Bell v. First Investors Servicing Corp.

256 A.3d 246

Ma Shun BELL, Appellant,

v.FIRST INVESTORS SERVICING CORPORATION, Appellee.

No. 20-CV-325

District of Columbia Court of Appeals.

Argued June 16, 2021

Decided August 12, 2021

Radi Dennis for appellant.

David M. Ross, with whom Kevin P. Farrell, Washington, was on the brief, for appellee.

Before Thompson and Easterly, Associate Judges, and Okun^* Associate Judge, Superior Court of the District of Columbia.

Thompson, Associate Judge:

On January 9, 2020, plaintiff/appellant Ma Shun Bell filed her Amended Complaint, individually and on behalf of persons similarly situated, against defendant/appellee First Investors Servicing Corporation ("FISC"), alleging abuse of process and defamation as well as violations of the District of Columbia Automobile Financing and Repossession Act ("AFRA"), 16 D.C.M.R. § 300 et seq. (2021) ; the District of Columbia Consumer Protection and Procedures Act ("CPPA"), D.C. Code § 28-3901 et seq . (2013 Repl. & 2021 Supp.); and the District of Columbia Debt Collection Law ("DCL"), D.C. Code § 28-3814 et seq. (2013 Repl.). On March 16, 2020, the Superior Court granted FISC's Super. Ct. Civ. Pro. R 12(b)(6) Motion to Dismiss on the ground of res judicata/claim preclusion. The instant appeal followed. For the reasons that follow, we affirm in part, reverse in part, and remand.

I. Factual Background

In 2012, Ma Shun Bell purchased a vehicle from A&H Motors through a Retail Installment Sales Contract (the "installment sales contract" or the "RISC") that was subsequently assigned to FISC. Towards the end of 2016, Ms. Bell stopped making payments on the vehicle and FISC repossessed the vehicle later that year. On March 29, 2017, FISC filed a claim against Ms. Bell in the Small Claims and Conciliation Branch of the Superior Court (the "Small Claims Branch" or "Small Claims Court") for what it asserts was the "deficiency balance owed." As part of the claim, FISC filed a "Verification Requirement Sheet," which indicated that Ms. Bell owed FISC "$8,271.41 with interest" and stated that the amount was "justly due and owing[.]"

On May 17, 2017, Ms. Bell appeared unrepresented in Small Claims Court and signed a settlement agreement after taking part in court-sponsored mediation. In the agreement, she agreed to pay FISC $8,271.41, at the rate of $150.00 per month, beginning on June 30, 2017. The agreement provided that if Ms. Bell defaulted by failing to make any of the payments, FISC was entitled to apply for entry of judgment against her in the amount of $8,271.41, plus prejudgment interest of $101.97. After Ms. Bell failed to make her monthly payment, FISC obtained a judgment against her on August 8, 2018. After having obtained counsel, Ms. Bell filed a motion to vacate the judgment, a motion for judicial review, and an application for allowance of appeal. All of these requests were denied.

On January 9, 2020, Ms. Bell filed her Amended Complaint, individually and on behalf of those similarly situated, against FISC, alleging five causes of action. The first and second causes of action included class and individual claims for violations of the AFRA (and its implementing regulations) and the CPPA. Ms. Bell's third, fourth, and fifth causes of action were individual claims alleging violations of the DCL, abuse of process, and defamation.

On January 22, 2020, FISC filed its Motion to Dismiss the Amended Complaint. On March 16, 2020, the trial court granted FISC's motion based on the doctrine of res judicata/claim preclusion. The trial court found that "Ms. Bell's allegations about FISC's collection practices and the underlying collection case [in which judgment was entered in Small Claims Court] share a common nucleus of facts[.]" The trial court also rejected Ms. Bell's argument that claim preclusion applied only to claims that were compulsory counterclaims in the suit that she and FISC settled. This appeal followed.

In her opening brief, Ms. Bell argues that there are several bases for reversal. First, she asserts that the claims she set out in her Amended Complaint were permissive rather than compulsory in FISC's Small Claims Branch suit and contends that, under the principle applied in this court's decision in Smith v. Greenway Apartments LP , 150 A.3d 1265 (D.C. 2016), res judicata can bar a permissive claim only "if prosecution of [such] claim would nullify or impair the rights of the party seeking preclusion under the first judgment." That is not the case here, she argues, because "FISC's right and interest to the [amount] awarded in the 2018 consent judgment is not disputed or challenged" and has been "paid and fully satisfied by Ms. Bell[,]" such that FISC's rights or interest in the "satisfied judgment" would not be affected by pursuit of her claims in the instant matter. Ms. Bell urges us to hold that because the trial court's order "cannot be reconciled with Smith , the trial court erred."¹

Ms. Bell further contends that FISC's "breach of contract action" was not based on the same transaction or occurrence as her "affirmative claims stemming from [FISC's] unlawful debt collection methods." Ms. Bell argues that the "factual nucleus" of her claims consists of "FISC's debt collection methods alleged to have violated DCMRs" as well as "FISC's false statements and omissions made to [her], to third parties and through affidavits relating to the amount owed and FISC's intentional and knowing business practice of converting legally uncollectable debts into valid judgments[,]" and that her claims do not rest on the installment contract that she asserts "[wa]s the basis for the 2018 consent judgment."

Ms. Bell additionally argues that the 2018 consent judgment, which is asserted as the basis for the res judicata bar, "is silent on waiver or relinquishment of [her] consumer protection claims." She argues that because she did not waive her rights under consumer protection laws when she entered into the settlement agreement on which the consent judgment was based, the consent judgment cannot be a basis for precluding her consumer protection claims.

FISC defends the trial court's res judicata ruling and further argues that Maryland law, rather than District of Columbia consumer protection laws, applied to Ms. Bell's contract, undermining the premise of her entire case and providing an alternate basis to uphold the trial court's dismissal ruling.² We address these arguments in turn, beginning with FISC's argument about the applicability of District of Columbia law, an argument that if successful would obviate the need to address Ms. Bell's statutory claims.

II. Standard of Review

We review the "dismissal of a claim pursuant to a 12(b)(6) motion de novo, ‘presuming the complaint's factual allegations to be true and construing them in the light most favorable to [the plaintiff].’ " Calomiris v. Calomiris , 3 A.3d 1186, 1190 (D.C. 2010) (quoting Bleck v. Power , 955 A.2d 712, 715 (D.C. 2008) ). "To survive a motion to dismiss, a complaint must set forth sufficient facts to establish the elements of a legally cognizable claim." Woods v. District of Columbia , 63 A.3d 551, 552–53 (D.C. 2013). "In examining the sufficiency of the complaint, the court may consider the complaint itself and any documents it incorporates by reference [here, the RISC]." Abdelrhman v. Ackerman , 76 A.3d 883, 887 (D.C. 2013).

III. Analysis

A. The Applicability of District of Columbia Law

Citing this court's analysis in Chamberlain v. Am. Honda Fin. Corp. , 931 A.2d 1018 (D.C. 2007), FISC argues that Maryland law rather than District of Columbia law applied to the installment sales contract, with the result that Ms. Bell's AFRA, CPPA, and DCL claims are not cognizable. We conclude that the factual record is insufficiently developed on this issue to permit us to determine whether Ms. Bell's statutory claims fail on this ground.

In Chamberlain , plaintiffs/appellants, who were District residents, purchased their vehicles in Maryland and financed their purchases through defendant/appellee American Honda Finance Corporation ("AHFC"), which repossessed their vehicles. Id . at 1019. Appellants argued that AHFC violated 16 D.C.M.R. § 341.5 (governing the storage of vehicles repossessed in the District) and § 342.2 (governing the fees associated with such repossession) and that these violations constituted unfair and deceptive trade practices, which violated the CPPA. Id . at 1020. The trial court concluded that Maryland law applied and dismissed appellants’ amended complaint for failure to state a claim because it cited only District of Columbia statutes and regulations as a basis for relief. Id . at 1021. We affirmed the trial court's ruling. Id . We explained that the key issue was whether the regulations relied upon by appellants applied given that they did not purchase their vehicles within the District. Id . at 1024. We concluded as a matter of law that § 341.5 and § 342.2 did not apply. Id . at 1021.

Explaining that conclusion, we noted that "[a]ccording to their plain language, these two regulations apply only to ‘holders[,]’ " id. at 1024, defined under 16 D.C.M.R. § 399.1 to include "any person legally or beneficially entitled to the proceeds of the instrument of security." We noted that under D.C. Code § 50–601(5) (2001), incorporated by reference in 16 D.C.M.R. § 399.1, an "instrument of security" "means any promissory note, retail installment contract , or other written promise to pay the unpaid balance of the total amount to be paid by a retail buyer of a motor vehicle." Id. (emphasis added) (quoting D.C. Code § 50–601(5) ). We further noted the definition of a "retail installment contract," id. at 1024, which D.C. Code § 50–601(9) defines as:

[A] contract entered into in the District or entered into by a seller licensed or required to be licensed by the District evidencing a retail installment transaction pursuant to which the title to or a lien on, or security or a security interest in, the motor vehicle, which is the subject matter

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