District Court (Cal.) Says Professional Basketball Player’s Lease of Rolls Royce Designated for Non-Consumer Use Does Not Trigger the Vehicle Leasing Act

In Momentum Commercial Funding, LLC v. Beasley, 2017 WL 1063840 (E.D. Cal. 2017), Judge Mendez dismissed a VLA claim brought by a professional basketball player against his vehicle leasing claim.

Beasley argues Momentum willfully violated the VLA by not complying with the statute’s disclosure requirements. Countercl. ¶¶ 21-28. Specifically, Beasley states Momentum violated section 2985.8(c)(1) by not disclosing in the Lease that Beasley was responsible for the difference between the Rolls-Royce’s residual value and realized value once the Lease expired. Id. ¶ 21. Beasley also claims Momentum violated that same provision by not accurately stating in the Lease the amount due before Beasley received the car. Id. ¶ 25. And, finally, Beasley alleges Momentum violated section 2985.8(a) by not disclosing all lease terms in a single document. Id. ¶ 22.  Here, dismissal turns on whether the Lease constitutes a “lease contract” under the VLA. Momentum argues it does not because the parties executed the Lease for business and commercial purposes and, so, the VLA does not apply. See Mot. at 3-5. Beasley disagrees, maintaining that he signed the Lease for personal purposes, rendering the VLA applicable. See Opp’n at 5-7.  The Court agrees with Momentum. The law makes clear the VLA does not apply to business or commercial contracts. See Cal. Civ. Code § 2985.7(d) (“Lease contract does not include a lease for…business or commercial purposes….”). Here, the Lease plainly states that the Commercial Code governes the contract and that this was not a consumer transaction. Exh. A ¶ 27 (citing Division 10 of the California Commercial Code). And the following language appeared right above Beasley’s signature line: “[Beasley] warrants that [he] will use the Equipment solely for commercial or business purposes.” Exh. A at 3. Lastly, Beasley certified “[he] intend[ed] that more than 50% of the use of the [Rolls-Royce]” would relate to his “trade or business….” Exh. D.  Beasley claims he “did not understand the complex lease documentation….” Opp’n at 2. This explanation does not suffice. The exhibits attached to Beasley’s counterclaim contain information contradicting the allegations supporting his counterclaim: Beasley says he did not understand the documents, yet he signed papers clearly indicating the Lease served business and commercial purposes. In these situations, a court need not accept as true the conclusory allegation. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (citing Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295-96 (9th Cir. 1998) (“[W]e are not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint.”). In other words, an individual can “plead himself out of a claim by including unnecessary details contrary to his claims.” Sprewell, 266 F.3d at 988 (internal citation omitted). Beasley has done just that. The exhibits attached to his counterclaim show he agreed to lease the Rolls-Royce solely for business and commercial purposes—purposes falling outside the VLA’s scope. Because these exhibits trump Beasley’s conclusory allegation, the Court dismisses Beasley’s counterclaim. See id.