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Nixon v. Brent Manning's Quality Preowned, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

October 17, 2016

DOUGLAS A. NIXON AND PIAOWAKA C. WINDWOLF PLAINTIFFS
v.
BRENT MANNING'S QUALITY PREOWNED, Inc., d/b/a BRENT MANNING'S CREDIT CARS, Inc., BRENT MANNING, BRETT THARP, and TRUITY FEDERAL CREDIT UNION DEFENDANTS TRUITY FEDERAL CREDIT UNION COUNTER CLAIMANT
v.
DOUGLAS A. NIXON AND PIAOWAKA C. WINDWOLF COUNTER DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS, INITED STATES DISTRICT JUDGE.

         Currently before the Court are Defendant/Counter Claimant Truity Federal Credit Union's ("Truity") Motion for Summary Judgment as to its Counterclaim (Doc. 52); Truity's Motion for Summary Judgment as to Plaintiffs Douglas A. Nixon's and Piaowaka C. Windwolfs Claims (Doc. 55); and Defendants Brent Manning's Quality Preowned, Inc.'s ("BMQP") and Brent Manning's Motion to Dismiss (Doc. 70). For the reasons stated herein, the Court rules as follows: Truity's Motion for Summary Judgment as to Plaintiffs' Claims (Doc. 55) is GRANTED; BMQP's and Brent Manning's Motion to Dismiss (Doc. 70) is GRANTED; and Truity's Motion for Summary Judgment as to its Counterclaim (Doc. 52) is GRANTED.

         I. BACKGROUND

         This case arises from the sale of a used vehicle allegedly gone awry. On March 30, 2015, Plaintiffs Douglas A. Nixon and Piaowaka C. Windwolf purchased a used 2007 Mini Cooper from BMQP. To finance their purchase, Plaintiffs entered into a "Retail Installment Contract and Security Agreement, " (Doc. 52-2), with BMQP that was subsequently assigned to Truity. That Agreement indicates a vehicle sale price of $7, 990 plus GAP insurance in the amount of $900, for a total of $8, 890. After making a down payment of $1, 500, the total amount financed was $7, 390. Plaintiffs made payments to Truity under the Agreement for six months. But, by the fall of 2015, Plaintiffs allege that the vehicle was effectively not road worthy, and so they stopped making their loan payments. Truity repossessed the vehicle, and on November 20, 2015 sold it at private auction for $3, 300. After crediting that amount, minus certain costs related to repossessing and auctioning the vehicle, Truity lists a remaining principal of $4, 214.87 on Plaintiffs' loan. (Doc. 52-3). Since the initiation of this lawsuit, that figure has been revised down to $3, 396.60 to account for a partial refund on Plaintiffs' GAP insurance. (Doc. 74, p. 3).

         Proceeding pro se, Plaintiffs filed a Complaint (Doc. 1) in this Court on January 5, 2016, and later filed an Amended Complaint (Doc. 32) on March 21, 2016. The Amended Complaint alleges that Defendants violated various provisions of the Federal Trade Commission Act ("FTCA"); the Magnuson-Moss Warranty Act; and the Federal Trade Commission's "Used Car Rule, " which is found at 16 C.F.R. § 455. Truity filed an Answer and Counterclaim on March 29, 2016, denying the claims against it and counterclaiming for the balance owed on Plaintiffs' loan, plus interest, attorney's fees, and expenses. On April 11, 2016, Plaintiffs filed an Answer to Truity's Counterclaim, which the Court will interpret as a general denial. BMQP filed its Answer to Plaintiffs' Amended Complaint (Doc. 48) on April 19, 2016, denying the claims against it.[1] Also named in the Complaint and Amended Complaint is Brett Tharp, a former salesman at BMQP who Plaintiffs have not been able to locate to effect service of process.

         Truity filed two motions for summary judgment on June 30, 2016. The first is a Motion for Summary Judgment as to Truity's Counterclaims (Doc. 52), and the second is a Motion for Summary Judgment as to Plaintiffs' Claims (Doc. 55). On August 5, 2016, BMQP and Brent Manning filed a Motion to Dismiss for Failure to State a Claim and for Lack of Jurisdiction (Doc. 70). All three motions have been fully briefed, and are ripe for decision. The Court will begin by discussing Truity's Motion as to Plaintiffs' Claims, then turn to BMQP's and Brent Manning's Motion to Dismiss, and finally will discuss Truity's Motion as to its Counterclaims.

         II. DISCUSSION

         A. Truity's Motion for Summary Judgment as to Plaintiffs' Claims

         "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In deciding a motion for summary judgment, the Court must view the facts in the light most favorable to the non-moving party, and give the non-moving party the benefit of any logical inferences that can be drawn from the facts. Union Bee. Co., 135 F.3d at 1212-13. The moving party bears the burden of proving the absence of any material factual disputes. Fed.R.Civ.P. 56(c); Matsushita Bee. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Nat'l Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602 (8th Cir. 1999). If the moving party meets this burden, then the non-moving party must "come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(c)). These facts must be "such that a reasonable jury could return a verdict for the nonmoving party." Allison v. Flexway Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). "The nonmoving party must do more than rely on allegations or denials in the pleadings, and the court should grant summary judgment if any essential element of the prima facie case is not supported by specific facts sufficient to raise a genuine issue for trial." Register v. Honeywell Fed. Mfg. & Techs., LLC, 397 F.3d 1130, 1136 (8th Cir. 2005) (citing Celotex Corp v. Catrett, 477 U.S. 317, 324 (1986)).

         Truity first contends that it is entitled to summary judgment on Plaintiffs' FTCA claim because the FTCA does not contain a private right of action. To explain, not all of the laws in the United States Code can be enforced by individuals bringing private law suits. Instead, many are enforced through regulatory agencies, such as the Federal Trade Commission ("FTC"). Looking to the provisions of the FTCA identified by Plaintiffs, it is clear that only the FTC, and not individual litigants, can file suits to enforce the FTCA.

         Plaintiffs list 15 U.S.C. §§ 45(a)(1) and (m)(1)(a); 53(b), and 57b as the provisions of the FTCA that Truity allegedly violated. Section 45(a) prohibits "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, " and empowers "the Commission" to prevent persons and entities from using such practices. 15 U.S.C. § 45(a)(1)-(2). Subsection (m)(1)(a) grants "the Commission" power to "commence a civil action ... in a district court of the United States against any person . . . [who] violates any rule under this subchapter respecting unfair or deceptive acts or practices . . . ." Section 53(b) gives "the Commission" power to "bring suit in a district court of the United States to enjoin" persons from violating provision of law enforced by the FTC. Section 57b likewise permits "the Commission" to bring civil actions, and details the forms of relief a court may grant "to redress injury to consumers or other persons . ..." 15 U.S.C. § 57b(a)-(b).

         As the plain language of the FTCA-which repeatedly gives "the Commission" enforcement authority-makes clear, it contains no private right of action. The Eighth Circuit recognized this in Morrison v. Back Yard Burgers, Inc., 91 F.3d 1184 (8th Cir. 1996). Therein, the franchisee plaintiffs sued the franchisor defendant for common law fraud. Id. To support their allegation that the franchisor had acted in bad faith, the plaintiffs argued that the franchisor expressed an opinion about the future profitability of the franchise in violation of an FTC regulation. Id. The Morrison Court held that a violation of an FTC regulation is not evidence of bad faith for purposes of proving common law fraud. Id. It noted that this holding "is consistent with other circuit's [sic] holdings that there is no private cause of action for violations of the Federal Trade Commission Act, " id. (listing cases), reasoning that if plaintiffs were "permitted to plead violation[s] of FTC regulations as part of a state common law fraud case, " then the Court would be "effectively extending a private cause of action under the Federal Trade Commission Act." Id. Other district courts within the Eighth Circuit have recognized that the FTCA does not include a private right of action as well. See Friend v. Fryberger, Buchanan, Smith & Frederick, P.A., 2012 WL 503796, at *4 (D. Minn. Feb. 14, 2012) (stating that "only the FTC, and not private litigants such as [the plaintiff], may enforce the FTCA"); Ventimiglia v. AT&T Yellow Pages, 543 F.Supp.2d 1038, 1045 (E.D. Mo. 2008) ("As there is no private right of action under the FTCA, Plaintiffs' claims cannot proceed."). Accordingly, Truity's Motion for Summary Judgment is granted as to Plaintiffs' FTCA claims.

         Turning next to Plaintiffs' claims under the "Used Car Rule, " 16 C.F.R. § 455, that regulation prohibits a "used vehicle dealer" from using certain deceptive acts and practices. 16 C.F.R. § 455.1 (a)-(c). The regulation's definition of a "dealer, " however, explicitly excludes "a bank or financial institution." Id. at (d)(3). As it is undisputed that Truity is a financial institution, e.g., Doc. 52-11, ¶ 3 (Tate affidavit), the regulation does not apply to it. Moreover, the regulation was promulgated by the FTC pursuant to the FTCA. Therefore, as discussed above, it does not contain a private right of action. For those reasons, Truity's Motion for Summary Judgment is granted as to Plaintiffs' "Used Car Rule" claim.

         Finally, Plaintiffs' claim under the Magnuson-Moss Warranty Act does not meet the Act's jurisdictional threshold amount of $50, 000, and must be dismissed without prejudice on that basis. The Act imposes several standards for warranties, and explicitly provides that "a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter. . . may bring suit. . . in an appropriate district court of the United States, subject to paragraph (3) of this subsection." 15 U.S.C. § 2310(d)(1). Paragraph (3) of the subsection in turn states that no claim brought in the U.S. district courts "shall be cognizable" if "the amount in controversy is less than . . . $50, 000." Id. at (d)(3)(B). In this case, Plaintiffs have requested "[$]5, 060.65 for the total costs of the car and the repairs and vehicle reports, " $900.00 for the GAP insurance, $3, 995.00 "for having to borrow to purchase another vehicle, " that Defendants "pay off the balance of the" estimated "$6, 000" loan, and $1, 184.00 for insurance expenses. (Doc. 32, ΒΆΒΆ 30-32). Doing the arithmetic, these claims total $17, 139.65, well short of the $50, 000 jurisdictional threshold. Therefore, Truity is entitled to ...


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