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Cosgrove v. Citizens Automobile Finance

August 26, 2010


The opinion of the court was delivered by: Schiller, J.


Plaintiff Brian Cosgrove seeks to represent a class of individuals who lost their automobiles after failing to make required loan payments and allegedly received notice of repossession that was defective under the Uniform Commercial Code ("UCC"). Currently before the Court are (1) Defendant Citizens Automobile Finance's Motion for Judgment on the Pleadings; (2) Cosgrove's Motion for Leave to File a Second Amended Complaint; (3) Defendant's Motion for Leave to Assert a Counterclaim; and (4) Defendant's Motion to Shift the Costs of Discovery. For the reasons stated below, the Court will deny the first three motions with prejudice and deny the final motion without prejudice.*fn1


Plaintiff Brian Cosgrove purchased two Mitsubishi automobiles from a Downingtown car dealership in December 2004, arranging for financing through Defendant Citizens Automobile Finance ("Citizens" or "Defendant"). (Am. Compl. ¶¶ 15, 18.) The financing contracts included the following clause:


If the vehicle has been repossessed, you may reinstate this Contract and the vehicle will be returned to you provided you pay all past due installments or agree with us on mutually satisfactory arrangements, plus accrued late charges, and if default at the time of repossession exceeded 15 days, expenses of retaking, repairing, and storage authorized by law. (Am. Compl. Exs. A, B.)

A little over a year after buying his new cars, Plaintiff became unable to make his monthly payments. (Am. Compl. ¶ 21.) He contacted Citizens to tell it that it "could repossess the two Autos." (Id.) Citizens reclaimed the cars on February 25, 2006 and March 29, 2006. (Id. ¶ 22.) A day after each car was taken, Citizens sent Plaintiff a document titled "Notice of Repossession, Redemption Rights and Deficiency Balance Obligation Under Pennsylvania State Law," which read in pertinent part: "You may redeem the vehicle by paying the entire amount you owe on the Contract (not just past due payments) plus, to the extent permitted by law, the cost of taking and storing the vehicle, and other expenses that we have incurred." (Id. Exs. C, D.)

Plaintiff filed this putative class action on behalf of himself and similarly situated consumers, alleging that Citizens violated Sections 9610 and 9611 of Pennsylvania's version of the UCC because it failed to provide commercially reasonable notification of disposition. (Id. ¶¶ 36--38.) Under Pennsylvania law, "[e]very aspect of a disposition of collateral, including the method, manner, time, place and other terms, must be commercially reasonable." 13 PA. CONS. STAT. §§ 9610(b). Furthermore, "a secured party that disposes of collateral under section 9610 (relating to disposition of collateral after default) shall send to the persons specified in subsection (c) a reasonable authenticated notification of disposition." 13 PA. CONS. STAT. § 9611(b). Plaintiff's case is brought under the UCC, but incorporates the standard for notice of reinstatement of rights described in the Motor Vehicle Sales Finance Act ("MVSFA"), which states, inter alia, that [w]hen repossession of a motor vehicle, which is the subject of an installment sale contract, is effected otherwise than by legal process, the holder shall immediately furnish the buyer with a written 'notice of repossession' . . . . [that] shall set forth the buyer's right as to reinstatement of the contract, if the holder extends the privilege of reinstatement and redemption of the motor vehicle [and] shall contain an itemized statement of the total amount required to redeem the motor vehicle. 69 PA. CONS. STAT. § 601, et seq. Plaintiff claims jurisdiction in this Court is proper pursuant to the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d).

Plaintiff alleges that Citizens' notice was insufficient because it (1) failed to notify consumers of their rights to reinstate their loan contracts, which according to the contract could be triggered by paying past due installments, and (2) misrepresented that consumers could only get their cars back if they paid the full amount owed on the loan. (Id. ¶¶ 38--39.) Plaintiff alleges that the notice sent by Citizens grossly mischaracterized the sum Plaintiff would need to pay to reinstate his loan contract, inflating his obligation more than tenfold. (Id. ¶¶ 7, 28.) According to Plaintiff, all of this renders the notice Citizens sent to him and others similarly situated unreasonable for purposes of the UCC.


Judgment on the pleadings "will not be granted unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law." Sheridan v. NGK Metals Corp., 609 F.3d 239, 260 n.25 (3d Cir. 2010). The Court must view all facts in the light most favorable to the non-moving party, and accept as true all allegations in the non-movant's complaint. Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008).The Court may grant a judgment on the pleadings only "if it is beyond doubt that the non-movant can plead no facts that would support his claim for relief." Constitution Bank v. DiMarco, 815 F. Supp. 154, 157 (E.D. Pa. 1993).

Motions to amend should be freely granted when justice so requires. FED. R. CIV. P. 15.

However, motions to amend can be denied as futile when an amended complaint would fail to state a claim on which relief could be granted. In re Burlington Coat Factory ...

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