Auto Finance Company Sues Massachusetts City Over Its Unconstitutional Sale Of Seized Vehicles

from the money-v-power dept

An opponent of asset forfeiture has arisen from an unexpected place. Honda’s finance division has taken the city of Revere, Massachusetts to court over the seizure and sale of a vehicle it still technically owned.

American Honda Finance Corp., based in California, alleged in its lawsuit filed Feb. 12 in U.S. District Court for the District of Massachusetts that its constitutional rights were violated when a Honda Civic was seized in 2016 by Revere’s police department.

“Plaintiff brings this action to remedy a deprivation of its long-settled and fundamental rights to be free from unreasonable seizures and to due process of law under the United States Constitution,” American Honda Finance Corp. said in its 13-page complaint.

The complaint [PDF] makes it clear the company thinks this is some bullshit: seizing and selling a vehicle that still belongs to the company holding the lien. Until the vehicle is paid off, Honda still owns the car. But Massachusetts law enforcement doesn’t appear to care who owns the car so long as they get to profit from its sale. The narrative detailed in the lawsuit makes it clear zero effort was made to make the car’s real owner aware of the city’s plans for the seized car.

On or about November 2, 2016, HONDA obtained a purchase money security interest and lien in The Subject Vehicle.

On November 28, 2016, The Subject Vehicle was officially titled in the State of New York with Shanasia Hackworth recorded as the owner and HONDA recorded as the first priority lienholder.

On or about December 30, 2016, REVERE took possession and custody of The Subject Vehicle pursuant to REVERE’s police officers acting in the course of their duties as law enforcement officers.

On or about December 30, 2016, REVERE, through its police officers acting in the cause of their duties as law enforcement officers, and pursuant to laws enacted to further official state interests, directed Mario’s Service Center, Inc. to tow and detain The Subject Vehicle.

On or about December 30, 2016, Mario’s Service Center, Inc. towed The Subject Vehicle and retained The Subject Vehicle on behalf of REVERE as part of an “investigation.”

REVERE did not notify HONDA that The Subject Vehicle had been seized.

REVERE thereafter concluded its investigation. REVERE did not, thereafter, return The Subject Vehicle to HONDA or anyone else. Instead, REVERE authorized its agent, Mario’s Towing Service Center, Inc., to detain and dispose of the vehicle pursuant to Massachusetts G.L.c. 255, §39A.

REVERE did not notify HONDA that after the investigation ended that REVERE authorized Mario’s Towing Service Center, Inc. to detain and dispose of The Subject Vehicle.

REVERE did not ensure that its agent, Mario’s Towing Service Center, Inc., notified HONDA that REVERE had authorized detention and disposal of the Subject Vehicle.

On or about May 18, 2017, REVERE’s agent, Mario’s Towing Service Center, Inc., sold The Subject Vehicle and The Subject Vehicle was retitled through the Massachusetts Department of Transportation with HONDA’s lien not recorded on said title.

Under Massachusetts law the sale pursuant to Massachusetts G.L.c 255, §39A and subsequent retitling extinguished HONDA’s property interest in The Subject Vehicle.

At no time prior to the sale or retitling of The Subject Vehicle did REVERE or any person provide any notice to HONDA relating to The Subject Vehicle.

There’s a genuine question of property interest in a vehicle whose title still resides with the financing company. This can’t be the first time a company has complained about a vehicle of theirs being auctioned off without notice, but this is the first federal complaint I’ve seen directly challenging a state’s seizure of vehicles from drivers who don’t actually own the vehicles they’re driving.

This was filed ten days before the Supreme Court held that certain forms of asset forfeiture violate Constitutional protections against excessive fines. Honda’s complaint seems to anticipate the high court’s displeasure with abusive forfeitures and pulls no punches in its description of the program the city of Revere participate in. (Emphasis in the original.)

Massachusetts G.L.c. 255, §39A effectuates the Commonwealth’s interest in enforcing traffic laws and in protecting the public from hazardous street conditions. The statute provides a means for the state to compensate private parties who assist the state by towing and storing vehicles at the direction of police. The statute has, however, fallen out of step with modern developments in constitutional law which confirm that a duly perfected security interest and lien in a vehicle is a constitutionally protected property right.

A program that takes property away from the property’s true owner — an entity completely disconnected from the underlying criminal activity/accusations — appears to be a violation of the company’s Constitutional rights, if not the greater protections given to property owners by the state’s constitution. The suit alleges a host of violated rights, as well as conversion under state law, arguing the sale of the vehicle without notifying the lien holder is basically theft of Honda’s property.

Is it going to take the deep pockets of pissed off corporations to finally make a serious dent in abusive forfeiture programs? It might. This case may be more tow-and-sell than most forfeitures, but the principle behind it — the state depriving companies of their property without notice — is identical. If this case adds to the judicial dialog on forfeiture programs, I’m all for it.



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Comments on “Auto Finance Company Sues Massachusetts City Over Its Unconstitutional Sale Of Seized Vehicles”

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57 Comments
mcinsandsays:

Hoping for a good popcorn moment!

Yes, I’m overly optimistic, but I’m hoping that the police department stole from the wrong owner this time. Honda has the deep pockets and a definite interest in making sure that this doesn’t set a precedent. I am hoping that they truly unleash the dogs on these larcenous public officials.

Anonymoussays:

Re: Re: Hoping for a good popcorn moment!

I agree, but it’ll be kind of sad if this is the case to turn things around. I mean, people have constitutional rights, and corporations don’t (notwithstanding SCOTUS nonsense, and that it’s not OK to steal from corporations regardless of human rights).

Qwertygiysays:

Re: Re: Re: Re: Re: Re: Hoping for a good popcorn moment!

There are some cases where’d I’d disagree with the treatment of a corporation as a person, but this isn’t one.

The stakeholders of Honda America jointly own Honda America and thus jointly own the car that was taken away, no differently than if a married couple jointly owned their car. And thus the company certainly should have the same rights regarding their seized property.

Anonymoussays:

Re: Re: Re: Re: Re: Re: Hoping for a good popcorn moment!

Anyway, corporations are just groups of people.

But they’re not. There’s a big difference between Pat down the hall taking some action, and "the corporation" taking some action. A person would go to prison for some of the things corporations pay fines for. If the fines are too much, the corporation can declare bankruptcy without the individuals declaring it. They’re subject to things like hostile takeovers with no human analog.

That doesn’t mean they should have no rights; the majority are doing nothing wrong and shouldn’t be subject to arbitrary government interference like asset seizures. But treating them as persons goes beyond what we need for a reasonable economy.

Anonymoussays:

Re: Re: Re: Re: Re: Re: Hoping for a good popcorn moment!

Somebody who actually understands the ruling in Citizens United, I see. Though IMHO a case could be made that limited liability results in limited rights. One cornerstone of conservative thought is individual accountability for ones actions, and corporations are used too often to dilute this type of accountability to homeopathic levels.

Montywsays:

Re: Popcorn Moments Nationwide

Revere isn’t the only municipality stealing under the guise of statute. Leased cars, property that are not owned by a person or corporation are routinely seized with no intention of return to the owner. From the sound of this case there wasn’t a felony conviction, but wouldn’t imprisonment be punishment enough. Anything seems justified under these statutes to increase the police budgets by illegal seizures.

The abuses of these illegal “seizures” is known world-wide. All under the guise of the INSANE policy of the war on drugs. This war as typical of American policies keeps morphing as time goes on. There is no way we can ever win a war on drugs. We should have learned with Prohibition on alcohol. It made criminal empires that last to today! Why does “our” government seem to want us to keep surrendering our liberties to be “safe”, another scare tactic.

Anonymoussays:

Re: Re: 'Look, lots of money, now won't you please go away?'

They might be scrambling to settle, but Honda would probably rather have the precedent set to protect their interests in the future.

The kicker is that the PD knew that Honda was the finance company. That information is returned on every vehicle registration check.

Jessiesays:

Re: Re: 'Look, lots of money, now won't you please go away?'

I don’t know. Government agencies also routinely dig in their heels, because how dare someone question the way they do business. Especially with the strongly worded critique of their actions, I wouldn’t be surprised if someone gets mad and decides to fight.

naschsays:

Re: Re: Re: Re: 'Look, lots of money, now won't you please go away?'

Government agencies also routinely dig in their heels, because how dare someone question the way they do business.

Plus it’s not as though the people making the decisions will suffer any consequences. It’s not their money, and they’re not going to fired even if they lose.

Shufflepantssays:

Re: Re: Re: Re: 'Look, lots of money, now won't you please go away?'

I’d imagine the only reason to bring this suit in the first place is to prevent reoccurrence. It may not even be the first they’d noticed. A single car is probably not worth the amount of legal costs they’ve already incurred in bringing this suit.

James Burkhardtsays:

Re: Re: Re: Re: Re: Re: 'Look, lots of money, now won't you please go away?'

So, the complaint identifies the car. A 2016 Honda Civic. Without looking up the trim, options, or condition via the VIN, the private party Blue Book on a "good" condition 2016 Honda civic is between $10k-$17K.

They will certainly eat through that value by the end of this, unless the city rolls over. But it is also quite likely they haven’t hit the Dealer used car value on this car yet.

Anonymoussays:

Re: Re: Re:2 Re: Re: Re: Re: 'Look, lots of money, now won't you please go aw

What’s interesting is that the original buyer is still on the hook for that money. They took out the loan. Whether the car even still exists is a non-issue to whether that buyer owes all of the money as yet unpaid on the loan. Honda would only be interested in the vehicle to recover as much of those unpaid funds as possible prior to taking the buyer to court and garnishing their wages should they fail to pay up.

One way or the other Honda will get their money (barring a declaration of bankruptcy). They can only be going after this PD/city to make a point.

Paul Brinkersays:

Re: Re: Re:3 Re: Re: Re: Re: Re: 'Look, lots of money, now won't you please g

The whole point of the Lien is to ensure you get your money or the car. If the state takes the car then the previous owner has no reason to pay the loan. As a recourse loan all they can do is take the car back and try to charge the previous owner any overhead or expenses for repossession. Some states also block additional recourse if they get the car back.

The only reason the person keeps paying is that he cares about his credit rating.

Anonymoussays:

Re: Re: Re:4 Re: Re: Re: Re: Re: Re: 'Look, lots of money, now won't you plea

Different states, different laws I suppose. Where I’m from recovery of the vehicle only reduces the amount you owe by whatever the lienholder can get for the vehicle; It doesn’t absolve you from any further payments. Sure, you can ignore the debt and trash your credit rating but you’ll still owe the money and debt collectors can and will do everything they can to collect every dollar. Plus stupid interest and fees.

PNRCinemasays:

Re: Re: 'Look, lots of money, now won't you please go away?'

Gotta say I wish you were right, but you’re probably not. I live in Revere, and they’ll do what they always do – stonewall, whine, kvetch, and spend thousands of dollars of taxpayer money only to lose the suit in the end, maybe three or four years down the road. If there’s one thing this city is good at, it’s stretching out court cases against it for as long as humanly possible…

Davidsays:

Re: Re: Re: Re: It isn't just the city of Revere

I don’t see that there is anything wrong with the seize and sale once you swallowed the absurd rationale for civil asset forfeiture in the first place.

The case against civil asset forfeiture is not against the owner but against the property purportedly involved with criminal activity. As such, the actual owner of the property does not come into play at all and notifying him seems unnecessary.

Yes, this is insane, but that is the rationale for civil asset forfeiture.

Just recently, SCOTUS unanimously rejected that bullshit rationale for a case coming to it, and SCOTUS includes several very law-and-order friendly judges.

So hopefully the days of civil asset forfeiture are numbered as the consequences ripple through the court system. But until that has happened, I don’t see how Honda should be less screwed in this case than, say, the mother of somebody who had some small bit of marihuana with him while driving her car.

This is just the normal amount of bullshit in connection with civil asset forfeiture. Honda does not have a better case than anybody else here.

Qwertygiysays:

Re: Re: Re: Re: Re: Re: It isn't just the city of Revere

Clarification: on the case I believe you are referring to, involving the drug dealer whose SUV was seized in Indiana, what the SCOTUS unanimously rejected was the idea that states get to ignore the 8th Amendment. All they ruled was that "unreasonable seizures are bad even when it’s not the federal government seizing things", not that "this was an unreasonable seizure". That was left for the lower court to decide, which I believe remains pending.

A favorable ruling, to be sure! But not one that is forbidding the practice of suing an object, or forbidding asset forfeiture.

As far as Honda’s ability vs. anyone else: you are correct, and that’s why it’s such a good thing. The difference here is not that Honda has better rights than a pothead’s mama. It’s that unlike Honda, your average pothead’s mama doesn’t have a spare million dollars available to throw at fighting a legal case. Honda doesn’t have to hope for good pro bono representation; they can afford to fight it as far as it takes.

Davidsays:

Re: Re: Re: Re:

But they don’t get the sympathy of a jury of peers. They are a Japanese company. They have to make sure that they make everything a question of law and don’t leave questions of fact relevant for the outcome to be decided by jury.

And then they still need a judge that will not rule for U.S. law and order against Japanese corporations as a matter of principle.

bobsays:

Re: Re: Re: Re: Re: Re:

But they don’t get the sympathy of a jury of peers. They are a Japanese company. They have to make sure that they make everything a question of law and don’t leave questions of fact relevant for the outcome to be decided by jury.

And then they still need a judge that will not rule for U.S. law and order against Japanese corporations as a matter of principle.

It doesn’t matter that it was a Japanese company or any other nationality. The law applies equally to citizens and non-citizens alike.

Now in practice, you can get racist people that gum up the process but the courts have other means to fix those issues.

Paul Brinkersays:

Re: Re:

The lawsuit is suing the car itself. The laws are written such that the only notice is the lawsuit vs the car. Honda would need to step in at that point as an interested party and fight for its ownership of the car. Since Honda was never given notice, they were never able to step in at the correct step in the court case.

This is the same thing that is done in almost all civil forfeiture cases. There is no notice, thus Honda is treated just like any other car owner who gets his car taken away.

This is why they want to fight so hard, if it goes the other way cops will just start taking all expensive looking cars on lease / loan and ignore liens forcing Honda to look for court filings (which in some towns are still on paper only). Or Honda will demand notice from the driver and have to fight this as well.

That Anonymous Cowardsays:

Thousands of people have been mugged by cops, aided by legislatures unwilling to fund them properly, with property worth more than the legal penalties had the case ever been brought.
Hand wringing but nothing changes…
Now they fscked a corporation and this is gonna be great.
Politicians trying to talk out of both sides of their faces trying to keep the cop lobby & corporate sponsorships supporting them.

But hey, this totally is winning the war on drugs!!!
Pay no attention to no drugs being scooped up in this, no dealers or head honchos busted…. just little people no one cares about being robbed under the color of law. Reminds me of that special law to get the terrorists and like 99.9% of the approved paper was for drug ‘crimes’.

Time to start throwing rock candy into politicians cars and reporting them doing meth. We know the shitty field test will say its meth & perhaps if they start losing cars they might understand what they are doing to other people… but I doubt it as they will flex their power to avoid the same punishments unleashed on the little people.

MathFoxsays:

Re: Re:

But hey, this totally is winning the war on drugs!!!

There is no war on drugs; there only is a collusion to keep drug trade profitable!

Time to start throwing rock candy into politicians cars and reporting them doing meth. We know the shitty field test will say its meth […]

Police "officers" know they need """friends""" in high places. Very unlikely that these actions will lead to seizures of politician property.

That Anonymous Cowardsays:

Re: Re: Re: Re:

See but if you are gonna report them for having meth, you show up with a camera & record it.
Letting them go after the field test returns a positive result can mean their ass, jailing a politician might mean their ass but at that moment they aren’t a politician they are a drug addict.

When push comes to shove, no cop will fall on his sword for someone outside the thin blue line. The union will punish the politician who tries to do payback & getting rid of a cop is like treating herpes… you might remove the sores form view but that shits there forever… and the politician will get called out for tampering with our saviors against evil to protect his own image.

I can’t take down a bent cop, I can’t take down a bent politician, but I sure as hell can put something into action where they have to fight each other trying to take the other down to save themselves. The collateral damage coming off of that will expose much more than any whistleblower could ever leak safely.

But then I have faith in human nature, that self preservation trumps anything else or logical thought.

Bamboo Harvestersays:

Re: Re:

You need to make the corporations fight each other.

Report the car stolen. Let Honda and the insurer fight it out.

There was a similar situation in NY about a decade back. We get a LOT of car/deer collisions. The car insurers made the claim that the deer "belonged" to whomever’s property it came off of, so they could sue the homeowner insurance.

Didn’t take two weeks before someone pointed out that ALL roads have a State Right of Way. NY State was not amused that the insurers thought they could sue the state for every critter that ran in the road and caused an accident.

Glennsays:

Property rights are not specifically and only Constitutionally protected rights. Corporations do have contractual property rights just like real live people do. Theft is still theft, even when some govt. tries to give itself the legal right to steal anything it wants to.

I suspect the "investigation" in this case was no more than a committee discussion of "can we steal this and get away with it? wth, let’s give it a shot; we’ve done it before–almost daily.".

Anonymoussays:

The Subject Vehicle and The Subject Vehicle was retitled through the Massachusetts Department of Transportation with HONDA?s lien not recorded on said title.

I’d like to know how this was possible. Regardless if law enforcement took the car, titling it falls under the jurisdiction of the state’s BMV.

In my state, we’re required to prove the VIN has no outstanding liens if a new title is necessary/required.

Anonymoussays:

1st case/district on the books, X more to go

Move along, nothing to see here. The PoPo have been seizing cars under lien from small used-car shops and large corporations for years. Again, the only reason this will go further is the fact it is a LARGE corporation.

I’m sure they are tired of this happening and this is just the straw that broke the camel?s back.

I would think that the lack of lien on the retitle will be downplayed as common human error and not intentional. Barring that, they may claim they failed in their due diligence prior to the sale. Was this failure on the local township, current state or previous state? I?m sure there will be finger pointing per the MO.

Now, like has been implied. If this is a common pattern, then yes, this could blow up. But Honda, or Toyota, or Nissan, Ford, or GMAC must first build up a few cases in multiple districts to force it up to the SCOTUS. I mean, multiple cases in the same district will not properly catch the eye of the high court. It will also take some disagreement in the different districts. Those are not hard requirements, but they are good guides to get the big bench to review the case.

With the case being filed in Massachusetts, and the car originally titled with a lien in New York, we are crossing not only state lines, but also district court lines. How much will that help with pushing this farther up the Judicial ladder?

Anonymoussays:

iirc, the intent of asset forfeiture was to remove financial assets from defendants in an effort to maintain costs of prosecution.

Since this vehicle did not belong to defendant and therefore could not used for paying an attorney … how does this meet the requirements of the "law"? Or maybe the law was written in vague manner intentionally.

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