Class Action Claims Lone Mountain, Cresco Truck Lease Agreements Violate Minn. Law

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Lone Mountain Truck Leasing, LLC and in-house financing arm Cresco Capital, Inc. are alleged in a proposed class action to have violated a Minnesota law by failing to provide proper notice of any intended sale or lease of a repossessed vehicle.

The lawsuit claims more specifically that the defendants have violated the Minnesota Uniform Commercial Code (UCC) by regularly sending pre-repossession notices that failed to comply with the law’s requirements, retaining all proceeds from the sale or lease of a repossessed vehicle without paying any surplus to the former owner or crediting any deficiency, charging an excessive $2,000 fee for repossession and selling the trucks at public sales without providing the information for the sale.

The plaintiff, an Ohio resident, says he purchased a 2013 Kenworth truck from Lone Mountain in 2016 through a master equipment lease agreement. Under the terms of the agreement, the plaintiff obtained through Cresco a loan to finance the purchase of the truck and was required to make a down payment of $5,500 followed by 44 regular monthly installments of $1,450, the complaint relays.

Per the case, the lease provided a “security interest” to Cresco under the UCC because the plaintiff was required to pay the company for the right to possess and use the truck. Further, the lease provided Cresco a security interest in that it stipulated that, according to the lawsuit:

• The plaintiff’s payment obligation lasted for the entire term of the lease;
• The lease could not be terminated by the plaintiff;
• The plaintiff was bound to become the owner of the truck; and
• His ownership would require no additional consideration.

Thus, the lease agreement constitutes a “security agreement” under the UCC because it provides a security interest to Cresco, the lawsuit argues.

The suit relays that the defendants sent the plaintiff a June 25, 2020 letter in which the companies stated they were repossessing his truck for alleged default and would sell or lease the vehicle at a private sale “within” 10 days following the notice. The letter further stated that the plaintiff was entitled to an accounting and could contact his lease manager for such, the case says.

After encountering obstacles in his attempts to obtain information and redeem his truck, the plaintiff hired a lawyer, the lawsuit says. Per the suit, the defendants had, before the plaintiff retained counsel, refused to allow him to redeem the truck or provide wire instructions for payment, and demanded an overstated balance on the vehicle, informed the plaintiff that the online system could not reverse a terminated lease, told the plaintiff that he must purchase the truck back from the defendants and refused to provide information about his personal property in the truck.

The day after the plaintiff hired a lawyer, however, the defendants allowed the man to redeem the truck, provided wire instructions, demanded a significantly reduced amount for the truck and provided all the information he needed concerning his personal property, the case says.

The lawsuit alleges the defendants’ initial June 2020 notice to the plaintiff violated the UCC because the letter was not provided within 10 or more days before the disposition and contained misleading information or not enough information. Per the suit, the defendants intended to sell the truck at a public, not private, sale, and failed to inform the plaintiff of the date and time of the sale. The case asserts that the plaintiff was permitted to redeem the truck at any time prior to the sale despite the defendants’ representations.

Moreover, the defendants’ agreements with the plaintiff and others violated the UCC in that the companies regularly retain all the proceeds for the sale of repossessed vehicles without paying lessees any surplus amounts or reducing their deficiency balance, according to the complaint. Further, the companies improperly charge an additional $2,000 fee for repossessions, the case alleges.

Per the suit, the defendants’ attempts to enforce a security interest were “objectively unfair, harassing, abusive, oppressive, and unconscionable.”

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