Ford Motor Credit Co. v. Caiazzo

• Decision Date: 13 September 1989
• Citation: 387 Pa.Super. 561,564 A.2d 931
• Parties: , 10 UCC Rep.Serv.2d 398 FORD MOTOR CREDIT COMPANY, Appellee, v. Josephine J. CAIAZZO A/K/A Josephine S. Caiazzo and Anthony J. Caiazzo A/K/A Anrhony J. Caiazzo, Appellants. 874 PITTS. 1988
• Court: Pennsylvania Superior Court

Page 931

564 A.2d 931

387 Pa.Super. 561, 10 UCC Rep.Serv.2d 398

FORD MOTOR CREDIT COMPANY, Appellee, v. Josephine J. CAIAZZO A/K/A Josephine S. Caiazzo and Anthony J. Caiazzo A/K/A Anrhony J. Caiazzo, Appellants.

874 PITTS. 1988

Superior Court of Pennsylvania.

Argued Jan. 12, 1989.

Filed Sept. 13, 1989.

Barbara Cymerman, Pittsburgh, for appellants.

Gregory M. Devine, Pittsburgh, for appellee.

Before ROWLEY, KELLY and HESTER, JJ.

KELLY, Judge:

Appellants, Anthony and Josephine Caiazzo, appeal from an order sustaining the preliminary objections of appellee, Ford Motor Credit Corporation, and dismissing the Caiazzo's answer, new matter, and counterclaim. The trial court, applying this Court's decision in Ford Motor Credit Corp. v. Dunsmore, 374 Pa.Super. 303, 542 A.2d 1033 (1988), reasoned that Caiazzos' claims were not properly cognizable in this replevin action. We find Ford Motor Credit Corp. v. Dunsmore, supra, materially distinguishable based upon appellant's assertion of a purchase money security interest under 13 Pa.C.S.A. § 2711(c), arising from Caiazzos' revocation of acceptance of the allegedly defective new car. No such assertion of a possessory interest had been made in Ford Motor Credit Corp. v. Dunsmore, supra. We affirm in part, and reverse in part, and remand for further proceedings.

The relevant facts may be accurately summarized as follows. On June 1, 1987, the Caiazzos purchased a 1987 Mercury Grand Marquis from Biondi Motor Corporation in Monroeville, Pennsylvania. Under the retail installment financing contract entered into by the Caiazzos, they granted Biondi Motor Corporation an assignable possessory security interest in the vehicle upon a default in payments. The contract, including the security interest, was lawfully assigned to Ford Motor Credit Corporation.

On January 20, 1988, Ford Motor Credit Corporation commenced an action in replevin seeking possession of the Mercury Grand Marquis. Ford Motor Credit Corporation specifically alleged that the Caiazzos had defaulted on their obligations under the financing agreement by withholding required payments, and based its replevin claim upon its possessory interest arising as the result of that alleged default. On February 10, 1988, Ford Motor Credit Corporation applied for, and was granted, a writ of seizure to take possession of the Mercury Grand Marquis.

On that same day, the Caiazzos filed their answer together with new matter and counterclaims. In addition to Lemon Law and related warranty claims and defenses, the Caiazzos alleged that they were not in default, but that they had properly revoked acceptance of the Mercury Grand Marquis because of uncorrected defects which substantially impaired the value of the vehicle, and that they had retained possession of the vehicle, notwithstanding revocation, pursuant to their possessory, purchase money security interest arising under 13 Pa.C.S.A. § 2711(c).

Ford Motor Credit Corporation filed preliminary objections asserting that the matters asserted in the Caiazzos' Answer, New Matter, and Counterclaims were not properly cognizable in a replevin action. The trial court, relying expressly on this Court's decision in Ford Motor Credit Corp. v. Dunsmore, supra, sustained the preliminary objections and dismissed the Caiazzos' Answer, New Matter and Counterclaim in its entirety. This timely appeal follows.

Our standard of review of an order granting preliminary objections in the nature of a demurrer was set forth in Vattimo v. Lower Bucks Hosp., Inc., 502 Pa. 241, 465 A.2d 1231 (1983), as follows:

All material facts set forth in the [pleading] as well as all inferences reasonably deducible therefrom are admitted as true [for the limited purpose of this review]. The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Where a doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it.

465 A.2d at 1232-33 (citations omitted); see also Mahoney v. Furches, 503 Pa. 60, 66, 468 A.2d 458, 461-62 (1983). In reviewing the grant of a demurrer we are not bound by the inferences drawn by the trial court, nor are we bound by its conclusions of law. See Woodward v. Dietrich, 378 Pa.Super. 111, 116, 548 A.2d 301, 303 (1988); Drug House, Inc. v. Keystone Bank, 272 Pa.Super. 130, 132, 414 A.2d 704, 705 (1979). Furthermore, we will affirm the grant of such a motion only when the moving party's right to succeed is certain and the case is so free from doubt that further proceedings would clearly be fruitless. Jones v. Travelers Insurance Co., 356 Pa.Super. 213, 217, 514 A.2d 576, 578 (1986).

To be successful in a replevin action, the plaintiff must show not only title, but also the exclusive right of immediate possession of the property in question. International Electronics Co. v. N.S.T. Metal Products Co., Inc., 370 Pa. 213, 88 A.2d 40 (1952); Wilson v. Highway Service Marineland, 274 Pa.Super. 391, 394, 418 A.2d 462, 464 (1980). "Exclusive" right of possession means only a right which excludes the defendant. Thus, a plaintiff in a replevin action must show good title and right to possession as against the defendant, but is not required to set up such a title or right as against the whole world. Gensbigler v. Shawley, Inc., 162 Pa.Super. 642, 644, 60 A.2d 360, 362 (1948).

The focus in a replevin actions is strictly limited to title and right of possession; all matters foreign to those limited issues are expressly excluded from consideration and are not available as defenses or counterclaims. Blossom Products Corporation v. National Underwear Company, 325 Pa. 383, 191 A. 40 (1937); Ford Motor Credit Co. v. Dunsmore, supra; Gensbigler v. Shawley, supra. In Ford Motor Credit Co. v. Dunsmore, supra, this Court specifically held that,

[a] warranty claim cannot be asserted as a defense in a replevin action. Lee-Strauss Co. v. Kelly, 292 Pa. 403, 141 A. 236 (1928); Hall's Safe Company v. Walenk, 42 Pa.Super. 576 (1910). Any such claims which the purchaser may have against the seller must instead be asserted in an independent proceeding. Hahn v. Andrews, 370 Pa. 65, 87 A.2d 284 (1952).

542 A.2d at 1034. Consequently, we affirm that portion of the trial court's order which dismissed appellant's Lemon Law and related warranty defenses and counterclaims in this case, as well as the Caiazzos' specific counterclaims for the return of the purchase amounts paid, and for alleged defamation damages.

There is, however, a material difference between the pleadings in this case and the pleadings at issue in Ford Motor Credit Corp. v. Dunsmore, supra. Here, the Caiazzos have specifically asserted a possessory interest in the Mercury Grand Marquis in the form of a purchase money security interest under 13 Pa.C.S.A. § 2711(c) arising from the Caiazzos' alleged justifiable revocation of acceptance of the vehicle based upon uncorrected defects which substantially impaired the value of the vehicle. No such claim was presented in Ford Motor Credit Corp. v. Dunsmore, supra.

Pursuant to Pa.R.C.P. 1082(a), a claim to possession based upon a lien on the property in question in a replevin action may properly be set forth as a counterclaim in the replevin action. See e.g. Wilson v. Highway Service Marineland, supra. Here, the Caiazzos alleged justifiable revocation of acceptance, and asserted a possessory, purchase money security interest under 13 Pa.C.S.A. § 2711(c). We find that the trial court erred in summarily dismissing this counterclaim.

Initially, we note that the fact that Ford Motor Credit Corporation was the assignee of Biondi Motor Corporation's security interest did not insulate Ford Motor Credit Corporation from the effects of the Caiazzos' alleged lawful revocation of acceptance of the Mercury Grand Marquis. Under Pennsylvania law, and the express terms of the financing contract in this case, the assignee of a security interest in a retail installment financing contract for a motor vehicle takes subject to all claims against the seller or manufacturer of the vehicle, and is not considered to be a holder in due course who takes free from such claims. See Casey v. Philadelphia Auto Sales Co., 428 Pa. 155, 236 A.2d 800 (1968); First National Bank of Millville v. Horwatt, 192 Pa.Super. 581, 162 A.2d 60 (1960); Ford Motor Credit Corp. v. Moser, 34 D. & C.3d 115 (1984).

The Caiazzos alleged a possessory, purchase money security interest under 13 Pa.C.S.A. § 2711(c) which provides as follows:

§ 2711 Remedies of buyer in general; security interest of buyer in rejected goods.

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(c) Security interest of buyer in rejected goods.--On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller (section 2706).

(Emphasis added). In Yates v. Clifford Motors, Inc., 283 Pa.Super. 293, 310-12, 423 A.2d 1262, 1271-72 (1980), this Court recognized the validity of a Section 2711(c) possessory, purchase money security interest following revocation of acceptance of a truck purchased via an installment financing agreement, even though following revocation of acceptance the buyer made no installment payments to the bank which held the mortgage under the motor vehicle financing agreement. Similarly, in Cardwell v. International Housing, Inc., 282 Pa.Super. 498, 513, 423 A.2d 355, 363 (1980), this Court recognized the validity of a Section 2711(c) possessory, purchase money security interest following revocation of acceptance of a mobile home purchased via an installment financing agreement. ¹

In the Uniform Commercial Code Commentary and Law Digest, Professor Quinn has cogently observed:

§ 2-711(a) Editorial...