In Ford Motor Credit Company v. Calandra, — A.3d —-, 2011 WL 2566076 (N.J.Super.A.D. 2011), the New Jersey Court affirmed summary judgment in favor of a vehicle finance company on a class action claim alleging that the finance company could not treat defaulting lessors different from non-defaulting lessors by charging disposition charges in connection with selling a leased vehicle in an involuntary termination situation.
Further, the implementing regulations expressly contemplate the imposition of “disposition charges” at the termination of a lease. Pursuant to 15 U.S.C.A. § 1667f, the Federal Reserve Board has issued regulations, referred to as “Regulation M,” 12 C.F.R. Part 213. The Federal Reserve Board’s official staff commentary to Regulation M states that the “regulation does not preclude a lessor from recovering other charges from the lessee at the end of the lease term. Examples of such charges include: i. Disposition charges[,] ii. Excess mileage charges[,] and iii. Late payment and default charges.” 12 C.F.R. Part 213, Supp. I § 213.4(m)(2)–3. ¶ Calandra’s assertion that a lessor may not treat a defaulting lessee differently than a lessee who fully performs his or her obligation is unsupported by the law. Simply because a lessor incurs these same costs when a lessee fully performs and returns the vehicle at the end of the lease term does not mean that these costs are not “caused by” a lessor’s default. A lessee who fully performs owes the lessor no further obligation. Once the vehicle is returned by a performing lessee, the lessor can do whatever it desires with the vehicle. In other words, Ford can make a business decision not to pass on the auction charges to a performing lessee. Calandra, however, owed Ford a substantial amount of money when she defaulted, and Ford was forced to sell the vehicle in order to mitigate damages and recover a portion of this debt. ¶ To protect itself in that situation, Ford clearly discloses in paragraph eleven of its contract that in addition to a defaulting lessee being required to return the vehicle to be sold at a public or private sale, such lessee will not only be obligated to pay the difference “between the Unpaid Adjusted Capitalized Cost and the value which could be realized at the sale of the Vehicle[ ] plus [ ] all other amounts then due under this lease” but “must also pay all expenses … payable by [Ford] to obtain, hold and sell the Vehicle….” The additional expenses are simply part of the formula used to calculate the obligation of a defaulting lessee. Ford does not receive more than it is entitled to under the lease. Moreover, it is undisputed that Ford receives no portion of the challenged auction expenses but, rather, they are contractual obligations to third parties.