ATKINSON v. CREDIT ACCEPTANCE CORPORATION

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

LESLIE ATKINSON, )

)

Plaintiff, )

)

v. )

)

CREDIT ACCEPTANCE CORPORATION )

PRIMERITUS FINANCIAL SERVICES )

INC., CAROLINA REPO, LLC, ) 1:22-cv-369

BRENT GODFREY, in his )

individual capacity as a law )

enforcement officer with the )

Harnett County Sheriffs Office, )

WAYNE COATS, in his official )

capacity as Sheriff of Harnett )

County, North Carolina, and )

JOHN DOE, as Surety, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge

As a result of what Plaintiff, Leslie Atkinson, contends

was a wrongful private repossession of her car, Plaintiff

brought this action against a number of defendants including

Harnett County Sheriff Wayne Coats (hereinafter “Coats”) and

Deputy Brent Godfrey (hereinafter “Godfrey”). (See Doc. 1.) All

other named defendants, that is, Credit Acceptance Corporation,

Primeritus Financial Services, Inc., and Carolina Repo, LLC, and

the claims related to those defendants, have been dismissed

without prejudice in favor of arbitration. (Doc. 44 at 5.) The

sole remaining claim is set forth in Count X, in which Plaintiff

alleges a violation of 42 U.S.C. § 1983 as to Coats and Godfrey.

(Doc. 1 at 24–29.)

Coats and Godfrey move to dismiss Count X pursuant to Fed.

R. Civ. P. 12(b)(1) and 12(b)(6). (Doc. 18.) Plaintiff has

responded in opposition to the motion, (Doc. 27), and Defendants

have replied, (Doc. 35). This court finds Defendants’ motion to

dismiss, (Doc. 18), should be denied.

I. BACKGROUND

On a motion to dismiss, a court must “accept as true all of

the factual allegations contained in the complaint . . . .” Ray

v. Roane, 948 F.3d 222, 226 (4th Cir. 2020) (quoting King v.

Rubenstein, 825 F.3d 206, 212 (4th Cir. 2016)). Defendants move

for dismissal pursuant to both 12(b)(1) and 12(b)(6), however,

neither party has requested an evidentiary hearing with respect

to the 12(b)(1) motion. Defendants’ jurisdictional challenge is

a facial challenge to the complaint.

In a facial challenge, a defendant asserts that the

allegations, taken as true, are insufficient to establish

subject matter jurisdiction. See Kerns v. United States, 585

F.3d 187, 192 (4th Cir. 2009). The court then effectively

affords a plaintiff “the same procedural protection as he would

receive under a Rule 12(b)(6) consideration,” taking the facts

as true and denying the Rule 12(b)(1) motion “if the complaint

alleges sufficient facts to invoke subject matter jurisdiction.”

Id. (citations omitted).

The facts, as relevant to this motion and taken in the

light most favorable to Plaintiff, are as follows.

Plaintiff is a resident of Sanford, North Carolina. (Compl.

(Doc. 1) at 2.) Coats was the Sheriff of Harnett County, North

Carolina. (Id. at 4.) Godfrey1 was a Deputy Sheriff with the

Harnett County Sheriff’s Office. (Id.)

On January 18, 2022, Carolina Repo, LLC (hereinafter “CR”)

attempted to repossess Plaintiff’s vehicle which was at that

time parked by Plaintiff’s back door. (Id. at 7.) “As CR was

backing up its truck towards the Vehicle, [Plaintiff] jumped in

the Vehicle” and started to drive away. (Id. at 8.) CR backed up

1 The complaint contains allegations as to Godfrey, set

forth in paragraphs 30-42, that are irrelevant, immaterial,

inflammatory, and completely inappropriate here even if true.

(See Compl. (Doc. 1) ¶¶ 30–42.) These allegations have no

bearing on Plaintiff’s claim, at least none this court can

discern at this stage. As a result, these allegations appear to

violate at least Fed. R. Civ. P. 8 and 12(f) as well as perhaps

Fed. R. Civ. P. 10(b). While this court is not able to

definitively say these allegations will have no bearing on the

subject matter at some point in time, they do not have any

bearing on the present pleadings or issues. Plaintiff is

cautioned that further allegations which appear to be

“immaterial, impertinent, or scandalous,” see Fed. R. Civ. P.

12(f), will be addressed by this court on its own motion. For

purposes of this order, the immaterial allegations will be

ignored.

and slid the tow bar under the vehicle and lifted the vehicle by

the bumper, causing the vehicle’s back tires to spin in the air.

(Id.) CR approached Plaintiff in her vehicle and demanded that

she exit the vehicle, to which Plaintiff responded that CR drop

the vehicle and leave. (Id.) The two argued. (Id.)

While the confrontation continued, CR called the Harnett

County Sheriff’s Office for assistance. (Id. at 8–9.) Godfrey

was sent to Plaintiff’s home where, upon arrival, Godfrey saw

Plaintiff still in the vehicle with the back end of the vehicle

raised by the tow bar. (Id. at 10–11.) Plaintiff “explained to

Godfrey that she was inside the Vehicle when CR slid its tow bar

under her bumper, she was inside the vehicle when CR lifted it,

and pointed out that the Vehicle was not even hooked up

properly.” (Id. at 11.)

According to Plaintiff, Godfrey “ordered [Plaintiff] to

exit the vehicle so that CR could repossess it.” (Id. at 11.)

Plaintiff alleges that she was intimidated by Godfrey and

therefore exited the vehicle so that it could be repossessed.

(Id.)

II. STANDARD OF REVIEW

To survive a Rule 12(b)(6) motion, “a complaint must

contain sufficient factual matter, accepted as true, to ‘state a

claim to relief that is plausible on its face.’” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its

face if “the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is

liable” and demonstrates “more than a sheer possibility that a

defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S.

at 556–57). When ruling on a motion to dismiss, this court

accepts the complaint’s factual allegations as true. Id.

Further, this court liberally construes “the complaint,

including all reasonable inferences therefrom, . . . in

plaintiff’s favor.” Estate of Williams-Moore v. All. One

Receivables Mgmt., Inc., 335 F. Supp. 2d 636, 646 (M.D.N.C.

2004) (citation omitted). This court does not, however, accept

legal conclusions as true, and “[t]hreadbare recitals of the

elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Iqbal, 556 U.S. at 678.

Under Federal Rule of Civil Procedure 12(b)(1), a plaintiff

must prove by a preponderance of the evidence the existence of

subject matter jurisdiction. See U.S. ex rel. Vuyyuru v. Jadhav,

555 F.3d 337, 347 (4th Cir. 2009).

III. ANALYSIS

Defendants make three arguments in support of their motion

to dismiss. Defendants argue that Plaintiff has failed to

plausibly allege the necessary state action under 42 U.S.C.

§ 1983 because Godfrey’s actions are no more than a “de minimus

involvement in a private company’s repossession of Plaintiff’s

vehicle . . . .” (Mot. to Dismiss Defs. Brent Godfrey and

Sheriff Wayne Coats (“MTD”) (Doc. 18) at 1.) Defendants also

argue that Godfrey is entitled to qualified immunity as a matter

of law. (Id. at 2.) Finally, Defendants argue that as to Coates,

Plaintiff has failed to plausibly allege a policy or custom of

the Harnett County Sheriff which caused a constitutional

violation. (Id.) Plaintiff disagrees and argues the motion

should be denied. (See Pl. Leslie Atkinson’s Resp. to Defs.

Brent Godfrey and Wayne Coats Mot. to Dismiss (“Resp.”) (Doc.

27).)

Both parties submit, and this court agrees, that the Fourth

Circuit has not addressed the issue of law enforcement

involvement in the private repossession of a motor vehicle. (Br.

in Supp. Mot. to Dismiss Defs. Brent Godfrey and Sheriff Wayne

Coats (“Br.”) (Doc. 19) at 7; Resp. (Doc. 27) at 16.)

A. Jurisdiction

Although Plaintiff contends that Defendants “move only

under Rule 12(b)(6)” for dismissal, (Resp. (Doc. 27) at 5), this

court concludes that Defendants assert a jurisdictional issue

for reasons similar to those described in Menchaca v. Chrysler

Credit Corp., 613 F.2d 507 (5th Cir. 1980). In Menchaca, the

Fifth Circuit stated that

[d]espite plaintiffs’ allegations of multiple bases of

jurisdiction in their original complaint, the parties

agree that the sole basis of jurisdiction that could

support this claim is 42 U.S.C. § 1983. As such, the

existence of the “under color of law” element of the

claim, i.e., state action, is required in order to

invoke the district court’s jurisdiction.

Id. at 511 (cleaned up). Under that analysis, a failure by

Plaintiff to plausibly allege state action could preclude

jurisdiction.

Like Menchaca, Plaintiff alleges an unconstitutional

seizure of her property in violation of the Fourth and

Fourteenth Amendments.2 (Compl. (Doc. 1) at 24-20.) Also like

Menchaca, jurisdiction as to Count X is predicated upon 28

U.S.C. § 1331, as this action arises under the Constitution and

laws of the United States. (See Compl. (Doc. 1) at 2.)3 The claim

by Plaintiff is a violation of 42 U.S.C. § 1983. Therefore,

under the analysis described by Menchaca, the failure by

2 Plaintiff also alleges a violation of the Fifth Amendment,

(Compl. (Doc. 1) at 2), which is immaterial to this analysis and

appears to have been abandoned in the briefing. (See, e.g.,

Resp. (Doc. 27) at 15.)

3 Plaintiff asserts several other grounds for jurisdiction,

however, with the dismissal of all other defendants and claims,

only this claim remains for jurisdictional purposes. Although

Plaintiff makes allegations about a conspiracy, (see Compl.

(Doc. 1) ¶ 108), Count X is alleged as a substantive violation

of 18 U.S.C. § 1983.

Plaintiff to plausibly allege state action supports a dismissal

on jurisdictional grounds.

Nevertheless, unlike Menchaca, Defendants assert a facial

challenge to jurisdiction and the allegations must be construed

in the light most favorable to Plaintiff. Plaintiff’s

allegations, taken as true, establish for purposes of this

motion that Plaintiff was in her car, attempting to drive away,

when CR used the tow bar to secure and lift the back end of her

car. Thereafter, Godfrey “ordered [Plaintiff] to exit the

Vehicle so that CR could repossess it” and, as a result,

Plaintiff “exited the vehicle.” (Compl. (Doc. 1) at 11.)

Whether Godfrey’s order can be construed as active

participation in the creditor’s repossession will have to be

determined later. For purposes of the motion to dismiss, it

appears the order to exit the vehicle so that CR could repossess

it, as alleged, plausibly describes active participation.

When an on-duty police officer actively participates

in a creditor’s repossession . . . “the officers are

participating in the removal of the debtor’s property

while cloaked in the mantle of their authority as

agents of the state.” Wallace v. Chrysler Credit

Corp., 743 F. Supp. 1228, 1234 (W.D. Va. 1990); see

also Lugar v. Edmondson Oil Co., 457 U.S. 922, 935 n.

18 (1982); Abbott v. Latshaw, 164 F.3d 141, 146 (3rd

Cir. 1998).

Goard v. Crown Auto, Inc., 170 F. Supp. 3d 915, 918 (W.D. Va.

2016) (cleaned up). Under this standard, this court is compelled

to find subject matter jurisdiction is present. To the extent

Defendants contend that the de minimus nature of Godfrey’s

involvement precludes jurisdiction, that issue will be addressed

in the analysis of the motion to dismiss pursuant to Fed. R.

Civ. P. 12(b)(6).

B. Failure to State a Claim

1. State Action

“By the plain terms of § 1983, two — and only two —

allegations are required in order to state a cause of action

under that statute. First, the plaintiff must allege that some

person has deprived him of a federal right. Second, he must

allege that the person who has deprived him of that right acted

under color of state or territorial law.” Gomez v. Toledo, 446

U.S. 635, 640 (1980). Defendants do not challenge the fact that

Plaintiff may have been deprived of a federal right, only that

state action was not employed to deprive her of that right.

Defendants contend Godfrey’s limited involvement cannot be

considered state action sufficient to establish the second

element of a § 1983 claim. (Br. (Doc. 19) at 10.) However, “[a]

‘seizure’ of property . . . occurs when ‘there is some

meaningful interference with an individual’s possessory

interests in that property.’” Soldal v. Cook Cnty., 506 U.S. 56,

61 (1992).

A number of cases have considered the question of

whether a law enforcement officer’s presence at or

participation in a creditor’s repossession constitutes

action under color of state law. In such cases, of

course, the officers are participating in the removal

of the debtor’s property while cloaked in the mantle

of their authority as agents of the state.

Wallace, 743 F. Supp. at 1234 (citations omitted). “Misuse of

power, possessed by virtue of state law and made possible only

because the wrongdoer is clothed with the authority of state

law, is action taken under color of state law.” United States v.

Classic, 313 U.S. 299 (1941).

At this stage of the proceedings, this court finds Marcus

v. McCollum persuasive. 394 F.3d 813 (10th Cir. 2004). As

described in Marcus with respect to law enforcement involvement

in a private repossession:

This area of the law is particularly fact-

sensitive, so the circumstances must be “examined in

their totality.” Howerton v. Gabica, 708 F.2d 380, 384

(9th Cir. 1983). If the evidence showed, for example,

that an “officer came on the scene at the request of

the repossessor and said to the debtor, ‘don’t

interfere with this repossession,’ or ‘you know you’re

not the rightful owner of the property,’” an officer

might be liable. Barrett v. Harwood, 189 F.3d 297, 303

(2d Cir. 1999); see also Greco v. Guss, 775 F.2d 161,

168 (7th Cir. 1985) (finding state action where deputy

told debtor that the seizure was legal); Harris v.

City of Roseburg, 664 F.2d 1121, 1127 (9th Cir. 1981)

(finding state action where debtor was told to stop

interfering or he would go to jail; debtor would have

prevented the repossession if police had not been

there). An officer’s “arrival with the repossessor”

could give “the repossession a cachet of legality” and

have “the effect of intimidating the debtor into not

exercising his right to resist, thus facilitating the

repossession.” Booker v. City of Atlanta, 776 F.2d

272, 274 (11th Cir. 1985). “Even if unintended, such

an effect could constitute police ‘intervention and

aid’ sufficient to establish state action.” Id.

(quoting Menchaca, 613 F.2d at 513).

Other factors courts take into consideration

include intervening at more than one step, Howerton,

708 F.2d at 385; failing to depart before completion

of the repossession, Jones v. Gutschenritter, 909 F.2d

1208, 1211–12 (8th Cir. 1990); standing in close

proximity to the creditor, id.; and unreasonably

recognizing the documentation of one party over

another, Abbott, 164 F.3d at 149. To repeat, the

overarching lesson of the case law is that officers

may act to diffuse a volatile situation, but may not

aid the repossessor in such a way that the

repossession would not have occurred but for their

assistance.

Marcus, 394 F.3d at 819 (cleaned up). This court finds that

determination of whether Godfrey participated in a manner

sufficient to constitute intervention and state action is a

fact-intensive issue. For instance, it is possible that under

all the circumstances, if Godfrey did in fact order Plaintiff to

exit the vehicle, that might be construed as recognizing the

rights of one party over another. Similarly, that fact might be

understood to “aid the repossessor in such a way that the

repossession would not have occurred” but for Godfrey’s

assistance. See id. On the other hand, an examination of the

totality of the circumstances might disclose that Godfrey’s

actions were necessary to keep the peace and were not in aid of

the repossessor.

A determination of whether Godfrey’s actions were

insufficient to constitute state action cannot be determined as

a matter of law for purposes of Fed. R. Civ. P. 12(b)(6).

Defendant’s argument raises factual issues which must be decided

in favor of Plaintiff’s averments.

2. Qualified Immunity

Godfrey contends that he is entitled to qualified immunity.

(Br. (Doc. 19) at 11.) When subject to suit under § 1983, state

and local officials may assert qualified immunity to shield them

“from liability for civil damages[,] insofar as their conduct

does not violate clearly established statutory or constitutional

rights of which a reasonable person would have known.” Harlow v.

Fitzgerald, 457 U.S. 800, 818 (1982). Therefore, in deciding

whether a government official is entitled to qualified immunity,

this court must determine whether there was a violation of a

person’s constitutional rights and then analyze whether the

right was “clearly established” so that a reasonable officer

would know “that his conduct was unlawful in the situation he

confronted.” Saucier v. Katz, 533 U.S. 194, 202 (2001). The

doctrine of “[q]ualified immunity gives government officials

breathing room to make reasonable but mistaken judgments,” and

“protects ‘all but the plainly incompetent or those who

knowingly violate the law.’” Ashcroft v. al-Kidd, 563 U.S. 731,

743 (2011) (citations omitted).

Plaintiff contends Godfrey’s actions violated her Fourth

and Fourteenth Amendment rights. (Resp. (Doc. 27) at 15-16.)

Defendants contend that:

There is no binding authority in this district,

or others, that would have given Defendant Godfrey

fair notice that his actions would result in an

“adoption” or conspiracy with the repossessing

company, let alone a violation of constitutional law.

The cases described in the previous section

demonstrate that his actions were appropriate, common,

and did not invoke Section 1983.

(Br. (Doc. 19) at 15.) Contrary to Defendants’ arguments, this

court finds at this stage of the proceedings that qualified

immunity has not been established. The court finds Goard, 170 F.

Supp. 3d 915, persuasive on the issue of qualified immunity.

First, the complaint contains allegations which are

sufficient to establish a violation of Plaintiff’s

constitutional rights.

The right to due process prior to the seizure of one’s

property is subject to Fourth and Fourteenth Amendment

scrutiny. See Fuentes v. Shevin, 407 U.S. 67, 92

(1972) (holding that Florida and Pennsylvania

prejudgment replevin statutes unconstitutionally

deprived persons of property without due process of

law because they denied the right to be heard before

taking the property away); Soldal v. Cook Cnty., 506

U.S. 56, 61 (1992) (providing Fourth and Fourteenth

Amendment protection to the removal of a mobile home

by police officers). Courts have also routinely denied

qualified immunity in officer-assisted repossession.

Goard, 170 F. Supp. 3d at 919.

Second, with respect to whether the right was clearly

established at the time of the private repossession here,

“[i]t is true that the Fourth Circuit has not, itself,

specifically considered whether a reasonable officer

could have believed that active involvement in a

private vehicle repossession would be lawful.” Morozov

v. Howard Cnty., No. MJG-10-1515, 2012 WL 2048296, at

*1 (D. Md. June 5, 2012). However, “reasonable police

officers should know from the established precedent in

Fuentes that their role is not to be participants in

property deprivations without notice and an

opportunity to be heard.” Abbott, 164 F.3d at 149.

Furthermore, the Supreme Court’s Soldal opinion,

discussed above, also provides sufficient precedent

that a police officer cannot actively participate in

self-help repossession. Soldal, 506 U.S. at 61; see

also Brian S. Batterton, Self-Help Repossession Versus

the Fourth Amendment, Legal & Liability Risk

Management Institute (Dec. 2012) (discussing how to

follow the law in self-help repossession cases after

Soldal).

Goard, 170 F. Supp. 3d at 920 (cleaned up).

Discovery and further proceedings may establish that

qualified immunity applies. However, at this stage, taking the

allegations of the complaint as true and drawing all reasonable

inferences in favor of Plaintiff, this court cannot find as a

matter of law that Defendants are entitled to qualified

immunity.

3. Coats and the Monell Claim

Defendants contend the allegations are insufficient to

establish a claim against Coats under Monell v. Dep’t of Soc.

Servs., 436 U.S. 658 (1978). (Br. (Doc. 19) at 16–19.) To

establish a claim against the Sheriff, Plaintiff must plausibly

allege that her injury, if any, resulted from an official policy

or custom of the Sheriff’s Office. See Collins v. City of Harker

Heights, 503 U.S. 115, 120–121 (1992). Official liability will

attach under § 1983 only if “‘execution of a government’s policy

or custom, whether made by its lawmakers or by those whose

edicts or acts may fairly be said to represent official policy,

inflicts the injury.’” Id. at 121 (quoting Monell, 435 U.S. at

694). Official liability under § 1983 may not be premised on a

respondeat superior or other vicarious liability theory. See

Collins, 503 U.S. at 121.

After careful review, this court finds Plaintiff’s

allegations sufficient to plausibly state a claim for relief

under Monell. Many of Plaintiff’s allegations as to custom or

policy are made on information and belief; discovery may or may

not disclose facts upon which Monell liability may be

established. However, this court is not able to find, as a

matter of law at this stage of the proceedings, that the claim

against Coates is subject to dismissal.

IV. CONCLUSION

For the reasons set forth herein, this court finds

Defendants’ Motion to Dismiss Defendants Brent Godfrey and

Sheriff Wayne Coats, (Doc. 18), should be denied. Plaintiff’s

complaint states a claim upon which relief may be granted under

42 U.S.C. § 1983. In addition, the allegations in the complaint

are not sufficient to establish the defense of qualified

immunity.

For the foregoing reasons,

IT IS THEREFORE ORDERED that Defendants Motion to Dismiss

Brent Godfrey and Sheriff Wayne Coates is hereby DENIED.

This the Sth day of March, 2023.

Union 1. Olen. Me

United States District J e

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