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Car Financial Services, Inc. v. Lambert

United States District Court, S.D. Alabama, Southern Division

July 11, 2019

CAR FINANCIAL SERVICES, INC., Plaintiff,
v.
CHARRANDA LAMBERT, individually and d/b/a A-1 Auto Sales and V. Lambert & Family Tire Sales and Auto Sales, and V. Lambert & Family, LLC, Defendants.

          ORDER

          KRISTI K. DUBOSE CHIEF UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendants' partial[1] motion for summary judgment (Docs. 62, 63), Plaintiff's Response (Doc. 71), and Defendants' Reply (Doc. 72). [2]

         I. Findings of Fact[3]

         As alleged, Plaintiff Car Financial Services, Inc. (Car Financial) is a Georgia corporation doing business in Florida in the automotive financial services business (e.g., purchases retail installment contracts, in whole or part, from used car dealers with recourse). (Docs. 1; 1-1 at 11; 37). Alabama resident Defendant Charranda Lambert (Ms. Lambert) is an individual d/b/a as A-1 Auto Sales, a used car business located in Alabama, and as part of the business from time to time sells vehicles to Customer Obligors on credit. (Id.) Defendant V. Lambert & Family, LLC is an Alabama limited liability company operated by Vincent Lambert. (Id.)

         The case deals with an alleged breach of contract tied to automobile financing agreements. Specifically, Car Financial has two programs with dealerships which involve purchasing a dealership's receivables; Account Bulk Purchase Program (“Bulk”) and the Payment Interval Purchase Program (“PIPP”). (Doc. 71 at 14-22 (Aff. Smith)).[4]

         Under the Bulk Program, a dealership enters into a Master Purchase Agreement-Bulk (“Bulk Agreement”) with Car Financial, which among other things, permits it to purchase the dealership's receivables. Id. The dealership assigns the receivables to Car Financial, entitling Car Financial to receive payments from borrower/customers for the remaining term of the financing agreement. Id. Car Financial receives and holds the original titles to the automobiles. Id. The dealership also signs a Power of Attorney agreement, which permits Car Financial to enforce rights granted to the dealership under the financing agreements with its customers. Id. As such, Car Financial steps into the shoes of the dealership as the primary lienholder for purchased automobiles, even though it does not change the lienholder on the title. Id. The receivables purchased by Car Financial are referenced in subsequent contracts called Short Form Purchase Agreements. (Doc. 71 at 14-22 (Aff. Smith)). Each receivable acquired through a Short Form Purchase Agreement is governed by the terms of the Bulk Agreement and the terms of the Bulk Agreement are incorporated by reference into each Short Form Purchase Agreement. Id. There is no limit on how many Short Form Purchase Agreements may be executed under a Bulk Agreement. Id. If a customer fails to make a payment within the first 30 days of Car Financial purchasing the contract (receivable), the dealership is obligated under the Bulk Agreement to repurchase that receivable. Id. After the initial 30-day period, however, Car Financial bears the risk of default by the customer. Id.

         Under the PIPP Program, a dealership enters into a Master Purchase Agreement-PIPP (“PIPP Agreement”) with Car Financial. (Doc. 71 at 14-22 (Aff. Smith)). The PIPP is similar to the Bulk Agreement with respect to assignment of receivables and delivery of title to vehicles. Id. However under a PIPP, Car Financial purchases only a defined portion of a customer's scheduled payments under their financing agreement (e.g., three months, six months, or longer), not the entire contract and payment term. Id. The PIPP also requires the dealership to repurchase from Car Financial any receivable that defaults during the term. Id. Car Financial has full recourse under a PIPP against the dealership for any customer default, regardless of the amount of time that has passed. Id.

         On August 23, 2016, Ms. Lambert (Seller) executed a Master Purchase Agreement-Bulk with Car Financial (Buyer), through which Car Financial may purchase from Seller automotive sales finance contracts (Receivables) via Short Form Purchase Agreements. (Doc. 63 at 1-13; Doc. 37-1 at 1-8; Doc. 71 at 33-34 (Dep. C. Lambert)). The agreement provides that Lambert sold 13 Receivables to Plaintiff for $16, 436.71. (Doc. 1-1 at 6-8). Simultaneously Ms. Lambert executed a personal guaranty of her obligations. (Doc. 37-1 at 10-12; Doc. 71 at 33-34 (Dep. C. Lambert)).

         On November 29, 2016, Ms. Lambert executed a Master Purchase Agreement-PIPP with Car Financial (Buyer) providing that Car Financial may purchase "a defined portion of the scheduled payments ("PIPs") of installment sale contracts ("Receivables") from Seller," via Short Form Purchase Agreements. (Doc. 37-1 at 14-27; Doc. 71 at 34-35 (Dep. C. Lambert)). Car Financial purchased nine (9) Receivables from Ms. Lambert for $9, 352.43. (Doc. 1-3 at 9-14). Simultaneously Ms. Lambert executed a personal guaranty of her obligations under the PIPP agreement. (Doc. 37-1 at 29-31; Doc. 71 at 35-36 (Dep. C. Lambert)).

         Per Car Financial, as of November 2017, a number of the receivables purchased in 2016 in its Bulk and PIPP portfolios with Ms. Lambert were in default. (Doc. 71-1). In March/April 2018, Car Financial purchased additional receivables from Ms. Lambert. (Id.)

         Car Financial further alleges that on May 2, 2018, Ms. Lambert entered into a Master Purchase Agreement-BULK with Plaintiff (a new Bulk agreement), and signed a personal guaranty. (Doc. 37-1 at 36-44). The documents were given to Vincent Lambert, who returned them to Car Financial with signatures purporting to be Ms. Lambert's, but she testified that she "did not sign it[]"). (Doc. 37-1 at 36; Doc. 71 at 39 (Dep. C.Lambert)).

         As of June 18, 2018, Car Financial notified Ms. Lambert that she was in default under the agreements in the amount of $172, 289.90. (Doc. 37-1; Doc. 71 at 36 (Dep. C.Lambert)). On June 27, 2018, Car Financial again notified Ms. Lambert of the default, and alleged further, that she was making false representations to customers, misdirecting payments, coercing payments with threats of repossession, wrongfully interfering with contractual relations, etc. (Doc. 37-1 at 34-35) (referencing Doc. 37-1)). Thereafter, Car Financial sued Ms. Lambert individually, for breach of contract, and V. Lambert & Family, LLC, for unjust enrichment. (Docs. 1, 37).

         II. Standard of Review

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of ...


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