COX v. COMMUNITY LOANS OF AMERICA INC et al, No. 4:2011cv00177 - Document 39 (M.D. Ga. 2012)
Court Description: ORDER denying 32 Motion to Dismiss Complaint; granting 20 Motion for Preliminary Injunction as to the named Plaintiffs and denying the Motion for Preliminary Injunction as to absent putative class members. Ordered by Judge Clay D. Land on 03/08/2012. (CGC)
Download PDF
<![CDATA[
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION JASON M. COX, et al., * Plaintiffs, * vs. * COMMUNITY LOANS OF AMERICA, INC., et al., * CASE NO. 4:11-cv-177 (CDL) * Defendants. * O R D E R This putative class action involves vehicle title pawns.1 Plaintiffs Jason M. Cox, Estevan Castillo and Leo Thomas Tookes Jr. (collectively, “Plaintiffs”) are members of the United States Military who entered vehicle title pawn transactions with one of the Defendants and were later unable to redeem their car titles. are Plaintiffs’ vehicles have either been repossessed or subject vehicle to title repossession. pawn Plaintiffs transactions are void allege from that the their inception because they are prohibited by the federal Military Lending Act (“MLA”), 10 U.S.C. § 987. Defendants Community Loans of America, Inc., Alabama Title Loans, Inc. and Georgia Auto Pawn, Inc. (collectively, “Defendants”) filed a Motion to Dismiss (ECF No. 1 32) relying on an arbitration clause in the Plaintiffs refer to the transactions as “vehicle title Defendants refer to the transactions as “vehicle title pawns.” relevant loans.” contracts. Defendants maintain that the arbitration clauses are enforceable and the transactions do not violate the MLA. As the Court announced during the hearing on the motion, Defendants’ motion is denied. This Order sets forth the reasons for the ruling. The Court also observes that Plaintiffs have filed a Motion for Preliminary Injunction (ECF No. 20), seeking preliminary injunctive relief for the named Plaintiffs and all potential members of the putative class. Defendants have agreed to refrain from taking action against the named Plaintiffs and have represented that they Castillo and Tookes will not repossess the vehicles of during the pendency of this litigation.2 Plaintiffs’ Motion for Preliminary Injunction (ECF No. 20) is therefore granted as to the named Plaintiffs. withdrawn their request for a preliminary Plaintiffs have injunction as to absent putative class members, so the Motion for Preliminary Injunction is denied as to the absent putative class members. MOTION TO DISMISS STANDARD In seeking dismissal of Plaintiffs’ Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants argue that Plaintiffs’ claims must be arbitrated as a matter of law based on a facial examination of the Complaint. When considering a 12(b)(6) motion to dismiss, the Court must accept as true all 2 Cox’s vehicle has already been repossessed and resold. 2 facts set forth in the plaintiff=s complaint and limit its consideration to the pleadings and exhibits attached thereto. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007); Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, ___ 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). In the present context, the Court must determine whether Plaintiffs have sufficiently alleged that their title pawn transactions violated the MLA, and thus the arbitration clauses in their agreements are unenforceable. Defendants argue that the transactions in question involve Plaintiffs actually selling their vehicles to Defendants while retaining the right to repurchase them by paying back the sale price plus a fee that is a percentage of the sale price. title pawn transactions are Defendants maintain that such not consumer credit transactions within the meaning of the MLA, and therefore, are not prohibited by the MLA. Plaintiffs contend that the transactions are loans that are secured by the titles to their vehicles, and as such, are prohibited consumer credit transactions under the MLA. At this stage of the proceedings, the Court examines Plaintiffs’ factual allegations in the Complaint along with any exhibits to 3 the Complaint. Construing all reasonable inferences in Plaintiffs’ favor, the Court must determine whether Plaintiffs have sufficiently alleged that the transactions are credit transactions prohibited by the MLA. FACTUAL ALLEGATIONS The Plaintiffs Plaintiffs are allege members of Compl. ¶¶ 3-5, ECF No. 18. vehicle title loans. the following the United in their States Complaint. military. Am. Defendants are businesses that make Id. ¶¶ 7, 10, 13. A vehicle title loan is a transaction in which the customer pledges or signs over his car title to a vehicle title loan company, and in return the customer receives cash. he pays the loan number of days. The customer gets his car title back if amount plus a percentage within a certain Each Plaintiff obtained a vehicle title loan from one of the Defendants. I. Plaintiff Jason Cox Plaintiff Jason Cox, a staff sergeant in the U.S. Army, obtained a vehicle title loan on his 2002 Dodge Durango from Defendant Alabama Title Loans, Inc. (“Alabama Title Loans”) in Phenix City, Alabama. Id. ¶¶ 33, 35. presented his military ID. Id. ¶ 34. In entering the loan, Cox The principal amount of the loan was $3,000.00, and it was repayable in thirty days. Id. ¶ 33; accord Am. Compl. Ex. C at 1, Cox Pawn Agreement & Disclosure 1, ECF No. 18-1 at 4 14 [hereinafter Cox Pawn Agreement]. The annual percentage rate for the loan was 146%. Am. Compl. ¶ 36; Cox Pawn Agreement 1. As a condition of the loan, Cox relinquished the title to his truck. Am. Compl. ¶ 35. Cox’s pawn agreement stated that Cox was “pledging” the title to his Dodge Durango to Alabama Title Loans “on the condition that it may be redeemed for a fixed price within a stated period of time.” execute all documents Cox Pawn Agreement 1. necessary and Cox agreed “to appropriate to record [Alabama Title Loans’] lien on the Certificate of Title.” Id. The agreement stated that Cox was “giving a security interest in the certificate of title” to the Dodge Durango, and it contained certain disclosures required under the federal Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”), including the “annual percentage rate” (“The cost of your credit as a yearly rate”), the “finance charge” (“The dollar amount the credit will cost you”), and the “amount financed” (“The amount of credit provided to you”). provision. Cox’s Id. The pawn agreement also contained an arbitration Id. at 2. loan was “rolled over, multiple times. Am. Compl. ¶ 37. Pledgor,” stated renewed which that his and/or refinanced” Cox received a “Reminder to “automobile pledged as security for the pawn.” title has been Am. Compl. Ex C at 11, Reminder to Pledgor, ECF No. 18-1 at 24. The Reminder stated that the title pawn “is a more expensive way of borrowing money” 5 and asked Cox to acknowledge that he “borrowed” a certain sum that he would need to repay in order to redeem the certificate of title on his truck. Id. The Reminder also asked Cox to acknowledge that if he did not pay the amount due, he would be “placing continued ownership of [his] automobile at risk.” Id. After nearly a year of “rolling over” the vehicle title loan, Cox could not afford to pay the balance due to redeem the title and could not afford the interest and finance payment required to roll over the loan again. Am. Compl. ¶¶ 42-43. The Dodge Durango was repossessed from Cox’s home at Ft. Benning, Georgia. Id. ¶¶ 45-47. II. Plaintiff Estevan Castillo Plaintiff Estevan Castillo, a master sergeant in the U.S. Army, obtained a vehicle title loan on his 1994 Chevrolet Camaro from Defendant Georgia Auto Pawn, Inc. (“Georgia Auto Pawn”) on Victory Drive in Columbus, Georgia. Am. Compl. ¶¶ 49, 52. In entering the loan, Castillo presented his military ID and his deployment orders. Id. ¶ 50. The principal amount of the loan was $600.00, and it was repayable in thirty days. accord Am. Agreement Compl. & Ex. D at 1, Disclosure/Receipt Castillo 1, [hereinafter Castillo Pawn Agreement]. rate for the loan was 152%. ECF Motor No. Id. ¶ 49; Vehicle 18-1 at Pawn 39 The annual percentage Am. Compl. ¶ 53; Castillo Pawn 6 Agreement 1. As a condition of the loan, Castillo relinquished the title to his car. Am. Compl. ¶ 52. Castillo’s pawn agreement stated that Georgia Auto Pawn was “purchasing” the title to Castillo’s Camaro, “on the condition that it may be redeemed for a fixed price within a stated period of time.” Castillo Pawn Agreement 1. Georgia Auto Pawn notified Castillo that it may charge him a fee “to register a lien upon the certificate of title.” that Castillo Camaro, and was it “giving contained a Id. security certain The agreement stated interest” disclosures in the required the under TILA, including the “annual percentage rate” (“The cost of your credit as a yearly rate”), the “finance charge” (“The dollar amount the credit will cost you”), and the “amount financed” (“The amount of credit provided to you”). Id. agreement also contained an arbitration provision. The pawn Id. at 2. Castillo’s loan was “deferred, rolled over, renewed and/or refinanced” multiple times. Am. Compl. ¶ 54. Castillo received a “Reminder to Pledgor,” which stated that his “automobile title has been pledged as security for the pawn.” Am. Compl. Ex. D at 4, Reminder to Pledgor, ECF No. 18-1 at 42. The Reminder stated that the title pawn “is a more expensive way of borrowing money” and asked Castillo to acknowledge that he “borrowed” a certain sum that he would need to repay certificate of title on his car. 7 Id. in order to redeem the The Reminder also asked Castillo to acknowledge that if he did not pay the amount due, he would be “placing continued ownership of [his] automobile at risk.” Id. After approximately a year of “rolling over” the vehicle title loan, Castillo could not afford to pay the balance due to redeem the title and could not afford the interest and finance payment required Compl. ¶¶ 59-60. Camaro. to roll over the loan again. Am. Defendants have threatened repossession of the Id. ¶ 61. III. Plaintiff Leo Thomas Tookes, Jr. Plaintiff Leo Thomas Tookes, Jr., a sergeant in the U.S. Marines, obtained a vehicle title loan on his 1999 Jeep Grand Cherokee from Georgia Auto Pawn at its location in Kingsland, Georgia. Am. Compl. ¶ 63, 65. Tookes had previously obtained a vehicle title loan from Georgia Auto Pawn; in entering the prior loan, Tookes presented his military ID. Id. ¶¶ 63-64. The principal amount of the second loan was $2,000.00, and it was repayable in thirty days. Id. ¶ 68; accord Am. Compl. Ex. E at 4, Tookes Motor Vehicle Pawn Agreement & Disclosure/Receipt 1, ECF No. 18-1 at 47 [hereinafter Tookes Pawn Agreement]. annual percentage rate for the loan was 152%. Tookes Pawn Agreement 1. The Am. Compl. ¶ 71; As a condition of the loan, Tookes relinquished the title to his car. Am. Compl. ¶ 70. Tookes’s pawn agreement stated that Georgia Auto Pawn was “purchasing” the title to Tookes’s Jeep, “on the condition that 8 it may be redeemed for a fixed price within a stated period of time.” Tookes Pawn Agreement 1. Georgia Auto Pawn notified Tookes that it may charge him a fee “to register a lien upon the certificate of title.” Id. The agreement stated that Tookes was “giving a security interest” in the Jeep, and it contained certain disclosures required under TILA, including the “annual percentage rate” (“The cost of your credit as a yearly rate”), the “finance charge” (“The dollar amount the credit will cost you”), and the “amount financed” (“The amount of credit provided to you”). provision. Id. The pawn agreement also contained an arbitration Id. at 2. Tookes’s loan was “deferred[,] rolled over, renewed and/or refinanced” multiple times. Am. Compl. ¶ 72. After nearly a year of “rolling over” the vehicle title loan, Tookes could not afford to pay the balance due to redeem the title and could not afford the interest and finance payment required to roll over the loan again, which means that the Jeep is subject to the possibility of repossession. Am. Compl. ¶¶ 77-79. DISCUSSION The central issue in this case is whether Plaintiffs have adequately alleged violations (“MLA”), 10 U.S.C. § 987.3 of the Military Lending Act It is undisputed that if the MLA 3 The “Military Lending Act” is the common name for the John Warner National Defense Authorization Act for Fiscal Year 2007 § 670, 9 applies, then contracts are the arbitration unenforceable, provisions 10 U.S.C. § in the relevant 987(e)(3), and the Motion to Dismiss based on the arbitration provision must be denied. I. Military Lending Act Background In 2006, the U.S. Department of Defense issued a report to Congress entitled “Report On Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents” (“DoD Report”). http://www.defense.gov/pubs/pdfs/report_to_ congress_final.pdf (last visited Mar. 5, 2012). The report focused on “predatory lending” to military personnel, including car title loans. lending to Id. at 4. military The report concluded that predatory personnel, including car title loans, “undermines military readiness, harms the morale of troops and their families, and adds volunteer fighting force.” to the cost Id. at 9. of fielding an all The report recommends prohibiting lenders from using “car title pawns as security for obligations.” Id. at 7, 51. The report also notes a steady and significant increase in the rate of revoked or denied security clearances for military personnel due to financial problems; “At a time when we are at war, this is an unacceptable loss of valuable talent and resources.” Id. at 87. Limitations on Terms of Consumer Credit Extended to Servicemembers and Dependents, Pub. L. 109-364, 120 Stat. 2083, 2266, codified at 10 U.S.C. § 987. 10 In response to the DoD Report, Congress enacted the MLA. The MLA provides that a “creditor who extends consumer credit” to a “covered member of the armed services” “may not impose an annual percentage rate of interest greater than 36 percent” with respect to the credit extended. 10 U.S.C. § 987(a), (b). The MLA also makes it unlawful for a “creditor to extend consumer credit to a covered member . . . with respect to which” the creditor uses obligation.” The “the title of a vehicle as security for the disclosures in 10 U.S.C. § 987(e)(5). MLA requires certain mandatory connection with the “extension of consumer credit.” 987(c). The federal laws. MLA expressly preempts 10 U.S.C. § 987(d). 10 U.S.C. § inconsistent state or As noted above, Defendants concede that if the MLA applies to the transactions at issue in this case, then the arbitration agreements are unenforceable. clauses in the relevant See 10 U.S.C. § 987(e)(3) (“It shall be unlawful for any creditor to extend consumer credit to a covered member or a dependent of such a member with respect to which . . . the creditor requires the borrower to submit to arbitration[.]”). If a “creditor” knowingly violates the MLA, that is a misdemeanor. 10 U.S.C. § 987(f)(1). Also, “[a]ny credit agreement, promissory note, or other contract prohibited under [the MLA] is void from the inception of such contract.” 10 U.S.C. § 987(f)(3). 11 The MLA does not define “creditor” or “consumer credit.” Rather, the prescribe statute directed regulations consultation with the the establishing Department of Secretary those of Defense definitions Treasury, Office to after of the Comptroller of the Currency, Office of Thrift Supervision, Board of Governors Commission, of the Federal Federal Deposit Reserve Insurance National Credit Union Administration. (3). System, Federal Corporation, Trade and the 10 U.S.C. § 987(h)(2)(D), In the final rule adding new regulations to implement the provisions of the MLA, the Department of Defense stated that “vehicle title loans should be included within the definition of consumer credit, and that covering consistent with the law’s purpose.” such transactions is Limitations on Terms of Consumer Credit Extended to Service Members and Dependents, 72 Fed. Reg. 50,580, 50,586 (Aug. 31, 2007). The regulations contain the following definitions: “Creditor” is “a person who is engaged in the business of extending consumer credit with respect transaction covered by this part.” to a consumer credit 32 C.F.R. § 232.3(e). “Credit” is “the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.” 32 C.F.R. § 232.3(d). “Consumer credit” is “closed-end credit offered or extended to a covered borrower primarily for personal, family or household 12 purposes” and includes “vehicle title loans,” which are defined as “Closed-end credit with a term of 181 days or fewer that is secured by the registered for borrower” title use other to on than a motor roads public a vehicle, and “credit that owned transaction by to has a been covered finance the purchase or lease of a motor vehicle when the credit is secured by the vehicle being purchased or leased.” 32 C.F.R. § 232.3(b)(1)(ii), (b)(2)(ii) (emphasis added). “Closed-end credit” is defined as “credit other than ‘open-end credit’ as Lending), that 12 term CFR is part defined 226.” in 32 Regulation C.F.R. § Z (Truth 232.3(a). in This definition of “closed-end credit” is therefore identical to the definition of “closed-end credit” in Regulation Z, which defines “closed-end credit” as “consumer credit credit’ as defined in this section.” other than ‘open-end 12 C.F.R. § 226.2(a)(10). “Open-end credit” is defined in Regulation Z as “consumer credit extended by a creditor under a plan in which: (i) The creditor reasonably contemplates repeated transactions; (ii) The creditor may impose a finance charge from time to time on an outstanding unpaid balance; and (iii) The amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the creditor) is generally made available to the extent that any outstanding 12 C.F.R. § 226.2(a)(20). balance is repaid.” The Federal Reserve Board promulgated 13 Official Staff Interpretations to Regulation Z and included “pawn transactions” as a type of closed-end credit transaction. 12 C.F.R. pt. 226, (interpretation Supp. regarding I, 12 Subpt. C.F.R. § C ¶ 17(c)(1)(18) 226.17(c)). “Pawn transactions” occur when, “in connection with an extension of credit, a consumer pledges or sells an item to a pawnbroker creditor in return for a sum of money and retains the right to redeem the item for a greater sum (the redemption price) within a specified period of time.” Id. The Department of Defense specifically adopted the Federal Reserve Board’s Official Staff Interpretations to Regulation Z. that “Regulation Z means any 32 C.F.R. § 232.3(i) (stating of the rules, regulations, or interpretations thereof, issued by the Board of Governors of the Federal Reserve System to implement the Truth in Lending Act, as amended, from time to time, including any interpretation or approval issued by an official or employee duly authorized by the Board of Governors of the Federal Reserve System to issue such interpretations or approvals.”). II. Did Plaintiffs Allege “Vehicle Title Loans”? The question for the Court is whether, taking the factual allegations in Plaintiffs’ Complaint to be true and resolving all reasonable inferences in Plaintiffs’ favor, Plaintiffs have alleged that the transactions they entered with Defendants are “vehicle title loans” within the meaning of the MLA. 14 Based on the allegations in the Complaint and the attachments to the Complaint, the Court concludes that they have. Defendants contend that the transactions at issue here are not “vehicle title loans” within the meaning of the MLA because the transactions here are creatures of state law that do not involve “credit” within the meaning of the MLA. Again, under the MLA, “credit” is “the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.” that 32 C.F.R. § 232.3(d). Plaintiffs did not take Defendants’ main argument is on “debt” because there is no promissory note or other form of promise to pay; rather, the transaction was actually a sale of a vehicle with the opportunity to buy it back and the right to continue to use the vehicle until the time for re-purchasing it expired. Construing Defendants’ own documents in Plaintiffs’ favor, however, Plaintiffs transactions agreements dollar have within state amount the the the plausibly meaning “cost credit of will of alleged the MLA. [Plaintiffs’] cost credit First, credit,” [Plaintiffs],” “amount of credit provided to [Plaintiffs].” Agreement 1. consumer the “[t]he and the E.g., Cox Pawn Second, the agreements state that Plaintiffs were “giving a security interest in the certificate of title” to their vehicles. E.g., id. Third, the agreements state that Defendants may register a lien on the certificate of title. 15 E.g., id. Fourth, reiterating security that for Cox his the and Castillo “automobile pawn,” each title stating that received has been pawning a notice pledged “is a as more expensive way of borrowing money,” asking that he acknowledge the amount “borrowed,” and asking him to acknowledge that “continued ownership of [his] automobile” would be “at risk” if the amount due was not paid. E.g., Am. Compl. Ex. C at 11, Reminder to Pledgor, ECF No. 18-1 at 24. In other words, construing the factual allegations in the Complaint and the attached agreements in Plaintiffs’ favor, each Plaintiff deposited his vehicle title security for the payment of a debt. with a Defendant as Defendants’ own documents state that Plaintiffs “borrowed” money. Moreover, a specific sum of money is due by agreement, and if it is not paid, then the Plaintiff loses the title to his car and the car itself. Cf. Black’s Law Dictionary, Debt (9th ed. 2009) (defining “debt” as “[l]iability on a claim; a specific sum of money due by agreement or otherwise”). concludes that transactions they For all of these reasons, the Court Plaintiffs entered sufficiently with Defendants alleged are that “vehicle the title loans” within the meaning of the MLA. Defendants focus on Georgia and Alabama law and repeatedly argue that the transactions in this case “are not loans.” the law of both states, a “pawn 16 transaction” is Under defined as either a “loan on the security of pledged goods” or a “purchase of pledged goods on the condition that the pledged goods may be redeemed or repurchased by the pledgor or seller for a fixed price within a fixed period of time.” accord Ala. Code § 5-19A-2(3). O.C.G.A. § 44-12-130(3); Under Georgia law, a pledgor or seller “may” redeem or repurchase the pledged goods (the car title). O.C.G.A. § 44-12-130(3). Under Alabama law, a pledgor does not have any obligation to redeem the pledged goods—meaning the car title. Ala. Code § 5-19A-6. Defendants assert that because the pledgor does not incur any personal liability to repay the “money advanced” under the law of Georgia and Alabama, then “pawn transactions” in those states do not involve “credit” or “debt.” The express preemption clause in the MLA “preempts any State or Federal law, rule, or regulation, including any State usury law, to the extent that such law, rule, or regulation is inconsistent with this section[.]” 10 U.S.C. § 987(d)(1). Therefore, to the extent that Georgia or Alabama law conflicts with the MLA, the state law is preempted. not matter that Alabama and Georgia Accordingly, it does would transactions as “pawns” rather than “loans.” categorize the What matters is that Plaintiffs sufficiently alleged that the transactions they entered with Defendants involve “credit” and are “vehicle title loans” within the meaning of the federal law. 17 Thus, even though the transactions under state may law, not they be may considered be “credit” considered transactions “consumer credit” transactions within the meaning of the MLA. Defendants argue that even if the Court finds that Plaintiffs have sufficiently alleged claims under the MLA, the law is notice so vague that and “pawn ambiguous that transactions” Defendants like the did ones not have alleged Plaintiffs’ Complaint were covered under the MLA. in Construing the factual allegations in the Complaint and the attachments to the Complaint in Plaintiffs’ favor, however, Defendants did have notice that the transactions would be covered under the MLA. discussed above, Defendants’ own documents reference As the “credit” provided to the Plaintiffs and state that Plaintiffs were “giving a security interest in the certificate of title” to their vehicles. E.g., Cox Pawn Agreement 1. Also, Defendants appear to acknowledge that the “pawn transactions” are a type of “closed-end credit transaction” within the meaning of the TILA, which has the same definition of “closed-end credit transaction” as the MLA. Defendants note that the Federal Reserve Board included “pawn transactions” as a type of closed-end credit transaction in its Official C.F.R. pt. 226, Staff Supp. Interpretations I, Subpt. C ¶ to Regulation 17(c)(1)(18). Z, 12 Indeed, Defendants assert that they included TILA disclosures in the 18 relevant agreements because they believed the transactions were “closed-end Defendants credit” transactions contend, however, within that the because meaning the of TILA. Department of Defense did not specifically adopt Regulation Z’s definition of “closed-end credit” (rather, it copied Regulation Z’s definition of “closed-end credit” and referred to Regulation Z for the definition of “open-end credit”), the Court should ignore the Official Staff Interpretation to Regulation Z for purposes of deciding the definition under the MLA. Defense of a “closed-end credit” transaction As discussed above, however, the Department of specifically adopted the Federal Reserve Official Staff Interpretations to Regulation Z. Board’s 32 C.F.R. § 232.3(i). Even if the Court were to ignore the fact that the Federal Reserve Board included “pawn transactions” as a type of closedend credit transaction, there are other factors giving Defendants notice that the transactions alleged in the Complaint would be covered under the MLA. The Department of Defense included “vehicle title loans” in the definition of “consumer credit.” 32 C.F.R. § 232.3(b)(1)(ii). The final rule adding new regulations to implement the provisions of the MLA discusses the “debt trap” created by “vehicle title loans” and observes that “[i]n many states these loans can be rolled over by the borrower several times if the borrower is unable to pay the principal and 19 interest when due. If not paid or rolled over, many states allow the creditor to repossess the vehicle and in some states the borrower is not entitled to any portion of the proceeds of the vehicle sale.” 72 Fed. Reg. at 50,582. The rule goes on to observe that “vehicle title loans” contribute to a “cycle-ofdebt” that Defense. is a Id. significant concern to the Department of The Department of Defense stated that “vehicle title loans should be included within the definition of consumer credit, and that covering such transactions is consistent with the law's purpose” and made it clear that its goal was to offer “protections from high-cost, short-term vehicle title loans.” Id. at 50,586. allegations For all of these reasons, construing the factual in the Complaint and the attachments to the Complaint in Plaintiffs’ favor, the Court concludes that the MLA is not ambiguous as to whether it covers the transactions alleged in the Complaint. Given that Plaintiffs sufficiently alleged claims under the MLA, the arbitration unenforceable. provisions in 10 U.S.C. § 987(e)(3). their agreements are Accordingly, Defendants’ Motion to Dismiss based on the arbitration provisions must be denied. CONCLUSION For the reasons explained in this Order, Defendants’ Motion to Dismiss (ECF No. 32) is denied. 20 Plaintiffs’ Motion for Preliminary Injunction (ECF No. 20) is granted as to the named Plaintiffs. Plaintiffs have withdrawn their request for a preliminary injunction as to absent putative class members, so the Motion for Preliminary Injunction is denied as to the absent putative class members. IT IS SO ORDERED, this 8th day of March, 2012. S/Clay D. Land CLAY D. LAND UNITED STATES DISTRICT JUDGE 21
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
