Gordon v. Santander Consumer USA, Inc.

Background

Kaydean Gordon bought a 2017 Mercedes Benz C300 from NYC Motorcars of the Bronx on May 21, 2021. She alleged that the salesperson told her she was approved for financing without a down payment, later requested information for her mother as a co-signer, and accepted a $4,515 cash down payment. Gordon alleged that NYC Motorcars ran credit checks on her mother without authorization and ran her own credit multiple times. She later received a delinquency notice from Santander Consumer USA, Inc., which held a lien on the vehicle.

Gordon alleged that Santander failed to account for her down payment, failed to update the loan balance, failed to provide loan documents or notices, and did not honor her attempted rescission notice. She asserted claims under the Fair Credit Reporting Act, the Truth in Lending Act, the New York General Business Law, and the Uniform Commercial Code. Santander removed the case from New York state court and moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim.

Fair Credit Reporting Act claim

The court concluded that Gordon’s cited privacy regulation was part of the Gramm-Leach-Bliley Act, not the Fair Credit Reporting Act, and that the Gramm-Leach-Bliley Act does not provide a private right to sue for the alleged violation. The court construed Gordon’s allegations about the allegedly incorrect loan balance as a claim that Santander reported inaccurate information under 15 U.S.C. § 1681s-2.

The court held that the provision requiring furnishers to report accurate information cannot be privately enforced. It also held that Gordon did not adequately plead a claim under the separately enforceable provision concerning investigations of disputed information. That provision requires notice from a credit-reporting agency, but Gordon alleged only that she personally notified Santander. The court dismissed the Fair Credit Reporting Act claim without prejudice.

Truth in Lending Act claim

The court construed Gordon’s claim as seeking rescission under the Truth in Lending Act. That rescission right applies to certain loans secured by a borrower’s principal dwelling. Gordon’s loan was secured by the vehicle, not by real property used as her principal dwelling. The court therefore held that the rescission remedy did not apply and that her related statutory-damages claim also failed. The court dismissed the Truth in Lending Act claim with prejudice and without leave to amend because amendment would be futile.

Uniform Commercial Code warranty claim

The court understood Gordon to be relying on the Uniform Commercial Code’s warranty that a seller will deliver goods free of undisclosed security interests or liens. The court held that Gordon knew she was financing the vehicle and did not allege that NYC Motorcars promised to provide a title free of all liens. The court also held that any warranty of title was made by the seller, NYC Motorcars, rather than Santander. The court dismissed this claim against Santander with prejudice.

New York deceptive-practices claim

The court construed Gordon’s unclear “business malpractice” claim as a claim under Section 349 of the New York General Business Law, which prohibits materially misleading, consumer-oriented business conduct that causes injury. The court found that Gordon’s allegations of misleading conduct concerned NYC Motorcars, not Santander, and that she did not identify misleading representations by Santander or explain why Santander was responsible for NYC Motorcars’ statements. The court dismissed this claim against Santander without prejudice. The court also noted that the subsection allowing the New York attorney general to seek an injunction could not be used by Gordon because she was not the attorney general.

Documentation claim and new claims

Gordon alleged that Santander failed to provide proper loan documents or notices, but the court found the allegation too unclear to identify a legal theory or establish a plausible claim. The court dismissed that claim without prejudice.

Gordon also raised claims under additional Uniform Commercial Code provisions for the first time in her opposition papers. The court held that a plaintiff cannot amend a complaint through briefing on a dismissal motion and did not consider those new claims.

Disposition

Judge Nelson S. Roman granted Santander’s motion to dismiss. The Fair Credit Reporting Act, New York deceptive-practices, and documentation claims were dismissed without prejudice. The Truth in Lending Act and Uniform Commercial Code warranty claims were dismissed with prejudice. Gordon was given until February 26, 2024, to file an amended complaint reasserting the claims dismissed without prejudice. The opinion states that failure to meet that deadline may result in the remaining claims being dismissed with prejudice. The order does not state that it resolved any claims against NYC Motorcars, which had not appeared in the case.