Soberanis v. City Title Loan LLC et al

Filing 20

ORDER AND OPINION The Court GRANTS IN PART AND DENIES IN PART Defendants' motion to dismiss (Dkt. No. 17 ). The Court DISMISSES claims under the South Carolina Unfair Trade Practices Act against Defendant 1st Choice Recovery, LLC. The motion to dismiss is otherwise DENIED. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 4/3/2017.(sshe, )

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

Latitia Soberanis,
Plaintiff,

v.
City Title Loan, LLC, and 1st Choice
Recovery, LLC,
Defendants.

Civil Action No. 2: 16-4034-RMG

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ORDER AND OPINION

This matter is before the Court on Defendants' motion to dismiss. For the reasons set forth
below, the Court grants the motion as to unfair trade practices claims against Defendant 1st Choice
Recovery, LLC, and otherwise denies the motion.
I.

Background
Defendant City Title Loan, LLC ("City Loan") loaned $2,800 to Defendant Letitia!

Soberanis for the purchase of a used 2003 Mercury Mountaineer, to be repaid over three years at
an annual percentage interest rate of 118.49%. (Dkt. No. 14 ~ 7.) Ms. Soberanis provided City
Loan a security interest in the vehicle. (Id ~ 8.) Ms. Soberanis apparently2 did not remit the first
payment installment and, on August 19, 2015, Defendant 1st Choice Recovery, LLC ("1st
Choice"), repossessed the vehicle from Ms. Soberanis's property on behalf of City Loan, allegedly
over Ms. Soberanis's objections in a manner constituting breach of the peace. (Id

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11-15.) Ms.

Soberanis alleges City Loan did not mail her a right to cure letter, which South Carolina law
requires as a prerequisite to repossession of personal property securing a consumer loan. (Id

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9.)

! Misspelled "Latitia" in the caption of the complaint.
2 Plaintiff does not allege that she made no payments, but she does not controvert Defendants'
assertion that she did not.

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Ms. Soberanis filed a complaint with the South Carolina Department of Consumer Affairs,
to which Defendants allegedly responded that she was attempting to avoid the mandatory
arbitration agreement in her promissory note. (Id

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19.) On June 1, 2016, she attempted to

commence an arbitration action with the American Arbitration Association ("AAA"), the
arbitration organization identified in the promissory note. (/d.

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20.) The arbitration agreement

provides for arbitration in South Carolina, with Ms. Soberanis responsible for arbitration fees up
to the amount of filing fees for bringing a civil suit in state or federal court in South Carolina and
City Loan responsible for the remainder of all arbitration fees. (Dkt. No. 11-1 at 6.) Ms. Soberanis
alleges that because City Loan failed to register the arbitration clause with the AAA and refused
to pay required arbitration fees, AAA closed the file and refused to administer the arbitration
agreement. (Dkt. No. 14 ~ 22-26.)
On September 30, 2016, Ms. Soberanis filed the present action in the Dorchester County
Court of Common Pleas. (Dkt. No.1-I.) The complaint was served on November 30, 2016, and
Defendants removed to this Court on December 30, 2016.

(Dkt. No.1.) Defendants move to

dismiss the amended complaint in its entirety. (Dkt. No. 17.)

II.

Legal Standard
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits the dismissal of an action if

the complaint fails "to state a claim upon which relief can be granted." Such a motion tests the
legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits
of the claim, or the applicability of defenses. . .. Our inquiry then is limited to whether the
allegations constitute 'a short and plain statement of the claim showing that the pleader is entitled
to relief.'" Republican PartyofN.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (quotation marks
and citation omitted). In a Rule 12(b)(6) motion, the Court is obligated to "assume the truth of all
facts alleged in the complaint and the existence of any fact that can be proved, consistent with the
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complaint's allegations." E. Shore MIas., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th
Cir. 2000). However, while the Court must accept the facts in a light most favorable to the non­
moving party, it "need not accept as true unwarranted inferences, unreasonable conclusions, or
arguments." Id.
To survive a motion to dismiss, the complaint must state "enough facts to state a claim to
relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although
the requirement of plausibility does not impose a probability requirement at this stage, the
complaint must show more than a "sheer possibility that a defendant has acted unlawfully."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint has "facial plausibility" where the
pleading "allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Id.

III.

Discussion

A.

First Cause of Action - Conversion
South Carolina law provides that creditor in a secured consumer credit transaction payable

in installments may not take possession of goods that are collateral for the debtor's obligation
"until twenty days after a notice of the consumer's right to cure is given." S.C. Code 37-5-111(1)
(citation omitted). A notice of the right to cure must be delivered to the consumer or mailed to the
consumer's residence no earlier than ten days after the consumer defaults-i.e., fails to make a
required payment. S.C. Code 37-5-110(1). If the creditor repossesses the collateral in violation
of those statutory requirements, it is liable to the debtor in conversion. S.C. Code 37-5-111(7).
Plaintiff s first cause of action asserts a claim for conversion against City Loan because
City Loan had 1st Choice repossess Plaintiff's vehicle without first sending a right to cure letter in

compliance with statutory requirements. (Dkt. No. 14 ~~ 30-34.) Defendants move to dismiss the

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conversion claim, arguing Plaintiff is estopped from denying that a proper right to cure letter was
mailed.
Defendants' argument is without merit. Estoppel is an affirmative defense. See Fed. R.
Civ. P. 8(c)(1 ). "[A] motion to dismiss filed under Federal Rule of Procedure 12(b)(6), which tests
the sufficiency of the complaint, generally cannot reach the merits of an affirmative defense ...
[bJut in the relatively rare circumstances where facts sufficient to rule on an affirmative defense
are alleged in the complaint, the defense may be reached by a motion to dismiss filed under Rule
12(b)(6). This principle only applies, however, if all facts necessary to the affirmative defense
'clearly appear[ J on the face of the complaint.'" Goodman v. Praxair, Inc., 494 F.3d 458,464
(4th Cir. 2007). A court "may consider a document submitted by the movant that was not attached
to or expressly incorporated in a complaint, so long as the document was integral to the complaint
and there is no dispute about the document's authenticity," and "a document is integral to the
complaint where the complaint relies heavily upon its terms and effect." Goines v. Valley Cmty.
Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016) (internal quotation marks omitted). Here, Plaintiff
alleges a right to cure letter was not sent. (Dkt. No. 14'9.) Defendants cannot move to dismiss
by refuting that allegation with evidence like envelopes and postal tracking information because
that evidence is not apparent from the face ofthe complaint, or from documents integral to it, such
as the promissory note. The complaint does not "rely heavily" on the terms of postal tracking
information or an envelope returned to City Loan as undeliverable. Defendant's "estoppel"
argument is really an argument that there is no genuine dispute that the letter was sent. That is an
argument for summary judgment under Rule 56, not dismissal under Rule 12. The Court therefore
denies the motion to dismiss as to the first cause of action.

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Although the Court denies Defendants' motion to dismiss the first cause of action based on
the above without considering evidence beyond the complaint and documents integral to it, the
Court, in the interests of judicial economy, will address the merits of Defendants' estoppel
argument to prevent relitigation of the argument. Defendants appear to argue Plaintiff is estopped
because Plaintiff provided evidence to refute Defendants' baseless suggestion that Plaintiff
actually refused to accept delivery of the letter or is otherwise responsible for City Loan's failure
to deliver it:
Plaintiff has argued that City Loan handwrote the address. Plaintiff is incorrect as
the envelope in question in Dkt 11-2 is a copy of the failed certified delivery with
the handwritten notes on the label to refuse delivery. More importantly, the only
way to fail a delivery is to attempt delivery, which is all that is required by SC Code
Ann § 37-5-110. In fact, this Exhibit provided by Plaintiff goes directly to prove
Defendant City Loan mailed a letter to Plaintiff with a post mark [sic] and the letter
was returned because Plaintiff refused delivery or provided inaccurate information.
(Dkt. No. 17-1 at 3 n.3 (emphasis added).)
The only handwriting on the envelope is in fact the address information handwritten by City Loan.
(Dkt. No. 11-2 at 1.) The envelope has a printed "return to sender / not deliverable as addressed"
label partially covering the address written by City Loan. (/d) From the copy of the envelope
filed in this case, it appears that City Loan might not have written the zip code with the address,
causing the envelope to be undeliverable, but, because the position of the return-to-sender label
obscures the handwritten address, it is impossible to be certain. Regardless, Defendants are well
aware that the letter was returned to City Loan having never left California, and so it was never
"refused" by Plaintiff. (See Dkt. No. 11-3.)
Defendants also repeatedly assert the address Plaintiff provided City Loan is somehow
"inaccurate" or "incorrect." (See Dkt. Nos. 17-1 at 3 n.3; 19 at 2 ("The address of the Right to
Cure letter, while incorrect, is the address provided by Plaintiffin documents to City Title Loan.");
19 at 3 (citing "notices on the United States Postal Service website, again showing mailing
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although undeliverable based on the misinfonnation provided by Plaintiff').) Defendants provide
no support whatsoever for those assertions, which are clearly intended to suggest the right to cure
letter was undeliverable because of some misconduct by Plaintiff. The Court has confinned via
public records that 145 Jordan Simmons Road, Mailbox A, Summerville, South Carolina, 29483
is a valid postal address. The Court does not know who lived there in June 2015, but nothing
suggests the address was inaccurate or incorrect.
Beyond blaming Plaintiff for City Loan's failure to mail a right to cure letter, Defendants'
estoppel argument is that Plaintiff, by providing evidence showing City Loan did not properly mail
a right to cure letter, admits one was mailed, albeit improperly, and that any attempted mailing, no
matter how defective, satisfies the requirement to "mail" a letter. (Dkt. Nos. 17-1 at 6-7; 19 at 3.)
The Court finds that argument utterly unpersuasive. The Court will not construe the verb "mails"
in S.C. Code § 37-5-110 so loosely as to include a self-metered letter so inadequately addressed
that the postal service could not even attempt delivery. The statutory requirement to "mail" a right
to cure letter to a debtor's residence requires a good faith attempt to cause mail services actually
to deliver the letter to the residence. That requirement is not satisfied when an incompletely
addressed mailing is promptly returned to the creditor, having never been within 2000 miles of the
intended destination.
Even if the letter were deemed mailed, it would be effective only if it were mailed no less
than ten days after Plaintiff defaulted. S.C. Code § 37-5-110(1). The right to cure letter is dated
July 3, 2015. (Dkt. No. 11-2 at 2.) Defendants represent to the Court that "[p]rior to repossession,
Plaintiff was required to pay $75.00 on June 2, 2015 and $286.13 on June 23, 2015." (Dkt. No.
17-1 at 3.) Defendants provide no citations supporting those asserted due dates, which does not
appear to be an accident because those dates are not accurate. The promissory note-provided by

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Plaintiff, not Defendants who instead assert dates as counsel's ipse dixif-plainly states that the
first payment was due on June 25, 2015, not June 23, 2015. (Dkt. No. 11-1 at 1 (providing
payments are due "Monthly, beginning 6/25/2015").) June 23, 2015 just happens to be exactly ten
days before July 3, 2015, the date of City Loan's right to cure letter. Further, nothing in the
promissory note suggests that a $75 payment was due on June 2, 2015. To the contrary, City Loan
represented to the South Carolina Department of Consumer Affairs that the loan agreement was

executed on June 2, 2015. (Dkt. No. 7-4.) The right to cure letter itself also states the loan was
executed on June 2,2015. (Dkt. No. 11-2 at 2.)
The Court is aware Plaintiffs counsel stated that the first payment due date was June 23,
2015 in the opposition to the first motion to dismiss, despite attaching the promissory note with
the correct date to that opposition, before catching his mistake in the opposition to the second
motion to dismiss. (Compare Dkt. No. 11 at 2 with Dkt No. 18 at 2, 8.) After Plaintiffs error,
Defendants argued the June 23, 2015 date as evidence that the letter was sent in compliance with
the statute and that this case should be dismissed. (Dkt. No. 17-1 at 3.) In the reply in support of
the second motion to dismiss-i.e., after Plaintiff correctly pointed out that the first payment was
due June 25,2015 and so the right to cure letter could not possibly have been mailed in compliance
with the statutory 10-day waiting period-Defendants abandoned the June 23, 2015 date, pivoting
to a $75 administrative fee they claim Plaintiff defaulted on June 2, 20I5-the same day the loan

agreement was executed:

3 Defendants

erroneously assert that "[i]n this matter, both Defendants and Plaintiff have submitted
the subject Promissory Note." (Dkt. No. 17-1 at 5.) Defendants have not submitted a copy of the
promissory note. Defendants have submitted: (1) legal memoranda, (2) a list of other foreclosure
actions against Ms. Soberanis, (3) the right to cure letter, (4) City Loan's response to Ms.
Soberanis's complaint with the South Carolina Department of Consumer Affairs, and (5) two
unpublished court opinions.

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The Promissory Note required fees to be paid as early as June 2, 2015, which were
never paid nor has Plaintiff disputed the she paid the fees. See Dkt 18, Plaintiff s
Memorandum Oppositions [sic] Defendants' Motion to dismiss wherein Plaintiff
did not address the initial finance fee.
She fails to address, or even acknowledge, Defendants' points regarding the
payments she never made beginning on June 2, 2015.
Plaintiff also ignores in her Memorandum in Opposition that the promissory note
fee of $75.00 was due and payable at the time of the loan of June 2, 2015 thereby
starting the 10 days for failure to make a payment. Payment, not default of
payment, is the required term under S.C. Code Ann. § 37-5-110. 4 Thus, any
argument that the Right to Cure letter was sent less than 10 days is improper.
(Dkt. No. 19 at 1,2,4.)
City Loan indeed did charge a $75 administrative fee. (Dkt. No. 11-1 at 1.) The promissory
note's "Promise to Pay" section states the loan amount is $2,875 (the $2,800 provided to the
borrower plus the $75 administrative fee) plus interest at 115% APR-which results in a $286.13
monthly payment. (Jd.) If the $75 payment is treated as interest rather than as part ofthe principal
borrowed, then the effective APR is 118.49%, as shown, correctly, in the promissory note's
Federal Truth in Lending Act disclosure, which lists the amount financed as $2,800, the APR as
118.49%, and the monthly payment as $286.13. (Jd.) Ms. Soberanis did not default on a $75
payment due at signing (which, if true, would have changed the loan amortization and caused the
monthly payment to have been calculated as $278.67).

Rather, Ms. Soberanis paid the $75

administrative fee with funds borrowed from City Loan and included in her loan amortizationshe borrowed $2,875 but received only $2,800.

The Court does not understand this sentence. The statute provides that a notice of "the
consumer's right to cure the default" may be sent "after a consumer has been in default for ten
days for failure to make a required payment." S.c. Code § 37-5-110.

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B.

Second Cause of Action - Repossession in Violation of S.C. Code § 37-5-1125
South Carolina law permits creditors to take possession of collateral to a consumer credit

transaction without judicial process only if possession can be taken without breach of the peace.
S.C. § 37-5-112. "[A] breach of the peace is a violation of public order, a disturbance of public
tranquility, by any act or conduct inciting to violence. . .. It is not necessary that the peace be
actually broken ... [i]fwhat is done is unjustifiable, tending with sufficient directness to break the
peace, no more is required." Jordan v. Citizens &

s. Nat. Bank olS. c., 298 S.E.2d 213, 214 (1982)

(internal quotation marks omitted). Plaintiffs second cause of action asserts City Loan took
possession of her vehicle in violation of S.C. Code § 37-5-112 when its agent 1st Choice
repossessed her vehicle without judicial process and in a manner constituting a breach ofthe peace.
Planitiff alleges 1st Choice refused to leave her residential property when confronted, forcing her
to call the police. (Dkt. No. 14 ~~ 11-15.) Refusing to leave someone's residential property when
asked is, of course, a breach of the peace, which is why the police responded to her call.
Defendants' counterargument-that 1st Choice had already effected the repossession before
Plaintiff asked them to leave-is without merit because Plaintiff clearly alleges that the
repossession was effected only after police arrived on the scene. (ld.

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15.) The Court therefore

denies the motion to dismiss as to the second cause of action.
C.

Third Cause of Action - Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act ("FDCPA") protects consumers from unfair

practices by debt collectors. 15 U.S.C. § 1692f. Section 1692f provides that a "debt collector may
not use unfair or unconscionable means to collect or attempt to collect any debt," including

Counterintuitively, Plaintiff pleads this cause of action only against City Loan, and not against
1st Choice (the party who allegedly breached the peace).

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"[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of
property if ... there is no present right to possession of the property claimed as collateral through
an enforceable security interest." Id Plaintiff alleges 1st Choice violated the FDCPA when it
repossessed her vehicle without a present right to do so. (Dkt. No. 14 ~ 40.)
Defendants argue the FDCP A claim against 1st Choice should be dismissed for two
reasons. First, Defendants argue 1st Choice is not a debt collector as that term is defined in the
FDCP A. (Dkt. No. 17-1 at 4.) That argument is without merit. "The term 'debt collector' ....
also includes person who uses any instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the enforcement of security interest." 15 U.S.C. §
1692a(6). Plaintiff alleges 1st Choice uses instrumentalities of interstate commerce in a business
the principal purpose of which is the enforcement of security interests. (Dkt. No. 14

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39.) The

proof of that allegation is not a matter to decide on a motion to dismiss.
Defendants also argue any FDCPA action is barred by the statute's one-year statute of
limitations. See 15 U.S.C. § l692k(d) (providing one-year limitations period). Plaintiff admits
the action is untimely but argues the statute of limitations should be equitably tolled because
Defendants engaged in inequitable conduct to prevent this action from being timely filed. (Dkt.
No. 18 at 4-7.) Specifically, Plaintiff alleges City Loan refused to waive the promissory note's
mandatory arbitration provision yet refused to participate in arbitration, thereby delaying the filing
of this action. (Dkt. No. 14 ~~ 19-29.)
"The doctrine of equitable tolling preserves a plaintiffs claims when strict application of
the statute oflimitations would be inequitable." Burnett v. NY. Cent. R.R. Co., 380 U.S. 424,428
(1965). Equitable tolling is appropriate when "the plaintiffs were prevented from asserting their

claims by some kind of wrongful conduct on the part of the defendant," and when "extraordinary

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circumstances beyond plaintiffs' control made it impossible to file the claims on time." Harris v.
Hutchinson, 209 F.3d 325, 330 (4th Cir. 2000) (internal quotation marks omitted). Equitable
tolling requires a plaintiff to show "the party pleading the statute of limitations fraudulently
concealed facts that are the basis of the [plaintiff s] claim, and (2) the [plaintiff] failed to discover
those facts within the statutory period, despite (3) the exercise of due diligence." Supermarket of
Marlinton, Inc. v. Meadow Gold Dairies, Inc., 71 F.3d 119, 122 (4th Cir. 1995).
The Court finds Plaintiffs allegations, if proven, sufficient for equitable tolling of the
statute of limitations. Plaintiff alleges City Loan insisted on enforcement of the mandatory
arbitration clause, then, after Plaintiff filed an arbitration action, refused to participate, causing the
arbitration association to refuse to administer the arbitration. Assuming those allegations true, it
would be inequitable to allow Defendants now to argue this action is untimely filed.
Defendants further argue the arbitration provision should not toll a claim against 1st Choice
because 1st Choice was not a party to the arbitration agreement. (Dkt. No. 17-1 at 7-8.) That
argument is without merit. Plaintiff was a party to the arbitration agreement, which required
Plaintiff to arbitrate its claims against 1st Choice:
"Claim" also includes claims by or against any third party using or providing any
product, service or benefit in connection with the Agreement (including, but not
limited to, credit bureaus, third parties retained by you, credit insurance companies,
debt collectors and all of their agents, employees, directors and representatives) if
and only if, such third party is named as a co-party with me or you (or files a Claim
with or against me or you) in connection with a Claim asserted by me or you against
the other.
(Dkt. No. 11-1 at 5.)
The arbitration provision explicitly includes claims against third party debt collectors or any third
party providing a service in connection with the promissory note, which the repossession company
unquestionably provided.
The Court therefore denies the motion to dismiss as to the third cause of action.
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D.

Fourth Cause of Action - Unconscionable Debt Collection Conduct
South Carolina law provides that, "[w]ith respect to a consumer credit transaction, if the

court as a matter of law finds that a person has engaged in, is engaging in, or is likely to engage in
unconscionable conduct in collecting a debt arising from that transaction, ... the consumer has a
cause of action to recover actual damages and, in an action other than a class action, a right to
recover from the person violating this section a penalty in the amount determined by the court of
not less than one hundred dollars nor more than one thousand dollars." S.C. Code § 37-5-108(2).
In considering whether debt collection action is unconscionable, the statute directs courts to
consider many factors, including whether the debt collector has engaged in improper
communications with the consumer. The statute enumerates many examples under that factor,
including, inter alia, calling the consumer late at night, directly calling a consumer known to have
legal representation, calling family members without permission, using profane language, or
"tak[ing] or threaten[ing] to take any nonjudicial action to effect dispossession or disablement of
property if ... there is no present right to possession of the property claimed as collateral through
an enforceable security interest or other ownership interest." S.C. Code § 37-5-108(5).
Plaintiff appears to misread the statute as an additional cause of action for improper
repossession. (See Dkt. No. 14, 45 ("Defendants violated S.C. Code §[]37-5-108(5)(b)(xi) by
taking and threatening to take a non-judicial action to effect disposition of property when there
was no present rightto do so.").) South Carolina Code § 37-5-108(5)(b)(xi) is simply one of many
enumerated types of improper conduct that would support a finding that a debt collector engaged
in improper communications with a consumer, which in tum would support a holding that the debt
collector used unconscionable debt collection practices. It is not, standing alone, an independent
regulation of primary conduct giving rise to a civil cause ofaction. An improper repossession may
(or may not) be part of a course of conduct constituting unconscionable debt collection practices,
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but an improper repossession is not per se unconscionable debt collection. Nonetheless, the Court
finds Plaintiff has met the minimum standard for pleading unconscionable debt collection under
South Carolina law by alleging the unlawful repossession of a vehicle serving as collateral, in a
manner constituting a breach of the peace. The Court therefore denies the motion to dismiss as to
the fourth cause of action.

E.

Fifth Cause of Action - Unfair Trade Practices
The South Carolina Unfair Trade Practices Act ("SCUTP A") forbids "unfair or deceptive

acts or practices in the conduct of any trade or commerce." S.C. Code § 39-5-20(a). "An unfair
trade practice has been defined as a practice which is offensive to public policy or which is
immoral, unethical, or oppressive." Wogan v. Kunze,623 S.E.2d 107, 120 (S.C. Ct. App. 2005).
"To recover in an action under the UTP A, the plaintiff must show: (1) the defendant engaged in
an unfair or deceptive act in the conduct of trade or commerce; (2) the unfair or deceptive act
affected public interest; and (3) the plaintiff suffered monetary or property loss as a result of the
defendant's unfair or deceptive act(s)." Wright v. Craft, 640 S.E.2d 486,498 (S.C. Ct. App. 2006).
Plaintiff alleges Defendants engaged in unfair or deceptive acts by (1) including a
mandatory arbitration clause and refusing to waive it, when City Loan never actually intended to
arbitrate claims but simply wanted to delay litigation, (2) by repossessing vehicles without sending
right to cure notices, and (3) by repossessing vehicles in a non-peaceful manner. (Dkt. No. 14 ~
49-50.) She alleges that conduct damaged her, and that it affects the public interest because it is
capable of repetition. (Id.

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51-52.)

Defendants present two arguments for dismissal of Plaintiffs SCUTPA claims. First,
Defendants argue the repossession was lawful and therefore cannot be the basis for a SCUTPA
claim, and second, they argue Plaintiff fails properly to allege effect on the public interest. The
first argument is obviously a disputed factual contention rather than a proper legal argument in

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support of a motion to dismiss. But Defendants' second argument is more substantial. SCUTP A
claims must allege an impact on the public interest, which "may be shown if the acts or practices
have the potential for repetition." Singleton v. Stokes Motors, Inc., 595 S.E.2d 461, 466 (S.C.
2004). "The potential for repetition may be demonstrated in either of two ways: (1) by showing
the same kind of actions occurred in the past, thus making it likely they will continue to occur
absent deterrence; or (2) by showing the company's procedures create a potential for repetition of
the unfair and deceptive acts." Wright, 640 S.E.2d at 501-02. Conclusory statements that unfair
acts could be repeated are insufficient to show a potential for repetition. See, e.g., Ameristone Tile,
LLC v. Ceramic Consulting Corp., 966 F. Supp. 2d 604, 621 (D.S.C. 2013). "Otherwise every

intentional breach of contract within a commercial setting would constitute an unfair trade practice
and thereby subject the breaching party to treble damages." Ardis v. Cox, 431 S.E.2d 267, 271
(S.C. Ct. App. 1993).
Defendants argue Plaintiffs allegation that "Upon information and belief, Defendants are
repeating this conduct throughout the state of South Carolina and/or the conduct is capable of
repetition" is a conclusory statement insufficient to show the impact on the public interest required
by the SCUTPA. (See Dkt. No. 14 ~ 52.) Certainly, Plaintiff has alleged nothing suggesting the
alleged failure to mail a right to cure letter in this case is not simply a one-time failure, but instead
part of broader practice of never mailing right to cure letters. Similarly, Plaintiff alleges nothing
suggesting 1st Choice's purportedly non-peaceful repossession was a repeated or likely to be
repeated business practice. The Court agrees Plaintiff fails to state SCUPTA claims regarding
those alleged practices, and, therefore, grants the motion to dismiss the fifth cause of action as to
1st Choice.

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The promissory note and its arbitration agreement, however, are standardized forms clearly
used for transactions other than the loan to Plaintiff. Plaintiff specifically alleges City Loan failed
to register the arbitration agreement as required by the arbitration association that City Loan
selected, yet it refuses to waive the arbitration agreement. (Dkt. No. 14 ~ 22-26.) It is plausible
to infer from those allegations that City Loan does not intend to honor the arbitration clauses in its
loan agreements and attempts to enforce them only as a device to delay adjudication of claims.
That is sufficient to allege a deceptive or unfair practice with the potential for repetition, in
violation of the SCUTP A. The Court therefore denies the motion to dismiss the fifth cause of
action as to City Loan.

IV.

Conclusion
For the foregoing reasons, the Court GRANTS IN PART AND DENIES IN PART

Defendants' motion to dismiss (Dkt. No. 17). The Court DISMISSES claims under the South
Carolina Unfair Trade Practices Act against Defendant 1st Choice Recovery, LLC. The motion to
dismiss is otherwise DENIED.

AND IT IS SO ORDERED.

Richard Mark Gerge
United States District ourt Judge
April
2017
Charleston, South Carolina

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