Honda Lease Tr. v. Butler Twp.

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HONDA LEASE TRUST, Plaintiff, v. BUTLER TOWNSHIP and MALANGA'S AUTOMOTIVE, Defendants, and MALANGA'S AUTOMOTIVE, Defendant/Third-Party Plaintiff, v. VINCENT MEDINA, Third-Party Defendant.

CIVIL No. 22-cv-4862 (KSH) (CLW)

United States District Court, D. New Jersey

June 28, 2024

NOT FOR PUBLICATION

OPINION

KATHARINE S. HAYDEN, U.S.D.J.

I. INTRODUCTION

In July 2020, Butler Township police officers conducted a traffic stop of a 2018 Honda Civic and discovered that the driver had no valid license, registration, or insurance. The police impounded the Honda Civic, directed a towing company Malanga's Automotive (“Malanga”), to tow and store it, and told the driver where it was going. As it turned out, the car was leased, and Malanga failed to notify the record owner, plaintiff Honda Lease Trust (“Honda”), of the car's whereabouts for 11 months after the impounding. Malanga then demanded thousands in towing and storage fees as a condition of releasing the car to Honda. Frustrated by its efforts to have the car released, Honda ultimately sued Malanga, and later added Butler Township as a defendant.

Nearly two years into the lawsuit, Malanga agreed to release the car to Honda in settlement of Honda's claims against it.^[1] However, Honda continues to pursue its claim against the Township, seeking a declaration that its policies governing the towing and storage of vehicles violate Honda's constitutional rights, as the Honda Civic's titled owner, under the Fourth, Fifth, and Fourteenth Amendments. Before the Court are the parties' cross-motions for summary judgment directed to that claim.

II. FACTUAL BACKGROUND

On July 21, 2018 Vincent Medina leased the Honda Civic from an unknown lessor who forthwith assigned the lease to Honda. (D.E. 20, Final Pretrial Order (“FPTO”) § 5, ¶¶ 1-2; D.E. 23-3, Plf. Stmt. of Undisputed Material Facts (“SUMF”) ¶¶ 1-2.)^[2] The New Jersey Department of Motor Vehicles issued title listing Honda as the owner on August 1, 2018. (D.E. 23-3, Plf. SUMF ¶ 3.)

Medina failed to make any payments on the lease, including the first one, which was due on August 22, 2018. (Id. ¶¶ 4-5.) Under the lease terms, Medina's default entitled Honda to immediate possession of the car. (Id.) Notwithstanding, Medina continued to operate the car for two years without making any payments. (See D.E. 28-3, Def. Watts Decl., Ex. H (Donahue Dep.) 13:9-14:9.)

On July 11, 2020, Medina was pulled over by Butler Township police officers, who charged him with driving with a suspended license, suspended registration, and no insurance, and they issued him a summons. (D.E. 23-3, Plf. SUMF ¶¶ 6-7.) The police department directed Malanga as one of its three official towing company partners to tow the car away and store it. (D.E. 20, FPTO § 5, ¶¶ 3, 4, 8; D.E. 23-3, Plf. SUMF ¶¶ 8-9, 36.) The police advised Medina where the car would be taken. (D.E. 20, FPTO § 5, ¶ 8; D.E. 28-3, Def. Watts Decl., Ex. T, Resp. 11.)

When a car is impounded, the Township's ordinance, § 216-1 to -18 (the “Ordinance”) (D.E. 23-5, Plf. Duston Decl., Ex. I), and its police department's standard operating procedures (the “SOP”) (Id., Ex. H) come into play, and it is undisputed that both were followed here. (D.E. 20, FPTO § 5, ¶ 8; D.E. 23-3, Plf. SUMF ¶ 30.) In essence, when police officers impound a car from the roadway, they “are required to complete a towed/impounded vehicle form indicating where the vehicle was impounded, owner's information, towing company, and the reason for the tow/impound,” and “[t]he driver who was issued the summons is then advised where the vehicle is located and what is required to retrieve it.” (D.E. 23-3, Plf. SUMF ¶ 33; see also SOP § VII; D.E. 28-4, Def. Hammonds Decl., Ex. i (incident report).)

The Butler Township ordinance for “Abandoned or unclaimed vehicles” requires contractors like Malanga to notify car owners within seven days of an impounding if the car is not removed:

The Police Department shall be responsible for notifying the owner of an abandoned vehicle towed under this chapter that his or her vehicle has been towed to the impound area. In the event that a towed vehicle is not removed within seven days by the owner, the towing company shall be responsible for notifying the Police Department of said situation. Failure of the contractor to notify the Police Department as stated herein shall limit the storage charge to seven days only. Thereafter, it shall be the obligation of the contractor to contact the owner or operator of a stored vehicle and to furnish proof to the Department that such attempt has been made. Failure to notify the owner or operator shall cause the storage charges to end at 30 days. After an attempt to make contact or if contact is made, storage charges will begin again for another 30 days. This procedure shall be followed until storage fees reach a maximum of 90 days.

(Ordinance § 216-16.)

The parties are in accord that Honda learned for the first time that the car was impounded and sitting on Malanga's lot when it got an “abandoned vehicle” letter from Malanga on June 23, 2021. (D.E. 20, FPTO § 5, ¶¶ 5-6; D.E. 23-3, Plf. SUMF ¶¶ 13-14.) The letter, titled “New Jersey Motor Vehicle Commission Abandoned Vehicle on Private Property 90-day Notice,” told Honda that “[a] vehicle is deemed to be abandoned if it is left on private property without the consent of the owner” and that Malanga was “notifying you of [its] intent to sell the vehicle unless you and/or the lienholder reclaim possession of the vehicle within 90 days of this letter, upon payment of the reasonable costs of removal and storage of the vehicle, and the expenses incurred ” (D.E. 233, Plf. SUMF ¶¶ 14, 16.)

On June 28, 2021, Honda contacted Malanga about getting the car back. (D.E. 20, FPTO § 5, ¶ 7; D.E. 23-3, Plf. SUMF ¶ 17.) Malanga told Honda it would need to pay $26,199.16 in towing and storage fees. (D.E. 20, FPTO § 5, ¶ 7; D.E. 23-3, Plf. SUMF ¶ 18.) It also required a formal police release form, pursuant to the Township ordinance § 216-14 and New Jersey law. (D.E. 20, FPTO § 5, ¶ 7; D.E. 23-3, Plf. SUMF ¶ 20; D.E. 28-2, Def. Stmt. of Material Facts in Dispute (“SDMF”) ¶ 20.) After some negotiations, Honda agreed to pay a reduced rate of $14,000 in exchange for the car's release. (D.E. 20, FPTO § 5, ¶¶ 7, 9; D.E. 23-3, Plf. SUMF ¶ 17; D.E. 28-1, Def. Counterstmt. of Undisputed Material Facts (“CSUMF”) ¶ 10.)

Honda then contacted the Butler Township police department for a release form. (D.E. 23 3, Plf. SUMF ¶ 22.) The Township's policies and New Jersey law require proof of insurance and registration for the release of a car towed by the police. (Id.; see Ordinance § 216-14; N.J.S.A. 39:3-40.6.) In a July 27, 2021 email, a police department representative, Rebecca Hammonds, told Honda that “[s]ince the car was impounded due to motor vehicle reasons[,] I am going to need you to provide us with a current registration and insurance for the vehicle. Once I get that I'll send over the release form.” (D.E. 23-3, Plf. SUMF ¶ 22; see D.E. 23-4, Plf. Donahue Decl., Ex. 6 (email exchange).)

At that point, Honda consulted an attorney and ultimately sued Malanga in state court in December 2021. (D.E. 23-3, Plf. SUMF ¶ 24; D.E. 1, Ex. A.) By August 30, 2021, well before suit commenced, the Township had agreed to waive the registration and insurance requirements because Honda did not intend to operate the Honda Civic on the road. (D.E. 23-3, Plf. SUMF ¶¶ 23, 25; see D.E. 28-4, Def. Hammonds Decl., Ex. v (email notifying Honda that it could pick up the release form and take the car away from Malanga's lot).)

On October 29, 2021, Honda's counsel wrote Malanga demanding the “immediate release” of the car without payment because “[Honda] is not obligated to pay you storage fees to regain possession of the Vehicle” and “New Jersey law does not permit you to retain possession of the Vehicle as against a lessor . . . based on a claim you are owed storage fees.” (D.E. 23-3, Plf. SUMF ¶ 26; see D.E. 23-5, Plf. Duston Decl., Ex. G (counsel letter to Malanga).) Malanga refused to release the car to Honda without payment. (D.E. 20, FPTO § 5, ¶ 11; D.E. 23-3, Plf. SUMF ¶¶ 27-28.)

III. PROCEDURAL HISTORY

On December 8, 2021, Honda filed a complaint in state court against Malanga, asserting replevin (count 1), conversion of property (count 2), tortious interference with a contract (count 3), and unconscionable commercial practices under the New Jersey Consumer Fraud Act (count 4). (D.E. 1, Ex. A (original complaint).)

On July 14, 2022, Honda filed an amended complaint adding Butler Township as a defendant. (D.E. 1, Ex. B (amended complaint).) It continued to assert the same four claims against Malanga and added a count against both the Township and Malanga under 42 U.S.C. § 1983 alleging violations of the Fourth, Fifth, and Fourteenth Amendments. Honda seeks payment of actual damages, consequential damages, punitive damages, and attorneys' fees and costs.

On August 2, 2022, with the Township's consent, Malanga removed the case to this Court based on federal question jurisdiction. (D.E. 1.) After the conclusion of discovery the parties submitted a final pretrial order to Magistrate Judge Waldor. (D.E. 20.) As of the filing of the final pretrial order on September 12, 2023, Malanga still retained possession of the Honda Civic. (D.E. 20, FPTO § 5, ¶ 11.) It offered, however, during a conference held on that date, to return the car to Honda in settlement of Honda's claims against it. (D.E. 23-3, Plf. SUMF ¶ 28; see also D.E. 23-5, Plf. Duston Decl. ¶ 10.) A few days later, Honda accepted that offer. (D.E. 23-5, Plf. Duston Decl. ¶ 10.) Honda did not, however, inform the Court of the settlement at that time, and it continued to...