UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

BRIANNA JEFFERSON,

Plaintiff,

Case No. 14-13749

v.

Paul D. Borman

United States District Judge

UNITED CAR COMPANY, INC.,

Defendant.

_____________________________/

OPINION AND ORDER GRANTING PLAINTIFF’S THIRD MOTION FOR ENTRY OF

DEFAULT JUDGMENT (ECF NO. 26)

 This action arises from Plaintiff’s allegations that Defendant United Car Company,

Inc. violated the federal Truth-in-Lending-Act, 15 U.S.C. § 1601, et seq. (“TILA”). 

Plaintiff’s Amended Complaint was filed on behalf herself and on behalf of a putative class. 

(ECF No. 6.) Defendant has failed to defend or otherwise appear in this action and Plaintiff

now moves this Court for entry of a Default Judgment pursuant to Federal Rule of Civil

Procedure 55(b)(2). (ECF No. 26.) As the class has never been certified, Plaintiff has moved

for entry of a default judgment only as to her own claims. Plaintiff has twice previously

moved for entry of default judgment, but the Court denied the previous motions without

prejudice due to defects in service and failure to seek a clerk’s entry of default. 

A hearing on this matter was held on July 14, 2016 and Defendant did not attend the

hearing. For the following reasons, the Court will grant Plaintiff’s Motion for Entry of a

Default Judgment. (ECF No. 26.)

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I. FACTUAL BACKGROUND

The Court previously set forth the factual background of this case in its June 11, 2015

Opinion and Order denying Plaintiff’s first motion for entry of a default judgment and

incorporates that section here:

Plaintiff alleges in her amended complaint that she purchased a used 2007

Chevrolet Impala from Defendant on September 10, 2014 and paid Defendant

$1,500 for a down payment. (Am. Compl. ¶¶ 24, 27). Plaintiff claims that

Defendant represented that Plaintiff’s credit was approved for financing and

also provided her with a retail installment sales contract (“RISC”) that

purportedly reflected all the terms and conditions of that financing. (Id. at ¶¶

24-25). In addition to the RISC, Plaintiff signed a “Purchase Spot Delivery

Agreement” which provided that Defendant could “unilaterally cancel the

contract ‘in the event the dealership is unable to assign the Retail Installment

Sales Contract to a third party,’ or if Defendant unilaterally cancels the RISC

or changes the terms to its pecuniary advantage.” (Id. at ¶ 26). Plaintiff signed

the RISC and Defendant delivered the vehicle to Plaintiff. (Id. at ¶ 25). 

On September 16, 2014, Defendant unilaterally canceled Plaintiff’s RISC and

demanded that she return the vehicle and a pay $600.00 “repossession fee” and

forfeit her down payment. Plaintiff alleges that Defendant was “verbally

abusive” and accused her of fraud. (Id. at ¶ 27). Defendant called again on

September 17 and 18 and repeated the same. (Id. at ¶ ¶ 28, 29). Plaintiff then

used her “monetary resources to repair another vehicle so that she could have

reliable transportation.” (Id. at ¶ 30). Then, on September 19, 2014,

Defendant contacted Plaintiff and advised her that it had “obtained financing”

for her. (Am. Compl. at ¶ 31). 

.... 

Plaintiff avers that Defendant did not consider the vehicle sold until Defendant

sold the RISC to a third-party. (Id.). However, Plaintiff was responsible for

insuring the car at her own expense after taking possession. (Id.). Plaintiff

alleges that Defendant’s use of the “Purchase Spot Delivery Agreement”

rendered the terms of the RISC illusory and illegally waived Defendant’s

obligations under TILA because TILA “mandates that retail installment

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contracts when signed by the buyer are the final written financing expression

between the parties and is binding on both the Defendant-creditor and the

buyers.” (Id. at ¶¶ 17-18).

(ECF No. 15, at *2-3.)

II. PROCEDURAL HISTORY

This action was originally filed on September 29, 2014. Plaintiff filed an amended

complaint on November 10, 2014 in response to a order to show cause regarding whether the

Eastern District of Michigan was the proper venue for her action. (ECF Nos. 5, 6.) On

December 20, 2014, Plaintiff requested a Clerk’s Entry of Default. (ECF No. 8.) The Clerk

granted the request and a Clerk’s Entry of Default was entered on December 24, 2014. (ECF

No. 9.) 

On February 26, 2015, this Court ordered Plaintiff to show cause why this case should

not be dismissed for failure to prosecute. (ECF No. 10.) In response to the order to show

cause, Plaintiff filed a Motion for Entry of a Default Judgment on March 3, 2015. (ECF No.

11.) On June 11, 2015, this Court denied Plaintiff’s Motion for Default finding that Plaintiff

had failed to effect proper service under the Federal Rules of Civil Procedure and that

Plaintiff’s request for Clerk’s Entry of Default and the Motion for Default were erroneously

premised upon the original complaint. (ECF No. 15.)

On September 3, 2015, the Court issued an order to show cause why this case should

not be dismissed for failure to prosecute. (ECF No. 17.) In response to the order to show

cause, Plaintiff filed a second Motion for Entry of a Default Judgment on September 15,

2015. (ECF No. 18.) On October 30, 2015, this Court denied Plaintiff’s second motion for

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default judgment because Plaintiff had failed to first move for a Clerk’s Entry of Default as

required by the Federal Rules of Civil Procedure. (ECF No. 22.)

On November 3, 2015, Plaintiff requested, and was granted, a clerk’s entry of default. 

(ECF Nos. 23, 24.) On February 4, 2016, this Court issued another order to show cause why

the case should not be dismissed for failure to prosecute. (ECF No. 25.) Plaintiff then filed

her third Motion for Entry of a Default Judgment. (ECF No. 26.)

III. STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 55(b) a judgment by default may be

entered against a defendant who has failed to plead or otherwise defend against an action. In

order to obtain judgment by default, the proponent must first request the clerk's entry of

default pursuant to Rule 55(a). See Hanner v. City of Dearborn Heights, No. 07-15251, 2008

WL 2744860, at *1 (E.D. Mich. July 14, 2008). Once a default has been entered by the

clerk’s office, all of a plaintiff’s well-pleaded allegations, except those relating to damages,

are deemed admitted. Antoine v. Atlas Turner, Inc., 66 F.3d 105, 110 (6th Cir. 1995), see

also Ford Motor Co. v. Cross, 441 F. Supp. 2d 837, 846 (E.D. Mich. 2006) (citation

omitted). Once a default is obtained, the party may then file for a default judgment by the

clerk or by the court. FED. R. CIV. P. 55(b). If the plaintiff’s well-pleaded allegations are

sufficient to support a finding of liability as to the defendant on the asserted claims, then the

Court should enter a judgment in favor of the plaintiff. See Cross, 441 F. Supp. 2d at 848. 

Although Rule 55(b)(2) does not provide a standard to determine when a party is entitled to a

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judgment by default, the case law sets forth that the court must exercise “sound judicial

discretion” when determining whether to enter the judgment. Wright & Miller, 10A Federal

Practice & Procedure, § 2685 (3d ed. 1998) (collecting cases). After a court determines that

a default judgment should be entered, it will determine the amount and character of the

recovery awarded. See id. § 2688 (collecting cases). 

IV. ANALYSIS

A. Sufficient Service

“Because a party has no duty to plead until properly served, sufficient service of

process is a prerequisite to entry of default.” Russell v. Tribley, No. 10-14824, 2011 WL

4387589, at *8 (E.D. Mich. Aug. 10, 2011) (collecting cases). The Federal Rules of Civil

Procedure provide that a corporation, partnership, or association must be served either by the

procedure set forth in Rule 4(e)(1), that provides an individual may be served by “following

the state law for serving a summons in an action brought in courts of general jurisdiction in

the state where the district court is located or where service is made,” or by “delivering a

copy of the summons and of the complaint to an officer, a managing or general agent, or any

other agent authorized by appointment or by law to receive service of process and – if the

agent is one authorized by statute and the statute so requires– by also mailing a copy to the

defendant.” FED. R. CIV. P. 4(h)(1)(A)-(B). The Michigan Court Rules provide that service

upon a domestic corporation may be made by “serving a summons and a copy of the

complaint on an officer or the resident agent.” Mich. Ct. Rule 2.105(D)(1).

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Plaintiff submits that Defendant is a licensed automobile dealer and pursuant to

Michigan statute, 

[a]s a condition precedent to the granting of a license, a dealer shall file with

the secretary of state an irrevocable written stipulation, authenticated by the

applicant, stipulating and agreeing that legal process affecting the dealer,

served on the secretary of state or a deputy of the secretary of state, has the

same effect as if personally served on the dealer. This appointment remains in

force as long as the dealer has any outstanding liability within this state.

Mich. Comp. Laws § 257.248. The record reveals that the summons and complaint were

properly served upon the Secretary of State pursuant to Mich. Comp. Laws § 257.248 on

June 23, 2015, and thereafter forwarded to Defendant. (ECF No. 16, Proof of Service.) 

Thus, Plaintiff has established that Defendant was properly served pursuant to the Michigan

Court Rules where service upon the Secretary of State has the same effect as personal service

upon the defendant dealer itself. 

B. TILA Violation

As noted above, once a default has been entered by the clerk’s office, the Court deems

all of a plaintiff’s well-pleaded allegations admitted, except those allegations relating to

damages. Antoine, 66 F.3d at 110. Accordingly, the question now before this Court is

whether Plaintiff’s well-pleaded allegations are sufficient to support a finding of liability as

to the defendant on the TILA claim. See Cross, 441 F. Supp. 2d at 848. 

 Plaintiff claims that Defendant violated 15 U.S.C. § 1638, and Regulation Z, 12

C.F.R. § 226.1, et seq., because the terms of the RISC executed by Plaintiff and Defendant

were entirely illusory based on a “Purchase Spot Delivery Agreement” that was

contemporaneously executed by the parties. (ECF No. 26, Ex. B, Retail Installment Contract

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and Security Agreement.) Plaintiff alleges that she is a consumer and Defendant is a creditor

as defined under TILA. Plaintiff further alleges that the “Purchase Spot Delivery

Agreement” provided that Defendant could unilaterally cancel the RISC, repossess the sold

vehicle, or change the terms of the RISC and require the buyer to sign a second and unbargained for RISC. (Am. Compl., at ¶ 17.) Plaintiff states that Defendant’s use of the

“Purchase Spot Deliver Agreement” violated TILA and Regulation Z “by using illusory

TILA disclosures in its RISCs including the APR, the Finance Charge, the Amount Financed,

the Total of Payments, the Total Sale Price and every other term” in Plaintiff’s RISC because

at the time of consummation the disclosures were subject to subsequent change or

cancellation at Defendant’s sole discretion. (Am. Compl., at ¶ 19.) 

Plaintiff’s TILA claims are supported by case law in this district holding that

analogous “spot delivery” contracts can violate TILA. See Patton v. Jeff Wyler Eastgate,

Inc., 608 F. Supp. 2d 907, 914-16 (S.D. Ohio, 2007) (holding that an automobile dealer

violated TILA by using a “spot delivery” contract that rendered the retail installment sales

contract illusory and concluding that “[t]he purpose of TILA would be frustrated if

automobile dealerships are permitted to rescind the terms of integrated automobile retail

installment sales contracts by use of a second, contradictory form.”); see also Salvagne v.

Fairfield Ford, Inc., 794 F. Supp. 2d 826 (S.D. Ohio, 2010) (finding TILA violation in

analogous circumstance and noting that the RISC and spot delivery agreement contradicted

each other in material ways which prevented the contracts from being read as one contract.)

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Although Plaintiff did not attach the Purchase Spot Delivery Agreement to the Motion

for Entry of Default Judgment she has pleaded its existence and its contents in her amended

complaint. The Court takes her well-pleaded complaints as true, and therefore, based on the

Purchase Spot Delivery Agreement rendering the terms of the RISC illusory, Plaintiff has

established a TILA violation. Patton, 608 F. Supp. 2d at 914-16. 

1. Damages

Regarding damages, Plaintiff seeks actual damages pursuant to 15 U.S.C. §

1640(a)(1) in the amount of $1,571.00, the amount of her deposit that is evidenced by the

attached receipt. (Ex. A.) Plaintiff also seeks statutory damages pursuant to 15 U.S.C. §

1640(a)(2)(A)(ii) in the capped amount of $2,000. The Court notes that § 1640(a)(2)(A)(ii)

applies to an “individual action relating to a consumer lease under part E of this subchapter,

25 per centum of the total amount of monthly payments under the lease, except that the

liability under this subparagraph shall not be less than $200 nor greater than $2,000.” Id. 

This action does not involve a consumer lease as defined by 15 U.S.C. § 1667(1) in Subpart

E. Plaintiff alleges she purchased a vehicle, she did not allege that she leased a vehicle. 

Therefore, the statutory damages are governed by § 1640(a)(2)(A)(iv), which provides that

“in the case of an individual action relating to a credit transaction not under an open end

credit plan that is secured by real property or a dwelling, not less than $400 or greater than

$4,000.” Id. Plaintiff’s requested statutory damages of $2,000 is within the statutory amount

allowed under § 1640(a)(2)(A)(iv) and thus is a reasonable award. 

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Plaintiff also requests attorneys fees and costs pursuant to TILA pursuant to §

1640(a)(3) which “permits recovery of reasonable attorney’s fees and costs.” Purtle v.

Eldridge Auto Sales, Inc., 91 F.3d 797, 800 (6th Cir. 1996). Plaintiff’s attorney has attached

affidavits attesting that he spent 6.4 hours on this case at a rate of $325 per hours, and

another attorney spent 2.7 hours on this case at a rate of $300.00 per hour for a total of

$3,637.50 for attorneys fees and $400.00 in filing fees. After review, the Court finds

Plaintiff’s request for attorney’s fees and costs are reasonable and will award Plaintiff her

requested attorney’s fees and costs in the total amount of $4,037.50.

C. Rescission

Plaintiff also seeks the rescission of her contract with Defendant. “Under Michigan

law, ‘rescission abrogates a contract completely.’ All former contract rights are annulled; it

is as if no contract had been made.” Diamond Computer Sys., Inc. v. SBC Communications,

Inc., 424 F. Supp. 2d 970, 986 (E.D. Mich. 2006) (quoting Samuel D. Begola Servs., Inc. v.

Wild Bros., 210 Mich. App. 636, 640 (Mich. Ct. App. 1995)). “In order to warrant rescission

of a contract, there must be a material breach affecting a substantial or essential part of the

contract.” Omnicom of Mich. v. Giannetti Inv. Co., 221 Mich. App. 341, 348 (Mich. Ct. App.

1997). 

In the present case, Plaintiff alleges that Defendant repudiated the contract by

demanding and repossessing the vehicle. The Court finds that Plaintiff has adequately

pleaded Defendant’s material breach of the contract and will therefore grant Plaintiff’s

request to rescind the RISC.

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V. CONCLUSION

For all these reasons, the Court GRANTS Plaintiff’s Third Motion for Entry of

Default Judgment and AWARDS Plaintiff actual and statutory damages in the amount of

$3,571.00 and attorney’s fees and costs in the amount of $4,037.50, for a total of $7,608.50. 

The Court will also RESCIND the Retail Installment Contract and Security Interest

Agreement attached as Exhibit A to this opinion and order.

IT IS SO ORDERED.

s/Paul D. Borman 

PAUL D. BORMAN

UNITED STATES DISTRICT JUDGE

Dated: July 18, 2016

CERTIFICATE OF SERVICE

The undersigned certifies that a copy of the foregoing order was served upon each attorney or

party of record herein by electronic means or first class U.S. mail on July 18, 2016.

s/Deborah Tofil 

Case Manager

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