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Esty v. HSBC Auto Finance

March 3, 2009


The opinion of the court was delivered by: (Judge Munley)


Before the court is plaintiff's motion for a preliminary injunction (Doc. 6).


This matter arises from a loan agreement between the plaintiff and defendant HSBC Auto Credit, Inc. Plaintiff entered into that agreement on March 20, 2008. (See Exhibits to Plaintiff's Complaint (Doc. 1-2)). In the agreement, defendant agreed to lend plaintiff $19,736.60, to be repaid over sixty months at 16.79% interest for the purchase of an automobile. (Id.). The vehicle that plaintiff purchased, a 2007 Mini Cooper, served as security for the loan. (Id.). Plaintiff made payments on the loan for several months. He eventually fell behind on those payments, however, and on February 6, 2009, Defendant HSBC Auto Finance sent plaintiff a notice of repossession, notice of right to redeem and notice of plan to sell property. (See Exh. 1 to Plaintiff's Motion for a Temporary Restraining Order (Doc. 6-2)). Plaintiff was past due on almost $2,000 in payments. (Id.). According to testimony at the hearing on plaintiff's motion, the defendants eventually repossessed the automobile in question.

Plaintiff filed the instant pro se complaint on February 6, 2009. (See Doc. 1). He alleges that the debt on an auto loan he signed was invalid because the defendants violated federal truth-in-lending law (15 U.S.C. § 1601, et seq.) in failing to disclose the terms of the loan and in failing to obtain a valid signature on the agreement. He seeks to have the court declare the contract void and discharge the plaintiff from any liability on the loan. He raises several claims. First, plaintiff alleges that defendants violated 12 U.S.C. § 1831 when they failed to inform him, as borrower, that Federal Reserve policies and procedures prohibit certain lenders from lending their own assets or the assets of other bank depositors. Second, plaintiff alleges that defendants did not inform him that his promissory note would be converted into a negotiable instrument that became an asset on the bank's books. Third, the banks allegedly did not inform plaintiff that his signature--not the banks--transformed the note into a negotiable instrument. Fourth, the banks failed to accede to plaintiff's express written request to provide proof of claim on the debt, and to tell plaintiff that the debt would be converted to an asset and sold without valuable consideration. Fifth, the lender did not provide plaintiff with a deposit slip for the money he provided under the loan converted into an asset. Defendant Felicia Straub is charged with aiding and abetting this scheme.

Plaintiff filed a motion for a temporary restraining order (TRO) (Doc. 6) on February 17, 2009. He alleged that the defendants planned to sell the automobile, in which he had a "perfected security interest." Plaintiff sought an injunction from the court preventing the sale of the automobile until the question of the loan agreement's validity was settled. He asserted that he would face irreparable harm from the sale of the car before he had an opportunity to litigate his claim.

United States District Judge A. Richard Caputo, to whom this matter is assigned, considered the plaintiff's motion for a TRO.*fn1 On January 19, 2009, Judge Caputo issued a memorandum and order (Doc. 7) denying the plaintiff's request for a temporary restraining order. Judge Caputo found that plaintiff had not made any showing that he would suffer immediate and irreparable injury, loss or damage. Because Federal Rule of Civil Procedure 65(b) requires such a showing, Judge Caputo denied the motion. At the same time, however, he scheduled a hearing on plaintiff's request for a preliminary injunction.

The court conducted this hearing on March 2, 2009. After considering the testimony of the plaintiff, who proceeded pro se and the representations of attorneys for the defendants, the court denied the motion for a preliminary injunction and ordered the defendants to respond to the complaint within twenty days. This memorandum and order serves to memorialize the court's action.


As this case is brought pursuant to 12 U.S.C. § 1831, the court has jurisdiction under 28 U.S.C. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.").

Legal Standard

The Third Circuit Court of Appeals has outlined four factors that a court ruling on a motion for a preliminary injunction must consider: (1) whether the movant has shown a reasonable probability of success on the merits; (2) whether the movant will be irreparably injured by denial of the relief; (3) whether granting preliminary relief will result in even greater harm to the nonmoving party; and (4) whether granting the preliminary relief will be in the public interest. Crissman v. Dover Downs Entertainment Inc., 239 F.3d 357, 364 (3d Cir.2001).

The above factors merely "structure the inquiry" and no one element will necessarily determine the outcome. The court must engage in a delicate balancing of all the elements, and attempt to minimize the probable harm to legally protected interests between the time of the preliminary injunction to the final hearing on the merits. Constructors Association of Western Pa. v. Kreps, 573 F.2d 811, 815 (3d Cir.1978). The movant ...

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