Capital One v. Fenton Motors

Case 3:19-cv-00521-L Document 1 Filed 03/01/19 Page 1 of 25 PageID 1
UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
CAPITAL ONE, N.A., d/b/a CAPITAL ONE §

AUTO FINANCE §
§
Plaintiff, §
§ CIVIL ACTION NO. _____________
3:19-cv-00521
v. §
§
FENTON MOTORS OF DALLAS, INC. § JURY TRIAL DEMANDED
D/B/A FENTON HYUNDAI; FENTON §
NISSAN OF ROCKWALL, LLC D/B/A §
FENTON NISSAN OF ROCKWALL; AND §
FENTON MOTORS OF PAMPA, INC. §
D/B/A FENTON FORD LINCOLN §
MERCURY §
§
Defendants. §
COMPLAINT
Plaintiff Capital One, N.A. d/b/a Capital One Auto Finance (“COAF”), by counsel, and
pursuant to Rule 8 of the Federal Rules of Civil Procedure, submits this Complaint against Fenton
Motors of Dallas, Inc. d/b/a Fenton Hyundai (“Fenton Hyundai”); Fenton Nissan of Rockwall,
LLC d/b/a Fenton Nissan of Rockwall (“Fenton Nissan”); and Fenton Motors of Pampa, Inc. d/b/a
Fenton Ford Lincoln Mercury (“Fenton Ford”) (collectively, the “Fenton Dealers”), and alleges as
follows:
INTRODUCTION
1. The Fenton Dealers are independent car dealerships, owned and managed by
members of the Fenton family.

2. Per their respective Dealer Agreement with COAF, each of the Fenton Dealers sold
to COAF chattel paper related to the financing of the Fenton Dealers’ sale of vehicles to individual
purchasers (the “Receivables”).
3. As part of the process of selling Receivables to COAF, each of the Fenton Dealers
submits documents and makes representations, warranties, and covenants to COAF so that COAF
can conduct an approval analysis on whether to agree to purchase the Receivables.
4. COAF brings this lawsuit because each of the Fenton Dealers breached its
respective Dealer Agreement, breached its respective representations, warranties, and covenants,
and made negligent misrepresentations to COAF. For example,
• For multiple Receivables, Fenton Ford provided benefits letters that overstated the
benefits/income for the borrowers on those Receivables;
• For multiple Receivables, Fenton Ford provided utility bills representing that the borrowers
and/or co-borrowers on those Receivables resided at certain addresses, but the borrowers
and/or co-borrowers did not live at the represented address;
• For multiple Receivables, Fenton Ford, Fenton Hyundai and Fenton Nissan misrepresented
that the corresponding vehicles were equipped with upgraded options and features that they
actually did not have.
5. As stated in more detail below, Defendants’ actions raise claims for breach of
contract, breach of representations and warranties, and negligent misrepresentation.
PARTIES
6. COAF is a national bank with its main office, as set forth in its Articles of
Association, located at 1680 Capital One Drive, McLean, Virginia.
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7. Defendant Fenton Hyundai is a corporation incorporated under the laws of the State
of Texas. Fenton Hyundai is an automobile dealership located at 16230 Lyndon B Johnson
Freeway, Mesquite, TX 75150.
8. Defendant Fenton Nissan is a limited liability company organized under the laws
of the State of Texas. Fenton Nissan is an automobile dealership located at 1700 East Interstate
30, Rockwall, TX 75087.
9. Defendant Fenton Ford is a corporation incorporated under the laws of the State of
Texas. Fenton Ford is an automobile dealership located at 123 North Hobart Street, Pampa, TX
79065.
JURISDICTION AND VENUE
10. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332.
11. COAF is a citizen of the Commonwealth of Virginia.
12. Fenton Ford and Fenton Hyundai are citizens of the State of Texas.
13. On information and belief, Fenton Nissan is a citizen of the State of Texas and not
a citizen of the Commonwealth of Virginia.
14. The matter in controversy exceeds the sum or value of $75,000, exclusive of interest
and costs. The amount in controversy is approximately seven hundred and four thousand, eight
hundred eighty dollars and thirteen cents ($674,837.76). Additionally, Defendants’ conduct has
resulted in recoverable damages and losses to COAF including its attorneys’ fees and costs.
15. Venue in this Court is proper pursuant to 28 U.S.C. § 1391(b).
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BACKGROUND FACTS
Agreement between COAF and The Fenton Dealers
16. Fenton Hyundai and COAF entered into a Dealer Agreement on or around
July 11, 2016.
17. Fenton Nissan and COAF entered into a Dealer Agreement on or around
May 2, 2016.
18. Fenton Ford and COAF entered into a Dealer Agreement on or around
February 1, 2004.
19. Through its respective Dealer Agreement with COAF, each of the Fenton Dealers
agreed to sell, and COAF agreed to purchase, at its sole discretion, “promissory notes, contracts,
security agreements, guaranties, chattel documents, financing instruments and other documents
acquired by [Fenton Ford] as part of the financing of the purchase of the new and/or used motor
vehicles . . . [(collectively, the “Receivables”)].”
20. Through its respective Dealer Agreement with COAF, the Fenton Dealers made
several representations, warranties, and covenants regarding the Receivables they sold to COAF.
These representations, warranties, and covenants include but are not limited to:
a. that all Receivables offered by Dealer to COAF are valid deferred payment
obligations for the amount therein set forth covering new and/or used motor vehicles owned by
Dealer free and clear of all liens and encumbrances (except liens and encumbrance created by the
Receivables) and are free and clear of any prior outstanding inventory financing security interest;
b. DEALER has properly filed of record the Debtor’s obligation and grant of
security interest within 20 days of the sale date in the subject motor vehicle [and] Dealer has
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properly perfected said security interest according to applicable law and said security interest
shows COAF as the secured party or as the proper assignee of the secured party;
c. DEALER as obtained a certificate of title for the subject motor vehicle
reflecting COAF as the primary lien holder;
d. DEALER warrants that: All contracts are genuine, signed by persons with
full capacity to contract and the only instruments executed for the automobiles describes therein,
and are and will continue free from defenses and off-sets;
e. The Dealer has sold, delivered and transferred the new and/or used motor
vehicle described in the subject Receivables [];
f. that the descriptions of said new and/or used motor vehicle, or any services
related thereto are in all respects true and complete;
g. that the Debtor or Debtors named in the Receivables are bona fide Debtors
and each Debtor and any guarantor had legal capacity to make such contracts;
h. that on the date of the assignment of the Receivables, the subject new and/or
used vehicle has been delivered to the Debtor and all required services have been fully performed;
i. that the down payment made by the Debtor or Debtors have been made in
cash unless otherwise specifically provided in writing in said Receivables;
j. that no part of the down payment made by the Debtor or Debtors has been
loaned directly or indirectly by Dealer to the Debtor;
k. that the sale and related financing of the subject new and/or used motor
vehicle and all matters related thereto comply in all material respects, and was consummated in
strict compliance with all requirements of applicable federal, state, and local laws, and regulations
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thereunder, including, without limitations, usury laws, the uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure laws.
21. Each Dealer Agreement further states that:
At any time prior to the scheduled maturity of any receivable and upon notice and
demand from COAF, the Dealer hereby agrees to repurchase from COAF any
Receivable for which there has been a breach of one or more of the Dealer’s
representations and warranties as set forth in Paragraph 1 above. In the event that
Dealer is required to repurchase any Receivable pursuant to this Paragraph 3, the
Dealer’s repurchase price shall be equal to the total outstanding indebtedness then
currently due under the terms of said Receivable.
Fenton Hyundai’s Misrepresentations and Breaches of its Dealer Agreement with COAF
22. Between October 3, 2017 and July 24, 2018, Fenton Hyundai sold at least 16
Receivables to COAF in which Fenton Hyundai breached its Dealer Agreement, breached its
representations, warranties, and covenants, and negligently misrepresented material facts to COAF
as established below.
23. In nine Receivables, Fenton Hyundai breached the Dealer Agreement and its
representations, warranties, and covenants by failing to perfect COAF’s security interest on the
vehicles, and failing to obtain certificates of title reflecting COAF as the primary lienholder on
those vehicles.
24. These Receivables include Application ID xx1959, xx5003, xx4633, xx4388,
xx8389, xx5322, xx1634, xx9958, and xx2038.
25. In one Receivable, Fenton Hyundai breached the Dealer Agreement and its
representations, warranties, and covenants by misrepresenting the borrower’s income.
26. This Receivable includes Application ID xx9554.
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27. In one Receivable, Fenton Hyundai breached the Dealer Agreement and its
representations, warranties, and covenants by misrepresenting that the borrower purchased and
signed the Receivable documents as a buyer and not as a co-signer.
29. In five Receivables, Fenton Hyundai breached the Dealer Agreement by failing to
reimburse COAF for $7,400.61 it rebated to borrowers due to these Receivables being prepaid or
otherwise terminated prior to their scheduled maturity.
30. These Receivables include Account Number xx2458, xx1386, xx0330, xx7089,
xx9162.
31. In two Receivables, Fenton Hyundai breached the Dealer Agreement and its
representations, warranties, and covenants by misrepresenting the extra features and options on
the vehicles described in the Receivables.
32. These Receivables include Application ID xx9997 and xx7390.
Fenton Nissan’s Misrepresentations and Breaches of its Dealer Agreement with COAF
33. Between October 3, 2017 and July 26, 2018, Fenton Nissan sold at least ten
Receivables to COAF in which Fenton Nissan breached its Dealer Agreement, breached its
34. In two Receivables, Fenton Nissan breached the Dealer Agreement and its
representations, warranties, and covenants by failing to perfect COAF’s security interest on the
vehicles, and failing to obtain certificates of title reflecting COAF as the primary lienholder on
those vehicles.
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36. In one Receivable, Fenton Nissan breached the Dealer Agreement and its
the vehicle described in the Receivable.
38. In six Receivables, Fenton Nissan breached the Dealer Agreement and its
representations, warranties, and covenants by failing to perfect the associated GAP policies and/or
service contracts it sold to borrowers.
xx0543, and xx8636.
40. In one Receivable, Fenton Nissan breached the Dealer Agreement by failing to
reimburse COAF for $2,802.25 it rebated due to this Receivable being prepaid or otherwise
terminated prior to its scheduled maturity.
41. This Receivable includes Account Number xx3714.
Fenton Ford’s Misrepresentations and Breaches of its Dealer Agreement with COAF
42. Between August 24, 2016 and September 25, 2018, Fenton Ford sold at least 20
Receivables to COAF in which Fenton Ford breached its Dealer Agreement, breached its
43. In two Receivables, Fenton Ford breached the Dealer Agreement and its
the vehicle described in the Receivables.
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45. In eleven Receivables, Fenton Ford breached the Dealer Agreement and its
representations, warranties, and covenants by misrepresenting the income of borrowers.
xx4305, xx5314, xx3893, xx0418, xx0679, xx7259, and xx3528.
47. In four Receivables, Fenton Ford breached the Dealer Agreement and its
representations, warranties, and covenants by misrepresenting that borrowers made a cash down
payment or that the down payment was not indirectly or directly loaned to the debtor by Fenton
Ford.
48. These Receivables include Application ID xx3293, xx6049, xx3893, and xx4162.
49. In six Receivables, Fenton Ford breached the Dealer Agreement and its
representations, warranties, and covenants by misrepresenting the residency/addresses of the
borrowers and/or co-borrowers.
xx6113, and xx6810.
51. In one Receivable, Fenton Ford breached the Dealer Agreement by failing to
reimburse Capital One for $956.48 it rebated due to this Receivable being prepaid or otherwise
terminated prior to its scheduled maturity.
52. This Receivable includes Account Number xx7755.
COUNTS
Count I: Negligent Misrepresentation

(Four claims of Down Payment Misrepresentation against Fenton Ford)
53. Paragraphs 1-52 are incorporated into this count by reference as if fully stated
herein.
54. Fenton Ford negligently represented to COAF that borrowers in the Receivables
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identified above made certain cash down payments.
55. Those representations were false because those borrowers did not make any down
payment, or did not make the down payment claimed by Fenton Ford.
56. Fenton Ford made the statements as a positive assertion without knowledge of its
truth when they made them to COAF or made the statements recklessly as a positive assertion.
57. Fenton Ford knew the statements were material to COAF’s decision to purchase
the Receivables.
58. Fenton Ford made the statements in the regular course of its business to guide
COAF and induce it into purchasing the Receivables in which Fenton Ford had a pecuniary
interest.
59. COAF reasonably relied on the statements because they was not exaggerated or
beyond belief and because Fenton Ford made the statements in the regular course of business and
dealings with COAF.
60. COAF suffered monetary damages and was further damaged by the
misrepresentations because COAF was induced into purchasing Receivables it otherwise would
not have purchased at all or would not have purchased them under the current terms.
Count II: Negligent Misrepresentation

(Two claims of Bookout Discrepancies against Fenton Ford)
(Two claims of Bookout Discrepancies against Fenton Nissan)
(One claim of Bookout Discrepancies against Fenton Hyundai)
herein.
62. The Fenton Dealers each negligently represented to COAF that vehicles in
Receivables identified above had options and features that those vehicles actually do not have.
63. Those representations were false.
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64. The Fenton Dealers each made the statements as a positive assertion without
knowledge of its truth when they made them to COAF or made the statements recklessly as a
positive assertion.
65. The Fenton Dealers each knew the statements were material to COAF’s decision to
purchase the Receivables.
66. The Fenton Dealers each made the statements in the regular course of its business
to guide COAF and induce it into purchasing the Receivables in which The Fenton Dealers had a
respective pecuniary interest.
67. COAF reasonably relied on the statements because they were not exaggerated or
beyond belief and because the Fenton Dealers made the statements in the regular course of business
and dealings with COAF.
Count III: Negligent Misrepresentation

(One claim of Income Misrepresentation against Fenton Hyundai)
(11 claims of Income Misrepresentation against Fenton Ford)
herein.
70. Fenton Hyundai and Fenton Ford each negligently represented to COAF that
borrowers in Receivables identified above had an income that is higher than what the borrowers
actually earn.
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72. Fenton Hyundai and Fenton Ford each made the statements as positive assertions
without knowledge of their truth when it made them to COAF or made the statement recklessly as
positive assertions.
73. Fenton Hyundai and Fenton Ford knew the statements were material to COAF’s
decision to purchase the Receivables.
74. Fenton Hyundai and Fenton Ford made the statements in the regular course of their
business to guide COAF and induce it into purchasing the Receivables in which Fenton Hyundai
and Fenton Ford had a respective pecuniary interest.
beyond belief and because Fenton Hyundai and Fenton Ford made the statements in the regular
course of business and dealings with COAF.
misrepresentation because COAF was induced into purchasing Receivables it otherwise would not
have purchased at all or would not have purchased them under the current terms.
Count IV: Negligent Misrepresentation

(Six claims of Residency Misrepresentation against Fenton Ford)
herein.
78. Fenton Ford negligently represented to COAF that borrowers and/or co-borrowers
in Receivables identified above had residential addresses where those individuals actually did not
live.
80. Fenton Ford made the statements as positive assertions without knowledge of its
truth when it made them to COAF or made the statements recklessly as positive assertions.
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81. Fenton Ford knew the statements were material to COAF’s decision to purchase
the Receivables.
82. Fenton Ford made the statements in the regular course of its business to guide
COAF and induce it into purchasing the Receivables in which Fenton Ford had a pecuniary
interest.
beyond belief and because Fenton Ford made the statements in the regular course of business and
dealings with COAF.
Count V: Negligent Misrepresentation

(One claim of Signature Misrepresentation against Fenton Hyundai)
herein.
86. Fenton Hyundai negligently represented to COAF that the purported borrower in a
Receivable identified above was a bona fide debtor and the purchaser with full legal capacity to
sign as the purchaser.
87. That representation was false.
88. Fenton Hyundai made the statement as a positive assertion without knowledge of
its truth when it made it to COAF or made the statement recklessly as a positive assertion.
89. Fenton Hyundai knew the statement was material to COAF’s decision to purchase
the Receivable.
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90. Fenton Hyundai made the statement in the regular course of its business to guide
COAF and induce it into purchasing the Receivable in which Fenton Hyundai had a pecuniary
interest.
91. COAF reasonably relied on the statement because it was not exaggerated or beyond
belief and because Fenton Hyundai made the statement in the regular course of business and
dealings with COAF.
misrepresentation because COAF was induced into purchasing a Receivable it otherwise would
not have purchased at all or would not have purchased it under the current terms.
Count VI: Breach of Representation, Warranty, and Covenant

(Nine claims related to Unperfected Titles against Fenton Hyundai)
(Two claims related to Unperfected Titles against Fenton Nissan)
herein.
94. Fenton Hyundai and Fenton Nissan each entered into a separate, independent
Dealer Agreement with COAF.
95. In its respective Dealer Agreement, both Fenton Hyundai and Fenton Nissan
represented, warranted, and covenanted:
a. that all Receivables offered by Dealer to COAF are valid deferred payment
obligations for the amount therein set forth covering new and/or used motor vehicles owned by
Dealer free and clear of all liens and encumbrances (except liens and encumbrance created by the
Receivables) and are free and clear of any prior outstanding inventory financing security interest;
b. DEALER has properly filed of record the Debtor’s obligation and grant of
security interest within 20 days of the sale date in the subject motor vehicle [and] Dealer has
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properly perfected said security interest according to applicable law and said security interest
shows COAF as the secured party or as the proper assignee of the secured party;
c. DEALER as obtained a certificate of title for the subject motor vehicle
reflecting COAF as the primary lien holder
d. that the sale and related financing of the subject new and/or used motor
vehicle and all matters related thereto comply in all material respects, and was consummated in
strict compliance with all requirements of applicable federal, state, and local laws, and regulations.
96. Fenton Hyundai and Fenton Nissan each breached its representations, warranties,
and covenants because it failed to perfect COAF’s security interest on vehicles in Receivables
identified above, and failed to obtain a certificate of title reflecting COAF as the primary lienholder
on those vehicles.
97. Fenton Hyundai and Fenton Nissan each breached its representations, warranties,
and covenants because, on information and belief, those vehicles are not free and clear of any prior
outstanding inventory financing security interest.
98. Through its Dealer Agreement, Fenton Hyundai and Fenton Nissan each:
agrees to repurchase from C.O.A.F. any Receivable for which there has been a
breach of one or more of the Dealer’s representations and warranties as set forth in
Paragraph 1, above. In the event that Dealer is required to repurchase any
Receivable pursuant to this Paragraph 3, the Dealer’s repurchase price shall be
equal to the total outstanding indebtedness then currently due under the terms of
said Receivable.
99. Fenton Hyundai’s and Fenton Nissan’s Dealer Agreement further states that it will
indemnify COAF for all “loss of principal or interest” and “[a]ttorney’s fees, court costs of
investigation and related costs” for “any breach of the any of the Dealer’s representations,
warranties and covenants contained in this Agreement.”
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Count VII: Breach of Representation, Warranty, and Covenant

(One claim related to Income Misrepresentation against Fenton Hyundai)
(11 claims related to Income Misrepresentation against Fenton Ford)
herein.
101. Fenton Hyundai and Fenton Ford each entered into a separate, independent Dealer
Agreement with COAF.
102. In its respective Dealer Agreement, both Fenton Hyundai and Fenton Ford each
represented, warranted, and covenanted “that the sale and related financing of the subject new
and/or used motor vehicle and all matters related thereto comply in all material respects, and was
consummated in strict compliance with all requirements of applicable federal, state, and local laws,
and regulations thereunder, including, without limitations, usury laws, the uniform Consumer
Credit Code, and other consumer credit laws and equal credit opportunity and disclosure laws.”
103. Fenton Hyundai and Fenton Ford each breached its representations, warranties, and
covenants because it misrepresented the income for borrowers in Receivables identified above.
104. Through its respective Dealer Agreement, Fenton Hyundai and Fenton Ford each:
Paragraph 1, above. In the event that Dealer is required to repurchase any Receivable
pursuant to this Paragraph 3, the Dealer’s repurchase price shall be equal to the total
outstanding indebtedness then currently due under the terms of said Receivable.
105. Fenton Hyundai’s and Fenton Ford’s Dealer Agreement further states that it will
indemnify COAF for all “loss of principal or interest” and “[a]ttorney’s fees, court costs of
investigation and related costs” for “any breach of the any of the Dealer’s representations,
warranties and covenants contained in this Agreement.”
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Count VIII: Breach of Representation, Warranty, and Covenant

(One claim related to a Bookout Discrepancy against Fenton Nissan)
(Two claims related to Bookout Discrepancies against Fenton Hyundai)
(Two claims related to Bookout Discrepancies against Fenton Ford)
herein.
107. Each of the Fenton Dealers entered into a separate, independent Dealer Agreement
with COAF.
108. In its respective Dealer Agreement, each of the Fenton Dealers represented,
warranted, and covenanted “that the sale and related financing of the subject new and/or used
motor vehicle and all matters related thereto comply in all material respects, and was consummated
in strict compliance with all requirements of applicable federal, state, and local laws, and
regulations thereunder, including, without limitations, usury laws, the uniform Consumer Credit
Code, and other consumer credit laws and equal credit opportunity and disclosure laws.”
109. Each of the Fenton Dealers further represented, warranted, and covenanted that “the
Dealer has sold, delivered and transferred the new and/or used motor vehicle described in the
subject Receivables []” and “that the descriptions of said new and/or used motor vehicle, or any
services related thereto are in all respects true and complete.”
110. Each of the Fenton Dealers breached its representations, warranties, and covenants
because it misrepresented the options and features on vehicles in Receivables identified above.
111. Through its respective Dealer Agreement, each of the Fenton Dealers:
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112. Each of the Fenton Dealer’s Dealer Agreement further states that it will indemnify
COAF for all “loss of principal or interest” and “[a]ttorney’s fees, court costs of investigation and
related costs” for “any breach of the any of the Dealer’s representations, warranties and covenants
contained in this Agreement.”
Count IX: Breach of Representation, Warranty, and Covenant

(One claim related to Signature Misrepresentation against Fenton Hyundai)
herein.
114. Fenton Hyundai entered into a Dealer Agreement with COAF.
115. In the Dealer Agreement, Fenton Hyundai made several representations,
warranties, and covenants including that “that the sale and related financing of the subject new
and/or used motor vehicle and all matters related thereto comply in all material respects, and was
consummated in strict compliance with all requirements of applicable federal, state, and local laws,
and regulations thereunder, including, without limitations, usury laws, the uniform Consumer
Credit Code, and other consumer credit laws and equal credit opportunity and disclosure laws.”
116. Fenton Hyundai further represented, warranted, and covenanted, that “all contracts
are genuine, signed by persons with full capacity to contract and the only instruments executed for
the automobiles describes therein, and are and will continue free from defenses and off-sets,” and
“that the Debtor or Debtors named in the Receivables are bona fide Debtors and each Debtor and
any guarantor had legal capacity to make such contracts.
117. Fenton Hyundai breached its representations, warranties, and covenants because it
misrepresented that the borrower in a Receivable identified above was a bona fide debtor and
purchaser with full legal capacity to sign in that capacity.
118. Through the Dealer Agreement, Fenton Hyundai:
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119. Fenton Hyundai’s Dealer Agreement further states that it will indemnify COAF for
all “loss of principal or interest” and “[a]ttorney’s fees, court costs of investigation and related
costs” for “any breach of the any of the Dealer’s representations, warranties and covenants
Count X: Breach of Representation, Warranty, and Covenant

(Four claims related to Down Payment against Fenton Ford)
herein.
121. Fenton Ford entered into a Dealer Agreement with COAF.
122. In the Dealer Agreement, Fenton Ford represented, warranted, and covenanted “that
the down payment made by the Debtor or Debtors have been made in cash unless otherwise
specifically provided in writing in said Receivables.”
123. Fenton Ford further represented, warranted, and covenanted that “no part of the
down payment made by the Debtor or Debtors has been loaned directly or indirectly by Dealer to
the Debtor.”
124. Fenton Ford breached its representations, warranties, and covenants because it
represented that borrowers identified in Receivables above made certain cash down payments that
the borrowers actually did not make, and/or because Fenton Ford directly or indirectly all or part
of the down payment(s) claimed by Fenton Ford.
125. Through the Dealer Agreement, Fenton Ford:
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said Receivable.
126. Fenton Ford’s Dealer Agreement further states that it will indemnify COAF for all
“loss of principal or interest” and “[a]ttorney’s fees, court costs of investigation and related costs”
for “any breach of the any of the Dealer’s representations, warranties and covenants contained in
this Agreement.”
Count XI: Breach of Representation, Warranty, and Covenant

(Six claims related to Residency Misrepresentation against Fenton Ford)
herein.
128. Fenton Ford entered into a Dealer Agreement with COAF.
129. In the Dealer Agreement, Fenton Ford represented, warranted, and covenanted “that
the sale and related financing of the subject new and/or used motor vehicle and all matters related
thereto comply in all material respects, and was consummated in strict compliance with all
requirements of applicable federal, state, and local laws, and regulations thereunder, including,
without limitations, usury laws, the uniform Consumer Credit Code, and other consumer credit
laws and equal credit opportunity and disclosure laws.”
130. Fenton Ford breached its representations, warranties, and covenants because it
misrepresented the residency for borrowers and/or co-borrowers in Receivables identified above.
131. Through the Dealer Agreement, Fenton Ford:
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132. Fenton Ford’s Dealer Agreement further states that it will indemnify COAF for all
“loss of principal or interest” and “[a]ttorney’s fees, court costs of investigation and related costs”
for “any breach of the any of the Dealer’s representations, warranties and covenants contained in
this Agreement.”
Count XII: Breach of Representation, Warranty, and Covenant

(Six claims related to Unperfected Third-Party Contracts against Fenton Nissan)
herein.
134. Fenton Nissan entered into a Dealer Agreement with COAF.
135. In the Dealer Agreement, Fenton Nissan represented, warranted, and covenanted
“that the sale and related financing of the subject new and/or used motor vehicle and all matters
related thereto comply in all material respects, and was consummated in strict compliance with all
requirements of applicable federal, state, and local laws, and regulations thereunder, including,
without limitations, usury laws, the uniform Consumer Credit Code, and other consumer credit
laws and equal credit opportunity and disclosure laws.”
136. Fenton Nissan further represented, warranted, and covenanted “that on the date of
the assignment of the Receivables, the subject new and/or used vehicle has been delivered to the
Debtor and all required services have been fully performed.”
137. Fenton Nissan breached its representations, warranties, and covenants because it
sold GAP and/or service contracts to borrowers in Receivables identified above and failed to
perfect those GAP and/or service contracts.
138. Through the Dealer Agreement, Fenton Nissan:
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139. Fenton Nissan’s Dealer Agreement further states that it will indemnify COAF for
all “loss of principal or interest” and “[a]ttorney’s fees, court costs of investigation and related
costs” for “any breach of the any of the Dealer’s representations, warranties and covenants
Count XX: Breach of Contract

(16 claims against Fenton Hyundai)
herein.
141. Each of the Fenton Dealers entered into a separate, independent Dealer Agreement
with COAF.
142. In its respective Dealer Agreement, each of the Fenton Dealers:
said Receivable.
143. Each of the Fenton Dealers breached multiple representations, warranties, and
covenants in its respective Dealer Agreement related to Receivables identified above.
144. COAF previously demanded that each of the Fenton Dealers repurchase the
respective Receivables identified above under the Dealer Agreement.
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145. The Fenton Dealers each refused to honor its contractual obligation to repurchase
the Receivables thereby materially breaching the Dealer Agreement.
146. Paragraph 6 in each of those Dealer Agreements allows Capital One to charge the
dealership for any indebtedness of the dealership to COAF arising from rebates paid to borrowers
by COAF related to Receivables that are pre-paid or terminated prior to maturity.
147. Fenton Hyundai breached Paragraph 6 of its Dealer Agreement.
148. COAF paid $7,400.61 in rebates related to Receivables sold by Fenton Hyundai.
149. To date, Fenton Hyundai has not reimbursed COAF for those amounts.
150. Fenton Nissan also breached Paragraph 6 of its Dealer Agreement.
151. COAF paid $2,802.25 in rebates related to Receivables sold by Fenton Nissan.
152. To date, Fenton Nissan has not reimbursed COAF for those amounts.
153. Fenton Ford also breached Paragraph 6 of the Dealer Agreement.
154. COAF paid $956.48 in rebates related to Receivables sold by Fenton Ford.
155. To date, Fenton Ford has not reimbursed COAF for those amounts.
156. COAF has suffered financial damages by the breach because it holds Receivables
with higher risk profiles than what COAF had bargained for.
157. COAF was further damaged by the Fenton Dealers’ failure to repurchase the
Receivables in an amount equal to the total outstanding indebtedness then currently due under the
terms of said Receivables.
158. COAF was further damaged by the amounts the Fenton Dealers have not
reimbursed it under Paragraph 6 of its Dealer Agreement.
23
PRAYER FOR RELIEF
WHEREFORE, COAF respectfully requests that the Court:
1. Find the respective Defendants liable for each of the separate, individual claims in
Counts I-XII and enter judgment in favor of COAF on each of those claims;
2. Award to COAF the full amount of its compensatory and consequential damages,
in an amount to be determined at trial but in no event less than two hundred twenty-three thousand
eight hundred eighty-four dollars and eleven cents ($223,884.11) against Fenton Hyundai;
in an amount to be determined at trial but in no event less than sixty-four thousand six hundred
twenty dollars and fifty-four cents ($64,620.54) against Fenton Nissan;
in an amount to be determined at trial but in no event less than three hundred eighty-six thousand
three hundred thirty-three dollars and eleven cents ($386,333.11) against Fenton Ford;
5. Award to COAF specific performance requiring each of the Fenton Dealers to
repurchase each of the respective Receivables it sold to COAF, identified above, under the terms
of its respective Dealer Agreement within 30 days of the entry of judgment;
6. Award to COAF its reasonable attorney’s fees, interest and costs against the Fenton
Dealers; and
7. Any other and further amount this Court deems just and proper.
JURY DEMAND
COAF demands a trial by jury.
24
Dated: March 1, 2019 Respectfully submitted,
/s/ Tatiana Alexander

Justin Opitz, SBN: 24051140
Tatiana Alexander, SBN: 24055090
McGUIREWOODS LLP
2000 McKinney Avenue, Suite 1400
Dallas, Texas 75201
T: +1 214 932 6400 F: +1 214 932 6499
jopitz@mcguirewoods.com
talexander@mcguirewoods.com
Phillip C. Chang
(Pro Hac Vice forthcoming)
A. Wolfgang McGavran, SBN: 24074682
(Pro Hac Vice forthcoming)
McGUIREWOODS LLP
2001 K Street N.W., Suite 400
Washington, DC 20006-1040
T: +1 202 857 1725
F: +1 202 828 2995
pchang@mcguirewoods.com
wmcgavran@mcguirewoods.com
ATTORNEYS FOR PLAINTIFF

CAPITAL ONE, N.A.
25

Capital One v. Fenton Motors

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Case 3:19-cv-00521-L Document 1 Filed 03/01/19 Page 1 of 25 PageID 1

UNITED STATES DISTRICT COURT

CAPITAL ONE, N.A., d/b/a CAPITAL ONE §

members of the Fenton family.

purchasers (the “Receivables”).

can conduct an approval analysis on whether to agree to purchase the Receivables.

and made negligent misrepresentations to COAF. For example,

benefits/income for the borrowers on those Receivables;

and/or co-borrowers did not live at the represented address;

actually did not have.

contract, breach of representations and warranties, and negligent misrepresentation.

Association, located at 1680 Capital One Drive, McLean, Virginia.

of Texas. Fenton Hyundai is an automobile dealership located at 16230 Lyndon B Johnson

Freeway, Mesquite, TX 75150.

30, Rockwall, TX 75087.

JURISDICTION AND VENUE

11. COAF is a citizen of the Commonwealth of Virginia.

a citizen of the Commonwealth of Virginia.

15. Venue in this Court is proper pursuant to 28 U.S.C. § 1391(b).

Agreement between COAF and The Fenton Dealers

July 11, 2016.

vehicles . . . [(collectively, the “Receivables”)].”

c. DEALER as obtained a certificate of title for the subject motor vehicle

reflecting COAF as the primary lien holder;

vehicle described in the subject Receivables [];

related thereto are in all respects true and complete;

cash unless otherwise specifically provided in writing in said Receivables;

loaned directly or indirectly by Dealer to the Debtor;

21. Each Dealer Agreement further states that:

24. These Receivables include Application ID xx1959, xx5003, xx4633, xx4388,

xx8389, xx5322, xx1634, xx9958, and xx2038.

representations, warranties, and covenants by misrepresenting the borrower’s income.

26. This Receivable includes Application ID xx9554.

signed the Receivable documents as a buyer and not as a co-signer.

28. This Receivable includes Application ID xx4633.

otherwise terminated prior to their scheduled maturity.

the vehicles described in the Receivables.

32. These Receivables include Application ID xx9997 and xx7390.

35. These Receivables include Application ID xx0060 and xx7197.

the vehicle described in the Receivable.

37. This Receivable includes Application ID xx8304.

service contracts it sold to borrowers.

39. These Receivables include Application ID xx1897, xx0239, xx6536, xx6468,

xx0543, and xx8636.

terminated prior to its scheduled maturity.

41. This Receivable includes Account Number xx3714.

the vehicle described in the Receivables.

44. These Receivables include Application ID xx1450 and xx3528.

representations, warranties, and covenants by misrepresenting the income of borrowers.

46. These Receivables include Application ID xx0355, xx3723, xx3456, xx8844,

xx4305, xx5314, xx3893, xx0418, xx0679, xx7259, and xx3528.

representations, warranties, and covenants by misrepresenting the residency/addresses of the

borrowers and/or co-borrowers.

50. These Receivables include Application ID xx8844, xx1212, xx1054, xx0679,

xx6113, and xx6810.

terminated prior to its scheduled maturity.

52. This Receivable includes Account Number xx7755.

Count I: Negligent Misrepresentation

identified above made certain cash down payments.

dealings with COAF.

Count II: Negligent Misrepresentation

63. Those representations were false.

purchase the Receivables.

respective pecuniary interest.

and dealings with COAF.

Count III: Negligent Misrepresentation

71. Those representations were false.