Valencia Carmichael v. Nissan Motor Acceptance, 291 F.3d 1278, 11th Cir. (2002)
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Scribd Government DocsValencia Carmichael v. Nissan Motor Acceptance, 291 F.3d 1278, 11th Cir. (2002)
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Scribd Government Docs291 F.
3d 1278
Valencia CARMICHAEL, Plaintiff-Appellant,
v.
NISSAN MOTOR ACCEPTANCE CORPORATION, Union
City Nissan, Defendants-Appellees.
No. 01-15302.
United States Court of Appeals, Eleventh Circuit.
May 20, 2002.
Charles McLeod Baird, Atlanta, GA, for Plaintiff-Appellant.
Darryl J. May, Joel E. Tasca, Ballard, Spahr, Andrews & Ingersoll,
Philadelphia, PA, Stephen H. Block, Levine & Block, Atlanta, GA, for
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of
Georgia.
Before BLACK and HULL, Circuit Judges, and LAZZARA * , District
Judge.
PER CURIAM:
This is a case of first impression concerning the Consumer Leasing Act, 15
U.S.C. 1667-1667f ("CLA"). According to the language of the CLA, the
one-year statute of limitations begins to run at "the termination of the lease
agreement." 15 U.S.C. 1667d(c). The issue is whether voluntary or
involuntary repossession of a leased automobile constitutes "termination of the
lease agreement" when such repossession occurs prior to the actual date of
lease termination. We affirm the district's court order holding that repossession,
voluntary or otherwise, constitutes termination of the lease under the CLA.
PERTINENT BACKGROUND
2
On May 3, 1997, Valencia Carmichael entered into an automobile lease with
Union City Nissan, Inc. When the lease was executed, it was immediately
assigned to Nissan Motor Acceptance Corporation ("NMAC") in accordance
with the terms of the lease. The lease required forty-two monthly payments
with an expiration date of November 2000. The lease listed $8,893.26 as the
"residual value" of the automobile. Pursuant to the terms of the lease, the
"residual value" is defined as the estimated value of the automobile at the end
of the lease.
3
Ms. Carmichael experienced financial difficulties in 1999 and notified NMAC
that she could not make the payments pursuant to the lease. She allegedly
arranged to make only partial payments past the original due dates.
Notwithstanding the purported agreement, NMAC repossessed the vehicle on
May 7, 1999, for failure to make rental payments. On July 8, 1999, NMAC
notified Ms. Carmichael by letter that the repossessed vehicle had been sold for
$6,500.00, and the deficiency balance owed on the lease was $8,948.08.
NMAC arrived at the balance based roughly on the unpaid balance of the lease,
which was $14,340.94, and other incurred expenses less the sale proceeds and
the refundable security deposit.
Ms. Carmichael filed this lawsuit on May 19, 2000, which was more than one
year past the uncontroverted May 7, 1999, date of repossession. She contends
in part that NMAC inflated the vehicle's original residual value. She also
asserts that NMAC's early termination formula is unreasonable and therefore in
violation of the CLA. Not only does she request relief in her individual
capacity, she seeks to represent a class of individuals having similar claims.
NMAC filed a motion to dismiss the amended complaint based on the CLA's
statute of limitations. Because the statute of limitations defense was not
apparent from the face of the amended complaint, the district court properly
converted NMAC's motion to dismiss into a motion for summary judgment. In
so doing, the district court ordered Ms. Carmichael to produce evidence
showing there was a genuine issue of fact as to NMAC's claim that the vehicle
was repossessed on May 7, 1999. Ms. Carmichael conceded the date of
repossession, but argued that the lease did not terminate until the assessment of
early termination charges on July 8, 1999. The district court granted the motion
and ordered the clerk to enter a judgment dismissing all claims. This timely
appeal followed from the judgment of dismissal.
STANDARD OF REVIEW
6
Regardless of a district court's labeling of a judgment as a dismissal or a
summary judgment, the appellate court must determine the substance of the
ruling. See Charles J. Arndt, Inc. v. City of Birmingham, 748 F.2d 1486,1489-
90 (11th Cir. 1984) (quoting Tuley v. Heyd, 482 F.2d 590, 593 (5th Cir.1973)).
The district court in this case converted the motion to dismiss into a motion for
summary judgment. The record reveals that the district court considered
additional facts outside the pleadings to resolve the motion. We therefore
review the district court's judgment in conformance with the standards for
reviewing summary judgments. Because the material facts are not in dispute
and the only issue is one of law, we review the order of the district court de
novo. See Heuer v. United States Sec'y of State, 20 F.3d 424, 426 (11th
Cir.1994) (citing Woodruff v. United States Dept. of Labor, 954 F.2d 634, 636
(11th Cir.1992)).
THE CLA
7
In 1976, Congress passed the CLA as an amendment to the Truth-in-Lending
Act ("TILA"), 15 U.S.C. 1601 et seq. The CLA extended the TILA's
disclosure requirements to consumer leases. See Applebaum v. Nissan Motor
Acceptance Corp., 226 F.3d 214, 217-18 (3d Cir.2000) (discussing the purpose
of the legislation), cert. denied, 533 U.S. 929, 121 S.Ct. 2549, 150 L.Ed.2d 717
(2001). In general, a consumer lease means a contract for the use of personal
property, such as an automobile, for a period exceeding four months and for a
"total contractual obligation" not exceeding $25,000. See 15 U.S.C. 1667(1).
In keeping with Congress' intended emphasis on disclosure rather than
regulation, the CLA requires full disclosure of the leasing terms and does not
regulate the terms and conditions of any particular consumer lease. See Turner
v. Gen. Motors Acceptance Corp., 180 F.3d 451, 454 (2d Cir.1999). Congress
articulated the purpose behind the CLA as one of assurance of meaningful
disclosure:
It is the purpose of this subchapter to assure a meaningful disclosure of the
terms of leases of personal property for personal, family, or household purposes
so as to enable the lessee to compare more readily the various lease terms
available to him, limit balloon payments in consumer leasing, enable
comparison of lease terms with credit terms where appropriate, and to assure
meaningful and accurate disclosures of lease terms in advertisements.
10
15 U.S.C. 1601(b). The CLA specifies the disclosures the lessor must provide
to the lessee at the time of entering into a consumer lease. See 15 U.S.C.
1667a.
11
The CLA incorporates some of the TILA's provisions dealing with civil
remedies. See 15 U.S.C. 1667d(a) (lessor is liable as provided in section 1640
of this title); Gaydos v. Huntington Nat'l Bank, 941 F.Supp. 669, 672 n. 2
(N.D.Ohio 1996). The definitions and rules of construction set forth in section
1602 of the TILA are applicable to the CLA. See 15 U.S.C. 1602(a); Clement
v. Am. Honda Fin. Corp., 145 F.Supp.2d 206, 210 n. 1 (D.Conn.2001). Courts
have used the TILA's definitions and general rules of construction, when
possible, in interpreting the CLA. See, e.g., Wiskup v. Liberty Buick Co., 953
F.Supp. 958, 969 (N.D.Ill. 1997). Like the TILA, the CLA is a consumer
protection statute which "is remedial in nature and therefore must be construed
liberally in order to best serve Congress' intent." Ellis v. Gen. Motors
Acceptance Corp., 160 F.3d 703, 707 (11th Cir.1998) (citing McGowan v.
King, Inc., 569 F.2d 845, 848 (5th Cir.1978)); Pettola v. Nissan Motor
Acceptance Corp., 44 F.Supp.2d 442, 447 (D.Conn.1999) (noting CLA is
remedial legislation to be liberally construed in favor of lessee).
12
The civil remedy provision of the CLA provides that a civil action brought by a
lessee must be filed within one year of "the termination of the lease agreement."
15 U.S.C. 1667d(c). The CLA, however, does not define the word
"termination." The question presented in this appeal is whether "termination"
occurred when the automobile in this case was repossessed.
ANALYSIS
13
Relying on Pettola v. Nissan Motor Acceptance Corp., 44 F.Supp.2d 442
(D.Conn. 1999), the district court held that a lease terminates for purposes of
the CLA when the claimant releases possession of the vehicle, either
voluntarily or otherwise. See also Highsmith v. Chrysler Credit Corp., 150 B.R.
997, 1001 (N.D.Ill.1993), aff'd in relevant part and rev'd in part on other
grounds, 18 F.3d 434, 436 (7th Cir.1994) (holding lease terminated on date
bankruptcy court entered agreed order rejecting lease, which allowed lessor to
retake possession of car); Kedziora v. Citicorp Nat'l Serv., Inc., 844 F.Supp.
1289, 1292 (N.D.Ill.1994) (finding default occurred when car was totally
destroyed in accident, thereby triggering early termination of lease). We agree
with the district court.
14
In Pettola, the court held that the automobile lease was terminated when the
lessee failed to make the required rental payments and voluntarily surrendered
her car to the dealer. At the time of surrender, the plaintiff had signed a
"Federal Odometer/Lease Termination Statement." As noted by the court in
Pettola, the statute of limitations in the CLA refers to the "termination" of the
lease rather than the expiration of the term set forth in the lease. See Pettola, 44
F.Supp.2d at 448. Moreover, the CLA requires disclosures regarding the
consequences of "early termination." See 15 U.S.C. 1667a(11); Regulation M,
12 C.F.R. 213.4(g). The references to "early termination" evidence the CLA's
contemplation that a lease may be terminated prior to the actual date of
expiration of the lease.
15
In this case, the fact that Ms. Carmichael's car was repossessed instead of
voluntarily turned over to a dealer makes no difference in our analysis of what
constitutes "termination" for the purposes of the statute of limitations. Under
either scenario, Ms. Carmichael, as customer-lessee, no longer has the vehicle
which is the subject of the lease, and a termination of the lease has occurred
before the expiration date of the lease.1 The lease conveyed a right to Ms.
Carmichael to possess the car, so repossession terminated that right.
Repossession was, therefore, the act which signified to Ms. Carmichael that
NMAC was exercising its option to terminate the lease.2 Moreover, Ms.
Carmichael's lease did not require NMAC to give either prior written notice of
intent to terminate or written notice of the actual termination. Thus, even though
NMAC might not have sold the repossessed vehicle until some later date, the
lease in this case was terminated upon the return of the vehicle to the
possession of the dealer or lessor.
16
In conclusion, based on the above analysis, we agree with the district court that
the lease in this case terminated on the date of repossession and not some later
date. We reject, as did the district court, the various arguments concerning the
tolling of the statute of limitations.
17
AFFIRMED.
Notes:
*
Honorable Richard A. Lazzara, U.S. District Judge for the Middle District of
Florida, sitting by designation
In this regard, we also expressly reject Ms. Carmichael's claims that the lease
was not terminated until the date her repossessed vehicle was sold and
assessments calculated according to her lease. In addition, we note that Ms.
Carmichael on appeal does not argue that any state law impacts or informs the
definition of termination of a lease for a vehicle, and thus we do not address
whether that is a possibilitySee In re Lamar, 249 B.R. 822
(Bankr.S.D.Ga.2000).
We can also envision other scenarios where the particular facts of the case may
affect the determination of when termination occurs for the purposes of the
CLA. For example, a creditor who cannot locate the vehicle might give written
notice that the lease is terminated for failure to make timely payments. We
hold, therefore, only that repossession of Ms. Carmichael's vehicle in this case
was sufficient to terminate the particular lease at issue on May 7, 1999, so as to
trigger the CLA's statute of limitations.
2
That NMAC offered Ms. Carmichael an option to redeem the vehicle by paying
the entire unpaid adjusted lease balance, sales tax, and charges for repossession
and collection is not inconsistent with our conclusion that the lease was
terminated as of the date of repossession. In pursuing redemption, Ms.
Carmichael effectively was required to buy the car, thereby owning it outright
as opposed to leasing it from NMAC
