A debtor purchased a car from a car dealership in March 2021. The dealership also financed the debtor’s purchase of the car, making the dealership the creditor in the transaction. The debtor made regular monthly payments on the car until July 2021, when she executed a written agreement with the creditor. The agreement specified that the creditor would accept landscaping work as payment for the July, August, and September payments. The debtor and creditor entered into this agreement on September 16, 2021, after the work had been accepted. Then, a few days later, on September 25, the creditor sent a third party to the debtor’s home to repossess the car, even though the debtor’s account was current according to the agreement from just days prior. While attempting to repossess the car, the third-party repossessor called the police to restrain the debtor. She was eight months pregnant at the time and was vehemently opposing the repossession, claiming that she was current in her payments and the creditor had no right to take her vehicle. The repossessor showed the police a handwritten note from the creditor and eventually took the car, damaging the debtor’s land and vehicle. It was later revealed that the creditor knew the debtor was current on her payments, but the creditor had gotten into an argument with the debtor’s boyfriend about drug money and was taking the car to punish the creditor’s boyfriend. The debtor then brought suit against the creditor, claiming a violation of (1) the Fair Debt Collection Practices Act (FDCPA), (2) the Truth in Lending Act (TILA), (3) Conversion, and (4) the Virginia Uniform Commercial Code (VUCC).
In Shelton v. Marshall, No. 5:22-cv-042, 2024 WL 1184444, 2024 U.S. Dist. LEXIS 48327 (W.D. Va. Mar. 19, 2024) (opinion not yet released for publication), the court entered a default judgment against the creditor on all four causes of action. The creditor failed to respond to any pleadings and later failed to attend the default judgment hearing held by the court. Thus, the court entered judgment against the creditor and examined the facts to determine the damages to be awarded to the debtor. First, the court discussed the FDCPA. The court found that the creditor had violated the act by wrongfully repossessing the vehicle. Furthermore, the court held that the creditor’s egregious behavior leading up to and during the repossession warranted an extra award of emotional distress damages in addition to actual, statutory, and attorney’s fees awards. Second, the court-imposed damages under TILA. The court determined that the creditor had misled the debtor with confusing disclosures. This resulted in the award of statutory damages and costs. Third, the court found that the creditor’s wrongful repossession amounted to conversion, entitling the debtor to actual damages and punitive damages that were three times the actual damages amount because of the creditor’s malice. Finally, the court held that the creditor violated multiple provisions of the VUCC. The creditor’s wrongful repossession and malicious conduct amounted to a breach of the peace. In addition, under the Uniform Commercial Code, the creditor had been obligated to sell the vehicle because the debtor had paid more than 60% of the purchase price. The debtor would then recover the excess proceeds from the sale. However, the creditor took the vehicle as “full satisfaction of the debt.” Therefore, the court imposed additional statutory damages on the creditor. Ultimately, the court imposed significant damages on the creditor for its wrongful repossession and egregious conduct.
By Maycee Redfearn: [email protected]
Edited By Ashley Boyce: [email protected]
Edited By Hayden Mariott: [email protected]