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William Hudson v. Eaglemark Savings Bank

May 9, 2011


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


Plaintiff William Hudson brings this putative consumer class action, on his own behalf and on behalf of others similarly situated, against motorcycle finance companies Eaglemark Savings Bank ("Eaglemark") and Harley-Davidson Credit Corp. ("HDCC"). Plaintiff alleges that, in connection with HDCC's repossession and sale of his Harley-Davidson motorcycle, Defendants failed to provide him with proper notice of disposition of collateral as required by the Uniform Commercial Code ("UCC"), 13 Pa. Cons. Stat. §§ 1101-5118, 7101-9710. Currently before the Court is Defendants' Motion to Dismiss the Amended Complaint. For the reasons that follow, we grant the Motion.


The Amended Complaint alleges the following facts. Plaintiff is a resident of Norristown, Pennsylvania. (Am. Compl. ¶ 4.) Defendants are Nevada corporations. (Id. ¶¶ 5, 7.) HDCC extends credit to consumers to purchase Harley-Davidson motorcycles. (Id. ¶ 12.) Eaglemark is a wholly-owned subsidiary of HDCC. (Id. ¶ 9.)

On June 30, 2007, Plaintiff purchased a new motorcycle from Smaltz's Harley-Davidson, Inc. ("Smaltz's"), a Harley-Davidson franchised dealer. (Id. ¶¶ 18-19.) Smaltz's arranged for on-site financing of the motorcycle through Eaglemark. (Id. ¶ 20.) Plaintiff signed a "Bill of Sale" listing Smaltz's as the seller and signed a "Promissory Note (Simple Interest) and Security Agreement" (the "Promissory Note"), which listed Eaglemark as the lender. (Id. ¶ 21 & Exs. A & B.) The Promissory Note stated that, in the event of a repossession, "'lender will mail a written notice of sale to you no less than ten (10) and no more than twenty (20) days (depending on the state you reside in) before selling the vehicle.'" (Id. ¶ 36 (quoting Ex. B ¶ 15).) The Promissory Note also stated that, upon Eaglemark's receipt and funding of the contract, the contract would automatically be assigned to HDCC. (Id. ¶ 27 (citing Ex. B ¶ 21).) Eaglemark assigned the contract to HDCC shortly thereafter. (Id. ¶ 28.)

Over the next two years, Plaintiff made monthly payments to HDCC. (Id. ¶ 29.) However, in 2009, he fell behind in his payments. (Id. ¶ 30.) On October 6, 2009, HDCC repossessed Plaintiff's motorcycle and sent to Plaintiff, by certified mail, a "Notice of Our Plan to Sell Property" (the "Notice"). (Id. ¶¶ 31, 34 & Ex. C.) The Notice stated, among other things, that HDCC planned to sell Plaintiff's motorcycle "'at a private sale sometime after' October 16, 2009." (Id. ¶ 35 (quoting Ex. C).)

Plaintiff alleges in the Amended Complaint that Eaglemark and HDCC violated the UCC by failing to provide proper and reasonable post-repossession notification of disposition. Specifically, Plaintiff alleges that the Notice was deficient because it (1) provided only ten days notice of the sale of the motorcycle; (2) failed to advise Plaintiff that the proceeds of the sale of his motorcycle, minus the costs of the sale, would reduce the amount Plaintiff owed; (3) failed to advise Plaintiff that he could recover his motorcycle at any time before the sale by paying the full amount he owed (not just past due payments) plus expenses; (4) failed to state the telephone number that Plaintiff could call to learn the exact amount he would have to pay to recover his motorcycle; (5) failed to provide an itemized statement of the amount required to recover the motorcycle; (6) failed to state the address of the place where the motorcycle was stored; and (7) failed to advise Plaintiff that any personal property left in the motorcycle would be held for 30 days from the date of the Notice.


In reviewing a motion to dismiss, we take the factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citing Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). Legal conclusions, however, receive no deference, and the court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986) (cited with approval in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A plaintiff's pleading obligation is to set forth "a short and plain statement of the claim," Fed. R. Civ. P. 8(a)(2), which gives the defendant "fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (quotation omitted). The "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570).


Because we have diversity jurisdiction over this case, we must apply state law. Berrier v. Simplicity Mfg., Inc., 563 F.3d 38, 46 n.11 (3d Cir. 2009) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). The parties agree that Pennsylvania law applies. Under Pennsylvania law, "a secured party that disposes of collateral" upon a debtor's default must send to the debtor "a reasonable authenticated notification of disposition." 13 Pa. Cons. Stat. § 9611(b). "The notification must be reasonable as to the manner in which it is sent, its timeliness (i.e., a reasonable time before the disposition is to take place), and its content." 13 Pa. Cons. Stat. § 9611 cmt. 2 (citing 13 Pa. Cons. Stat. §§ 9612-9614).

The Amended Complaint alleges that the Notice was unreasonable both because it was untimely and because it failed to include certain information and advisories that the UCC allegedly requires. Defendants have moved to dismiss the Amended Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6), asserting that the Amended Complaint fails to state a claim upon which relief may be granted because the Notice, which is attached to the Amended Complaint, fully complied with the UCC. We first consider the timeliness of the Notice, and then turn to the reasonableness of its contents.

A. The Timeliness of the Notice

Defendants argue that we should dismiss Plaintiff's claim that the Notice was untimely because the UCC requires only that a notice of disposition of collateral be sent within a reasonable time and the Amended Complaint does not state a plausible claim that the ten days notice provided in this case was unreasonable. In response, Plaintiff notes that the Pennsylvania Motor Vehicle Sale Financing Act ("MVSFA"), 69 P.S. ยงยง 601-637.1, requires that a lender provide fifteen days notice of its intent to sell a repossessed motor vehicle and contends that this time requirement applies in this UCC action. In the ...

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