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Chaiwong v. Hanlees Fremont, Inc.

United States District Court, N.D. California

September 1, 2017

HANLEES FREMONT, INC., et al., Defendants.



         Pending before the Court is Defendant Ally Financial, Inc.'s (“Ally”) motion to dismiss Plaintiff Weerachai Chaiwong's (“Plaintiff”) first amended complaint, Dkt. No. 21, as well as Ally's motion to dismiss the cross-claims of its co-Defendant Hanlees Fremont, Inc. (“Hanlees”), Dkt. No. 36. Having carefully considered the parties' arguments and papers, the Court GRANTS both motions for the reasons set forth below.

         I. BACKGROUND[1]

         The following facts are undisputed unless otherwise noted. Plaintiff leased a Chevrolet Equinox from Fremont Chevrolet on June 22, 2010. Dkt. No. 19 ¶¶ 20, 22, & Ex. 3. The lease agreement listed the “Scheduled Lease End Date” as September 21, 2013. Id. ¶ 20, & Ex. 3 at 4.[2] However, the lease also stated that “[i]f this lease ends on or after the last scheduled payment is due, we will treat the lease as if it ended as scheduled and not as if it ended early” (the “Treat As” clause). Id., Ex. 3 at 4. The lease also stated that at lease end Plaintiff would owe “any excess mileage charge, any lease end daily extension charge, and [Ally's] estimated or actual cost of repairing excess wear, plus any tax, ” but that Plaintiff was free to terminate the lease “anytime” prior to its scheduled end date, though early termination fees would then apply. Id., Ex. 3 at 4.

         Prior to Plaintiff's termination of the lease, Ally accepted assignment of the contract. Id. ¶ 22. On September 19, 2013, Plaintiff attempted to “trade” the vehicle in to Defendant Hanlees, a third party dealership, in connection with the lease of a Hyundai Santa Fe, rather than returning the vehicle to Ally directly. Id. ¶ 24. Plaintiff claims that Hanlees “represented to Plaintiff that it was authorized to accept the [Equinox] as a trade-in vehicle.” Id. ¶ 27. Plaintiff also claims that as a result of his alleged “trade-in” of the vehicle, Hanlees became responsible for paying Ally the $17, 543.50 balance owed on the lease but only issued a check to Ally in the amount of $15, 736.00. Id. ¶ 32.

         While Hanlees initially indicated that it wished to purchase the Equinox, Ally mistakenly repossessed the vehicle in October 2013 causing Hanlees to change its mind, and Ally issued Hanlees a refund of the $15, 736.00 check. Dkt. No. 25 ¶¶ 65, 66; Dkt. No. 19, Ex. 2. Because Plaintiff relinquished the Equinox two days prior to the “Scheduled Lease End Date” listed in the contract, Plaintiff believed he was terminating his lease with Ally early. Dkt. No. 19 ¶ 26. However, because Plaintiff had already made the final payment on the lease, Ally treated the lease as if it had ended as scheduled, and charged Plaintiff $9, 712.76 for excess wear and mileage and related sales/use taxes. Id. ¶ 37; Dkt. No. 21 at 3.

         Within a few months of “trading” the vehicle in, “Plaintiff began receiving calls from Ally “stating that he was delinquent on payments for the lease of the Chevrolet.” Dkt. No. 19 ¶ 33. Plaintiff “notified [] Ally that he had traded in the Chevrolet to [] Hanlees.” Id. In addition, Plaintiff “immediately” notified Hanlees of the issue and “requested that [] Hanlees fulfill its contractual obligation to pay off any remaining lease balance on the Chevrolet” to Ally. Id.

         Plaintiff filed suit against Ally and Hanlees in the Superior Court of California on May 25, 2016. Dkt. No. 1, Ex. 1. On July 20, 2016, the action was removed to this Court under the Class Action Fairness Act. Id. at 1. Plaintiff filed a First Amended Individual and Class Action Complaint on September 1, 2016 (“FAC”). Dkt. No. 19. The FAC alleges three claims against Ally, including (1) violation of the Unfair Competition Law (“UCL”) Business and Professions Code § 17200 by committing unfair and unlawful acts, id. ¶¶ 80-90; (2) violation of the Rosenthal Fair Debt Collection Practices Act (“FDCPA”), id. ¶¶ 91-108; and (3) declaratory relief, id. ¶¶ 109-115. The FAC also asserts claims against Hanlees arising out of Hanlees' alleged misrepresentation to Plaintiff that it would pay off the balance of the Equinox after Plaintiff traded the vehicle in for the Hyundai. Id. ¶¶ 54-79.

         In addition, in its answer to the FAC, Hanlees asserted several cross-claims against Ally, including (1) violation of the UCL Business and Professions Code § 17200 by committing unlawful, unfair, and deceptive acts; (2) equitable indemnity; (3) intentional interference with prospective economic advantage; and (4) slander and disparagement of title. Dkt. No. 25. Ally now moves to dismiss both Plaintiff's and Hanlees' claims. See Dkt. Nos. 21, 36.


         Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief[.]” A defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, Courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

         Federal Rule of Civil Procedure 9(b) heightens these pleading requirements for all claims that “sound in fraud” or are “grounded in fraud.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) (citation omitted); Fed.R.Civ.P. 9(b) (“In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.”). “[The Ninth Circuit] has interpreted Rule 9(b) to require that allegations of fraud are specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong.” Neubronner v. Milken, 6 F.3d 666, 671 (9th Cir. 1993) (quotation marks and citation omitted).

         III. ...

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