Copyright (c) 2017 Thomson Reuters
December 13, 2017
Judge rejects tribal immunity for manager of auto lender
(Reuters) - A former co-manager of a tribal lender accused of collecting illegally high interest rates cannot escape the lawsuit against him by claiming tribal sovereign immunity, a federal judge in Philadelphia ruled.
In a decision on Monday, U.S. District Judge Gerald Pappert said Craig Mansfield, former co-manager of Michigan-based Sovereign Lending Solutions, was not protected by an Indian tribe's immunity because he was sued in his individual capacity.
An auto lending arm of the Lac Vieux Desert Band of Lake Superior Chippewa Indians in Michigan, Sovereign Lending closed its business in 2014.
Philadelphia resident Daniel Pennachietti sued Mansfield in June, alleging that he was charged triple-digit interest rates on an auto loan he took out in 2013 from the lender. Pennsylvania caps rates at 6 percent for unlicensed lenders, according to Pennachietti's lawsuit.
The lawsuit alleged that Mansfield ran the day-to-day operations of Sovereign Lending, directed it to collect unlawfully high interest rates, and ordered the repossession of vehicles when the illegal interest was not paid.
The lawsuit is asking for triple damages under the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act, which bars the collection of unlawful debt. RICO imposes personal liability on individuals who operate an enterprise that collects unlawful debt, Pennachietti's lawsuit said.
James Williams, chairman of the Indian tribe, said in an email that the tribe is exploring all options, including an appeal.
"The tribe will continue to take necessary steps to defend its interests and protect its sovereignty and its current and former employees," he said.
Robert Salvin, a lawyer for Pennachietti, said Indian tribes "are doing a lot of unlicensed, illegal, usurious lending, using tribal immunity as a shield."
Pennachietti's complaint said his sports utility vehicle was repossessed by Sovereign Lending in 2014 after he was late on a final balloon payment of $6,696 on a $5,050 loan. Pennachietti said he had already paid over $6,300 and had to pay another $7,000 to get his vehicle returned.
Mansfield, a Wisconsin resident and member of the tribe, had asked the court to dismiss the complaint in June, asserting that the tribe's immunity extends to tribal employees when they are acting in their official capacity.
Mansfield said he had no individual liability because he did not act independently, and any employee in his role would have performed his duties in essentially the same way.
In response, Pennachietti said Mansfield is not entitled to immunity under the recent U.S. Supreme Court decision in Lewis v. Clarke, in which the high court held that tribal immunity does not protect an individual from personal liability arising from the course of tribal employment.
In Monday's decision, Pappert agreed that tribal immunity does not apply.
"What matters is not the capacity in which Mansfield acted while employed by Sovereign, but rather the capacity in which he is currently being sued," Pappert said. Because the lawsuit is asking the court to impose only personal liability on Mansfield, he is not entitled to tribal immunity, the judge said.
The case is Pennachietti v. Mansfield, U.S. District Court, Eastern District of Pennsylvania, No. 17-2582.
For the plaintiff: Robert Salvin at Philadelphia Debt Clinic and Consumer Law Center
For the defendant: Joel Frank at Lamb McErlane and Justin Gray at the Rosette law firm
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Company: JUDGE GROUP INC (THE)
News Subject: (Judicial Cases & Rulings (1JU36); Legal (1LE33); Liability (1LI55))
Industry: (Banking (1BA20); Financial Services (1FI37); Loans (1LO12); Retail Banking Services (1RE38))
Region: (Americas (1AM92); Asia (1AS61); Indian Subcontinent (1IN32); Michigan (1MI45); North America (1NO39); Pennsylvania (1PE71); Southern Asia (1SO52); U.S. Mid-Atlantic Region (1MI18); U.S. Midwest Region (1MI19); USA (1US73))
Other Indexing: (Sovereign Lending Solutions) (James Williams; Craig Mansfield; Daniel Pennachietti; Robert Salvin; Gerald Pappert; McErlane; Joel Frank; Justin Gray)
Keywords: banking; fedlit (N2:USA); (OCC:OLRTXT); (N2:US)Keywords: