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Mora v. Harley-Davidson Credit Corp.

July 7, 2009


The opinion of the court was delivered by: Oliver W. Wanger United States District Judge


(DOC. 8)


Plaintiff Luis Manuel Mora ("Mora") filed this class action lawsuit against Defendant Harley-Davidson Credit Corporation ("HDCC") in the Superior Court of the State of California, County of Merced, on August 19, 2008. Plaintiff alleges HDCC violated California's Rees-Levering Automobile Sales Finance Act ("ASFA"), California Civil Code § 2981 et seq., and Unfair Competition Law, California Business and Professions Code § 17200 et seq., when it sent customers notices of its intent to dispose of repossessed vehicles that were defective under California law and attempted to collect deficiencies from debtors that were legally prohibited because HDCC failed to strictly comply with ASFA's notice provisions. On September 26, 2008, Defendant HDCC filed a notice of removal pursuant to 28 U.S.C. §§ 1332, 1441, and 1446 and the Class Action Fairness Act of 2005 ("CAFA").

Before the court for decision is Defendant's motion to dismiss, or in the alternative, motion to strike Plaintiff's claims to the extent they are based on alleged false reporting to credit reporting agencies. The motions are based on the ground that such claims are expressly preempted by the Fair Credit Reporting Act ("FCRA"), codified at 15 U.S.C. § 1681 et seq. Plaintiff opposes, arguing FCRA does not preempt the claims and Plaintiff's state claims are based on state consumer protection laws that are unrelated to FCRA.


Plaintiff entered into a conditional sales contract to purchase a new 2006 Harley-Davidson motorcycle with financing arranged through Defendant HDCC. As a financed sale of a motor vehicle, Plaintiff asserts this transaction is controlled exclusively in California by ASFA. The selling dealer sold and assigned its interest in the sales contract to lienholder HDCC. Plaintiff contends that the motorcycle was plagued by defects that the dealer was unable to repair after numerous attempts. He voluntarily surrendered it to HDCC in August 2007.

Plaintiff alleges that on September 4, 2007, HDCC sent Plaintiff a notice of intent to dispose of a repossesed vehicle that failed to comply with ASFA and applicable provisions of the California Commercial Code. Plaintiff argues that, under ASFA, if a lender fails to give a legally compliant notice before it sells or disposes of a repossessed or surrendered vehicle, it loses its right to any deficiency owed from the buyer and is prohibited from claiming or asserting any deficiency. Accordingly, Plaintiff claims HDCC has no legal right to attempt to collect any claimed deficiency from him and a purported class of similarly situated former owners of Harley-Davidson motorcycles financed by HDCC. HDCC has both attempted to collect and successfully collected a claimed deficiency from Plaintiff.

Plaintiff seeks to represent a class of "all persons from whom HDCC and its associates, affiliates, and subsidiaries claims it is owed a deficiency that was invalid due to HDCC's defective NOTICE(S) and its failure to comply with the notice requirements of Rees-Levering." (Doc. 1-2, Complaint at 8.) Plaintiff asserts that the allegedly defective notice he received is a standard notice HDCC sends as a matter of common business practice to persons claimed to be liable to HDCC under its conditional sales contract covering HDCC repossessed vehicles. (Id. at 7.) Plaintiff asserts that, at least four years prior to the date of his complaint, HDCC has regularly collected and attempted to collect deficiencies from proposed class members in violation of ASFA. (Id.) Plaintiff is "unable to state the precise number of potential members of the proposed class because that information is in the sole possession of HDCC." (Id. at 8.) Plaintiff believes the size of the proposed class is "at least in the hundreds." (Id.)

Plaintiff seeks: 1) a declaration that HDCC did not comply with AFSA and has no right to assert any deficiency claim against any class member, 2) damages in the form of recovery for all class members of payments made to HDCC on the deficiency claims, compensation for damage to the credit records of class members, and actual damages, 3) an injunction prohibiting HDCC from future collection efforts and forcing it to disgorge profits, 4) to set aside judgments HDCC successfully sought and obtained against class members who it claimed owed a deficiency, and 5) attorney's fees.


A. Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint. Novarro v. Black, 250 F.3d 729, 732 (9th Cir. 2001). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, it is required to contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65 (2007); see also Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997) (issue is not whether plaintiff will ultimately prevail, but whether claimant is entitled to offer evidence to support the claim). Dismissal is warranted under Rule 12(b)(6) where the complaint lacks a cognizable legal theory or where the complaint presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). In deciding a motion to dismiss, the court accepts as true all material factual allegations in the complaint and construes them in the light most favorable to the plaintiff. See Newman v. Sathyavaglswaran, 287 F.3d 786, 788 (9th Cir. 2002).

The court need not accept as true allegations that contradict facts which may be judicially noticed. See Mullis v. United States Bankruptcy Ct., 828 F.2d 1385, 1388 (9th Cir. 1987). For example, matters of public record may be considered, including pleadings, orders, and other papers filed with the court or records of administrative bodies, see Mack v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), while conclusions of law, conclusory allegations, unreasonable inferences, or unwarranted deductions of fact need not be accepted. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see also Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994) ("[A] document is not 'outside' the complaint if the complaint specifically refers to the document and if its authenticity is not questioned."). Allegations in the complaint may be disregarded if contradicted by facts established by exhibits attached to the complaint. Sprewell, 266 F.3d at 988. Thus when ruling on a motion to dismiss, the court may consider facts ...

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