BofA Denied Dismissal On Post-Repo Class Action Suit
As the owner or emplyee of a repossession agency, it is important to stay informed about relevant legal developments. In a recent case, Nelson v. Bank of America, National Association, a Pennsylvania federal district court made a significant ruling regarding the repossession process. The court determined that the allegations made by the plaintiffs, who claimed that the bank’s repossession notices did not comply with Pennsylvania’s Motor Vehicle Sales Finance Act (MVFSA), were sufficient to state a claim under the Pennsylvania Uniform Commercial Code (UCC). Consequently, the court denied the bank’s motion to dismiss the plaintiffs’ class action complaint.
The plaintiffs in this case asserted that the bank acted in an unreasonable manner by failing to provide adequate notice of the repossession of their financed motor vehicles and subsequently selling those vehicles to satisfy outstanding debts. They contended that under the MVFSA, secured parties are obligated to notify debtors that they have the right to redeem their vehicles within 15 days of the mailing of the notice. Since the notices received by the named plaintiffs did not meet the 15-day requirement, they alleged that the bank violated their right to receive commercially reasonable notice as prescribed in Section 9610 of the UCC. Consequently, they sought statutory damages under the UCC. The bank sought to dismiss the plaintiffs’ complaint, arguing that the MVFSA does not provide a private right of action and that an alleged violation of the MVFSA cannot serve as the basis for a UCC claim of unreasonableness.
The district court rejected the bank’s motion, relying on a 1985 decision by the Pennsylvania Superior Court. This prior ruling addressed the issue of whether the MVFSA’s notice requirements and foreclosure procedures for motor vehicle security interests are governed by the UCC, the MVFSA, or both. The Superior Court determined that both statutes were applicable, citing previous case law that established the UCC’s provision on commercial reasonableness as governing the disposition of repossessed vehicles. The court also considered the Pennsylvania Statutory Construction Act, which states that statutes and their parts are considered in pari materia when they relate to the same persons, things, or classes of persons or things. Based on this interpretation, the Superior Court concluded that the MVFSA and UCC were in pari materia regarding the notice to be provided to debtors by secured creditors, as both statutes concerned the sale of repossessed vehicles. Consequently, the district court asserted that since the notice provisions of the MVFSA and the UCC apply to repossession and resale after default on a motor vehicle sales installment contract, the remedies available under the UCC for the violation of these notice provisions are also applicable to violations of other provisions of the MVFSA.
As a provider of repossession services , it is crucial to take note of this ruling as it clarifies the legal obligations regarding repossession notices under the UCC. Ensuring compliance with these requirements will help minimize the risk of legal action and potential liability.
