Hansen v. Santander Bank, N.A.

Background

Altanie Hansen alleged that she entered into a consumer credit transaction with Santander Bank, N.A. for a 2016 Kia and later fell behind on payments. She alleged that Santander hired UAR Direct, LLC to help repossess the vehicle and that UAR assigned the repossession to 11th Hour Recovery, LLC.

Hansen alleged that, while she was sitting in the vehicle in a McDonald’s parking lot, a car remained next to her with its bright lights on. She alleged that she then felt the vehicle jerk and discovered that a tow truck was lifting it with her inside. She further alleged that two 11th Hour employees shined flashlights in her eyes, told her the vehicle belonged to the bank, blocked the vehicle from leaving, and later caused damage to it.

The opinion states that Santander Bank, N.A. and UAR Direct, LLC were misnomers and that the parties had agreed to correct the names after the ruling. The order applied to the entities identified in the footnote as Santander Consumer USA Inc. and United Nationwide Recovery LLC.

Rule 12(b)(6) standard

The court considered the motion under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally plausible claim. At this stage, the court accepted well-pleaded factual allegations as true and viewed them in the light most favorable to Hansen, but it did not accept bare legal conclusions or wholly conclusory allegations.

Fair Debt Collection Practices Act

Hansen alleged that UAR and 11th Hour violated section 1692f(6) of the Fair Debt Collection Practices Act by attempting to take the vehicle when they allegedly no longer had a present right to possess it because the repossession breached the peace.

The court held that repossession companies such as 11th Hour are debt collectors for the limited purpose of section 1692f(6), which covers enforcement of security interests. The court also held that UAR, as the intermediary between the creditor and repossession company, was sufficiently alleged to fall within that limited definition. Santander was treated differently because the complaint alleged that it owned the security interest, and creditors are not debt collectors under the relevant provision merely because they seek to collect their own debts.

The court explained that Minnesota law determines whether a repossessor had a present right to possession. Under Minnesota’s secured-transactions statute, a secured party may repossess without court involvement only if it proceeds without breaching the peace. Following Eighth Circuit precedent, the court held that a breach of the peace can eliminate the present right to possession for purposes of section 1692f(6).

The court found Hansen’s allegations sufficient to plausibly allege a breach of the peace. In particular, a factfinder could determine that lifting a vehicle while a repossession agent knew an occupant was inside was violent or threatened violence. The court also stated that the alleged vehicle damage could be considered in the analysis, although damage alone would not be enough. The court denied the motion to dismiss the Fair Debt Collection Practices Act claim against UAR and 11th Hour.

Breach of the peace

The court applied five factors identified in the governing precedent: where the repossession occurred, the debtor’s express or implied consent, third-party reactions, the type of premises entered, and the creditor’s use of deception. It concluded that Hansen alleged enough facts for a factfinder to plausibly find a breach of the peace, including that she was inside the vehicle when it was lifted, the agents allegedly knew she was there, and the vehicle was damaged.

The court rejected the argument that the repossession was necessarily complete before any breach occurred. Unlike the precedent relied on by defendants, Hansen allegedly remained inside the vehicle and was never without the vehicle or its keys. The court therefore denied the motion to dismiss the breach-of-peace claim as to all defendants.

Conversion

Hansen later withdrew her conversion claims against Santander and UAR, leaving the dispute over 11th Hour. The court held that conversion requires willful interference with personal property that deprives the person entitled to it of use or possession, and that the interference must be permanent or last for an indefinite period.

Hansen alleged that the repossession agents blocked her vehicle from leaving for approximately 30 minutes. The court held that this alleged period of interference could not support a conversion claim under Minnesota law. It granted the motion to dismiss the conversion claim as to all defendants and dismissed that claim with prejudice.

Trespass to chattel

Hansen initially asserted trespass to chattel against all defendants but withdrew the claim against Santander and UAR. The court therefore dismissed the trespass-to-chattel claim as to Santander and UAR and stated that the claim against 11th Hour remained. The dismissal as to Santander and UAR was with prejudice.

Punitive damages

The court applied Federal Rule of Civil Procedure 15 rather than Minnesota Statute section 549.191 to the procedure for adding the punitive-damages claim. It reasoned that Rule 15 allowed Hansen to amend her complaint as a matter of course before a responsive pleading was filed, and that the federal rule directly addressed the same procedural issue.

Under Minnesota law, punitive damages require clear and convincing evidence that the defendant deliberately disregarded the rights or safety of others. The court held that Hansen did not adequately allege that Santander or UAR specifically directed the repossession in the manner alleged, deliberately disregarded a high probability that 11th Hour was unfit, employed 11th Hour in a managerial role, or approved 11th Hour’s conduct while knowing its character and probable consequences. The court granted the motion to dismiss the punitive-damages claim against Santander and UAR and dismissed that claim with prejudice.

As to 11th Hour, the court found Hansen’s allegations sufficient at the pleading stage. The allegations that an employee watched her vehicle, that the employees lifted it while she was inside and damaged it, and that they then told her to seek shelter elsewhere suggested that 11th Hour knew she was inside and chose to tow the vehicle anyway. The court held that these allegations supported a prima facie case of deliberate disregard for her safety and denied the motion to dismiss the punitive-damages claim against 11th Hour.

Disposition

The court ordered that defendants’ motion to dismiss was granted in part and denied in part. The Fair Debt Collection Practices Act claim against UAR and 11th Hour was not dismissed; the breach-of-peace claim against all defendants was not dismissed; the conversion claim against all defendants was dismissed with prejudice; the trespass-to-chattel claim against Santander and UAR was dismissed with prejudice; the punitive-damages claim against Santander and UAR was dismissed with prejudice; and the punitive-damages claim against 11th Hour was not dismissed.