Rhomes v. Mecca Auto, LLC

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DAVANTE RHOMES, Plaintiff, v. MECCA AUTO, LLC, Defendant.

No. 3:21-CV-01360 (KAD)

United States District Court, D. Connecticut

August 2, 2022

MEMORANDUM OF DECISION RE: PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT (ECF NO. 10)

KARI A. DOOLEY, UNITED STATES DISTRICT JUDGE

This action arises out of Plaintiff Davante Rhomes' purchase and financing of a used vehicle from Defendant Mecca Auto LLC (“Mecca”). Plaintiff brought this action alleging violations of the Truth in Lending Act (“TILA”), the Retail Installment Sales Financing Act (“RISFA”), the Connecticut Unfair Trade Practices Act (“CUTPA”), Article 9 of the Uniform Commercial Code (“UCC”), the Connecticut Creditor Collections Practices Act (“CCCPA”), and a breach of the implied warranty of merchantability under the Magnuson-Moss Warranty Act (“MMWA”). Pending before the Court is Plaintiff's Motion for Default Judgment pursuant to Fed.R.Civ.P. 55(b). See ECF No 10. For the reasons set forth below, Plaintiff's motion is GRANTED and the Clerk of Court is directed to enter Judgment in favor of Plaintiff in accordance with the following.

Facts^[1]

The allegations in the Complaint, which are deemed admitted, are as follows. On January 16, 2021, Plaintiff agreed to purchase a 2006 Subaru Legacy (“the vehicle”) from Defendant for a cash price of $4,218.84. Compl. ¶ 7-8. Plaintiff paid a $1,000 down payment and Mecca provided the financing for the remaining balance.^[2] Id. at ¶ 9-10. Mecca prepared a “promisory [sic] note” (“Promissory Note” or the “Note”) stating that Plaintiff would pay the remaining balance of $3,218.84 through weekly installments of $175 for 18 weeks.^[3] Id. at ¶ 11. This was the only document prepared or provided to the Plaintiff in connection with both the sale and financing of the vehicle. The Promissory Note did not disclose the finance charge as an annual percentage rate (“APR”) but rather as a $300 handwritten charge in the itemization of the total purchase price for the vehicle. Id. at ¶ 12. The itemized purchase price also included a handwritten “doc” charge of $499 despite Mecca not disclosing any dealer conveyance fee on its advertisement. The “doc” charge also failed to state that it is negotiable. Id. at ¶ 13. The Promissory Note did not disclose the terms of credit, including the amount financed, the APR, or an accurate schedule of payments. Id. at ¶ 14. Defendant claimed a lien on the vehicle and informed Plaintiff-without his consent- that it installed a global positioning system (“GPS”) on the vehicle without any retail installment contract or granting of a security interest. Id. at ¶ 16-17.

Soon after Plaintiff took ownership of the vehicle, the check engine and oil lights illuminated. Id. at 18. Plaintiff brought the vehicle back to Defendant for repairs which it refused to perform. Id. at 19. Due to the unreliability of the vehicle, Plaintiff drove it infrequently. Id. at ¶ 20. By July 2021, Plaintiff had difficulty making his payments to Defendant. As a result, Defendant revised the Promissory Note to require 39 additional payments at $125 per week. At that rate, the Plaintiff would have paid more than $1,600 above the original remaining balance. Id. at ¶ 21.

Defendant threatened Plaintiff with repossession of the vehicle, as well as “surcharges” and interest and late fees. Id. at ¶ 22-23.

On or about September 21, 2021, the vehicle broke down. Plaintiff informed Defendant in writing on September 21, 2021 that he was revoking his acceptance of the vehicle and/or rescinding the transaction. Id. at ¶ 25. Plaintiff offered Defendant the opportunity to retrieve the vehicle from his residence, which it did not do. Id. at ¶ 26, 29. Despite demands from Plaintiff for Defendant to return all sums paid on the Promissory Note, Defendant has refused to return any money to Plaintiff. Id. at ¶ 28-29.

On October 14, 2021, Plaintiff brought this action alleging violations of TILA, RISFA, and CUTPA, as the Promissory Note fails to include statutorily required terms such as an appropriate finance charge, APR, the amount financed, and an accurate schedule of payments, among others. Plaintiff also alleges a violation of the UCC, as Defendant engaged in electronic self-help through the installation of a GPS device without Plaintiff's consent or proper disclosures. Additionally, Plaintiff alleges a violation of CUTPA and the CCCPA for Defendant's threats to repossess the vehicle without any legal basis to do so. Plaintiff attests that because of Defendant's conduct, he suffered ascertainable losses and damages. Plaintiff specifically seeks TILA statutory damages, CUTPA punitive damages, a return of all amounts paid to Defendant, loss of use damages, attorneys' fees, and an order rescinding the contract under RISFA.^[4]

Although served on October 28, 2021, Defendant failed to appear, answer, or otherwise defend the action. Therefore, Plaintiff moved for entry of default against Defendant, which the Court granted on May 17, 2022. On May 13, 2022, Plaintiff filed the instant Motion for Default Judgment. And on June 30, 2022, the Court held an evidentiary hearing on the motion. At the hearing, the Court heard testimony from Plaintiff and received various exhibits into the record.

Standard of Review

“It is well established that a party is not entitled to a default judgment as of right; rather the entry of a default judgment is entrusted to the sound judicial discretion of the court.” Cablevision of S. Conn. Ltd. Partnership v. Smith, 141 F.Supp.2d 277, 281 (D. Conn. 2001) (internal quotation marks omitted) (citing Shah v. N.Y. State Dep't of Civil Serv., 168 F.3d 610, 615 (2d Cir. 1999)). In civil cases, however, “where a party fails to respond, after notice the court is ordinarily justified in entering a judgment against the defaulting party[.]” Bermudez v. Reid, 733 F.2d 18, 21 (2d Cir. 1984). In making this determination and evaluating the allegations asserted against a defendant, the Court may “deem[ ] all the well-pleaded allegations in the pleadings to be admitted.” Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997). Here, the Court also has the benefit of Plaintiff's testimony as well as the exhibits he submitted, which further establish both liability and damages. In determining damages, “[t]he outer bounds of recovery allowable are ...measured by the principle of proximate cause. The default judgment d[oes] not give plaintiff a blank check to recover from defendant any losses it had ever suffered from whatever source. It could only recover those damages arising from the acts and injuries pleaded[.]” Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158-59 (2d Cir. 1992) (internal brackets and citation omitted).

As discussed below, Plaintiff has sufficiently alleged facts supporting his claims and has produced evidence of damages to the Court's satisfaction. Accordingly, Defendant's failure to appear, respond, or otherwise defend the instant action warrants a default judgment for Plaintiff.

Discussion

TILA

TILA seeks to “assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit[.]” 15 U.S.C. § 1601(a). Thus, “TILA provides for a private right of action for damages where a creditor fails to make disclosures required by the Act.” Sylvia v. Kensington Auto Serv., Inc., No. 3:20-CV-01622 (KAD), 2021 WL 2634502, at *2 (D. Conn. June 26, 2021) (internal quotation marks omitted).

Upon consideration of Plaintiff's allegations, testimony, and the Promissory Note^[5], it is manifest that Defendant did not provide Plaintiff with many of the disclosures mandated by TILA. See 15 U.S.C. § 1638(a). For example, the Note does not include the proper period of payments scheduled for Plaintiff to repay his obligation.^[6] See id. § 1638(a)(6) (requiring disclosure of “due dates or period of payments scheduled to repay the total of payments”). Further, the Note omits any information regarding the consequences of a late payment. See id. § 1638(a)(10) (requiring disclosure of “[a]ny dollar charge or percentage amount which may be imposed by a creditor solely on account of a late payment”). Moreover, the Note also lacks any statement with respect to default, the right to accelerate the maturity of debt, or prepayment rebates or penalties. See id. § 1638(a)(12) (requiring “[a] statement that the consumer should refer to the appropriate contract document for any information such document provides about nonpayment, default, the right to accelerate the maturity of debt, and prepayment rebates and penalties”). To the extent that the Note might arguably include the alleged missing disclosures, or sufficient information from which the missing disclosures might be gleaned, the TILA requirements are not “clearly and conspicuously in writing,” as required. 12 C.F.R. § 226.17(a)(1). Thus, the Court finds that Plaintiff has established a TILA violation.

RISFA

“RISFA sets forth the conditions governing retail installment sales contracts under Connecticut law.” Sylvia, 2021 WL 2634502, at *2. It provides that “[e]very retail installment contract shall be in writing, shall contain all the agreements of the parties and shall be completed as to all essential provisions prior to the signing of the contract by the retail buyer.” Conn. Gen. Stat. § 36a-771(a). It also “requires sellers to comply with the Connecticut Truth in Lending Act, which in turn incorporates the requirements of the federal TILA and Regulation Z.” Sylvia, 2021 WL 2634502, at *2; see Conn. Gen. Stat. § 36a-771(b). Thus, insofar as Defendant violated TILA, it also violated RISFA. And given the vague and very...