914 F. Supp. 2d 1301
N.D. Ga.2012Background
- Clark filed in Georgia Superior Court; case removed to federal court on diversity grounds.
- Contracts for apartment-style furniture leases included a 120-day “same as cash” purchase option.
- Clark requested payoff amounts in Jan 2011 but was allegedly told to renew the leases for six months to obtain payoff.
- Clark renewed the September/October Bedroom Contracts and the November Living Room Contract in March 2011; accounts were not corrected to reflect payoff options.
- Clark alleges she paid more than necessary and still does not own the leased furniture; Clark filed an 11-count Second Amended Complaint and Class Action; Defendant moved to dismiss eight counts under Rule 12(b)(6).
- Court sets legal standard for Rule 12(b)(6) and proceeds to analyze each challenged count.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| False advertising under GA law (O.C.G.A. 10-1-420). | Clark seeks relief for deceptive advertising; seeks injunctive relief notwithstanding law. | Exclusive remedy is injunctive relief; damages inadequate; no pleading of inadequate legal remedies. | Count II dismissed; injunctive relief exclusive remedy; damages adequate thus no claim. |
| Breach of the implied covenant of good faith and fair dealing. | Covenant breached by withholding payoff information and undermining the 120-day offer. | Not duplicative of breach of contract; implied covenant must rest on contract terms. | Count V survives; claim not duplicative and independent to a degree. |
| Unjust enrichment as an alternative theory where contract exists. | Plaintiff pleads unjust enrichment in the alternative to contract claims. | If a valid contract exists, unjust enrichment is typically barred. | Count VI survives; pleading in the alternative allowed where contract validity contested. |
| Unconscionability of the contracts. | Alleges procedural and substantive unconscionability. | Georgia requires both procedural and substantive unconscionability; lacks substantiation. | Count VII dismissed; lack of sufficient substantive unconscionability shown. |
| RISA violation collection of time-price and status as retail installment contracts. | Contracts constitute retail installment contracts with improper rate; exceed cap. | Contracts are leases/time-price arrangements not subject to RISA as defined. | Count X survives; Georgia code permits analysis of whether contracts fit RISA; claim stated. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for factual allegations in complaint)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (rules on pleading standards require plausible claims)
- Deerskin Trading Post, Inc. v. United Parcel Service of America, Inc., 972 F. Supp. 665 (N.D. Ga. 1997) (injunctive relief requires inadequacy of remedies at law)
- Alan’s of Atlanta, Inc. v. Minolta Corp., 903 F.2d 1414 (11th Cir. 1990) (implied covenant cannot be breached independent of contract terms)
- Myung Sung Presbyterian Church, Inc. v. N. Am. Ass’n of Slavic Churches & Ministries, Inc., 291 Ga. App. 808 (Ga. App. 2008) (Georgia implied covenant principles and contract interpretation guidance)
- NEC Techs., Inc. v. Nelson, 267 Ga. 390 (Ga. 1996) (unconscionability requires procedural and substantive showing)
- Gordon v. Crown Cent. Petroleum Corp., 423 F. Supp. 58 (N.D. Ga. 1976) (unconscionability framework in contract analysis)
- Davis (General Fin. Corp. v. Davis), 126 Ga. App. 821, 191 S.E.2d 865 (Ga. App. 1972) (time-price contracts not usury; not loans)