Heiko Goldenstein v. Repossessors Inc.
2016 U.S. App. LEXIS 4447
| 3rd Cir. | 2016Background
- Goldenstein (PA resident) took a $1,000 online vehicle-secured loan from Sovereign Lending Solutions (tribal lender) at an asserted 250% interest rate; Sovereign withdrew two installments then a third failed for insufficient funds.
- Sovereign contracted with Repossessors, Inc., which contracted with Shady Oak Enterprises d/b/a Premier to repossess Goldenstein’s car; Premier required release documents and refused return of the car unless signed.
- After consulting counsel, Goldenstein paid $2,393 (loan balance plus repossession fees) and signed releases, then sued in Eastern District of Pennsylvania asserting FDCPA, PFCEUA, UCC claims, and RICO (collection of unlawful debt and conspiracy).
- The District Court granted summary judgment for defendants, holding repossession did not violate the FDCPA because defendants had a present right to possess collateral and concluding repossession cannot be the “collection of unlawful debt” under RICO; it did not substantively address PFCEUA/UCC claims.
- The Third Circuit affirmed the FDCPA dismissal (repossession valid despite alleged usury) but reversed as to RICO and PFCEUA/UCC issues and remanded for further proceedings, holding that repossession/forfeiture can constitute the “collection of unlawful debt.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether repossession violated FDCPA because loan was usurious and thus no present right to possess collateral | Goldenstein: usurious loan voids right to possess; repossession was unlawful | Defendants: despite usury, Pennsylvania law permits secured party to take collateral after default; Goldenstein defaulted | Held: Defendants had present right to possession; FDCPA claim fails |
| Whether forfeiture/repossession can constitute RICO “collection of unlawful debt” | Goldenstein: repossession to liquidate collateral is a method of collecting debt and falls within RICO’s prohibition | Defendants/District Court: repossession is distinct from collecting debt and cannot be RICO predicate | Held: Reversed — repossession/forfeiture can be “collection of unlawful debt” under RICO; remanded for further RICO analysis |
| Whether a RICO enterprise and requisite mens rea exist here | Goldenstein: parties’ coordinated repossession activities can form an enterprise and satisfy RICO elements | Defendants: entities were ad hoc and lack the culpable intent required by RICO | Held: Third Circuit declined to decide on appeal; remanded for District Court factfinding because record is underdeveloped |
| Whether PFCEUA and UCC claims (misrepresentations re: releases) survive summary judgment | Goldenstein: PFCEUA (incorporating FDCPA §1692e) and UCC claims target coercive/misleading practice of forcing releases to recover vehicle | Defendants: (did not adequately raise these at summary judgment) | Held: District Court erred by not addressing these claims on the merits; vacated and remanded for consideration |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard and movant burden)
- Anderson v. Liberty Lobby, 477 U.S. 242 (genuine dispute and reasonable jury standard)
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (RICO should be read broadly)
- Turkette, 452 U.S. 576 (RICO reaches legitimate and illegitimate enterprises)
- United States v. Eufrasio, 935 F.2d 553 (single act inducing repayment on unlawful debt may be sufficient)
- United States v. Vastola, 899 F.2d 211 (collection of unlawful debt need not show a pattern)
- Pa. Dep’t of Banking v. NCAS of Del., LLC, 995 A.2d 422 (LIPL usury effect: interest beyond lawful rate is voidable, not entire loan)