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Hartt v. Flagship Credit Corp.

July 7, 2010


The opinion of the court was delivered by: Norma L. Shapiro, S.J.


Plaintiff, Glynn Hartt, brought this putative consumer class action against defendant, Flagship Credit Corporation ("Flagship"), for violations of the Texas Business & Commercial Code § 9.601, et seq. Flagship is an automobile-finance company. Hartt and the putative class allege that Flagship systematically failed to provide requisite notices of repossession or statutorily required notices in connection with the repossession and resale of financed vehicles as required by the Tex. Bus. & Com. Code. Hartt defines the class as all persons: (1) with addresses within the State of Texas; (2) who financed a vehicle with Flagship primarily for consumer use, and pledged the vehicle for a loan; (3) from whom Flagship repossessed the vehicle or caused it to be repossessed; (4) who were sent a deficient notice in the period commencing December 10, 2005 through the date of class certification. (See Pl. Compl. ¶ 29).


Hartt filed this putative class action in the Court of Common Pleas, Philadelphia County on or about December 10, 2009. Flagship removed the action to the United States District Court for the Eastern District of Pennsylvania based on 28 U.S.C. § 1332 and § 1441, as amended in relevant part by the Class Action Fairness Act of 2005 ("CAFA"). 28 U.S.C. §§ 1332(d)(2)(A), (d)(5)(B). Hartt did not challenge removal. Following removal, the court ordered a rule to show cause addressing the factual basis for removal and the appropriateness of transfer to Texas under 28 U.S.C. § 1404. By order of April 13, 2010, the court ordered that discovery be stayed pending decision on subject-matter jurisdiction and transfer.


1. Subject Matter Jurisdiction

It is the responsibility of the court to inquire, sua sponte, into subject matter jurisdiction even when removal is not challenged. See, e.g., Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006) (subject matter jurisdiction can be raised by the court or the parties at any stage in litigation); Huber v. Taylor, 532 F.3d 237, 249 (3d Cir. 2008) (court must sua sponte determine subject matter jurisdiction). Removal is proper under CAFA when defendant can prove that: (a) any member of the putative class is a citizen of a state different from any defendant; (b) the number of members of all proposed plaintiff classes in the aggregate is more than 100; and (c) the amount in controversy exceeds the sum or value of $5,000,000 exclusive of interest and costs. 28 U.S.C. §§ 1332(d)(2)(A), (d)(5)(B). The removing party asserting federal jurisdiction bears the burden of showing that the action is properly before the federal court. Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007).

A. Diversity

Hartt is a citizen of Texas, and the proposed class is limited to residents of Texas. (Pl. Compl. ¶ 25). Flagship is a Delaware corporation with its principal place of business in Pennsylvania. (Notice of Removal ¶ 3). There is diversity of citizenship if there is the requisite jurisdictional amount.

B. Class Size

David Bertoncini, Flagship's Senior Vice President of Risk and Business Development, testified about the loans and accounts potentially implicated by the proposed class from information compiled in Flagship's electronic records database. (Tr. 4/12/10 at 6). Mr. Bertoncini determined the number of Texas customers with loans in default, excluding customers who signed notification waivers or moved out of Texas, and concluded that the putative class consisted of 902 members. (Tr. 4/12/10 at 8-10). There is sufficient numerosity.

C. Amount in Controversy*fn1

David Bertoncini also testified on the amount in controversy based on the 902 class member accounts in Flagship's electronic records database. The database enabled him to calculate the amount of finance charges paid by the relevant customers, as well as the principal amount of the loan obligations. (Tr. 4/12/10 at 15-23). Based on the statutory formula for minimum damages, Mr. Bertoncini testified that the amount in controversy would exceed $5 million.*fn2 The accrued service charges for all potential members of the putative class total $4,233,041. (Notice of Removal, Ex. A, ¶ 6; Tr. 4/12/10 at 19, 22). The amount of finance charges over the life of the loan total approximately $13 million. (Tr. 4/12/10 at 16, 23). The total amount of the loans is $20,248,091. (Notice of Removal, Ex. A, ¶ 7; Tr. 4/12/10 at 18, 23). The amount in controversy requirement is established.

There is subject-matter jurisdiction under CAFA so removal is proper under 28 U.S.C. § § ...

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