An apparent paperwork snafu put car buyers Derek Hindle and Meredith Partridge in credit trouble. And late last year, a federal judge in Boston allowed the customers to pursue a Fair Credit Reporting Act suit accusing Toyota Motor Credit Corp. of reporting inaccurate information to credit agencies about the termination of their lease.
But U.S. District Judge F. Dennis Saylor IV dismissed claims that the captive lender violated state consumer protection law and caused emotional distress to the lessees, Hindle and Partridge.
According to the decision, Hindle and Partridge leased a 2015 Prius from Boch Toyota South in North Attleboro, Mass., in July 2015. They contacted the dealership in spring 2017 to buy the vehicle and lower their monthly payments. Boch Toyota then paid off their lease and bought the Prius from Toyota Credit. The lender in turn sent the title to the store.
But Hindle and Partridge failed to complete the necessary paperwork to buy the Prius. Instead they surrendered the car to the dealership and canceled the registration.
Toyota Credit then reactivated the lease and notified credit bureaus when Hindle and Partridge didn't make payments, and the lender reported the late lease payments as undisputed, the decision said.
Hindle and Partridge sued Boch Toyota and the lender but later dismissed their claims against the dealership. But their lawyer, John Longo, of Providence, R.I., said, "We still intend to go after" the store.
Toyota Credit denied committing any violations, said it had "properly reinstated" the lease and asked Saylor to toss out the case.
In his decision, Saylor ruled that the Fair Credit Reporting Act component of the case can go on and said it's too early to tell whether the dispute "was entirely without merit." He cited allegations that the lender told Hindle in a letter and by phone that Boch had "paid off" the lease and that the lease was "over."
Saylor said, "It may be true that Hindle is mistaken, that the lease's reactivation should have been obvious or that his dispute about the lease is otherwise without merit" but that's insufficient to warrant dismissal of the claim.
As for emotional distress, Saylor found no evidence that the lender acted maliciously or that the lessees suffered any injury from its actions. Similarly, he said the state consumer law claim fails because there was no showing of "malice or willful intent to injure."
A Toyota Credit spokesman said the next steps in the litigation are to file an answer to the remaining claim and proceed to pretrial discovery. He said, "We have continued to have negotiations."