## Facts

- Christopher Garcia financed a vehicle through Capital One Auto Finance, Inc. (Capital One) under a retail installment contract requiring 72 monthly payments of $525.26.
- The contract contained a no-oral-modification clause requiring contract changes to be in writing.
- After Garcia fell behind on payments, he contacted Capital One and was told he qualified for a temporary payment reduction plan (TPRP).
- Capital One emailed Garcia stating he could enroll in the TPRP by (1) signing and returning an agreement letter and (2) making a $262.63 “good-faith” payment by January 16, 2022.
- Garcia made the $262.63 payment on January 14, 2022, but alleged he never received the agreement letter and therefore never signed it.
- On February 7, 2022, at about 2:30 a.m., Dezba Asset Recovery, Inc. (Dezba), acting on Capital One’s behalf, repossessed Garcia’s vehicle using a tow truck.
- Garcia confronted the tow-truck driver and verbally objected, but the repossession continued.
- Garcia sued Capital One and Dezba, alleging (among other claims) unlawful repossession under N.Y. U.C.C. § 9-609, violations of the FDCPA, conversion, and deceptive practices under New York GBL § 349.

## Issues

1. Whether the pleadings plausibly alleged that defendants lacked a present right to repossess under N.Y. U.C.C. § 9-609 because the TPRP placed Garcia out of default despite the contract’s no-oral-modification clause and the absence of a signed written agreement.
2. Whether allegations that the repossession occurred at night and continued after Garcia’s verbal objection plausibly alleged a “breach of the peace” under N.Y. U.C.C. § 9-609.
3. Whether Garcia plausibly stated an FDCPA claim under 15 U.S.C. § 1692f, including whether he adequately alleged that either defendant was a “debt collector” and that the challenged conduct was debt collection covered by the statute.
4. Whether Garcia plausibly stated a New York conversion claim based on the repossession where defendants claimed a contractual and statutory right to possession upon default.
5. Whether Garcia plausibly alleged deceptive, consumer-oriented conduct and injury under New York GBL § 349 as to (a) Capital One and (b) Dezba.

## Decision

- Defendants’ Rule 12(b)(6) motion to dismiss was granted in part and denied in part.
- The N.Y. U.C.C. § 9-609 unlawful repossession claim was dismissed without prejudice.
- The FDCPA § 1692f claim was dismissed without prejudice.
- The conversion claim was dismissed without prejudice.
- The GBL § 349 claim was dismissed without prejudice as to Dezba.
- The GBL § 349 claim survived as to Capital One.
- Garcia was granted leave to amend the dismissed claims.

## Legal Principles

- On a Rule 12(b)(6) motion, the court accepts well-pleaded factual allegations as true and may consider documents incorporated by reference or integral to the complaint, even if submitted with motion papers.
- A no-oral-modification clause can defeat a claim that a repayment plan changed the parties’ contract where the plan required a signed writing and the complaint does not plausibly allege execution of that writing.
- Under N.Y. U.C.C. § 9-609, a secured party may repossess collateral by self-help only if it has a present right to possession and the repossession is completed without breach of the peace.
- Allegations of a verbal objection, without more factual content indicating threats, violence, or physical confrontation, generally do not plausibly plead a breach of the peace for Article 9 purposes at the motion-to-dismiss stage.
- An FDCPA claim requires facts supporting that the defendant is a “debt collector” under the statute and engaged in conduct the FDCPA regulates; conclusory labels tied to a repossession are not enough.
- A conversion claim requires unauthorized dominion over property; where the pleadings do not plausibly negate defendants’ right to possession, conversion is not plausibly stated.
- A GBL § 349 claim requires (1) consumer-oriented conduct, (2) a materially misleading act or practice, and (3) injury; allegations that a lender induced a “good-faith” payment through misleading TPRP communications can be sufficient, while a repossession agent requires separate deceptive conduct beyond performing the repossession.

## Conclusion

The court held that Garcia’s pleadings did not plausibly show that the TPRP eliminated his default or that the repossession involved a breach of the peace, and it dismissed the unlawful repossession, FDCPA, and conversion claims without prejudice; however, it allowed Garcia’s GBL § 349 claim to proceed against Capital One based on alleged misleading TPRP communications while dismissing the same claim against Dezba for lack of distinct deceptive conduct.


Garcia v. Dezba Asset Recovery, Inc. and Capital One Auto Finance, Inc., 2023 WL 2691756 (2023)