Edwards et al v. Westlake Financial Services et al

IN THE UNITED 	STATES 	DISTRICT 	COURT
EASTERN DISTRICT OF 	ARKANSAS
CENTRAL DIVISION
DALE 	ELLINGTON 	PLAINTIFF
V. 	No. 	4:23-cv-284-DPM
WESTLAKE FINANCIAL SERVICES 	DEFENDANT
ORDER
Westlake 	Financial 	Services 	seeks 	summary 	judgment 	on 	Dale
Ellington's 	remaining 	claims 	under the 	Fair 	Debt 	Collection 	Practices
Act 	and the 	equivalent 	Arkansas 	statute. 	Doc. 	79. 	All 	those 	claims
depend 	on 	Westlake 	being 	a 	debt 	collector. 	That 	depends, 	in 	turn, 	on
whether 	Ellington 	was 	in 	default 	on a car 	loan 	when 	Westlake received
it. 	15 	U.S.C. 	§ 	1692a(6)(F)(iii); 	Ark. Code 	Ann. 	§ 	17-24-502(5)(D)(vi)(c).
Posh 	Automotive 	sold 	Ellington 	a 	2008 	Mustang 	on 	credit 	using 	a 	retail
installment 	contract 	and security 	agreement. 	The 	parties' 	contract
contained 	a 	default 	provision.
Default. 	You 	will be 	in 	default 	on 	this 	Contract 	if 	any 	one
of the 	following 	occurs 	(except 	as 	prohibited 	by 	law):
¯ 	You 	fail 	to 	perform 	any obligation 	that 	you 	have
undertaken 	in 	this 	contract.
¯ 	We, in 	good 	faith, 	believe that 	you 	cannot, 	or 	will 	not,
pay 	or 	perform 	the 	obligations you 	have 	agreed 	to 	in
this 	Contract.
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If 	you 	default, 	you agree 	to 	pay 	our 	costs 	for 	collecting
amounts 	owing, 	including 	court 	costs, 	reasonable 	attorneys'
fees, 	and 	fees 	for repossession, repair, 	storage 	and 	sale 	of the
Property 	securing this 	Contract, 	to 	the 	extent 	permitted 	by
law.
If 	an 	event 	of 	default 	occurs 	as 	to 	any 	of 	you, 	we 	may
exercise 	our 	remedies against 	any 	or 	all 	of 	you.
Doc. 	79-2 	at 	7.
The 	Court 	views 	the 	facts 	in 	the 	light 	most 	favorable 	to 	Ellington.
Anderson 	v. Rugged 	Races, 	LLC, 	42 	F.4th 	955, 	958 	(8th 	Cir. 	2022).
A 	timeline illuminates the 	parties' dealings.
January 	2021 	.......... Ellington 	bought 	the Mustang 	from
Posh 	with 	a 	loan 	from the 	dealership.
At 	first, 	he used 	an 	insurer 	that 	Posh
wouldn't 	work with. 	Doc. 	86-2 	at 	67.
¯ 	February 	2021 	........ Ellington 	made 	the first of 	ten
monthly 	payments 	to 	Posh.
¯ 	April 	and
July 	2021 	................. Posh 	received 	notices 	that 	Ellington's
insurance 	on 	the 	Mustang had 	lapsed.
Eventually, 	he 	got 	coverage 	through
his 	mother's 	policy, 	which Posh
accepted. 	Doc. 79-3 	at 	55; 	Doc. 	86-2
at 	69 & 	78.
¯ 	October 	2021 	.......... Ellington 	made 	two 	payments 	to
Posh. 	The 	second 	payment 	was 	for
November. 	That 	was 	the 	last 	monthly
payment 	he made 	to 	Posh.
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¯ 	23 	October 	2021 	..... Ellington 	was 	arrested 	after 	a 	traffic
stop. 	The 	Mustang was 	impounded.
The 	charges 	were 	eventually
dropped 	and 	Ellington 	got 	the
Mustang back 	alter paying 	a 	$200
impound 	fee. 	Doc. 79-3 	at 	50.
¯ 	Before 	and 	on
25 	October 	2021 	..... Ellington 	talked 	to 	Carissa 	Hill, 	owner
of 	Posh, 	and 	Peanut, 	an 	employee,
about his 	insurance 	and 	car 	payments.
Ellington 	said he would 	not 	make 	any
more 	payments, 	or 	maintain
insurance, 	unless 	he 	got 	the title 	to 	the
Mustang. 	Ellington 	says 	Hill 	told 	him
he 	was 	in 	default.
¯ 	November 	or
December 	2021 	...... Westlake started 	servicing 	Ellington's
loan. The 	exact 	date 	is 	unclear.
It's 	undisputed 	that 	it 	occurred 	at
least 	by 	December. 	Compare 	Doc. 	79-2
at 	2 	& 	10 	with 	Doc. 	63 	at 	2.
¯ 	December 	2021 	...... Ellington 	made 	his 	first 	monthly
payment 	to 	Westlake.
¯ 	January 2022 	.......... 	Ellington 	made 	his second 	monthly
payment 	to 	Westlake.
¯ 	February 	2022 	........ Ellington 	made his third 	monthly
payment 	to 	Westlake.
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¯ 	March 	2022............. Ellington 	wrecked 	the 	Mustang.
He 	also made 	his 	fourth 	monthly
payment 	to 	Westlake.
¯ 	April 	2022............... Ellington 	missed his 	car 	payment 	and
Westlake 	sought 	to 	collect the debt.
Ellington 	contends 	he 	was 	in 	default 	before Westlake 	began
servicing the loan. 	He 	points 	to 	his 	conversations 	with 	Hill and 	Peanut
in 	which 	he 	refused 	to 	make 	any 	more 	payments 	unless 	Posh 	gave 	him
the 	title. 	Doc. 	86-TI. 	He 	also 	relies 	on 	the 	insurance 	tangles.
Ellington's 	coverage 	lapsed 	at 	least 	twice 	before Westlake took 	over 	the
loan. 	Doc. 79-3 	at 	55; 	Doc. 86-2 	at 	41.
No 	genuine 	dispute 	of 	material fact 	exists 	about the 	status 	of
Ellington's 	account 	when 	Posh 	transferred 	it 	to 	Westlake.
His 	performance 	of 	his 	contractual 	obligations 	was 	imperfect,
especially 	about 	the 	insurance. 	He 	was 	in 	default 	whenever 	coverage
lapsed. While 	Posh 	could 	have confirmed his default and exercised 	its
remedies, 	the 	dealership 	did 	not 	do 	so. 	Ellington 	never missed 	a
payment. 	And Posh 	worked 	through 	insurance 	lapses 	with 	him.
It 	is 	undisputed 	that he made all his 	monthly 	payments 	for
fourteen 	months, from the 	time 	he 	bought 	the Mustang 	in 	January 	2021
until 	April 	2022. 	Doc. 86 	at 	3; 	Doc. 	79-2 	at 	12. 	Under 	the 	parties'
contract, 	Posh could have 	declared 	a 	default after 	Ellington's 	"no 	more
payments" 	statements 	if 	the 	dealership 	"in 	good 	faith, 	believe[d]" 	he
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wasn't 	going 	to 	pay. 	Doc. 	72-2 	at 	7. 	But 	Posh never took 	any 	steps 	to
do 	so. 	And 	Ellington 	can't 	rely 	on 	his 	testimony 	about Posh's
statements 	(through 	Hill) 	that 	he 	was 	in 	default; 	what 	Ellington says
she said 	is 	inadmissible 	hearsay. 	American Home Assurance 	Co. 	v. 	Greater
Omaha 	Packing 	Co., Inc., 	819 	F.3d 	417, 429 	(8th 	Cir. 	2016). 	Hill testified
under oath that she never 	said he 	was 	in 	default. 	Doc. 86-2 	at 	75.
The 	insurance 	back 	and forth doesn't 	equal 	a 	default 	at 	the 	time
of 	transfer, 	either. 	The 	contract 	required 	Ellington 	to 	insure 	the
Mustang. 	But 	it 	also 	permitted 	Posh 	to 	insure 	the vehicle and avoid
default. 	Doc. 	72-2 	at 	8. 	More 	importantly, 	Posh could forebear. "If 	any
event 	of 	default 	occurs 	as 	to 	any of 	you, 	we 	may 	exercise 	our 	remedies
against 	any 	or 	all of 	you." 	Doc. 	79-2 	at 	7 	(emphasis 	added). 	Here, 	Posh
worked 	with 	its 	customer, 	twice, 	on 	insurance. 	"By deciding 	not 	to 	use
any 	remedy, 	we 	do 	not 	give 	up 	our 	right 	to 	consider 	the 	event 	a 	default
if 	it 	happens 	again." 	Ibid. 	After 	each 	coverage 	lapse 	and 	insurance
trouble, Posh worked with 	Ellington 	to 	resolve 	the 	issue 	and 	cure
Ellington's 	default. 	Doc. 	79-3 	at 	40; 	Doc. 	86 	at 	75 	& 	78. 	Ellington 	now
questions 	whether 	getting 	coverage 	through 	his 	mother's 	policy 	was 	a
solid fix because she lacked 	an 	insurable 	interest. 	Posh 	accepted 	this
fix, 	though. 	Doc. 86-2 	at 	69 	& 	78. 	That 	acceptance 	cured 	any 	default.
Plus, 	the 	insurance 	lapses 	and 	fixes 	occurred 	in 	the spring and 	summer
of 	2021, 	several months 	before 	the 	fall 	2021 	transfer 	to 	Westlake.
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Bottom 	line: 	On 	this 	record 	as 	a 	whole 	-
the 	contract 	terms, 	the
payment 	history, 	the 	insurance 	tangles, 	and the 	parties' 	dealings 	-
no
reasonable fact finder 	could 	conclude 	that 	Ellington 	was 	in 	default
when 	Westlake received 	the 	account.
Ellington pleads 	that 	Westlake 	"purchased 	the note" and 	began
servicing the loan 	in 	December 	2021. 	Doc. 63 	at 	2-4. But 	he 	responds 	to
the 	motion 	for 	summary 	judgment by 	arguing 	that 	Westlake didn't
receive 	a 	valid assignment. 	Doc. 	85 	at 	2. 	This 	no-assignment 	contention
is 	new. 	Ellington 	is 	bound 	by 	his 	judicial 	admission about Westlake's
status 	as 	servicer 	of 	the 	loan. 	Missouri 	Housing 	Development 	Commission
v. 	Brice, 	919 	F.2d 	1306, 	1315 	(8th 	Cir. 	1990). 	He 	never 	sought 	permission
to 	amend his complaint. 	And 	a 	party 	may 	not 	amend 	his 	pleading 	in
briefing. 	Northern 	States Power Co. 	v. Federal 	Transit 	Administration,
358 F.3d 	1050, 	1056-57 	(8th 	Cir. 	2004). 	It's unfair 	to 	the opposing 	party
and 	gums up 	the 	orderly 	progression 	of 	the 	case. 	This 	legal principle
applies 	with 	particular force 	where, 	as 	here, 	Ellington 	has amended 	his
complaint 	several 	times 	and 	had 	an 	extended 	period 	to 	analyze 	the
case. 	Last, 	the 	undisputed facts show 	Westlake's 	performance 	as 	the
servicer 	of 	Ellington's 	loan 	by 	accepting 	payments 	from him and
seeking 	collection 	after he 	stopped 	paying.
*
Westlake's 	motion 	for 	summary 	judgment, 	Doc. 	79, is 	granted.
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So 	Ordered.
D.P. 	Marshall 	Jr. '
United 	States District 	Judge
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