A Pennsylvania federal district court has ruled that the plaintiffs’ allegations that notices of repossession sent by a bank failed to comply with the state’s Motor Vehicle Sales Finance Act (MVFSA) were sufficient to state a claim under the Pennsylvania Uniform Commercial Code (UCC). As a result, the court denied the bank’s motion to dismiss the plaintiffs’ class action complaint.
In Nelson v. Bank of America, National Association, the plaintiffs alleged that the bank failed to act in a commercially reasonable manner by not providing adequate notice of the repossession of their financed motor vehicles and by selling those vehicles to satisfy outstanding debts. They alleged that the MVFSA requires secured parties to provide debtors with notice that they have the right to redeem their vehicles within 15 days of the date the notice is mailed. Because the notices received by the named plaintiffs did not comply with the 15-day requirement, they alleged that the bank violated their rights to receive commercially reasonable notice under Section 9610 of the UCC, thereby entitling them to recover statutory damages under the UCC. The bank moved to dismiss the plaintiffs’ complaint, arguing that the MVFSA does not provide a private right of action and that the plaintiffs could not assert a UCC unreasonableness claim based solely on an alleged MVFSA violation.
In denying the bank’s notion, the district court relied on a 1985 Pennsylvania Superior Court decision that addressed the question whether the MVFSA’s notice requirements and procedures for foreclosure of a security interest in a motor vehicle are governed by the UCC, the MVFSA, or both. The Superior Court held that both statutes were applicable based on prior case law holding that the UCC provision on commercial reasonableness governs the disposition of repossessed vehicles and based on the Pennsylvania Statutory Construction Act.
The Statutory Construction Act provides that statutes and parts of statutes are in pari materia when they relate to the same persons or things or classes of persons or things. The Superior Court held that the MVFSA and UCC were in pari materia on the question of the kind of notice to be given to the debtor by the secured creditor because they both related to the sale of the repossessed vehicle. Based on this reasoning, the district court stated that “[i]nasmuch as the notice provisions of the MVFSA and the UCC apply to repossession and resale after default on a motor vehicle sales installment contract, it follows that the remedies available under the UCC for violation of these notice provisions are likewise available for violation of other provisions of the MVFSA.”