A Magistrate judge in Oregon is recommending that a defendant’s motion for summary judgment be granted in a Fair Debt Collection Practices Act case dealing with the purchase of a used car that turned out to be a lemon.
The Background: The plaintiff purchased a used car from a used car dealer in October 2014. The agreement itemized the purchase price, the down payment, and 24 monthly payments. The agreement also specified a $25 late fee for payments that were made 10 or more days late, that failure to comply could result in the vehicle being repossessed, and that the car was being sold as is. The plaintiff claims he had assurances that the engine on the vehicle had recently been rebuilt.
- After driving the car less than 200 miles, it began experiencing engine problems. The plaintiff returned the vehicle to the used car lot, where he was instructed to take the car to the mechanic who allegedly rebuilt the engine. The plaintiff claimed to continue making monthly payments until he was told to stop because the repairs were taking so long.
- After two years, the mechanic said he would not be doing any more work on the car, but provided the plaintiff with an engine that he could install himself.
- When the plaintiff retrieved the vehicle in November 2016, it was inoperable.
- The plaintiff failed to make the downpayment when he took possession of the car. Instead, he made half of the downpayment a week after taking possession and the other half a month later. The plaintiff made nine of the 24 monthly payments. The dealer added 34 late fees to the balance.
- The plaintiff received a letter from a collection law firm seeking to collect $5,387.80. The plaintiff called the dealer and was told the owner would call him back after returning from vacation, but the plaintiff never heard back.
- The law firm then filed suit seeking to collect on the unpaid debt. The plaintiff alleged the statute of limitations to file a lawsuit had expired and then filed his own lawsuit, accusing the firm of violating the FDCPA and Oregon state law.
- The plaintiff claimed the defendant engaged in harassing or abusive conduct, unfair and unconscionable conduct by falsely representing the amount that was owed, and using false representations to collect on a debt.
The Ruling: The plaintiff did not specifically state which provision of Section 1692d the defendant allegedly violated, but the speculation was that it had something to do with the collection letter being sent to the address of the plaintiff’s employer. But that address was provided to the used car dealer when the vehicle was sold, so sending the letter there was reasonable, ruled Judge Mark D. Clarke of the District Court for the District of Oregon.
- The plaintiff claimed the late fees were illegal because they were not part of the original contract and were included in as separate document. While the amount of the late fee may have been excessive, they were expressly authorized in the contract and their inclusion was also not a violation of the FDCPA, Judge Clarke ruled.
- Because the plaintiff never contacted the defendant to dispute the debt — he called the used car lot instead — the defendant had no reason to think the debt was not valid.
- Finally, even if the amount being collected was inaccurate, the defendant is entitled to the FDCPA’s Bona Fide Error defense, Judge Clarke ruled, because he included a signed declaration from the used car dealer verifying the amount owed when the collection lawsuit was filed.
