Opinion
Civil Action No. 03-2618-CM.
February 7, 2005
MEMORANDUM AND ORDER
On November 3, 2003, plaintiff filed suit against defendant in the District Court of Johnson County, Kansas, alleging violations of Kan. Stat. Ann. § 8-135(c)(7) and the Kansas Consumer Protection Act, Kan. Stat. Ann. § 50-623 et seq. (KCPA), conversion, and defamation. Defendant removed the case to this court on December 5, 2003. On March 26, 2004, plaintiff filed an amended complaint, alleging: (1) violation of Kan. Stat. Ann. § 8-135(c)(7) (Count I); (2) various violations of the KCPA (Counts II, III, IV, and V); and (3) defamation (Count VI). In the pretrial order, which was entered on July 29, 2004, plaintiff abandoned her defamation claim. This matter comes before the court on defendant's Motion for Summary Judgment (Doc. 23) on plaintiff's remaining claims.
The pretrial order supercedes all prior pleadings, establishes the issues to be considered at trial, and controls "the subsequent course of the action unless modified by a subsequent order." Fed.R.Civ.P. 16(e); Wilson v. Muckala, 303 F.3d 1207, 1215-16 (10th Cir. 2002).
I. Facts
The following facts are undisputed. In September 2001, plaintiff signed a retail installment contract (RIC) with Randy Curnow Buick Pontiac GMC Truck, Inc., for the purchase of a 2000 Pontiac Sunfire (the Sunfire) for $12,750.00. Plaintiff made a down payment of $2,400.00 and agreed to finance the remaining $10,350.00. On September 13, 2001, the RIC was assigned to defendant, and plaintiff was obligated to make payments under the RIC to defendant.
At the time of the assignment, the Kansas Certificate of Title (the title) for the Sunfire listed defendant as a lienholder and was properly assigned and delivered to plaintiff. Following assignment of the RIC to defendant, plaintiff continually defaulted on the RIC. On February 7, 2002, defendant repossessed the Sunfire.
On February 7, 2002, plaintiff contacted defendant seeking reinstatement of the RIC. During that call, defendant offered to reinstate the RIC if plaintiff paid her outstanding account balance of $885.00. Plaintiff agreed to do so, and was aware that her obligation to make continuing payments on the RIC, in the same manner and amounts as prior to the repossession, had been reinstated as of February 8, 2002. Plaintiff paid the $885.00 on February 15, 2002. Following plaintiff's payment, defendant faxed her a release instructing PS Auto Auction, who had possession of the Sunfire, to release the automobile back to plaintiff. On February 15, 2002, plaintiff picked up the Sunfire. As of February 15, 2002, the title to the Sunfire reflected plaintiff as the owner and defendant as the lienholder. Plaintiff understood that defendant would have the right to repossess the Sunfire if she failed to make her payments.
On March 1, 2002, defendant's repossession agent completed a repossession affidavit reflecting the February 7, 2002 repossession of the Sunfire from plaintiff. Subsequently, a new title was issued reflecting defendant as the owner of the vehicle.
On March 5, 2002, defendant sent plaintiff a delinquency notice reflecting her failure to make her monthly payment on February 28, 2002, resulting in a total balance due of $564.55. Plaintiff did not pay the late balance reflected in the March 5, 2002 delinquency notice. Plaintiff failed to make any payment on the RIC in March or April 2002.
On April 24, 2002, defendant notified plaintiff by mail that her RIC was in default, with a past due balance of $1,003.86, and offered her the opportunity to cure her default by May 14, 2002. Plaintiff did not respond to the April 24, 2002 notice.
On June 21, 2002, plaintiff wired defendant a $850.00 payment. This payment was insufficient to bring plaintiff current on her RIC. In July 2002, plaintiff made no monthly payment on the RIC.
On August 9 and 16, 2002, plaintiff wired defendant payments of $200.00 and $375.00 respectively, which were insufficient to bring plaintiff current on the RIC.
On September 9, 2002, defendant sent plaintiff another delinquency notice advising her that her account was again past due, and that the total amount due was $825.41. On September 12, 2002, plaintiff wired defendant a $400.00 payment, which was insufficient to bring plaintiff current on the RIC.
In September 2002, plaintiff was informed that she could not renew her tags because the title to the Sunfire reflected defendant as the owner. That was the first time plaintiff became aware the title was not in her name. On September 19, 2002, defendant asked plaintiff to complete a power of attorney for the transfer of title into her name, which plaintiff completed on September 26, 2002. Plaintiff drove the Sunfire following her September 2002 discovery that the title to the Sunfire was in defendant's name.
On October 25, 2002, plaintiff wired defendant a $100.00 payment, which was insufficient to bring plaintiff current on the RIC.
On November 7, 2002, defendant sent plaintiff a delinquency notice informing her that her past due balance was $974.03. On November 13, 2002, defendant sent plaintiff another letter requesting her to resolve her delinquency.
On November 19, 2002, defendant sent plaintiff another letter informing her that her past due balance had grown to $10,023.60, and requesting her to make arrangements for payment of this balance. On November 26, 2002, defendant sent plaintiff another letter asking that she contact defendant regarding her delinquency.
The parties' briefings and the pretrial order reflect the same amount. The court is not certain but believes the number is probably closer to $1000.00. The parties did not provide the court with a copy of the November 19, 2002 letter. In any event, the amount is not material to the court's findings herein.
On December 24, 2002, plaintiff's fiancé, Jack Robertson, received a traffic ticket while driving the Sunfire with plaintiff in the car.
On December 31, 2002, plaintiff wired defendant a $700.00 payment, which was insufficient to bring plaintiff current on the RIC.
On January 7, 2003, defendant sent plaintiff another delinquency notice, advising that plaintiff's failures to make her monthly payments and pay her past due balance rendered her account past due, with a balance of $922.65.
On January 17, 2003, plaintiff sent a letter to defendant requesting that title to the Sunfire be transferred into her name, but made no payments on the RIC.
On February 24, 2003, defendant signed title to the Sunfire over to plaintiff. Plaintiff made no additional payments on the RIC. On March 11, 2003, defendant repossessed the Sunfire. Defendant sold the Sunfire at a private sale after plaintiff failed to redeem it.
After crediting plaintiff's account with the sale amount, plaintiff's account has a deficiency balance of $7,855.45. Of the $10,350.00 financed in September 2001, plaintiff paid only $4,540.00.
The RIC contains a provision limiting defendant's liability arising from the RIC to the amount paid on the RIC by plaintiff.
II. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citing Anderson, 477 U.S. at 248).
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256; see Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id.
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut," rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).
III. Discussion
A. Whether the Retail Installment Contract Became Void and Unenforceable in March 2002
Count I of plaintiff's complaint alleges that defendant violated Kan. Stat. Ann. § 8-135(c)(7) by failing to timely deliver title to the Sunfire to plaintiff following reinstatement of the RIC on February 8, 2002, and subsequently transferring title of the Sunfire into defendant's name on March 5, 2002, making the RIC void and unenforceable. Defendant contends that Kan. Stat. Ann. § 8-135(c)(7) is inapplicable to this case, as the reinstatement in February 8, 2002, did not constitute a sale. Defendant contends that Kansas case law and statutes consistently define the word "sale" to mean a transaction whereby the ownership of property passes from one party to another for consideration of value. Defendant argues that the only sale in this case was plaintiff's original purchase of the Sunfire in September 2001, and that plaintiff provided no additional consideration for the February 2002 reinstatement. Rather, plaintiff agreed to make a payment toward the past due balance on the RIC, which plaintiff was already contractually obligated to make. Plaintiff does not dispute that the RIC was valid when plaintiff signed it in September 2001.
The court agrees with defendant's position that the February 2002 reinstatement of the RIC following defendant's repossession of the Sunfire was not a sale. In fact, plaintiff's attempt to invalidate the RIC through the use of Section 8-135(c)(7) brings to focus the crucial issue in this case: the parties' rights and obligations with respect to the Sunfire and the RIC following defendant's first repossession of the Sunfire in February 2002.
The bankruptcy court in this district recently examined the rights of creditors and debtors regarding repossessed vehicles under Kansas law in In re Estis, 311 B.R. 592 (Bankr. D. Kan. 2004). In that case, the defendant cited language in Kan. Stat. Ann. § 8-135(c)(2) in support of its argument that ownership of a repossessed vehicle passed to defendant, as the creditor, after it repossessed a vehicle from the plaintiff and applied for title pursuant to Kansas law. The bankruptcy court held that "repossession is merely a device to collect on the creditor's claim, and . . . therefore repossession does not transfer ownership to the creditor." Id. at 597 (citing In re Sanders, 291 B.R. 97, 101 (Bankr. E.D. Mich. 2003) (citing In re Robinson, 285 B.R. 732, 737 (Bankr. W.D. Okla. 2002))). The bankruptcy court found "evidence of a debtor's continuing ownership interest in a repossessed vehicle throughout Revised Article 9 as adopted in Kansas." Id. The bankruptcy court further found that "[a] 'repossession title' provides nothing more than a mechanism by which a creditor may pass legal or record title to a transferee upon exercising its remedies under the UCC." Id. at 598. "The mere repossession of the automobile does not alter a debtor's interest in the property." Id. at 599. In fact, Kansas' Article 9 gives a debtor the right to redeem collateral at any time before the secured party disposes of it. Kan. Stat. Ann. § 84-9-623. Therefore, actual ownership of a repossessed vehicle does not shift from the debtor until the secured party disposes of it.
Kansas' Article 9 specifically states that "[a] transfer of record or legal title to collateral to a secured party . . . is not of itself a disposition of collateral under this article and does not of itself relieve the secured party of the secured party's duties under this article." Kan. Stat. Ann. § 84-9-619(c). Moreover, the fact that a secured party is named as the owner on a title, instead of as the lienholder, does not invalidate the secured party's interest in the property, and does not relieve the debtor of its obligation to the secured party. See In re Charles, 268 B.R. 575, 577-78 (D. Kan. 2001) (holding that strict compliance with perfection provisions of the Kansas certificate of title statute not necessary for secured party to perfect security interest in motor vehicle; substantial compliance with title statute sufficient to perfect security interest and debtor's estate could not avoid obligations of security interest because of title mistake).
Applying those principles to this case, ownership of the Sunfire remained with plaintiff, even after defendant repossessed the Sunfire in February 2002, permitted plaintiff to reinstate the RIC, and despite the fact that defendant obtained a new title to the Sunfire, reflecting defendant as the owner of the vehicle. In fact, actual ownership of the Sunfire did not pass from plaintiff to any other party until defendant sold the Sunfire at a private sale in 2003, after plaintiff failed to exercise her redemption rights following defendant's second repossession of the Sunfire. The fact that defendant obtained a new title to the Sunfire in March 2002, which mistakenly listed defendant as the owner instead of the lienholder, did not invalidate the RIC or plaintiff's obligations under the RIC — especially in light of the fact that plaintiff agrees the RIC was valid and enforceable when she signed it in September 2001.
Notably, in September 2002, when plaintiff realized that the title to the Sunfire reflected defendant as the owner and contacted defendant, defendant (after a four-month delay) had the title reissued in plaintiff's name.
Plaintiff's argument that the RIC is void and unenforceable, while a creative attempt to avoid plaintiff's obligations under the RIC, is unpersuasive and fails to state a viable claim for relief. Accordingly, defendant is entitled to summary judgment on Count I of plaintiff's complaint.
B. Plaintiff's Remaining Claims
Plaintiff's remaining claims (violations of Kan. Stat. Ann. § 50-627(a) and (b) (Count II); violations of Kan. Stat. Ann. § 50-262(b) (Count III); violations of Kan. Stat. Ann. § 50-626(a) and (b) (Count IV); and violations of Kan. Stat. Ann. § 50-626(a) and (b) (Count V)) are all premised on plaintiff's contentions that the RIC became void and unenforceable in March 2002, that plaintiff had no ownership rights in the vehicle after March 5, 2002, and that defendant acted in an unlawful, fraudulent, and unconscionable manner when defendant took payments from plaintiff and made demand for payments from plaintiff pursuant to the RIC after March 5, 2002. In light of the court's holding that the February 2002 reinstatement of the RIC was not a sale, and that the RIC remained valid and enforceable, plaintiff's remaining claims fail. Accordingly, defendant is entitled to summary judgment on Counts II, III, IV, and V of plaintiff's complaint.
IT IS THEREFORE ORDERED that defendant's Motion for Summary Judgment (Doc. 23) is granted.