Valencia Carmichael v. Nissan Motor Acceptance

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
__________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
MAY 20, 2002
No. 01-15302 THOMAS K. KAHN
___________________ CLERK

D. C. Docket No. 00-01254-CV-TWT-1

VALENCIA CARMICHAEL,

Plaintiff-Appellant,

versus

NISSAN MOTOR ACCEPTANCE
CORPORATION UNION CITY NISSAN,

Defendant-Appellee.

___________________

Appeal from the United States District Court
for the Northern District of Georgia
___________________
(May 20, 2002)

Before BLACK and HULL, Circuit Judges, and LAZZARA*, District Judge.

PER CURIAM:

____________________
*Honorable Richard A. Lazzara, U.S. District Judge for the Middle District of Florida,
sitting by designation.
 This is a case of first impression concerning the Consumer Leasing Act, 15

U.S.C. §§ 1667-1667f (“CLA”). According to the language of the CLA, the one-

year statute of limitations begins to run at “the termination of the lease agreement.”

15 U.S.C. § 1667d(c). The issue is whether voluntary or involuntary repossession

of a leased automobile constitutes “termination of the lease agreement” when such

repossession occurs prior to the actual date of lease termination. We affirm the

district’s court order holding that repossession, voluntary or otherwise, constitutes

termination of the lease under the CLA.

PERTINENT BACKGROUND

On May 3, 1997, Valencia Carmichael entered into an automobile lease with

Union City Nissan, Inc. When the lease was executed, it was immediately

assigned to Nissan Motor Acceptance Corporation (“NMAC”) in accordance with

the terms of the lease. The lease required forty-two monthly payments with an

expiration date of November 2000. The lease listed $8,893.26 as the “residual

value” of the automobile. Pursuant to the terms of the lease, the “residual value” is

defined as the estimated value of the automobile at the end of the lease.

Ms. Carmichael experienced financial difficulties in 1999 and notified

NMAC that she could not make the payments pursuant to the lease. She allegedly

arranged to make only partial payments past the original due dates.

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Notwithstanding the purported agreement, NMAC repossessed the vehicle on May

7, 1999, for failure to make rental payments. On July 8, 1999, NMAC notified Ms.

Carmichael by letter that the repossessed vehicle had been sold for $6,500.00, and

the deficiency balance owed on the lease was $8,948.08. NMAC arrived at the

balance based roughly on the unpaid balance of the lease, which was $14,340.94,

and other incurred expenses less the sale proceeds and the refundable security

deposit.

Ms. Carmichael filed this lawsuit on May 19, 2000, which was more than

one year past the uncontroverted May 7, 1999, date of repossession. She contends

in part that NMAC inflated the vehicle’s original residual value. She also asserts

that NMAC’s early termination formula is unreasonable and therefore in violation

of the CLA. Not only does she request relief in her individual capacity, she seeks

to represent a class of individuals having similar claims.

NMAC filed a motion to dismiss the amended complaint based on the

CLA’s statute of limitations. Because the statute of limitations defense was not

apparent from the face of the amended complaint, the district court properly

converted NMAC’s motion to dismiss into a motion for summary judgment. In so

doing, the district court ordered Ms. Carmichael to produce evidence showing

there was a genuine issue of fact as to NMAC’s claim that the vehicle was

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repossessed on May 7, 1999. Ms. Carmichael conceded the date of repossession,

but argued that the lease did not terminate until the assessment of early termination

charges on July 8, 1999. The district court granted the motion and ordered the

clerk to enter a judgment dismissing all claims. This timely appeal followed from

the judgment of dismissal.

STANDARD OF REVIEW

Regardless of a district court’s labeling of a judgment as a dismissal or a

summary judgment, the appellate court must determine the substance of the ruling.

See Charles J. Arndt, Inc. v. City of Birmingham, 748 F.2d 1486,1489-90 (11th Cir.

1984) (quoting Tuley v. Heyd, 482 F.2d 590, 593 (5th Cir. 1973)). The district

court in this case converted the motion to dismiss into a motion for summary

judgment. The record reveals that the district court considered additional facts

outside the pleadings to resolve the motion. We therefore review the district

court’s judgment in conformance with the standards for reviewing summary

judgments. Because the material facts are not in dispute and the only issue is one

of law, we review the order of the district court de novo. See Heuer v. United

States Sec’y of State, 20 F.3d 424, 426 (11th Cir. 1994) (citing Woodruff v. United

States Dept. of Labor, 954 F.2d 634, 636 (11th Cir. 1992)).

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 THE CLA

In 1976, Congress passed the CLA as an amendment to the Truth-in-

Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq. The CLA extended the TILA’s

disclosure requirements to consumer leases. See Applebaum v. Nissan Motor

Acceptance Corp., 226 F.3d 214, 217-18 (3d Cir. 2000) (discussing the purpose of

the legislation), cert. denied, 533 U.S. 929 (2001). In general, a consumer lease

means a contract for the use of personal property, such as an automobile, for a

period exceeding four months and for a “total contractual obligation” not

exceeding $25,000. See 15 U.S.C. § 1667(1).

In keeping with Congress’ intended emphasis on disclosure rather than

regulation, the CLA requires full disclosure of the leasing terms and does not

regulate the terms and conditions of any particular consumer lease. See Turner v.

Gen. Motors Acceptance Corp., 180 F.3d 451, 454 (2d Cir. 1999). Congress

articulated the purpose behind the CLA as one of assurance of meaningful

disclosure:

It is the purpose of this subchapter to assure a meaningful
disclosure of the terms of leases of personal property for
personal, family, or household purposes so as to enable
the lessee to compare more readily the various lease
terms available to him, limit balloon payments in
consumer leasing, enable comparison of lease terms with
credit terms where appropriate, and to assure meaningful
and accurate disclosures of lease terms in advertisements.

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15 U.S.C. § 1601(b). The CLA specifies the disclosures the lessor must provide to

the lessee at the time of entering into a consumer lease. See 15 U.S.C. § 1667a.

The CLA incorporates some of the TILA’s provisions dealing with civil

remedies. See 15 U.S.C. § 1667d(a) (lessor is liable as provided in section 1640 of

this title); Gaydos v. Huntington Nat’l Bank, 941 F. Supp. 669, 672 n.2 (N.D. Ohio

1996). The definitions and rules of construction set forth in section 1602 of the

TILA are applicable to the CLA. See 15 U.S.C. § 1602(a); Clement v. Am. Honda

Fin. Corp., 145 F. Supp. 2d 206, 210 n.1 (D. Conn. 2001). Courts have used the

TILA’s definitions and general rules of construction, when possible, in interpreting

the CLA. See, e.g., Wiskup v. Liberty Buick Co., 953 F. Supp. 958, 969 (N.D. Ill.

1997). Like the TILA, the CLA is a consumer protection statute which “is

remedial in nature and therefore must be construed liberally in order to best serve

Congress’ intent.” Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703, 707 (11th

Cir. 1998) (citing McGowan v. King, Inc., 569 F.2d 845, 848 (5th Cir. 1978));

Pettola v. Nissan Motor Acceptance Corp., 44 F. Supp. 2d 442, 447 (D. Conn.

1999) (noting CLA is remedial legislation to be liberally construed in favor of

lessee).

The civil remedy provision of the CLA provides that a civil action brought

by a lessee must be filed within one year of “the termination of the lease

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agreement.” 15 U.S.C. § 1667d(c). The CLA, however, does not define the word

“termination.” The question presented in this appeal is whether “termination”

occurred when the automobile in this case was repossessed.

ANALYSIS

Relying on Pettola v. Nissan Motor Acceptance Corp., 44 F. Supp. 2d 442

(D. Conn. 1999), the district court held that a lease terminates for purposes of the

CLA when the claimant releases possession of the vehicle, either voluntarily or

otherwise. See also Highsmith v. Chrysler Credit Corp., 150 B.R. 997, 1001 (N.D.

Ill. 1993), aff’d in relevant part and rev’d in part on other grounds, 18 F.3d 434,

436 (7th Cir. 1994) (holding lease terminated on date bankruptcy court entered

agreed order rejecting lease, which allowed lessor to retake possession of car);

Kedziora v. Citicorp Nat’l Serv., Inc., 844 F. Supp. 1289, 1292 (N.D. Ill. 1994)

(finding default occurred when car was totally destroyed in accident, thereby

triggering early termination of lease). We agree with the district court.

In Pettola, the court held that the automobile lease was terminated when the

lessee failed to make the required rental payments and voluntarily surrendered her

car to the dealer. At the time of surrender, the plaintiff had signed a “Federal

Odometer/Lease Termination Statement.” As noted by the court in Pettola, the

statute of limitations in the CLA refers to the “termination” of the lease rather than

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the expiration of the term set forth in the lease. See Pettola, 44 F. Supp. 2d at 448.

Moreover, the CLA requires disclosures regarding the consequences of “early

termination.” See 15 U.S.A. § 1667a(11); Regulation M, 12 C.F.R. § 213.4(g).

The references to “early termination” evidence the CLA’s contemplation that a

lease may be terminated prior to the actual date of expiration of the lease.

In this case, the fact that Ms. Carmichael’s car was repossessed instead of

voluntarily turned over to a dealer makes no difference in our analysis of what

constitutes “termination” for the purposes of the statute of limitations. Under

either scenario, Ms. Carmichael, as customer-lessee, no longer has the vehicle

which is the subject of the lease, and a termination of the lease has occurred before

the expiration date of the lease.1 The lease conveyed a right to Ms. Carmichael to

possess the car, so repossession terminated that right. Repossession was, therefore,

the act which signified to Ms. Carmichael that NMAC was exercising its option to

1 In this regard, we also expressly reject Ms. Carmichael’s claims that the lease was not
terminated until the date her repossessed vehicle was sold and assessments calculated according
to her lease. In addition, we note that Ms. Carmichael on appeal does not argue that any state
law impacts or informs the definition of termination of a lease for a vehicle, and thus we do not
address whether that is a possibility. See In re Lamar, 249 B.R. 822 (Bankr. S.D. Ga. 2000).
We can also envision other scenarios where the particular facts of the case may affect the
determination of when termination occurs for the purposes of the CLA. For example, a creditor
who cannot locate the vehicle might give written notice that the lease is terminated for failure to
make timely payments. We hold, therefore, only that repossession of Ms. Carmichael’s vehicle
in this case was sufficient to terminate the particular lease at issue on May 7, 1999, so as to
trigger the CLA’s statute of limitations.

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terminate the lease.2 Moreover, Ms. Carmichael’s lease did not require NMAC to

give either prior written notice of intent to terminate or written notice of the actual

termination. Thus, even though NMAC might not have sold the repossessed

vehicle until some later date, the lease in this case was terminated upon the return

of the vehicle to the possession of the dealer or lessor.

In conclusion, based on the above analysis, we agree with the district court

that the lease in this case terminated on the date of repossession and not some later

date. We reject, as did the district court, the various arguments concerning the

tolling of the statute of limitations.

AFFIRMED.

2 That NMAC offered Ms. Carmichael an option to redeem the vehicle by paying the
entire unpaid adjusted lease balance, sales tax, and charges for repossession and collection is not
inconsistent with our conclusion that the lease was terminated as of the date of repossession. In
pursuing redemption, Ms. Carmichael effectively was required to buy the car, thereby owning it
outright as opposed to leasing it from NMAC.

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