Ambrose v. Advantage Funding Commercial Capital Corp. (In re Ambrose)

• Decision Date: 13 March 2017
• Docket Number: Case No. 16–51326–JRS
• Citation: 568 B.R. 716
• Parties: IN RE: Jennifer Frances AMBROSE, Debtor. Jennifer Frances Ambrose, Movant, v. Advantage Funding Commercial Capital Corp., Claim No. 12–1, Respondent.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

568 B.R. 716

IN RE: Jennifer Frances AMBROSE, Debtor.

Jennifer Frances Ambrose, Movant,

v.Advantage Funding Commercial Capital Corp., Claim No. 12–1, Respondent.

Case No. 16–51326–JRS

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

Signed March 13, 2017

Alexander Gray Hait, Hait & Kuhn, Woodstock, GA, for Debtor.

Eric W. Roach, Nancy J. Whaley, Standing Chapter 13 Trustee, Atlanta, GA, for Trustee.

ORDER

James R. Sacca, U.S. Bankruptcy Court Judge

Before the Court is Debtor's Objection to Proof of Claim of Advantage Funding Commercial Capital Corporation Claim # 12–1. (Doc. 61). The Objection is in regards to a deficiency claim arising from the sale of a 2009 Nissan UD 3300 Vocational Truck, Vin No. JNAPC81L79AC75035 (the "Collateral") in which the creditor had a perfected first-priority lien.

Background

On February 5, 2015, Advantage Funding Commercial Capital Corporation ("Advantage Funding") executed a Master Promissory Note and Security Agreement (the "Note") with Ambrose Industrial Services Corporation ("AISC"), a company owned by Ms. Ambrose. As a result, Advantage Funding retained a first priority security interest in the Collateral. The certificate of title also listed the Collateral as AISC's property. Ms. Ambrose personally guaranteed the Note, but otherwise had no legal or equitable interest in the Collateral. AISC eventually defaulted on the monthly payments pursuant to the Note's terms.

On January 23, 2016, AISC filed its voluntary petition for relief under Chapter 7. See In reAmbrose Industrial Servs. Corp. , Case No. 16–51268–WLH. Advantage Funding moved for relief from the automatic stay which was granted on March 7, 2016. The Order authorized Advantage Funding to "proceed with the enforcement of its rights and remedies in and to the Collateral under the loan documents and applicable non-bankruptcy law including, but no limited to, self-help repossession." Order Granting Motion for Relief from Stay, Case No. 16–51268–WLH.

Ms. Ambrose filed the current petition on January 25, 2016 for Chapter 13 relief. (Doc. 1). She listed Advantage Funding as a secured creditor as to the Collateral in the amount of $136,446.00 on her Schedule D. On March 29, 2016, Advantage Funding filed a general unsecured claim, Claim # 12–1 (the "Claim") in the amount of $149,057.46. On April 29, 2016, Advantage Funding repossessed¹ the Collateral from a third-party's lot pursuant to the Order lifting the stay in the AISC bankruptcy.

On July 7, 2016, Ms. Ambrose filed the Objection to Claim, arguing that Advantage Funding's claim should be reduced to the deficiency amount because she was no longer in possession of the Collateral. Advantage Funding filed its response to the objection, arguing that as soon as a sale of the Collateral is finalized, it would amend its Claim. (Doc. 65). On November 7, 2016, Advantage Funding filed a brief in support of its response. (Doc. 87). Notably, Ms. Ambrose's objection has evolved over the course of time from the original demand that the claim be reduced to the deficiency amount, to arguing that Advantage Funding failed to give proper notice under the Georgia Motor Vehicles Sales Finance Act (the "Georgia Act"), O.C.G.A. §§ 10–1–30 et seq. As such, in the brief, Advantage Funding addressed Ms. Ambrose's newest argument, that Advantage Funding failed to satisfy the Georgia Act.

On December 15, 2016, the Court Ordered and Noticed a rescheduled hearing on the Objection to Proof of Claim which would be held on January 24, 2017. (Doc. 89). Both parties appeared at the hearing and addressed, among other things, whether Advantage Funding was a "sales finance company" under the Georgia Act which, if it was, would have required Advantage Funding to provide certain notice within 10 days of repossession pursuant to the Georgia Act to maintain a deficiency claim. At the conclusion of the hearing, the Court allotted Ms. Ambrose until February 3, 2017 to file a brief on the issue, and Advantage Funding until February 13, 2017 to respond. Ms. Ambrose ultimately never filed a brief, but Advantage Funding timely filed an additional brief on February 13, 2017 (Doc. 92).

Discussion

I. Advantage Funding does not constitute a sales finance company

At the January 24, 2017 hearing, Ms. Ambrose argued that Advantage Funding was a sales finance company under the Georgia Act and, because it failed to provide the additional notice, Advantage Funding was not entitled to a deficiency claim. Pursuant to the Georgia Act, certain transactions involving motor vehicles requireadditional notice to recover a deficiency against a buyer. Specifically,

(a) When any motor vehicle has been repossessed after default in accordance with Part 6 of Article 9 of Title 11, the seller or holder shall not be entitled to recover a deficiency against the buyer unless within ten days after the repossession he or she forwards by registered or certified mail or statutory overnight delivery to the address of the buyer shown on the contract or later designated by the buyer a notice of the seller's or holder's intention to pursue a deficiency claim against the buyer.

O.C.G.A. § 10–1–36(a) (emphasis added). However, a deficiency claim is only barred if the person seeking such a claim is a "seller"² or "holder" under the Georgia Act. A "holder" of a retail installment contract is defined as "the retail seller of a motor vehicle under the contract or, if the contract is purchased by a sales finance company or another assignee, the sales finance company or other assignee at the time of the determination." O.C.G.A. § 10–1–31(a)(3). First, a retail installment contract is an instrument that creates a purchase money security interest. O.C.G.A. § 10–1–31(a)(9). Further, a "sales finance company" is defined in the Georgia Act as "a person engaged in the business of purchasing retail installment contracts from one or more retail sellers." O.C.G.A. § 10–1–31(a)(12).

In determining whether Advantage Funding is a sales finance company under the Georgia Act, the Court must look to the plain language of the statutes at issue. Where the language of a statute is clear, the "sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms." Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A. , 530 U.S. 1, 6, 120 S.Ct. 1942, 1947, 147 L.Ed.2d 1 (2000) (internal quotations omitted) (quoting United States v. Ron Pair Enters., Inc. , 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989) ). The Court finds the relevant language is clear, and thus the analysis begins and ends with the plain language.

As such, the Court disagrees with Ms. Ambrose and finds that Advantage Funding is not a sales finance company under the Georgia Act. In order for Advantage Funding to be a sales finance company under the Georgia Act, it would be necessary that Advantage Funding had purchased a retail installment contract from a "seller." Massey v. Stephens , 155 Ga.App. 243, 247, 270 S.E.2d 796, 799 (1980) (finding the Georgia Act inapplicable because there was no retail installment contract where there was no financing furnished by the seller or its assignee in order to purchase the collateral); Motor Contract Co. of Atlanta v. Sawyer , 123 Ga.App. 207, 208, 180 S.E.2d 282, 283 (1971) (noting the Georgia Act governs sales finance companies "engaged in the business of purchasing retail installment contracts from retail sellers"). Second, Advantage Funding would have to be engaged in such a business of purchasing retail installment contracts. Ervin v. Arnold , 197 Ga.App. 841, 842, 399 S.E.2d 548, 549 (1990) (finding that compliance with the Georgia Act is not required when person is not in the business of selling vehicles in retail installment contracts).

The facts before the Court are not in dispute: Advantage Funding has a perfected first-priority security interest in and lien against the Collateral. Advantage Funding has a security interest as a result of the terms of the Note. There is no evidence establishing that Advantage Funding sold and financed the Collateral or purchased an instrument creating a purchase money security interest from a "seller." In re Graupner , 356 B.R. 907, 922 (Bankr. M.D. Ga. 2006) (discussing that the first step to determine if the Georgia Act applies is whether there was a purchase money security interest created in a retail installment contract). Additionally, Advantage Funding operates a transportation finance and leasing business, and is not in the business of purchasing retail installment contracts. The Court is unpersuaded and unwilling to extend the boundaries of the clear text of the Georgia Act. In re Lease Purchase Corp. , No. 87-11177, 1994 WL 16005421, at *2–3 (Bankr. S.D. Ga. May 18, 1994) (refusing to extend the definition of "buyer" to include the trustee). As such, the Court finds Advantage Funding is not a sales finance company for the purposes of the Georgia Act and, therefore, was not required to provide additional notice in order to recover a deficiency claim.

II. Ms. Ambrose waived her right to a defense of additional notice entitlement

At the January 24, 2017 hearing, Advantage Funding argued that the Note contained an express waiver of any statutory notice. Advantage Funding filed a supplement brief on this issue, but even though ordered by the Court, Ms. Ambrose never briefed the Court on this particular argument. The Court agrees with Advantage Funding that the Note's express waiver is valid and enforceable. In particular, Ms. Amborse's personal guarantee states:

GUARANTOR HEREBY WAIVES: PRESENTMENT, NOTICE OF DISHONOR AND PROTEST, NOTICE OF DEFAULT BY DEBTOR, OF SALE OR OTHER DEALING WITH ANY SECURITY AND ANY OTHER NOTICE TO WHICH GUARANTOR MIGHT OTHERWISE BE ENTITED.

Claim 12–1, p. 18. As such, Advantage Funding alleged that even if the Georgia Act applied to Advantage Funding, Ms. Ambrose cannot rely on the failure to provide proper notice because ...