Garcia v. Mega Auto Outlet

CARLOS ALEXIS MARTINEZ GARCIA, Plaintiff, v. MEGA AUTO OUTLET, et al., Defendants.

Civil Action No. 1:20-cv-945 (LO/TCB)

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

February 23, 2021

REPORT AND RECOMMENDATION

THIS MATTER is before the Court on Plaintiff Carlos Alexis Martinez Garcia's ("Plaintiff") Motion for Default Judgment as to Defendant Mega Auto Outlet ("Defendant") (Dkt. 10).¹ For the reasons articulated below, the undersigned U.S. Magistrate Judge recommends that the Court grant in part Plaintiff's motion at to Counts I, II, and III and dismiss Count IV of the Complaint.

I. BACKGROUND

A. Procedural Posture

Plaintiff filed this lawsuit against Defendant Mega Auto Outlet ("Defendant") on August 21, 2020 pursuant to the Federal Truth in Lending Act (TILA), 15 U.S.C. § 1640; the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691(e); the Virginia Consumer Protection Act (VCPA), Va. Code Ann. § 59.1-200; and common law fraud. (See dkt. 1.) Plaintiff requested theclerk's entry of default on December 4, 2020, and the clerk entered default on December 7, 2020. (Dkts. 7, 8.)

Plaintiff filed the instant motion on January 29, 2021 and noticed the motion for a hearing on Friday, February 12, 2021. (Dkts. 10, 11, 12.) Then, the undersigned issued an order on February 1, 2021 stating:

"[T]o proceed as cautiously and safely as possible, the Court will not hold a hearing on this matter. Instead, the Court will allow any interested party to file an objection within twenty (20) days of the date of this order. Accordingly, any objections to Plaintiff's motion for default judgment are to be filed with the Clerk's office by Monday, February 22, 2021 at 5:00 p.m. The undersigned will then issue a Report and Recommendation concerning the default judgment without a hearing.

(Dkt. 13 at 1.)

No interested party filed a timely objection with the Clerk's office. Accordingly, the undersigned issues this Report and Recommendation to address Plaintiff's motion for default judgment.

B. Jurisdiction and Venue

Before the Court can render default judgment, it must have subject-matter and personal jurisdiction over the defaulting party, and venue must be proper.

First, the undersigned finds that this Court has federal question subject-matter jurisdiction. Plaintiff brought this cause of action pursuant to the TILA and the ECOA, federal statutes. (See Compl. ¶ 2.) This Court therefore has original jurisdiction under 28 U.S.C. § 1331 (jurisdiction over "civil actions arising under the Constitution, laws, or treaties of the United States"). Additionally, this Court has supplemental jurisdiction over the related state law claims under the VCPA and for common law fraud pursuant to 28 U.S.C. § 1367. (Id.)

Second, the Court has personal jurisdiction over Defendant. The standards of federal dueprocess and the forum state's long-arm statute must be satisfied for a federal court to have personal jurisdiction over a party. See Tire Eng'g & Distribution, LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 301 (4th Cir. 2012). Federal due process permits personal jurisdiction where a defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Further, "a defendant should be able to anticipate being brought to court in the forum, in that the contacts must be directed at the forum state in more than a random, fortuitous, or attenuated way." ePlus Tech., Inc. v. Aboud, 313 F.3d 166, 176 (4th Cir. 2002). Virginia's long-arm statute, Virginia Code section 8.01-328.1, provides for personal jurisdiction to the extent that federal due process permits. Id. With federal due process and Virginia's long-arm statute requiring the same standard, essentially only one inquiry is required. See id.

Furthermore, a court may either have specific jurisdiction, which arises when the defendant's contacts with the forum state give rise to the basis of the lawsuit, or general jurisdiction, which arises when the defendant is domiciled in the forum state or if the defendant has affiliations with the state that are so "continuous and systematic" as to render the party "essentially at home." Fireclean LLC v. Tuohy, No. 1:16-cv-294-JJC-MSN, 2016 WL 4414845, at *2 (E.D. Va. June 14, 2016) (citation omitted); see also Tire Eng'g, 682 F.3d at 301 (citation omitted). Here, the Court has general jurisdiction over Defendant because Defendant is a Virginia limited liability company with its principal places of business at 3335 Jefferson Davis Highway, Stafford, Virginia 11554. (Compl. ¶ 5.) Accordingly, Defendant has availed itself to this Court's general jurisdiction.

Lastly, Plaintiff filed this lawsuit in the proper venue. Under 28 U.S.C. § 1391(b), venueis proper in a judicial district (1) "in which any defendant resides, if all defendants are residents of the State in which the district is located"; or (2) "in which a substantial part of the events or omissions giving rise to the claim occurred." 28 U.S.C. § 1391(b)(1)-(2). Here, venue is proper under either provision because Defendant is a Virginia limited liability company and all alleged events took place in Virginia. (Compl. ¶ 3.)

C. Service of Process

Before the Court can render default judgment, it must be satisfied that the defaulting parties have been properly served.

Under Federal Rule of Civil Procedure 4(h)(1)(B), a plaintiff can serve a corporation, partnership, or association "by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process." Fed. R. Civ. P. 4(h)(1)(B). Turning to Rule 4(e)(1), the provision allows service by "following state law . . . where the district court is located or where service is made." Fed. R. Civ. P. 4(e)(1). Under Virginia code section 8.01-299, a plaintiff may serve a domestic limited liability company "[b]y personal service on any officer, director, or registered agent." Va. Code Ann. § 8.01-299(1) (2020).

Here, Plaintiff's private process server delivered a copy of the summons and complaint to Faiz Akbar, owner of Defendant Mega Auto Outlet, on October 7, 2020. (See Dkt. 4.) Accordingly, the undersigned is satisfied that Plaintiff effected proper service on Defendant.

II. FINDINGS OF FACT

Upon a full review of the pleadings and record in this case, the undersigned finds that Plaintiff has established the following facts.

Plaintiff visited Mega Auto Outlet on January 25, 2020 to negotiate a trade-in of his 2005Nissan Frontier for a Toyota Tacoma he had seen in a Facebook advertisement. (Compl. ¶¶ 7-8; Martinez Garcia Decl. ¶ 1.) After discussion with one of Defendant's salesmen, Defendant orally agreed to sell the Toyota Tacoma to Plaintiff for $7,999.00. (Compl. ¶ 9; Martinez Garcia Decl. ¶¶ 1-6.) They further agreed that Plaintiff would trade in his 2005 Nissan for $3,000.00 and that Plaintiff would pay the remaining balance for the Toyota Tacoma by making payments of $338.41 over a period of 18 months. (Compl. ¶¶ 10-11; Martinez Garcia Decl. ¶¶ 5, 7.) Plaintiff had not yet arranged for insurance for the Toyota Tacoma, however, so he left Mega Auto Outlet without finalizing the parties' agreement. (Compl. ¶ 12; Martinez Garcia Decl. ¶ 8.)

Plaintiff returned to Mega Auto Outlet two days later, January 27, 2020 to finalize the deal. (Compl. ¶ 13; Martinez Garcia Decl. ¶ 9.) That day, Plaintiff met with an assistant manager who confirmed that the price of the Toyota Tacoma was $7,999.00 to be paid for with the $3,000.00 trade-in value and payments of $348.00 over a period of 18 months. (Compl. ¶ 15.) In finalizing the agreement, the assistant manager passed Plaintiff documents to sign from across his desk and Plaintiff signed every document the assistant manager handed him. (Compl. ¶¶ 16-18.) Plaintiff, however, speaks Spanish and could not read the documents because they were in English. (Compl. ¶ 19.) Regardless, Plaintiff signed the documents because he understood the terms of the agreement and believed each document was necessary in order to purchase the vehicle in accordance with the negotiated terms. (Compl. ¶ 20.)

All of the documents were on paper and Plaintiff did not electronically sign any documents. (Compl. ¶¶ 21-23; Martinez Garcia Decl. ¶ 10.) Further, Plaintiff signed all of the documents by hand himself, and did not authorize anyone else to sign contracts for him. (Compl. ¶ 24.) The assistant manager did not disclose the identity of the creditor or amount financed pursuant to the TILA, 15 U.S.C. § 1638. (Compl. ¶ 25.)

Defendant did not present Plaintiff with a retail installment sale contract. (Compl. ¶ 26.) Plaintiff initialed a Buyer's Order, and Defendant gave him a copy of only pages two and three of the document.² (Compl. ¶ 28.) The copy of the second and third pages of the Buyer's Order did not contain the information required by VA Code Ann. § 46.2-1530. (Compl. ¶ 29.)

Plaintiff also signed a promissory note for $3,000.00, which he believed confirmed the trade-in agreement.³ (Compl. ¶¶ 30-31.) Defendant did not request that Plaintiff pay any cash that day, nor did Plaintiff pay cash that day. (Compl. ¶¶ 32-33.) The assistant manager, however, instructed Plaintiff to tell Westlake Financial that he paid $3,000.00 in cash and not to divulge that the $3,000.00 value was actually a trade-in.⁴ (Compl. ¶¶ 34.)

Pursuant to the parties' agreement, Plaintiff left the 2005 Nissan Frontier with Defendant and drove off in the Toyota Tacoma. (Compl. ¶ 36.)

Then, on February 13, 2020, Westlake Financial sent Plaintiff a letter reflecting 48 remaining payments amounting to $11,414.77, which constituted 30 more payments than Plaintiff had agreed to. (Compl. ¶ 37; Martinez Garcia Decl. ¶ 11.) When...