Ford Motor Credit Co. v. Updegraff

• Decision Date: 10 April 2007
• Docket Number: No. WD 66331.,WD 66331.
• Parties: FORD MOTOR CREDIT COMPANY, Respondent, v. Paula J. UPDEGRAFF, Appellant.
• Court: Missouri Court of Appeals

218 S.W.3d 617

FORD MOTOR CREDIT COMPANY, Respondent, v. Paula J. UPDEGRAFF, Appellant.

No. WD 66331.

Missouri Court of Appeals, Western District.

April 10, 2007.

COPYRIGHT MATERIAL OMITTED

Jeffrey A. Befort, Kansas City, MO, for respondent.

Dale K. Irwin, Kansas City, MO, for appellant.

Before SMART, P.J., and EDWIN H. SMITH and HARDWICK, JJ.

EDWIN H. SMITH, Judge.

Paula J. Updegraff appeals the judgment of the Circuit Court of Clay County, for the respondent, Ford Motor Credit Company, on its petition for a deficiency judgment of $5,831.90, in accordance with §§ 400.X-XXX-XXX.9-710,¹ with respect to the repossession and sale of the appellant's 2001 Ford Focus, which had been financed by the respondent.

The appellant raises three points on appeal. In Point I, she claims that the trial court erred in admitting evidence of the respondent's sale of the Ford Focus, because it was outside the pleadings. In Point II, she claims that the trial court erred in entering judgment for the respondent, because the evidence was insufficient to show a required proof element of its claim, that in selling the Ford Focus, it strictly complied with § 400.9-610(b), requiring that the sale be done in a commercially reasonable manner. In Point III, she claims that the trial court erred in entering judgment for the respondent, because the evidence was insufficient to show a required proof element of its claim, that in disposing of the collateral it complied with the requirements of §§ 400.9-611 and 400.9-614.

Because we determine, sua sponte, that the respondent's petition for a deficiency judgment failed to state a cause of action upon which relief could be granted, we dismiss for a lack of jurisdiction to review the appellant's appeal on the merits and remand.

Facts

On July 5, 2001, the appellant purchased a 2001 Ford Focus from Thoroughbred Ford, Inc., in Kansas City, Missouri, for $16,650. She also purchased an extended service contract (ESC) on the Focus for $1,475, resulting in a total purchase price of $18,125. After making a down payment of $3,000, the remaining balance, $15,125, was financed by Thoroughbred. The finance contract required the appellant to make sixty monthly payments of $298.78 until the principal and interest thereon were paid in full and gave Thoroughbred a security interest in the Focus. The contract was later assigned to the respondent.

The appellant failed to make her payments on the Focus in April and May of 2002, and accordingly, on July 14, 2002, the respondent repossessed it. On July 16, 2002, the respondent sent the appellant a "Notice of Our Plan to Sell Property," which indicated that it was going to sell the Focus at a private sale no sooner than ten days from July 16, 2002. On September 25, 2002, at the Kansas City Auto Auction, the respondent sold the Focus for $8,300, leaving a balance due from the appellant of $5,927.04.

On August 4, 2004, the respondent filed a petition in the Circuit Court of Clay County seeking a deficiency judgment of $5,927.04. The petition was taken up and heard by the court on October 6, 2005. Prior to the presentation of evidence, the respondent sought leave to amend its petition by interlineation to reduce the amount of the deficiency sought from $5,927.04 to $5,331.90, reflecting the refund due the appellant on the ESC. The trial court granted leave to amend.

At trial, over the appellant's objection that the evidence was beyond the scope of the pleadings, the trial court allowed the testimony of Sherry Gerstner, a dealer account manager employed by Ford Motor Company, regarding the details of the sale of the Focus. On November 17, 2005, the trial court entered judgment in favor of the respondent in the amount of $5,831.90, which included $5,331.90 for the deficiency and $500 for attorney's fees.

This appeal follows.

Appellate Jurisdiction

In every case, before considering the merits of the appeal, we must first determine, sua sponte, our jurisdiction to do so, in that if we do not have jurisdiction, we must dismiss. Brock v. Blackwood, 143 S.W.3d 47, 55 (Mo.App.2004). "Our jurisdiction to review on the merits is predicated on the trial court's having jurisdiction to enter the judgment appealed." Id. If the trial court lacked jurisdiction to enter the judgment, then we lack jurisdiction to review it on the merits. Id. In that case, we only have jurisdiction to determine our jurisdiction in the first instance. Id.

In this case, our appellate jurisdiction is called into question by the appellant's argument in Point I. In making her claim, that the trial court erred in admitting evidence of the respondent's sale of the Focus because it was outside the pleadings, the appellant contends that the respondent, in pleading for a deficiency judgment with respect to §§ 400.X-XXX-XXX.9-710, violated § 408.556.1, in that the respondent's petition did not allege any facts to show compliance with § 400.9-610, as required, inter alia, by § 408.556.1. Section 408.556.1 reads:

In any action brought by a lender against a borrower arising from default, the petition shall allege the facts of the borrower's default, facts sufficient to show compliance with the provisions of sections 400.9-601 to 400.9-629, RSMo, which provisions are hereby deemed applicable to all credit transactions, with respect to any sale or other disposition of collateral for the credit transaction, the amount to which the lender is entitled, and an indication of how that amount was determined.

Given the express language of this subsection, it mandates, inter alia, that to properly plead a cause of action for a deficiency judgment, the petition must allege, inter alia, facts sufficient to show compliance with the provisions of § 400.9-610(b). Section 400.9-610(b) reads:

(b) Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

Hence, to state a cause of action for a deficiency judgment, the respondent, inter alia, had to plead compliance with the mandate of § 400.9-610(b). And, the failure to do so would require dismissal, pursuant to Rule 55.27(a)(6),² for failure to state a cause of action upon which relief could be granted.

The issue of whether a petition states a cause of action upon which relief can be granted is inherent in every appeal and may be raised sua sponte by both the trial and appellate courts. Brock, 143 S.W.3d at 55-56. "This is because the failure to state a claim on which relief can be granted essentially deprives the trial court of subject matter jurisdiction and, thus, the authority to rule on the plaintiff's petition; and if the trial court lacked subject matter jurisdiction to rule, we necessarily have no jurisdiction to review the court's ruling on the merits." Id. at 56 (internal quotation marks and citation omitted).

The respondent contends that it did not violate the mandate of § 408.556.1, that "the petition shall allege . . . facts sufficient to show compliance with the provisions of sections 400.9-601 to 400.9-629," specifically, § 400.9-610(b), as alleged by the appellant, in that it pled, inter alia: "The Plaintiff has performed all of its duties and obligations under the aforesaid contract; furthermore, all conditions precedent have occurred, including but not limited to the giving of any Notice of Sale that may be required by law, Defendant has breached said contract." (Emphasis added.) In so contending, the respondent relies on Rule 55.16 and § 509.170, both of which read, in pertinent part: "In pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred." In other words, the respondent is contending that the express mandate of § 408.556.1, that it plead "facts sufficient to show compliance with the provisions of sections 400.9-601 to 400.9-629," is a condition precedent in pleading a proper cause of action for a deficiency judgment such that despite the express language of the mandate, Rule 55.16 and § 509.170 permitted it to plead in conclusory fashion that "furthermore, all conditions precedent have occurred." Hence, in determining, sua sponte, our jurisdiction in this case to review on the merits, the issue is whether, pursuant to Rule 55.16 and § 509.170, the allegation in the respondent's petition, that "furthermore, all conditions precedent have occurred," was sufficient to comply with the mandate of § 408.556.1, that to properly plead a cause of action for a deficiency judgment, the plaintiff must have pled "facts sufficient to show compliance with the provisions of sections 400.9-601 to 400.9-629."

The mandate of § 408.556.1, with respect to the pleading of facts to state a cause of action for a deficiency judgment, is consistent with the requirement of Rule 55.05, that a plaintiff's petition must "contain a short and plain statement of the facts showing that the pleader is entitled to relief." The purpose of this fact-pleading requirement "is to present, define, and isolate the controverted issues so as to advise the trial court and the parties of the issues to be tried and to expedite the trial of a cause on the merits." Sivigliano v. Harrah's N. Kan. City Corp., 188 S.W.3d 46, 48 (Mo.App. 2006) (internal quotation marks and citation omitted). "Although the petition does not have to plead evidentiary or operative facts showing an entitlement to the relief sought, it must plead ultimate facts demonstrating such an entitlement and cannot rely on mere conclusions." Brock, 143 S.W.3d at 56. In determining whether a petition states a cause of action upon which relief can be granted, we are to disregard conclusions not supported by the facts pled. Id. The failure to...