Westlake Services: Stop Repossession 

JANUARY 28, 2024

NJTLAW

Successfully Responding to a Westlake Services Repossession 

JANUARY 8, 2024

I. Who Is Westlake Services?

Westlake Financial is a Los Angeles, California -based auto finance company that specializes in subprime and near-subprime loans.   According to the company, Westlake Financial funds contracts through a network of over 50,000 new and used car dealerships throughout the United States.   Westlake Financials’ official name is Westlake Services, LLC. and does business under the tradename of Westlake Financial Services.   It is a private company and claims to be “the largest privately held finance company in the United States,” and is owned by the Hankey Group.

Westlake Financial Services

According to their website as of 2023, the most senior executive within Westlake Financial is Ian Anderson, with the title of Group President.  Don Hankey is Chairman of the Board of Hankey Group, which owns Westlake Financial, and also serves as Westlake’s Chairman. His son, Bret Hankey, is the company’s Vice Chairman.

Westlake‘s headquarters are in Los Angeles, California, with their mailing address at: 4751 Wilshire Blvd., Suite 100, Los Angeles, CA 90010.

Westlake of often referred to a a subprime lender. A subprime auto loan is a type of loan lenders offer to buyers with low credit scores and poor credit histories. Typically, these loans are for people with credit scores below 600.  Subprime loans have a higher interest rate because borrowers who need them are most likely to default on the loans. Subprime auto loan interest rates are usually at least triple the prime loan rate.

II. Does Westlake Repossess Vehicles?

Yes, especially where is you miss a payment. One recent repossession case involved a consumer from Tampa, Florida by the name of Rashana Williams who was the owner of a 2014 Chevy 4DR Sedan.  Ms. Williams proudly purchased her Motor Vehicle for cash and owned it free-and-clear.  Obviously, there were no liens on her motor vehicle title.  Since the purchase of her Motor Vehicle, she used it for her personal and household purposes. Her vehicle was her sole means of personal transportation.  On May 26, 2023, she was shocked when she discovered that her Motor Vehicle was missing.  Assuming that the Motor Vehicle was stolen, she immediately contacted the Hillsborough County Sherriff’s department to advise them of the suspected theft only to learn that her Motor Vehicle was wrongfully repossessed. She was advised by the repo company, Action Towing Services, LLC, that Westlake was responsible for her car being repossessed. She called Westlake and explained that her Motor Vehicle was wrongfully taken and begged them to release it. Unfortunately, but not surprisingly, she received no cooperation from the representatives of Westlake.

After she called Westlake and got nowhere, she then began to look for transportation options and was forced to pay over close to $800 for a rental car.  As a result of her Motor Vehicle being repossessed when she consistently endeavored to pay her bills on time, she had to deal with the embarrassment and humiliation of having her car towed away with everyone in her neighborhood believing that she missed payments on her Motor Vehicle.

After Ms. Williams took legal action, John Schwartz, Sr. Legal Analyst, Legal Dept., Westlake Financial Services responded to her counsel advising that Westlake Financial Services did not repossess Mr. Williams’ vehicle and that the lawsuit was a mistake.

John Schwartz, Senior Legal Analyst, Westlake Financial Services

After John Schwartz denied the claim, Westlake retained the law firm of Liebler, Gonzalez and Portuondo, LGP of Miami, FL. The lawyer handling the case was James Raymond Lieber who began negotiating with Williams’s counsel for a settlement. In connection with negotiating a settlement, on November 21, 2023, Mr. Liebler promised to ” . . . get you the settlement check on an expedited basis.”  This pre-Christmas promise was broken and Williams and her counsel were required to file a Motion to Enforce Settlement Agreement on January 9, 2024, almost 2 months after the promise.

James Randolph Liebler II

III. Defenses to a Westlake lawsuit on a deficiency balance?

Repossession and Sale of Vehicle must be done in a commercially reasonable manner

State law under the Uniform Commercial Code, provides that “every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If secured party/lender proceeds in a commercially reasonable manner, it may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.”

What follows are the steps that a secured party/creditor must take:

• Provide notice of intent to sell – the secured party must provide authenticated notice to the debtor and any other lienholders or obligors, at least 10 days prior to the sale. The notice must be reasonable with respect to timing, manner and content.
• Seek to maximize the sale – whether through public through an auction or private sale, the creditor is obligated to pursue the best option and highest return for the sale of the collateral; should the debtor sue the creditor at a later period for unreasonable collection, the court will more heavily scrutinize a private sale as opposed to an auction.

Apply sale proceeds to the unpaid debt – after covering the legal and administrative fees of the sale, the creditor shall USE THE PROCEEDS towards satisfaction of the debt and distribute the proceeds to junior creditors and even return any excess proceeds to the debtor.

• Is Westlake Financial Services a holder in due course?

Westlake Services: Stop Repossession  5

The Holder in Due Course Rule protects car buyers when dealers sell the buyers’ credit contracts to other lenders. Specifically, the Rule preserves consumers’ rights to raise claims and defenses against purchasers of consumer credit contracts – with automobile sales, it protects consumers who buy cars from dealers on credit. When dealers sell credit contracts to lenders, consumers are obligated to pay the lenders instead of the dealers. Under the Rule, if a auto dealer engaged in fraud or made misrepresentations in selling a car on credit, a consumer could raise the dealer’s conduct as a defense to the lender’s demand for payments.

Without the Rule, consumers would not have this protection in states that preclude them from asserting against lenders the claims and defenses they have against dealers if the lenders bought the credit contracts in good faith and without knowledge of these claims and defenses.

The Holder in Due Course Rule requires dealers and finance companies involved in auto sales to include in their credit contracts a notice that lenders who buy the contracts are subject to the claims and defenses consumers may assert against dealers. It effectively makes lenders liable for dealers’ conduct, and gives them an incentive to work with reputable dealers.

The Holder in Due Course Rule was recently applied to a deficiency lawsuit brought by Westlake Financial in Seminole County, Florida. Here are the facts: On December 21, 2016, Danielle Gump, purchased, for a total of $22,144.04, a 2008 BMW 5 with 80,000 miles, from a dealer named Autosports, LLC.   This sale was memorialized by a Retail Installment Contract and Security Agreement dated December 21, 2021.

The same night that she purchased the vehicle, she realized both headlights were not functional, which was an obvious safety hazard so she could not drive the car at night.  She took the vehicle back to Autosports the next day for them to fix the headlights.  Autosports’ service department examined the issue and claimed they could not fix the headlights and that the entire headlight assembly had to be replaced.   Ms. Gump then took the vehicle to the Winter Park BMW dealership to confirm that diagnosis and was quoted $6,000 to replace the headlight assembly.

One week after she purchased the vehicle, its engine light came on and the car began running very rough.   Ms. Gump took the vehicle back to Autosports again for them to diagnose this additional issue.  They advised her that they would need to keep the vehicle to work on it and provided her with a loaner VW Jetta.  Autosports kept the vehicle for several months, claiming they had to obtain various parts on the secondary market to fix the vehicle and replace the headlights.

In April of 2017, after making payments and lodging many complaints in person and during phone calls about major safety and mechanical problems, Autosports advised that they would not be able to fix the vehicle and told her to return it along with the VW Jetta loaner.

Based on the uncontroverted facts, Autosports breached its contract with Ms. Gump by selling her a seriously defective vehicle.

The Retail Installment Contract and Security Agreement dated December 21, 2021 contained the following language:

NOTICE. ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT [WESTLAKE] IS SUBJ.ECT TO ALL CLAIMS AND DEFENSES-WHICH THE DEBTOR [DANIELLE GUMP] COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES [AUTOSPORT] OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF, RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.  (Bracketed language inserted by author.)

Based on the undisputed facts, Ms. Gump has a strong defense to this action against the seller of the vehicle, Autosports, LLC, and these defenses can be and are being asserted against Westlake.

Ms. Gump should also be able to recover her attorney’s fees against Westlake as the Retail Installment Contract and Security Agreement dated December 21, 2021 also contained the following language:

“If you default, you agree to pay our court costs and fees for repossession, repair, storage, and sale of the Per securing this Contract.  You also agree to pay reasonable attorney’s fees after default and referral to an attorney not a salaried employee of ours.”

Under section 57.105(7) of the Florida Statutes, unilateral attorney’s fees provisions in a contract are deemed reciprocal.   The entitlement to fees under section 57.105(7) applies when the party seeking fees prevails and is a party to the contract containing the fee provision.

Statute of Limitations

Under Florida law, most legal or equitable actions based upon a breach of a written contract must be brought within five years. So, an action on a deficiency balance cannot be brought beyond 5 years after the deficiency has been established

In 2017, the Justice Department filed a complaint in a California U.S. District Court alleging that Westlake Financial Services and its subsidiary, Wilshire Commercial Capital, violated the Service Members Relief Act by unlawfully repossessing at least 70 vehicles owned by SCRA-protected servicemembers. In order to resolve those allegations, Westlake Financial entered into a settlement requiring the company to pay over $700,000 to service members and a $60,788 civil penalty and to be subject to monitoring by the department.

IV. Westlake and the Department of Justice Lawsuit

While monitoring Westlake’s compliance with the SCRA, the Justice Department discovered problems with the company’s handling of interest rate benefit requests. The department determined that Westlake Financial was failing to apply interest rate benefits back to the date orders were issued calling the servicemember to active duty. The department also determined that Westlake Financial had improperly delayed the approval of interest rate benefits to some servicemembers.

V. Westlake Financial and the CFPB

The Consumer Financial Protection Bureau, (CFPB) has entered into a consent order with Westlake Services, LLC, an indirect auto finance company, and its wholly owned subsidiary, Wilshire Consumer Credit, LLC, for alleged deceptive debt collection practices.  The consent order requires the companies to provide $44.1 million in redress and balance relief to borrowers and imposes a civil money penalty of $4.25 million.

Consumer Financial Protection Bureau

According to the consent order, Westlake Financial Services specializes in purchasing and servicing retail installment contracts, including subprime and near-subprime contracts for auto sales. Wilshire offers auto title loans directly to borrowers and services those loans, and also purchases and services auto title loans made by other lenders.

The CFPB claimed that Westlake engaged in numerous illegal and deceptive debt collection practices. For example, the CFPB found that the companies used a web-based service, Skip Tracy, to place outgoing calls and choose the phone number and caller ID text the recipient would see. Collectors allegedly pretended to be repossession companies, pizza delivery services, flower shops, family members and friends to trick borrowers into answering the phone and disclosing the location of their vehicle or pressuring borrowers into making payments. The CFPB asserted that when Westlake pretended to be repossession companies calling to collect on the debt, they became “debt collectors” under the Fair Debt Collection Practices Act.

The CFPB also alleged that Westlake falsely threatened to refer borrowers on auto sales for investigation or criminal prosecution, misrepresented the payment amount necessary to release a repossessed vehicle, falsely represented that borrowers’ vehicles were about to be repossessed to create a sense of urgency, and disclosed borrowers’ loan information to employers, friend and family members.

In addition to these debt collection practices, the CFPB also claimed that Westlake deceived borrowers regarding the effects of due date changes and extensions to loan terms by failing to disclose that these changes would result in the payment of additional interest. Finally, the CFPB claimed Wilshire misleadingly disclosed the monthly interest rate of its title loan products without also disclosing, or while minimizing in fine print, the annual interest rate in advertisements.

Westlake and Wilshire were required to pay $44.1 million in redress, which consisted of $25.8 in cash payments and $18.3 million in balance reductions, as well as a $4.25 million civil money penalty. Additionally, Westlake Financial Services and Wilshire was required to end all deceptive debt collection practices and ensure all advertisements comply with the Truth in Lending Act.  Finally, Westlake Financial and Wilshire were required to provide borrowers with accurate information regarding the effect of due date changes and extensions and obtain borrowers’ informed consent to these changes before implementation.

VI. Frequently Asked Questions

After how many missed payments will Westlake wait before ordering a repossession of the vehicle?

There is no time limit. Westlake can order a repossession of a vehicle after missing only one payment.

Is Westlake responsible for the acts of the towing company that it selects?

Under Florida Law and pursuant to Section 679.503, Florida Statutes, it is impermissible for a creditor to breach the peace during a self-help repossession. A breach of peace is defined in Section 877.03, Florida Statutes, as engaging in acts that are of the nature to corrupt the public morals, outrage the sense of public decency or affect the peace and quiet of persons who may witness them. Therefore, under Florida law, a creditor cannot break locks, damage property or illegally enter a debtor’s property during the course of repossession.

CategoriesCar RepossessionTagsWestlake Financial Services

Repossession While Owner Still in Vehicle

Leave a Reply

CategoriesCar RepossessionTagsrepossessions. auto loan, stop repossession, Westlake Financial Services

Repossession While Owner Still in Vehicle

Leave a Reply