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Credit Acceptance Corporation v. Lowery

Court of Common Pleas of Delaware

January 12, 2017

Credit Acceptance Corporation
v.
David Lowery

          Charles S. Knothe, Esq.

          DECISION ON PLAINTIFFS MOTION FOR SUMMARY JUDGMENT

          CHARLES W. WELCH, III JUDGE

         Dear Mr. Knothe and Mr. Lowery:

         The plaintiff, Credit Acceptance Corporation, has filed the above-referenced civil debt action against the defendant, David Lowery, for money it alleges is owed to it for a default on a car loan. The plaintiff has filed a motion for summary judgment for judgment to be entered against the defendant for $15, 134.87, plus interest, attorney's fees and court costs. The defendant opposes the plaintiffs motion on the grounds that the plaintiff has failed to mitigate its damages for this matter and is not entitled to the sum it alleges is due. After consideration of the plaintiffs motion, oral argument and all written submissions, the plaintiffs motion is granted. Judgment is entered for the plaintiff against the defendant.

         FACTS[1]

         The defendant co-signed a Retail Installment Contract ("Contract") as one of two buyers for the purchase of a 2006 Nissan Altima ("Vehicle"). Pursuant to the Contract, the buyers were obligated to make a monthly payment of $416.67 for 48 months. The Contract also provided that a security interest in the Vehicle was provided to the creditor-seller for the Contract. In the event of a default on the Contract by the buyers, the creditor-seller was entitled to repossess the Vehicle and sell it to offset the balance still owed to it. Specifically, the Contract provided that if the buyers defaulted, the creditor-seller "may take (repossess) the Vehicle" from the buyers. Under the Contract, the buyers were also liable to the creditor-seller for any deficiency balance due to it after the sale of the Vehicle. Additionally, the Contract entitled the creditor-seller to recover reasonable attorney's fees incurred for the collection of amounts due to it. The Contract's creditor-seller's rights were assigned to the plaintiff immediately in the Contract.

         The buyers defaulted on the Contract on or about June 14, 2011, when a payment was not made. The balance due on the Contract was $15, 134.87, as of December 10, 2012.

         The plaintiff did not repossess the Vehicle in which it had a security interest when the buyers defaulted on the Contract in June of 2011. It has been the understanding of the plaintiff that a garage keeper's lien sale was conducted by a third party on the Vehicle. Evidence of a Justice of the Peace Court action to conduct such a lien sale was provided to the Court, but, no evidence was introduced showing that the sale was actually conducted.

         It is the position of the plaintiff that it is entitled to a judgment for the total balance due on the Contract against the defendant as a buyer on the Contract. The defendant admits that the buyers may have defaulted on the Contract. However, he contends that the plaintiff has failed to mitigate its damages by failing to repossess the Vehicle to offset amounts due to it.[2]'[3] Therefore, it is his position that the plaintiff is not entitled to the sums that it alleges are due.

         LEGAL STANDARD

         For the plaintiff to prevail on its motion for summary judgment, it must prove, by a preponderance of the evidence, that there are no genuine issues as to any material fact and that it is entitled to a judgment as a matter of law.[4] In reviewing the record, the Court must view the facts and all reasonable inferences therefrom in the light most favorable to the non-moving party.[5]

         DECISION

         The issue before the Court is a simple one. Is a creditor entitled to recover the full balance due on a car loan where (1) the buyer bought the car and defaulted on the car loan (2) pursuant to a loan agreement that provides that the creditor "may" repossess the car and (3) the creditor has failed to pursue such a repossession? The Court concludes that the answer is yes.

         Pursuant to 6 Del. C. § 9-601(a), a secured party "may reduce a claim to judgment, foreclose, or otherwise enforce the claim ... by any available judicial procedure."[6] Section 9-601(b) further provides that the rights under subsection (a) are "cumulative and may be exercised simultaneously."[7] The U.S. Third Circuit Court of Appeals, pursuant to Pennsylvania's equivalent commercial statute, interpreted this language to mean that, "[a] secured party is not required to elect one remedy to the exclusion of another."[8] The Delaware Superior Court adopted this rationale in Shultz v. Delaware Trust Co.[9] In Shultz, the Court held that, "a secured party is permitted to pursue alternative remedies until the obligation is satisfied."[10]Shultz did not, however, explicitly adopt the Third ...


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