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State Road Auto Sales, Inc. v. Massachusetts Division of Banks (Lawyers Weekly No. 09-013-18)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT. 1784CV04041-BLS2 ____________________ STATE ROAD AUTO SALES, INC. v. MASSACHUSETTS DIVISION OF BANKS ____________________ MEMORANDUM AND ORDER DENYING PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION State Road Auto Sales, Inc., seeks a preliminary injunction that would bar the Massachusetts Division of Banks from completing an ongoing adjudicatory hearing. The Division brought administrative charges asserting that State Road violated G.L. c. 255B, which governs retail installment sales of motor vehicles, by acting as a “motor vehicle sales finance company” without a license and by entering into illegal motor vehicle installment sales with individual consumers. The Legislature authorized the Commissioner of Banks to implement and enforce c. 255B. State Road is entitled to contest those charges through an evidentiary proceeding before a Division hearing officer. State Road argues that the Division’s administrative charges and adjudicatory proceeding are barred by State Road’s recent settlement of a class action brought on behalf of consumers who entered into motor vehicle leases with State Road that were in effect after October 21, 2013, and were signed before January 1, 2016. More specifically, State Road argues that the order approving the class action settlement deprived the Division of subject matter jurisdiction to decide the pending administrative charges and, in the alternative, that the prior settlement has collateral estoppel or issue preclusive effect that would bar the Division from exercising its jurisdiction over State Road. The Court concludes that State Road is not entitled to preliminary injunctive relief because it has failed to exhaust its administrative remedies and therefore is not likely to succeed on the merits of its claims. Cf. Fordyce v. Town of Hanover, 457 Mass. 248, 266 (2010) (vacating preliminary injunction because plaintiffs were “unlikely to succeed on the merits”). The Division of Banks has already began an enforcement action against State Road, those adjudicatory proceedings are still pending, and the determination of – 2 – whether the Division can prosecute and decide the administrative charges turns on disputed issues of fact and not pure issues of law. Under these circumstances, State Road must exhaust its administrative remedies at the Division before seeking to challenge the Division’s exercise of jurisdiction over State Road in court. See Wilczewski v. Commissioner of the Dept. of Envtl. Quality Eng’g, 404 Mass. 787, 793-794 (1989) (affirming dismissal of challenge to agency’s jurisdiction in pending matter); Gill v. Board of Reg. of Psychologists, 399 Mass. 724, 728 (1987) (ordering dismissal of action); East Chop Tennis Club v. Massachusetts Comm’n Against Discrim., 364 Mass. 444, 451 (1973) (vacating decree entered by Superior Court and ordering dismissal of action); Reliance Ins. Co. v. Commissioner of Ins., 31 Mass. App. Ct. 581, 585 (1991) (affirming dismissal of action). […]

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Posted by Massachusetts Legal Resources - March 1, 2018 at 9:05 am

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