DCFS USA, LLC v. Dist. of Columbia

803 F.Supp.2d 29

DCFS USA, LLC, Plaintiff,

v.DISTRICT OF COLUMBIA, et al., Defendants.

Civil Action No. 10–042 (RMC).

United States District Court, District of Columbia.

Aug. 17, 2011.

James Douglas Cuthbertson, LeClairRyan, Alexandria, VA, Jeena S. Patel, Michael G. Brady, Warner Norcross & Judd LLP, Southfield, MI, for Plaintiff.

Michael J. Lanzdorf, Tasha Monique Hardy, Office of the Attorney General, District of Columbia, Washington, DC, for Defendants.

MEMORANDUM OPINION

ROSEMARY M. COLLYER, District Judge.

This is a case about a luxury car auctioned by the District of Columbia Department of Public Works (“DPW”) without notice to the holder of the note. Plaintiff DCFS USA, LLC (“DCFS”) sues the District of Columbia under the Fifth Amendment of the U.S. Constitution and 42 U.S.C. § 1983, complaining that the D.C. failed to provide constitutionally-required prior notice. Finding merit to the constitutional claim, the Court will enter summary judgment for DCFS on Count I of the Amended Complaint.

I. FACTS

In 2006, Stephen Yelverton purchased a 2006 Mercedes Benz SLK350 (the “Vehicle”) from Mercedes Benz of Alexandria in Alexandria, Virginia. Mr. Yelverton signed a purchase agreement, under which he gave a down payment of $8,000.00 towards the Vehicle's purchase price of $55,177.66, and agreed to sixty monthly payments of $706.17 beginning in September 2006, with a final payment of $23,106.30 due in September 2011. The total purchase price, with interest, was $65,476.50. The Vehicle operated with a Virginia license plate.

Mercedes Benz of Alexandria assigned the purchase agreement to DaimlerChrysler Financial Services Americas LLC (“DCFSA”), giving DCFSA a first security interest in the Vehicle. DCFSA's security interest was properly perfected and was reflected on the Vehicle's Certificate of Title. Plaintiff DCFS is the successor in interest to DCFSA and thus became the secured creditor to the Vehicle. Eventually, Mr. Yelverton defaulted on the purchase agreement by failing to make timely payments. DCFS notified Mr. Yelverton of his default and demanded payment in full, in the amount of $42,606.70, on September 16, 2008. Mr. Yelverton never cured the default.

On December 22, 2008, the DPW towed and impounded the Vehicle. On January 12, 2009, the DPW published an impoundment notice in The Washington Times, notifying the public of the DPW's intent to sell the Vehicle at auction. On February 4, 2009, the DPW sent an impoundment notice, by first class mail, to Mr. Yelverton at his last known address. Mr. Yelverton did not respond to the notice. The Vehicle was advertised for online auction between March 12 and March 19, 2009, and was sold on March 17, 2009, for $18,900. As of that date, it remained unclaimed. The DPW sold the Vehicle free and clear of DCFS's security interest.

The District of Columbia provided neither DCFSA nor DCFS with prior mailed notice that the Vehicle was impounded and might be auctioned. In July 2009, DCFS learned that the Vehicle had been auctioned by DPW after conducting an internet search using the Vehicle's vehicle identification number. An employee of DPW then informed DCFS that it had not received notice because the Vehicle was not registered in the District. Pl.'s Cross– Mot. for Summ. J. & Opp'n to Def.'s Mot. for Summ. J. [Dkts. # 31, 32] (“Pl.'s Opp'n”), Ex. I (Aff. of Ernie Bucks) ¶ 8. At the time the Vehicle was sold, Mr. Yelverton owed DCFS more than $42,000. DCFS demanded that the District reimburse it for the full amount, but the District rejected the demand. This lawsuit followed.

DCFS alleges that the District denied it prior notice and a meaningful opportunity to be heard on the impoundment and sale of the Vehicle in violation of its right to procedural due process under the Fifth Amendment of the United States Constitution (Count I) and also alleges a violation of 42 U.S.C. § 1983 (Count II). See Am. Compl. [Dkt. # 27] Counts I–II. The Court ordered discovery solely on Count I, the Fifth Amendment claim, as the § 1983 claim would rise or fall with the first count. DCFS filed an Amended Complaint on November 19, 2010, omitting claims against Mr. Yelverton after he was voluntarily dismissed. See Am. Compl.; Notice of Voluntary Dismissal [Dkt. # 8]. The District filed an amended motion to dismiss, or in the alternative, for summary judgment and DCFS cross-moved for summary judgment. The cross motions are ripe.

II. LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the adequacy of a complaint on its face, testing whether a plaintiff has properly stated a claim. Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Id. 8(a)(1). A complaint must be sufficient “to give a defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted). Although a complaint does not need detailed factual allegations, the facts alleged “must be enough to raise a right to relief above the speculative level.” Id. In deciding a motion under Rule 12(b)(6), a court must treat the complaint's factual allegations as true, “even if doubtful in fact.” Id.

Summary judgment should be granted only if the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991 (D.C.Cir.2002). In determining whether a genuine issue of material fact exists, the court must view all facts and draw all justifiable inferences in the nonmoving party's favor and accept the nonmoving party's evidence as true. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A nonmoving party, however, must establish more than “the mere existence of a scintilla of evidence” in support of its position. Id. at 252, 106 S.Ct. 2505. In addition, the nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton, 164 F.3d 671, 675 (D.C.Cir.1999). Rather, the nonmoving party must present specific facts that would enable a reasonable jury to find in its favor. Id. at 675. If the evidence “is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505 (citations omitted).

III. ANALYSIS

A. Admissibility of Certain Evidence

The District of Columbia seeks to have the Court consider an affidavit by Cynthia Jones, a Certified Public Manager for DPW's Abandoned Vehicle Division which states:

1. On December 23, 2008, the District inquired of the Maryland, Virginia, Pennsylvania and Delaware motor vehicle departments for information related to the ownership of the Vehicle, using its Virginia license plate number. These inquiries were made electronically, using the Washington Area Law Enforcement System (“WALES”), a computerized information system. The WALES system is the primary tool available to DPW to obtain ownership information for vehicles in its possession. All four departments reported that the license plate number was not registered in their jurisdiction.

2. On February 4, 2009, the District again inquired of the Virginia Department of Motor Vehicles (“DMV”) for information about the Vehicle, this time providing its vehicle identification number. The Virginia DMV, using the National Law Enforcement Telecommunications System, responded with the name and address of Mr. Yelverton. No additional information was provided.

See Def.'s Reply & Opp'n to Pl.'s Cross–Mot. for Summ. J. [Dkts. # 34, 35] (“Def.'s Reply”), Ex. A (Affidavit of Cynthia Jones) (“Jones Aff.”) ¶¶ 4, 7. The District introduced the Jones Affidavit, and the facts stated therein, for the first time in its combined reply and opposition to DCFS's cross-motion for summary judgment.

DCFS strongly objects to the District's attempt to undermine its previous admission in discovery that D.C. did not search the database of Virginia's DMV to determine whether there were any lienholders reflected on the Vehicle's title. See Pl.'s Reply [Dkt. # 36] at 5–6. The District admitted—and the Court judicially established as fact—that it “did not search the records of Virginia's Department of Motor Vehicles to determine whether there were any lien holders reflected on the title of the Vehicle.” Pl.'s Opp'n, Ex. G (District's Responses to Admission Requests) ¶ 5.¹

Nonetheless, the District incredibly argues now that its admission before is not inconsistent with the Jones Affidavit that “[o]n December 23, 2008, inquiries were sent by the DPW to ... the Virginia Department of Motor Vehicles ... for information related to the ownership” and lienholder information of the Vehicle. Jones Aff. ¶ 4, see also id. ¶ 7 (further explaining that “an additional inquiry identifying the Vehicle by its Vehicle Identification Number was sent by the DPW to the Virginia Department of Motor Vehicles through WALES for information about the Vehicle”). The District contends that it employed WALES to conduct the inquiry, but did not search Virginia's DMV database itself. See Def.'s Surreply [Dkt. # 40] at 3 (“WALES does not allow the District to search the Virginia Department of Motor Vehicles' records; rather, WALES simply allows the District to request information concerning vehicles in its possession about which other states may have information.”). In other words, the District used WALES as an intermediary to inquire of the Virginia DMV database as to information concerning the Vehicle, its previous admission and the Court's sanction to the contrary. The Court will not permit such gamesmanship. The District cannot undermine this...