otherwise by
Federal statute.’” Alkhatib, 2015 WL 3507340, at *25 (second and third alterations in original).
Lieb, on which Alkhatib principally relied, noted that “[b]efore it can be concluded that (pendent)
jurisdiction exists, a federal court must satisfy itself not only that Art[icle] III permits it, but that
Congress in the statutes conferring jurisdiction has not expressly or by implication negated its
existence.” Lieb, 538 F. Supp. at 140. The court in Lieb found that “Congress implicitly
negated” supplemental jurisdiction of MMWA claims that do not meet the amount-incontroversy requirement because “Congress deliberately chose that figure to prevent Magnuson–
Moss claims from inundating the federal court.” Id. (citing Novosel v. Northway Motor Car
Corp., 460 F. Supp. 541, 543–44 (N.D.N.Y. 1978))). The court in Lieb also noted that exercising
supplemental jurisdiction “effectively would rewrite the amount in controversy requirement” and
held that “[o]nce Congress has chosen a higher figure, a court may not exercise its discretionary
powers to apply a lower threshold.” Id. The Court is not persuaded that the MMWA negates the
Court’s authority to exercise supplemental jurisdiction pursuant to 28 U.S.C. § 1367.
“When it is claimed that a later enacted statute creates an irreconcilable conflict with an
earlier statute, the question is whether the later statute, by implication, has repealed all or, more
typically, part of the earlier statute.” Garfield v. Ocwen Loan Servicing, LLC, 811 F.3d 86, 89
(2d Cir. 2016). The Supreme Court has explicitly stated that “repeals by implication are not
favored and will not be presumed unless the intention of the legislature to repeal is clear and

19

manifest.” Nat’l Ass’n of Home Builders v. Defs. of Wildlife, 551 U.S. 644, 662 (2007)
(alteration and internal quotation marks omitted) (citing Watt v. Alaska, 451 U.S. 259, 267
(1981)). The Supreme Court has also made clear that federal courts cannot “infer a statutory
repeal unless the later statute expressly contradicts the original act or unless such a construction
is absolutely necessary in order that the words of the later statute shall have any meaning at all.”
Id. at 662–63 (alterations and internal quotation marks omitted) (collecting cases)); see also
Garfield, 811 F.3d at 89 (“Repeal by implication is disfavored. ‘In the absence of some
affirmative showing of an intention to repeal, the only permissible justification for a repeal by
implication is when the earlier and later statutes are irreconcilable.’” (quoting Morton v.
Mancari, 417 U.S. 535, 550 (1974)).
The MMWA amount-in-controversy requirement does not expressly contradict the
supplemental jurisdiction statute. The MMWA imposes a limitation on a court’s exercise of
original jurisdiction but does not discuss a court’s authority to exercise supplemental jurisdiction.
See 15 U.S.C. § 2310(d)(3); Chavis, 415 F. Supp. 2d at 623–24 (noting that the MMWA’s
amount-in-controversy requirement limits the court’s “traditional” source of federal question
jurisdiction but does not alter “alternative source[s] of federal jurisdiction,” such as supplemental
jurisdiction). Furthermore, the MMWA and the supplemental jurisdiction statute are not
irreconcilable, nor will exercising supplemental jurisdiction render the amount-in-controversy
requirement completely meaningless. The MMWA’s amount-in-controversy requirement
prevents a federal court from hearing an MMWA claim that does not meet the required amount
in controversy and does not share a common nucleus of operative fact with a claim that
independently confers subject matter jurisdiction. See Montefiore Med. Ctr., 642 F.3d at 332
(noting that “[i]n order to exercise supplemental jurisdiction, a federal court must first have

20

before it a claim sufficient to confer subject matter jurisdiction” and the claims “must stem from
the same ‘common nucleus of operative fact’” (quoting Gibbs, 383 U.S. at 725)); see also
Oneida Indian Nation of N.Y. v. Madison Cty., 665 F.3d 408, 436 (2d Cir. 2011) (noting that a
court may exercise supplemental jurisdiction only “where an independent basis of subject-matter
jurisdiction exists”). Because the MMWA does not expressly contradict the supplemental
jurisdiction statute, and because the two statutes are not irreconcilable, the Court concludes that
the MMWA’s amount-in-controversy requirement does not prohibit the Court from exercising
supplemental jurisdiction over Plaintiff’s MMWA claim. See Nat’l Ass’n of Home Builders, 551
U.S. at 662–63 (stating that in order for a statute to have been implicitly repealed by a later
enacted statute the later statute must expressly contradict the original statute or the two statutes
must be in “irreconcilable conflict”).
Moreover, exercising supplemental jurisdiction over MMWA claims that do not meet the
amount-in-controversy requirement will not inundate the federal courts because such claims will
necessarily share a “common nucleus of operative fact” with a claim pending before the court.
See Seybold, 628 F. Supp. at 916, 918. Thus, exercising supplemental jurisdiction will not
lengthen the action, require new evidence, or affect the ability of courts to function efficiently.
Id. In addition, exercising supplemental jurisdiction over such claims avoids “creating the
unfavored situation of piecemeal litigation.” Id. (quoting Brummett, 38 Fed. R. Serv. 2d
at 1444–45).
2.

There is a basis for exercising supplemental jurisdiction

Although the Court can exercise supplemental jurisdiction, the Court must nevertheless
determine whether there is a basis to decline to exercise supplemental jurisdiction. As the Court
explained in the September 2015 Order, 28 U.S.C. § 1367 authorizes a district court that has

21

original jurisdiction over a claim to exercise supplemental jurisdiction over “all other claims”
that share a common nucleus of operative fact with the first claim. Pierre, 2015 WL 5793319,
at *2 (quoting 28 U.S.C. § 1367). Where a plaintiff’s state law claim shares a common nucleus
of operative fact with the plaintiff’s federal claim, the court can decline to exercise supplemental
jurisdiction over the state law claim “only if” one of the circumstances enumerated at 28 U.S.C.
§ 1367(c) is present. Id. at *3 (quoting Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d
234, 245 (2d Cir. 2011)); see also Rivera v. Rochester Genesee Reg’l Transp. Auth., 743 F.3d 11,
27 (2d Cir. 2014) (“[T]he discretion to decline supplemental jurisdiction is available only if
founded upon an enumerated category of [28 U.S.C. § 1367(c)].” (alteration in original) (quoting
Treglia v. Town of Manlius, 313 F.3d 713, 723 (2d Cir. 2002))); Shahriar, 659 F.3d at 245
(“[T]he discretion to decline supplemental jurisdiction is available only if founded upon an
enumerated category of subsection 1367(c).” (quoting Itar–Tass Russian News Agency v.
Russian Kurier, Inc., 140 F.3d 442, 448 (2d Cir. 1998))). Under 28 U.S.C. § 1367(c), a district
court may decline to exercise supplemental jurisdiction if:
(1) the claim raises a novel or complex issue of State law, (2) the
claim substantially predominates over the claim or claims over
which the district court has original jurisdiction, (3) the district court
has dismissed all claims over which it has original jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons
for declining jurisdiction.
28 U.S.C. § 1367(c).
Here, Plaintiff has asserted the same claims against Planet and Suzuki, and Planet has not
moved for summary judgment. Therefore, “regardless of the outcome of Suzuki’s motion,”
Plaintiff’s TILA and MMWA claims against Planet remain pending and will proceed to trial.
Pierre, 2015 WL 5793319, at *3. The Court has federal question jurisdiction over Plaintiff’s
TILA claim, which shares a common nucleus of operative fact with Plaintiff’s MMWA claim

22

since both sets of claims arise from Plaintiff’s purchase of a vehicle from Planet and Suzuki’s
financing of that purchase. Id. Because Plaintiff’s MMWA claim shares a common nucleus of
operative fact with Plaintiff’s TILA claim, the Court can decline to exercise supplemental
jurisdiction only if the section 1367(c) circumstances are present. However, none of the section
1367(c) circumstances are present. Plaintiff’s MMWA claim does not raise a novel or complex
issue of state law, does not predominate over Plaintiff’s TILA claim against Planet and Suzuki,
the Court has not dismissed all claims over which it has jurisdiction, and there are no other
compelling reasons to decline jurisdiction. Accordingly, there is no basis to decline
supplemental jurisdiction. The Court therefore exercises supplemental jurisdiction over
Plaintiff’s MMWA claim against Suzuki. The Court next addresses the merits of Plaintiff’s
MMWA claim. 9
ii.

Assignee liability

Suzuki asserts that it was not “involved in [P]laintiff’s purchase of any underlying
warranty,” and therefore Plaintiff has no MMWA claim against it. (Suzuki Mem. 2.) Plaintiff
argues that Suzuki is subject to all claims that Plaintiff can assert against Planet because Suzuki,
as an assignee, “stepped into the shoes” of Planet. (Pl. Mem. 10–11 (citing 16 C.F.R. § 433.2).)
The MMWA allows a consumer who is “damaged by the failure of a supplier, warrantor,
or service contractor to comply with any obligation under th[e] [MMWA]” to “bring suit for
damages and other legal and equitable relief.” 15 U.S.C. § 2310(d)(1). The MMWA, unlike
TILA, does not contain an express provision limiting assignee liability, and the Second Circuit
has not addressed whether such a limitation should be implied. District courts that have

9

Because Judge Orenstein dismissed Plaintiff’s MMWA claim against Suzuki on
jurisdictional grounds, he did not consider the merits of Plaintiff’s MMWA claim. (See R&R
10.)
23

considered whether MMWA liability extends to assignees have reached differing results.
Compare Angelillo v. Harte Nissan, Inc., No. 09-CV-1313, 2010 WL 569887, at *6 (D. Conn.
Feb. 17, 2010) (holding that the “plaintiff cannot assert a claim against [the defendant], as
assignee, under the MMWA), and Owens v. Tranex Credit Corp., No. 96-CV-1272, 1998 WL
35983384, at *17 (S.D. Ind. Aug. 11, 1998) (same), with Diaz, 424 F. Supp. 2d at 544 (holding
that a plaintiff may assert an MMWA claim against an assignee), and Dees v. Bob O’Connor
Ford, Inc., No. 94-CV-7083, 1995 WL 441629, at *3 (N.D. Ill. July 20, 1995) (same).
Courts that have concluded that the MMWA provides for assignee liability have based
their decisions on 16 C.F.R. § 433.2, generally referred to as the “Holder Rule.” The Holder
Rule, a regulation promulgated by the Federal Trade Commission (the “FTC”), preserves a
consumer’s right to assert the same legal claims and defenses against the assignee of a credit
contract as that consumer could have asserted against the assignor. See Diaz, 424 F. Supp. 2d at
543–44; Dees, 1995 WL 441629, at *3. The courts that have concluded that the MMWA
provides for assignee liability have found that the Holder Rule permits plaintiffs to assert
MMWA claims against assignees. See Diaz, 424 F. Supp. 2d at 544; Dees, 1995 WL 441629,
at *3.
In contrast, courts that have concluded that the MMWA does not provide for assignee
liability have relied on section 2310(f) of the MMWA, which states that “only the warrantor
actually making a written affirmation of fact, promise, or undertaking shall be deemed to have
created a written warranty, and any rights arising thereunder may be enforced under th[e]
[MMWA] only against such warrantor and no other person.”10 See Angelillo, 2010 WL 569887,

10

The MMWA defines warrantor as “any supplier or other person who gives or offers to
give a written warranty or who is or may be obligated under an implied warranty.” 15 U.S.C.
§ 2301(5).
24

at *5–6; Owens, 1998 WL 35983384, at *16–17. These courts have concluded that section
2310(f) is a “limiting jurisdictional provision” that “super[s]edes” the Holder Rule. Angelillo,
2010 WL 569887, at *6; see also Owens, 1998 WL 35983384, at *17 (stating that the
“[MMWA] very clearly and specifically limits who may be liable under the Act” and, therefore,
the Holder Rule “should not be construed to trump the plain language of the [MMWA]”). In
reaching this conclusion, these courts have compared section 2310(f) of the MMWA to section
1641(a) of TILA, 11 and have held that section 2310(f), like section 1641(a) of TILA, supersedes
the Holder Rule. See Angelillo, 2010 WL 569887, at *6 (stating that there was “no reason to
distinguish the cases addressing TILA” and the MMWA claim before the court); Owens,
1998 WL 35983384, at *17 (stating the question of assignee liability under the MMWA was
“virtually identical” to assignee liability under TILA (citing Taylor, 150 F.3d at 693)). The
Court finds that, based on the text of the MMWA and the general principle that a regulation
cannot override the plain language of a statute, the MMWA prohibits assignee liability.
The plain text of the MMWA prohibits assignee liability where the assignee is not the
person who created the written warranty. 15 U.S.C. § 2310(f) (providing that that the MMWA
may be enforced against “only the warrantor [who] actually . . . created a written
warranty . . . and no other person”). Although the Holder Rule normally permits an individual to
assert all claims and defenses against an assignee that he or she could have asserted against the
assignor, “[r]egulations cannot trump the plain language of statutes.” Taylor, 150 F.3d at 693
(first quoting Robbins v. Bentsen, 41 F.3d 1195, 1198 (7th Cir. 1994); and then citing Foster v.
Celani, 849 F.2d 91, 91 (2d Cir. 1988)); see also Decker v. Nw. Envtl. Def. Ctr., 568 U.S. ---, ---,

11

Section 1641(a) of TILA provides that an assignee is liable for a TILA violation “only
if the violation for which such action or proceeding is brought is apparent on the face of the
disclosure statement, except where the assignment was involuntary.” 15 U.S.C. § 1641(a).
25

133 S. Ct. 1326, 1334 (2013) (“It is a basic tenet that regulations, in order to be valid, must be
consistent with the statute under which they are promulgated.” (citation and internal quotation
marks omitted)); Seabrook v. Obama, No. 14-CV-4431, 2015 WL 4635617, at *6 (S.D.N.Y.
Aug. 4, 2015) (noting that “statutes trump regulations”); cf. Costantino v. U.S. Citizenship,
No. 14-CV-8753, 2015 WL 8489976, at *2 n.2 (S.D.N.Y. Dec. 9, 2015) (stating that an agency’s
policy guidance cannot “trump the plain language of the relevant statutes”). The Court finds that
section 2310(f) of the MMWA trumps the Holder Rule and expressly prohibits Plaintiff from
asserting her MMWA claim against Suzuki as an assignee who did not create the warranty at
issue. The Court therefore grants Suzuki’s motion for summary judgment as to Plaintiff’s
MMWA claim.
d.

State law claims

Judge Orenstein recommended that the Court decline to exercise supplemental
jurisdiction over Plaintiff’s common law fraud and false advertising claims against Suzuki.
(R&R 10.) The Court’s September 2015 Order declined to adopt that portion of R&R. Pierre,
2015 WL 5793319, at *3–4. The Court now considers the merits of Suzuki’s motion for
summary judgment as to Plaintiff’s state law claims against Suzuki.
Suzuki argues that Plaintiff’s fraud and false advertising claims must be dismissed
because Suzuki was not “involved whatsoever in the complained-of advertising by the dealership
or the complained-of deceptive practices allegedly directed at plaintiff by the dealership in her
purchase.” (Suzuki Mem. 3.) Plaintiff relies on section 302(9) of New York Personal Property
Law and the Holder Rule to argue that Suzuki is liable as an assignee for all claims that Plaintiff
can assert against Planet. (Pl. Mem. 10–11.)
“It has always been the law in New York that an assignee stands in the shoes of its

26

assignor and takes subject to those liabilities of its assignor that were in existence prior to the
assignment . . . .” Diesel Props S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 55 (2d Cir.
2011) (quoting Septembertide Pub., B.V. v. Stein & Day, Inc., 884 F.2d 675, 682 (2d Cir. 1989));
see also In re NobleHouse Techs., Inc., No. 12-10797, 2013 WL 6816129, at *5 (Bankr.
N.D.N.Y. Dec. 24, 2013) (“The golden rule of assignments is that the assignee steps into the
shoes of the assignor . . . .” (citing Int’l Ribbon Mills, Ltd. v. Arjan Ribbons, Inc., 36 N.Y.2d 121,
126 (1975))); see generally N.Y. Gen. Oblig. Law § 13-105 (“Where a claim or demand can be
transferred, the transfer thereof passes an interest . . . subject to any defense or counter-claim,
existing against the transferrer, before notice of the transfer, or against the transferee.”).
Section 302(9) of the New York Motor Vehicle Retail Instalment Sales Act provides that:
No retail instalment contract shall contain any provision by which
the buyer agrees not to assert against an assignee a claim or defense
arising out of the sale or require or entail the execution of any note
or series of notes, which when separately negotiated will cut off as
to third parties any right of action or defense which the buyer may
have against the seller. The assignee of a retail installment contract
or obligation shall be subject to all claims and defenses of the buyer
against the seller arising from the sale notwithstanding any
agreement to the contrary, but the assignee’s liability under this
subdivision shall not exceed the amount owing to the assignee at the
time the claim or defense is asserted against the assignee.
N.Y. Pers. Prop. Law § 302(9); see also Ramirez v. Nat’l Co-op. Bank, 938 N.Y.S.2d 280, 282
(App. Div. 2011) (finding that the Holder Rule and Personal Property Law § 302(9) preserve
consumer claims and defenses by mandating that “[a]ny holder of [a] consumer credit contract is
subject to all claims and defenses which the debtor could assert against the seller of goods or
services obtained” (alterations in original)); Matter of State of New York v. DeFranco Ford, Inc.,
609 N.Y.S.2d 266, 267 (App. Div. 1994) (“The appellant’s [car financing company] liability to
consumers arises from its status as assignee of the retail installment contracts. Pursuant to
Personal Property Law § 302(9), the appellant, as an assignee, is subject to ‘all claims and
27

defenses of the buyer against the seller arising from the sale.’”).
Pursuant to both section 302(9) of New York Personal Property Law and the Holder
Rule, Suzuki may be held liable for Plaintiff’s fraud and false advertising claims based on fraud
and false advertising allegedly committed by Planet. See Diaz, 424 F. Supp. 2d at 544 (holding
that pursuant to the Holder Rule a car financer could be liable as an assignee for deceptive sales
practices allegedly committed by the car dealership); Ramirez, 938 N.Y.S.2d at 283 (holding that
pursuant to the Holder Rule and section 302(9), a car financer could be liable as an assignee for
fraud allegedly committed by the car dealership). Accordingly, the Court denies Suzuki’s
motion for summary judgment as to Plaintiff’s state law claims.12

12

In its reply brief, Suzuki argues for the first time, without any legal support, that
Plaintiff’s fraud claim is “duplicitous” of her TILA claim because both claims are based on the
same misleading statements. (See Suzuki Reply 4.) Suzuki did not make this argument in its
initial brief in support of its motion for summary judgment and cannot do so in its reply brief.
See, e.g., United States v. Pepin, 514 F.3d 193, 203 n.13 (2d Cir. 2008) (noting that courts
“generally do not consider issues raised in a reply brief for the first time” because the opposing
party “may not have an adequate opportunity to respond to it” (quoting In re Harris, 464 F.3d
263, 268–69 n.3 (2d Cir. 2006))); In re Harris, 464 F.3d at 268–69 n.3 (2d Cir. 2006) (same
(first citing Thomas v. Roach, 165 F.3d 137, 146 (2d Cir. 1999); and then citing Booking v. Gen.
Star Mgmt. Co., 254 F.3d 414, 418 (2d Cir. 2001))); Phoenix Aktiengesellschaft v. Ecoplas, Inc.,
391 F.3d 433, 438 n.4 (2d Cir. 2004) (declining to address argument first raised in a reply brief
because the opposing party “may not have an adequate opportunity to respond to it” (quoting
Mitchell v. Fishbein, 377 F.3d 157, 164 (2d Cir. 2004))); Mitchell, 377 F.3d at 164–65 (same
(collecting cases)); Levy v. Young Adult Inst., Inc., 103 F. Supp. 3d 426, 441 (S.D.N.Y. 2015)
(refusing to consider an argument raised for the first time in a reply brief and stating that “the
Court will not evaluate arguments that are so drastically underdeveloped” (citing Diesel v. Town
of Lewisboro, 232 F.3d 92, 110 (2d Cir. 2000)). Even if this argument was properly before the
Court, it would not support dismissal of either claim since the Second Circuit, several district
courts and the New York Court of Appeals have recognized that a plaintiff may bring both
claims. See Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473, 491–92 (2d Cir. 2014)
(permitting the plaintiff to assert both TILA and fraud claims based on the same transaction);
Vincent v. Money Store, 402 F. Supp. 2d 501, 504 (S.D.N.Y. 2005) (same); Vaughn v. Consumer
Home Mortgage, Inc., No. 01-CV-7937, 2003 WL 21241669, at *1 (E.D.N.Y. Mar. 23, 2003)
(same); see also People ex rel. Spitzer v. Applied Card Sys., Inc., 11 N.Y.3d 105, 109 (2008)
(holding that TILA did not preempt state law fraud claims).
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III. Conclusion
For the foregoing reasons, the Court denies Suzuki’s motion for summary judgment as to
Plaintiff’s TILA claim as it relates to the Theft Deterrent Certificate and the Warranty
Application and Plaintiff’s state law claims. The Court grants Suzuki’s motion for summary
judgment as to Plaintiff’s MMWA claim.
SO ORDERED:
s/ MKB
MARGO K. BRODIE
United States District Judge
Dated: June 21, 2016
Brooklyn, New York

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