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Garcia v. Kakish

United States District Court, E.D. California

June 27, 2017

MUSHEER A. KAKISH, et al., Defendants.


          Jennifer L. Thurston UNITED STATES MAGISTRATE JUDGE.

         Justin Garcia and Andrew Garcia assert the defendants are liable for violations of the Fair Debt Collection Practices Act for actions taken during the course of a repossession of his vehicle. (Doc. 9) Santander Consumer USA Inc. asserts that Justin Garcia signed a binding arbitration agreement. Therefore, Santander seeks to compel arbitration and dismiss the action or to stay the matter to allow completion of arbitration. (Doc. 19) Because the Court finds that Justin Garcia agreed to arbitration and Andrew Garcia's claims are factually and legally intertwined with the contract setting forth the arbitration provision, the Court RECOMMENDS[1] Santander's motion to compel arbitration be GRANTED IN PART.

         I. Background

         Justin Garcia asserts that he bought “an automobile on credit from Paul Blanco's Good Car Company, an auto dealership located in Bakersfield, California, pursuant to a conditional sales contract. The contract is regulated by the Rees- Levering Automobile Sales Finance Act.” (Doc. 9 at 2, ¶ 1) “Santander Consumer USA Inc., an automotive lender, took assignment of the conditional sales contract from the dealership.” (Id.) According to Plaintiffs, “[w]hen Justin Garcia fell behind on his payments, Santander hired an unlicensed repossession agency, third party Par, Inc., to repossess plaintiff's vehicle.” (Id.) Par, Inc. then subcontracted the repossession to Musheer Kakish and Keith Church, who were doing business as All County Recovery[2]. (Id.)

         Plaintiffs assert they were in the vehicle in a Walmart parking lot when “[t]wo repo men from All County Recovery suddenly pulled up in a tow truck, and blocked the vehicle from behind.” (Doc. 9 at 2, ¶ 2) According to Plaintiffs, “One repo man descended from the tow-truck, came around to Justin Garcia's window, and announced the vehicle was being repossessed.” (Id.) Plaintiffs allege that “Justin Garcia objected to the repossession, ” after which “[t]he repo man forcibly opened the driver's door to plaintiff's vehicle, and slammed it into another car which was parked beside plaintiff, damaging that vehicle.” (Id.) Plaintiffs report they were still in the vehicle when the repo man signaled to the driver of the tow truck, which “banged into the vehicle from behind, and began lifting it in the air.” (Id.) Plaintiffs allege “Andrew Garcia hit his head and was injured.” (Id.)

         Plaintiffs assert that after they exited the vehicle, they “continued to object to the repossession and the damage that had been done to the other vehicle.” (Doc. 9 at 2, ¶ 3) They allege, “All County Recovery's repo man became enraged, and stated he had called the police, who were on their way to the scene. This was a lie.” (Id. at 2-3, ¶ 3) Plaintiffs assert that “eventually, ” the keys to the vehicle were turned over by Justin Garcia.” (Id. at 3, ¶ 3) After the repossessors “dragged the vehicle to another part of the parking lot, ” one of them got in the vehicle and drove it away, while the other drove the tow truck. (Id.)

         According to Plaintiffs, “All County Recovery absconded with some of plaintiff Justin Garcia's personal possessions still in the vehicle.” (Doc. 9 at 3, ¶ 6) In addition, Plaintiffs assert that “All County Recovery failed to notify plaintiff Justin Garcia in writing of the seizure of the vehicle within 48 hours, and failed to mail him a written inventory of the personal items it had seized, ” in violation of the Collateral Recovery Act. (Id.) Further, Plaintiffs assert that when Justin Garcia called All County Recovery to obtain his possessions, he was informed that “he would be charged more than $200 for the storage of his property.” (Id. at 4, ¶ 7)

         Plaintiffs allege that “Santander never mailed plaintiff Justin Garcia a written post-repossession notice (“NOI”), as required by Civil Code § 2983.2(a).” (Doc. 9 at 5, ¶ 9) However, Plaintiffs report Justin Garcia “later obtained a copy of an alleged NOI, which Santander claimed to have issued.” (Id.) Plaintiffs contend the NOI was a form “Santander uses for all California borrowers whose vehicles it repossesses, ” and was defective because it failed to disclose information including “the due date of a monthly installment payment coming due during the reinstatement period, ” “the due date and amount of a late fee on the monthly installment payment coming due during the initial or extended reinstatement period, ” and “that plaintiff would have to pay a third party repossession agency for administrative fees and vehicle storage fees.” (Id.)

         Plaintiffs allege that “Justin Garcia did not reinstate or redeem his contract, and Santander sold the vehicle.” (Doc. 9 at 6, ¶ 10) In addition, Plaintiffs contend that notwithstanding this defective NOI, “Santander assessed plaintiff Justin Garcia a deficiency balance” despite knowing one was not owed, and “reported it to the three credit reporting agencies.” (Id., ¶ 11) Plaintiffs assert, “In order to force plaintiff Justin Garcia to pay a debt he didn't owe, Santander continued reporting the unlawful deficiency balance each and every month from the time the deficiency balance was assessed, through the present.” (Id., ¶ 12)

         Plaintiffs allege that “one or more of All County Recovery's employees who assisted in the repossession was not properly registered as a repossession agency employee with the Bureau of Security and Investigative Services, and therefore had no legal right to participate in locating or repossessing [the] vehicle.” (Doc. 9 at 3, ¶ 5) Plaintiffs assert that “defendant All County Recovery is regularly sending unlicensed and unregistered personnel to repossess the vehicles of hundreds or thousands of California borrowers per year, and that a public injunction is necessary to put a stop to this illegal, unlicensed conduct, which harms the general public and is inherently dangerous.” (Id.) In addition, Plaintiffs contend a public injunction is necessary “to restrain All County Recovery from charging personal property or vehicle storage fees unless they are (1) properly disclosed in written notices to borrowers, and (2) in the same amount as authorized by the secured party.” (Id., ¶ 8)

         Similarly, Justin Garcia seeks a public injunction against Santander, restraining the company “from using its current form NOI template, from collecting any deficiency balances from those California borrowers to whom it sent a non-compliant NOI, and from making any derogatory credit reporting of such deficiency balances.” (Id. at 7, ¶13)

         Based upon the actions taken during the course of the repossession, Plaintiffs identify the following causes of action in the First Amended Complaint: (1) violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692; (2) violations of California's Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788; (3) violations of the California Consumer Credit Reporting Agencies Act, Cal. Civ. Code § 1785.1; (4) declaratory relief; (5) conversion; (6) battery; (7) violations of the Collateral Recovery Act; (8) and violations of California's unfair competition law, Cal. Bus. & Prof. Code §17200. (See generally Doc. 9 at 8-19)

         On May 19, 2017, Defendant Santander filed the motion to compel arbitration now pending before the Court, asserting Plaintiff had agreed to arbitrate all claims related to the financing and purchase of his vehicle. (Doc. 19) Plaintiffs filed their opposition to the motion on June 8, 2017. (Doc. 22) On June 17, 2017, Santander filed a motion for a two-day extension of time to file the brief in reply (Doc. 24), which Plaintiffs opposed (Doc. 25).

         II. Motion for an Extension of Time

         As an initial matter, Defendant sought leave to file an untimely reply brief pursuant to Rule 6 of the Federal Rules of Civil Procedure, which provides that “[w]hen an act may or must be done within a specified time, the court may, for good cause, extend the time… on motion made after the time has expired if the party failed to act because of excusable neglect.” Fed.R.Civ.P. 6(b)(1)(B).

         The Supreme Court explained “excusable neglect” encompasses a failure to comply with filing deadlines “caused by inadvertence, mistake, or carelessness, as well as intervening circumstances beyond the party's control.” Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380, 388 (1993). To determine whether there has been “excusable neglect, ” the Court considers: “(1) the danger of prejudice to the non-moving party, (2) the length of delay and its potential impact on judicial proceedings, (3) the reason for the delay, including whether it was within the reasonable control of the movant, and (4) whether the moving party's conduct was in good faith. Pincay v. Andrews, 389 F.3d 853, 855 (9th Cir. 2004), citing Pioneer, 507 U.S. at 395.

         Defendant contends the untimely filing is due to excusable neglect because counsel did not receive an ECF notice that the opposition was filed. (Doc. 24 at 2) Specifically, Alexander Gershen, an attorney at McGuire Woods LLP, counsel for the defendant, asserts that he was monitoring the cases for Antony Le while Mr. Le was out of the country. (Doc. 24-1 at 2) Mr. Gershen believed he was receiving the ECF notices on behalf of Mr. Le, but reports that an ECF notice related to the opposition was not received. (Id.) Mr. Gershen asserts he first learned of the filing of the opposition on June 16, 2017, after which Defendant requested Plaintiff agree to an extension of time for the filing. (Id.) The next day, Defendants filed the motion for an extension of time with the reply brief.

         Plaintiffs oppose the extension of time, asserting that “Santander has not shown good cause for leave to file a late reply brief.” (Doc. 25 at 3) Plaintiffs observe, “Mr. Le is defendant's only counsel of record in this case, and yet he submits no declaration in support of the application. Even if he was out of the country at the time of the opposition (which is not confirmed by any testimony from Mr. Le himself), he failed to make suitable arrangements for another lawyer to cover in his absence.” (Id.) According to Plaintiffs, despite the assertion that Mr. Gershen was “monitoring the case in Mr. Le's absence, … Mr. Gershen never took the time to appear via ECF, so he was guaranteed not to receive anything from ECF about this case.” (Id.)

         Significantly, as Defendant observes, courts have determined “failure to receive an ECF notification can be adequate grounds for finding excusable neglect.” (Doc. 24 at 2, citing, e.g., Kucik v. Yamaha Motor Corp., 2009 U.S. Dist. LEXIS 96704 (N.D. Ind. Oct. 16, 2009) (granting enlargement of time for responding to motion to dismiss, where counsel did not receive ECF notice); Alexander v. Principi, 16 Fed, Appx.755 (9th Circ. 2001) (granting enlargement of time to file reply brief); Jones v. Neven, 2011 WL 2132978 (D. Nev. May 26, 2011) (granting enlargement of time to file a late Reply for procedural issues). Indeed, the factors set forth by the Ninth Circuit support a similar conclusion here.

         The reply brief was to be filed on Thursday, June 15 and the request for an extension time with the reply brief was filed on Saturday, June 17. Thus, the filing delay was only two days, or one business day, and had minimal impact upon the judicial proceedings. Plaintiffs were not entitled to file a response to the reply and lost just one business day to review the arguments presented in the reply brief before the hearing. While the awareness of the filing of the opposition was certainly within counsel's control-as even if an ECF notice was not received, the docket could be reviewed for an opposition- there is no evidence that Defendant acted in bad faith or with dilatory motives.

         On the other hand, at the hearing, the Court inquired as to the prejudice suffered by the plaintiffs due to the late filing and they offered none. Likewise, they refused the Court's offer to continue the hearing to make up for the time lost caused by the late filing. Accordingly, the Court finds the factors support a finding that the untimely filing was due to excusable neglect and the plaintiffs suffered no prejudice. Thus, the motion for an extension of time (Doc. 24) is GRANTED.

         III. Evidentiary Objections

         In support of the motion to compel arbitration, Defendant submitted the declaration of Mark Neiros who is the Senior Vice President Servicing and Recovery Operations at Santander. (Doc. 19-1) Mr. Neiros reports that he is “familiar with the operations and record-keeping” of Santander, which “issues automobile loans directly to consumers or takes assignment of vehicle sales contracts, also known as Retail Installment Sale Contracts, from automobile dealerships along with the rights, claims, and defenses provided by the contracts, including the right to receive payments from the vehicle purchases.” (Id. at 2, ¶ 4) Mr. Neiros reviewed Santander's “records relating to Plaintiff's account, ” and the “records reflect that on September 5, 2015, Plaintiff executed a ‘Retail Installment Sale Contract-Simple Finance Charge (With Arbitration Provision)'… in connection with the purchase and financing of a 2014 Ford Mustang (the ‘Vehicle') from an auto dealership.” (Doc. 19-1 at 2, ¶ 6) After this, the contract was assigned to Santander. (Id. at 2, ¶ 6) Mr. Neiros attests that the document attached to his declaration is, in fact, the contract that Justin Garcia signed. (Id. at 3, ¶ 7) He asserts that the contract is a “business record of [Santander] that [is] kept and maintained in the regular and routine course of SC's business activity.” (Id. at 3, ¶ 10) According to Mr. Neiros, “It was a regular and routine practice of S.C. to keep and maintain such records, ” and the contract was “maintained by a person or persons with knowledge of and a business duty to maintain, record, or transmit such records.” (Id.)

         Plaintiffs assert that “Santander has also failed to submit any admissible evidence of an arbitration contract.” (Doc. 22 at 4) Plaintiffs contend the agreement attached to the declaration of Mr. Neiros “purports to be between “Paul Blanco's Good Car Company of Bakersfield” and Justin Garcia.” (Doc. 22 at 6) Plaintiffs argue, “Neither Paul Blanco's nor Justin Garcia have testified about the purported contract, and it is therefore not authenticated by any ‘testimony by a witness with knowledge.'” (Id., citing Fed.R.Evid. 901.) Plaintiffs argue that because Mr. Neiros' knowledge “comes only second hand, from reviewing Santander's records, ” the document has not been properly authenticated. (Id. at 7) In addition, Plaintiffs contend that as the vice president of recovery operations, Mr. Neiros is not the custodian of record.” (Id.) Plaintiffs conclude the contract “is unauthenticated and inadmissible hearsay.” (Id. at 4)

         Notably, there is no requirement that the signatories to the contract authenticate it. (Fed. R. Evid. 901(b)(1). It is sufficient if a person testifies that the thing is what it is claimed to be. (Id.) Mr. Neiros has set forth a sufficient basis for his knowledge that this is the contract referenced in the plaintiffs' operative complaint. In addition, contracts are not hearsay and no hearsay exception need be shown for their admissibility. In United States v. Pang, 362 F.3d 1187, 1192 (9th Cir. 2004), the Ninth Circuit held, “out-of-court statements that are offered as evidence of legally operative verbal conduct are not hearsay. They are considered “verbal acts.” Thus, the Court finds that Mr. Neiros adequately sets forth his basis for knowledge that the contract he submits is, in fact, the actual contract signed by Justin Garcia and Paul Blanco's Good Car Company of Bakersfield. Thus, he satisfies § 901(b)(1). Likewise, he establishes that Santander has maintained this document in the course of its business as the assignee of the contract.

         Moreover, “[o]n a motion to compel arbitration, the court applies a standard similar to the summary judgment standard applied under Rule 56 of the Federal Rules of Civil Procedure.” Alvarez v. T-Mobile USA, Inc., 2011 WL 6702424 (E.D. Cal. Dec. 21, 2011). In evaluating a motion for summary judgment, “courts focus on admissibility of the evidence's content, not its form.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). Thus a party must produce evidence that could be rendered in an admissible form. Celotex, 477 U.S. 317. It is indisputable that the contract could be properly authenticated and presented in admissible form. Importantly, Plaintiffs admit that Justin Garcia entered into the ...

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