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Ford Motor Credit Company, LLC v. Calandra

A-0590-10T1 (N.J. Super. App. Div. 2011) (Unpublished)

LEASES; AUTOMOBILES; DEFAULT — When a vehicle lessee defaults under a lease, the lessor is entitled to charge the reasonable cost to transport the vehicle to an auction to prepare it for sale because doing so merely makes the lessor whole for the expenses it is forced to incur in order to maximize the sale proceeds that will ultimately be credited to the defaulting lessee.

A vehicle lease made it a default if the lessee failed to make a payment when due or failed to keep any other agreement in the lease. The lease then detailed the rights of the lessor upon default. A lessee missed several payments and then returned the vehicle to the dealership. The lessor hired a company to transport the vehicle from the dealership to a yard where it was sold at auction. The lessor credited the lessee with the gross proceeds, less the expenses incurred in selling the vehicle.

The lessor then sued the lessee for breach of the lease. The lessee filed an answer and a counterclaim, asserting violations of the Consumer Leasing Act (CLA); the Uniform Commercial Code (UCC); the New Jersey Consumer Fraud Act (CFA); the New Jersey Truth-In-Consumer Contract, Warranty and Notice Act (TCCWNA); and the New Jersey Plain Language Act (PLA). It also filed a motion for class certification. While the motion was pending, the lessor moved for summary judgment on its claim for the amount due on the debt and for dismissal of the counterclaims. The lessee filed an opposition and moved for partial summary judgment on the issue of the lessor’s liability for the statutory violations asserted in her counterclaims. Following argument, the lower court granted the lessor’s motion for summary judgment, dismissing the UCC claim only, and denying the lessee’s motion for partial summary judgment. In another order, the lower court certified the matter as a class action with a specified subclass and designated the lessee as the class and subclass representative. The lessor moved for reconsideration. The lessee filed its opposition and a cross-motion to compel discovery. The lower court granted the lessor’s motion for reconsideration, and then granted the lessor’s motion for summary judgment in its entirety, dismissing all of the counterclaims with prejudice.

On appeal to the Appellate Division, the lessee argued that the lower court inexplicably reversed its prior findings and that summary judgment was premature in light of the early stage of discovery. The Court disagreed, finding that the lessor, on reconsideration, more than amply highlighted the copious discovery that had been provided to the lessee pertaining to the relevant legal issue before the court, the nature and reasonableness of the charges, and the disclosures under the default provision of the lease. Other than bald assertions that additional discovery was needed after the class was certified, the lessee cited to no material, outstanding discovery issues sufficient to preclude summary judgment. To the contrary, it appeared to the Court that the material facts regarding the transaction were not in dispute, and thus there was no reason to delay adjudication of the matter.

The Court also agreed with the lower court that, contrary to the lessee’s assertion, expenses charged by the lessor to transport the vehicle to the auction and to prepare it for sale were reasonable because the lessor was merely making itself whole for the actual, out-of-pocket costs it was forced to incur to maximize the sales proceeds that would ultimately be credited to the defaulting lessee. The CLA, the Court noted, allows for charges for delinquency, default, and early termination to the extent they are reasonable in the light of the anticipated or actual harm. The lessee’s assertion that a lessor may not treat a defaulting lessee differently than a lessee who fully performs his or her obligation was unsupported by the law.

Further, the lessee did not identify any unlawful conduct on the lessor’s part sufficient to constitute a CFA claim. The only basis for its underlying claim of statutory violations was based on the charge to transport her vehicle and prepare it for auction. She did not dispute that the lessor actually incurred these costs and did not show they were reasonable in amount. In affirming, the Court found that it was unclear what additional relevant information could possibly have been uncovered through additional discovery.

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