[hannah]

Court of Appeals of Missouri, Western District, upheld a trial court's decision that D.A.N. Joint Ventures was unable to collect on a 1998 car-loan debt because the statute of limitations governing actions based on the breach of a contract for the sale of goods is only four years. D.A.N. had argued that the court should have applied a general 10-year statute of limitations found elsewhere in the statute.

D.A.N. Joint Venture v. Clark (MLW No. 55209) (7 pages), was the first case in which a Missouri appellate court has addressed the issue, but other jurisdictions across the nation largely have come to the same conclusion.

Respondent Theresa Clark bought a used car in August 1997 and executed a retail installment contract and security agreement, which was assigned to a finance company. The following year, Clark defaulted on the contract, and the finance company repossessed and sold the car. Eventually, D.A.N. bought the debt and sued Clark in November 2004 to collect the balance due on the contract, along with interest and late charges. D.A.N. argued that Uniform Commercial Code, which has been adopted into Missouri statute, allowed it to collect on the unpaid debt because it had inherited a security interest. The code allows for a secured party to repossess and sell collateral upon the default of a debtor. After that is done, "the obligor is liable for any deficiency. " That section of code doesn't specify a statute of limitations, but Missouri law generally provides a 10-year statute of limitations for monetary contracts, which D.A.N. said should apply. However, another section of the UCC deals separately with contracts for the sale of goods - such as a vehicle.

"D.A.N. 's only relationship to Clark arises from its position as the assignee of the retail installment contract," the court said in an opinion by Judge Ronald R. Holliger. "Unlike a lender who supplies funds for the purchase of an automobile, neither D.A.N. nor its predecessors had any relationship with Clark before she purchased the car. "

Dale Irwin of Slough, Connealy, Irwin & Madden LLC in Kansas City, who represented Clark, said courts across the country have dealt with the plain language of the Uniform Commercial Code in the same way. "The overwhelming number of courts in the country that have considered that issue have all come down on the side of the plain language of the UCC, which is the four-year statute of limitations," he said. Irwin said his client's debt was purchased along with a number of other old debts from a company in Florida and he suspects that many of those investments are now worthless. "That means every bit of that paper they bought is stale, it's outside the statute of limitations," he said. "All of it went into default back in the mid-'90s, basically."

Case is attached.

[Frisbee]

Excellent find. I've been searching for 4 years for a case that lays this out in simple language.

This ruling covers everything necessary to defeat the claims of a written contract.

This is a perfect case for my files. Thank you for all your hard work.

[hannah]

Well...a recently decided case in Georgia says an auto deficiency there falls under secured contract.

A consumer (Almand) was sued by a law firm representing a debt collector to whom the consumer's debt had been assigned. The consumer countered with her own suit, alleging that the law firm violated the Fair Debt Collection Practices Act because the suit was brought after the expiration of the applicable statute of limitations.

In this case as with many others, there were two potentially applicable statutes of limitations.

The U.S. District Court, Middle District of Georgia found that, because uncertainty existed as to whether the applicable statute of limitations was one which had not expired, the filing of the suit could not be held to constitute unfair or harassing conduct under the FDCPA. (Almand v. Reynolds & Robin PC, No. 07-CV-64-WDO (M.D. Ga. 05/01/07).)

On July 6, 2000, Tammy Almand financed the purchase of a used car with a loan from American Investment Bank. Under the terms of the loan, Almand gave AIB a security interest in the car as collateral. In March 2001, Almand defaulted, and AIB repossessed the vehicle. After the vehicle was sold at public auction, a deficiency of approximately $11,000 remained.

This debt was assigned (sold?) to Calvary Portfolio Services, which hired Reynolds & Robin PC as its legal representative. On Jan. 17, 2007, slightly less than six years after Almand's default, the law firm sued Almand, seeking recovery of the balance. Almand filed an answer alleging that the statute of limitations had run on the debt.

Almand then sued Reynolds & Robin, alleging that because the statute of limitations had expired, the law firm's suit violated the FDCPA. She claimed that under 15 USC 1692(e), the suit represented a false, deceptive or misleading representation in connection with the collection of her debt.

Reynolds & Robin moved for summary judgment, contending that no violation of the FDCPA could have occurred because it was unclear whether the applicable statute of limitations was the four-year Georgia statute for sale of goods, or the state's six-year statute for secured transactions. The law firm argued that it had a good faith basis for filing the suit, based on authority supporting the applicability of the six-year statute.

The District Court noted that both parties acknowledged there was no controlling authority from the Georgia Supreme Court as to which statute of limitations applied. A review of the Georgia code and applicable case law, however, indicated that the state's highest courts would hold that the case qualified as a secured transaction, for which the six-year statute of limitations applied. The District Court was unwilling to speak in the first instance and decide which law Georgia courts should apply. However, the court did conclude that, because at the least uncertainty existed as to the applicable statute of limitations, no violation of the FDCPA could be found to arise where, if the six-year period applied, the suit would have been timely filed. Therefore, the court held as a matter of law that Reynolds & Robin could not be found to have engaged in unfair or harassing conduct.

The District Court granted Reynolds & Robin's motion for summary judgment.

You will need to read the argument made for the use of the correct statute. Since all AIB did was provide financing for the auto loan, the Court found it fell under the secured transaction statute in Georgia and not the UCC for sale of goods. What is unclear in this case is whether AIB still owned the debt or if Calvary did.

Case is attached.