Aniebue v. Jaguar Credit Corp...

Decision Date16 February 2011
Docket NumberNo. A10A2308.,A10A2308.
Citation308 Ga.App. 1,708 S.E.2d 4
PartiesANIEBUEv.JAGUAR CREDIT CORPORATION.
CourtGeorgia Court of Appeals

OPINION TEXT STARTS HERE

Chukwuemeka A. Aniebue, for pro se.Bridgers, Peters & Kleber, Jerry C. Tootle Jr., for appellee.ADAMS, Judge.

Chukwuemeka A. Aniebue, pro se, appeals the trial court's grant of summary judgment to Jaguar Credit Corporation (“JCC”) in the company's suit to recover the deficiency on an automobile lease.

To prevail on a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact, and that the undisputed facts, viewed in a light most favorable to the party opposing the motion, warrant judgment as a matter of law. OCGA § 9–11–56(c); Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991). This Court applies a de novo review to a grant of summary judgment, viewing the evidence and all reasonable inferences therefrom in the light most favorable to the nonmovant. Versey v. Citizens Trust Bank, 306 Ga.App. 479, 702 S.E.2d 479 (2010).

So viewed, the evidence shows that on September 10, 2007, Chukwuemeka A. Aniebue (“Aniebue”) and his wife, Alma Aniebue, signed a Motor Vehicle Lease Agreement with Hennessey Jaguar of Gwinnett.1 Under this Agreement, the Aniebues entered into a four-year monthly payment lease for a 2008 Jaguar, which required them to make a $999.27 payment each month. At the end of the lease, the Aniebues had the option of purchasing the car for the stated “residual value” of $19,684.

The Agreement further provided that the Aniebues could voluntarily terminate the lease by returning the vehicle. But if they chose to terminate, they were required to pay the difference between the unpaid portion of Adjusted Capitalized Cost, which the lease calculated at $59,145, and the vehicle's fair market wholesale price, in addition to any other costs due and owing under the lease. In the event of a default, JCC was entitled to a return of the vehicle, and the Aniebues were required to pay the difference between the Adjusted Capitalized Cost and “the value that could be realized at the wholesale sale of the Vehicle,” as well as any other costs due and owing.

JCC purchased the lease from Hennessey Jaguar in the ordinary course of business and serviced the Aniebues' account. JCC's account records indicate that the Aniebues made regular monthly payments of $1,000 to $1,010 for the first four months of the lease, from October 2007 to January 2008, but made no payments in February or March 2008. The Aniebues then resumed payments in varying amounts from April through June 2008, including payments of only $500 for two of those months. Although no payment is recorded for either July or September 2008, the Aniebues made two $1,000 payments in August.

On October 8, 2008, the Aniebues voluntarily surrendered the car to JCC. Aniebue denies that he made the surrender because the lease was in default, despite the fact that JCC records indicate that the lease was not current at that time.2 Rather, Aniebue states that he initiated the surrender primarily because the automobile had “developed major technical problems ranging from bad seat belt, noisy brakes, and occasional lock-engine.” At the time of surrender, Aniebue signed a voluntary surrender form, which reflects that the balance remaining under the lease was $52,496.09. By signing the form, Aniebue agreed that the car could be sold and if the sale price did not cover the balance due plus sale expenses, he agreed to pay JCC the difference. The form also provided that Aniebue was not “waiving his right to redeem the property or to be advised of any proposed sale of the property before it is sold.”

JCC sold the car at auction for $29,600 in January 2009. Aniebue states that he received no prior notice of this sale, and JCC has provided no proof of such notice. JCC applied the sales proceeds to the balance due on the account, which the company had adjusted downward from the balance shown on the voluntary surrender form to $48,591.29,3 leaving a balance of $18,991.29. The company then added charges in the amount of $5,248.17, reflecting repossession expense, maintenance fee, lease extension fee, late charges and service charges, resulting in a total of $24,239.46. JCC initiated this action to collect this amount plus interest and attorney fees, and the trial court subsequently granted summary judgment in its favor against Aniebue.

1. Aniebue argues that the trial court erred in granting JCC's motion for summary judgment because JCC failed to provide him notice as required under OCGA § 10–1–36 and 11–9–611(b).4 The applicability of these sections, however, “depends on whether the contract denominated a lease by the parties is a true lease or is a disguised secured transaction. If the lease is not a security transaction the notice provisions are inapplicable, and the [post-surrender] sale was properly conducted.” (Citation and punctuation omitted.) Mejia v. C & S Bank, 175 Ga.App. 80, 81, 332 S.E.2d 170 (1985).

Under Georgia's version of the UCC, [w]hether a transaction creates a lease or security interest is determined by the facts of each case.” OCGA § 11–1–201(37). That statute “defines the distinction between a ‘true lease’ and a security interest in an agreement involving ... a purchase option [by] focusing the inquiry on the economics of the transaction, not the intent of the parties.” (Citation and punctuation omitted.) Coleman v. DaimlerChrysler Svcs. of North America, 276 Ga.App. 336, 337, 623 S.E.2d 189 (2005). Accordingly, under OCGA § 11–1–201(37),

a transaction creates a security interest if [1] the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and ... [2] [t]he lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.

OCGA § 11–1–201(37). This two-pronged analysis has been termed the “Bright-Line Test” for determining whether a security interest exists. Coleman, 276 Ga.App. at 338, 623 S.E.2d 189. In addition, the statute provides that [a] transaction does not create a security interest merely because it provides that ... [t]he lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.” Id. Accordingly, we have recognized that [t]here is a set of purchase options whose fixed price is less than fair market value but greater than nominal that must be determined on the facts of each case to ascertain whether the transaction in which the option is included creates a lease or a security interest.” Id. Thus, regardless of whether other provisions of the Agreement are

indicative of a security agreement, it is commonly held that “the best test” for determining the intent of an agreement which provides for an option to buy, is a comparison of the option price with the market value of the equipment at the time the option is to be exercised. Such a comparison shows whether the lessee is paying actual value or acquiring the property at a substantially lower price.

(Citation and punctuation omitted.) Mejia v. C & S Bank, 175 Ga.App. at 81, 332 S.E.2d 170.

The Agreement here sets the end-of-lease purchase option price for the vehicle, which it denominates the “residual value,” at $19,684, but it does not expressly state that this figure represents the estimated fair market value as of September 2011, the time the purchase option could be exercised. And JCC failed to provide the trial court with information regarding such value. Without this information, we cannot apply the “best test” for determining whether the Agreement creates a security interest. However, the use of the term “residual value” suggests the parties were attempting to value the car at lease end. And the record demonstrates that the $19,684 purchase option price is approximately one-third of the car's value in September 2007 as agreed upon by the parties at the beginning of the lease and approximately two-thirds of the sale price netted at the wholesale auction in January 2009. Accordingly, even if the option price were less than the fair market value as of September 2011, we conclude that it cannot be deemed a merely nominal amount.

Moreover, application of the Bright–Line Test under OCGA § 11–1–201(37) “does not necessarily end the analysis.” Coleman v. DaimlerChrysler Svcs., 276 Ga.App. at 339, 623 S.E.2d 189. Rather, we have recognized that

“the key issue the Court must determine is whether the lessor retains a meaningful residual interest at the end of the lease term. If there is a meaningful reversionary interest ... the parties have signed a lease, not a security agreement. If there is no reversionary interest, the parties have signed a security agreement, not a lease.” (Citations and punctuation omitted.) Id. Courts across the country have applied various tests in determining whether the lessor retained a meaningful reversionary interest under the UCC. We conclude that the test employed in In re QDS Components, 292 B.R. 313, 342 (S.D.Ohio 2002),5 is appropriate for application in this case. That test analyzes two factors: (1) whether the purchase option price is nominal; and (2) whether the agreement contains any provision for the lessee's acquisition of equity in the vehicle.” “the key issue the Court must determine is whether the lessor retains a meaningful residual interest at the end of the lease term. If there is a meaningful reversionary interest ... the parties have signed a lease, not a security agreement. If there is no reversionary interest, the parties have signed a security agreement, not a lease.” (Citations and punctuation omitted.) Id. Courts across the country have applied various tests in...

To continue reading

Request your trial
5 cases
  • United States v. Bushay
    • United States
    • U.S. District Court — Northern District of Georgia
    • August 5, 2014
    ...and (2) whether the agreement contains any provision for the lessee's acquisition of equity in the vehicle.” Aniebue v. Jaguar Credit Corp., 308 Ga.App. 1, 708 S.E.2d 4, 8 (2011) (quoting In re QDS Components, 292 B.R. at 342 ) (internal quotation marks ...
  • In the Interest of J.C., a Child.
    • United States
    • Georgia Court of Appeals
    • March 10, 2011
    ... ... (Punctuation omitted.) KMart Corp. v. Coker, 261 Ga. 745, 747(2), (3), 410 S.E.2d 425 (1991) (examining ... ...
  • Capital City Developers, LLC v. Bank of N. Ga.
    • United States
    • Georgia Court of Appeals
    • July 5, 2012
    ...interest rates during life of loan based on bank's prime rate and debtor denied liability). 14. See Aniebue v. Jaguar Credit Corp., 308 Ga.App. 1, 6(2), 708 S.E.2d 4 (2011). 15. (Citation and punctuation omitted.) Hendricks v. Enterprise Financial Corp., 199 Ga.App. 577, 581(4), 405 S.E.2d ......
  • In re Estate Wheeler
    • United States
    • Georgia Court of Appeals
    • March 6, 2019
    ...licensed attorney may appear before a judicial body on behalf of another. See OCGA § 15-19-51 (a) (1) ; Aniebue v. Jaguar Credit Corp. , 308 Ga. App. 1, 1 n.1, 708 S.E.2d 4 (2011) ; Congress Re-Insurance Corp. v. Archer-Western Contractors , 226 Ga. App. 829, 831 (1), 487 S.E.2d 679 (1997) ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT