In re Spinner

• Decision Date: 29 September 2008
• Docket Number: Bankruptcy No. 06-71767-MGD.,Adversary No. 06-6415-MGD.
• Citation: 398 B.R. 84
• Parties: In re Tarran M. SPINNER, Debtor. Tarran M. Spinner, Plaintiff, v. Cash In A Hurry, LLC, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

398 B.R. 84

In re Tarran M. SPINNER, Debtor Tarran M. Spinner, Plaintiff, v. Cash In A Hurry, LLC, Defendant.

Bankruptcy No. 06-71767-MGD.

Adversary No. 06-6415-MGD.

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

September 29, 2008.

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Ralph Goldberg, Goldberg & Cuvillier, P.C., Decatur, GA. for Plaintiff, Tarran M. Spinner.

Wade G. Anderson, Macon, GA, Richard E. Thomasson, Thomasson Law Firm, LLC, Atlanta, GA, for Defendant, Cash In A Hurry, LLC.

MEMORANDUM OPINION

MARY GRACE DIEHL, Bankruptcy Judge.

Tarran M. Spinner ("Debtor") filed the above-styled adversary proceeding against Cash In A Hurry, LLC ("Defendant"), and a trial on the matter was held on June 3, 2008. Debtor alleges a Truth In Lending Act ("TILA") violation by Defendant and seeks statutory damages. In addition, Debtor seeks damages for the sale of Debtor's vehicle, a 1997 BMW 528i, as an alleged willful violation of the automatic stay under 11 U.S.C. § 362(k), or, alternatively, recovery for an alleged fraudulent transfer pursuant to 11 U.S.C. § 548(a)(1).

The Court has jurisdiction pursuant to 28 U.S.C. § 1334, and this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). This memorandum opinion constitutes findings of fact and conclusions of law pursuant to FED. R. CIV. P. 52(a), applicable to this proceeding pursuant to Fed. R. BANKR.P. 7052.

FINDINGS OF FACT

On January 23, 2006, Defendant and Debtor entered into a title pawn loan transaction ("pawn transaction"). (Plaintiffs Exhibit 1). Defendant regularly extends credit for personal, family, and household purposes for which a finance charge is imposed. This pawn transaction was for personal purposes. Debtor gave Defendant a title lien on her vehicle, a 1997 BMW 528i, in exchange for $2,078.00 in cash.¹ (Plaintiffs Exhibits 1 & 2). The terms of the pawn transaction included an initial $519.50 finance charge and an annual percentage rate ("APR") of 304.24%. The $519.50 finance charge is 25% of the $2,078.00 loan amount. The maturity date on the loan was February 22, 2006, a term of thirty days. Debtor has the option to redeem, which means all amounts owing are paid by the maturity date. Alternatively the parties can consent to an extension of the pawn transaction for additional thirty-day periods. A thirty-day grace period follows the maturity date and allowed Debtor to redeem the vehicle during that period. Upon expiration of the grace period, Debtor's property would become the pawnbroker's property.

The APR after the second thirty-day extension was contracted to be reduced to 152.12%. This reduced APR would be applicable to any extension beyond 90 days after the initial pawn transaction date. The contract noted applicable fees for title registration, vehicle storage, and repossession.

This pawn transaction was extended six times (Plaintiffs Exhibit 3).

▄ First Extension: Debtor's first payment on February 22, 2006 of $919.50 was first applied to the finance charge, and then the principal amount was reduced to $1,678.00. On February 22, 2006, the contract was extended and Debtor incurred an additional interest or "roll over" charge for the extension in the amount of $419.50, which represents 25% of the unpaid principal amount. The maturity date for the extended contract was now March 24, 2006.

▄ Second Extension: On March 30, 2006, Debtor paid $500.00 on her account. This payment was applied to the roll over charge and reduced the principal on the loan by $80.50. The principal balance on the loan after Debtor's March 30, 2006 payment was 41,597.50. The contract was extended, and a roll over charge in the amount of $399.38, which amounts to 25% of the March 30, 2006 principal balance. The maturity date for the extended contract was now April 23, 2006.

▄ Third Extension: Debtor made a $399.38 payment on April 28, 2006. This payment paid off the interest in total, but the principal balance on the loan remained at $1,597.50. The contract was extended and a $399.38 roll over charge was added to Debtor's loan. The maturity date on the extended contract was now May 23, 2006.

▄ Fourth Extension: Debtor made two payments totaling $399.38 on June 7, 2006 and June 9, 2006. These payments covered interest charges, but the principal amount of the loan remained at $1,597.50. The contract was extended on June 9, 2006 and a roll-over charge in the amount of $399.38 was added to Debtor's balance. The maturity date on the extended contract was June 22, 2006.

▄ Fifth Extension: Debtor made two payments totaling $399.38 on July 13, 2006 and July 20, 2006. These payments covered interest charges, but the principal amount of the loan remained at $1,597.50. The contract was extended on July 13, 2006 and a roll-over charge in the amount of $399.38 was added to Debtor's balance. The maturity date on the extended contract was July 22, 2006.

▄ Sixth Extension: Debtor made two payments totaling $399.38 on August 4, 2006 and August 18, 2006. These payments covered interest charges, but the principal amount of the loan remained at $1,597.50. The contract was extended on August 20, 2006 and a roll-over charge in the amount of $399.38 was added to Debtor's balance. The maturity date on the extended contract was August 21, 2006.

Debtor's payments totaled $3,017.02 prior to the repossession of her vehicle. The amount still owing on the account totaled $1,996.88, including $1,597.50 in principal and $399.38 in fees. The grace period on the contract ran from August 21, 2006 to September 20, 2006.

Debtor testified that her car was repossessed at approximately 2:00 a.m. on September 22, 2006. Debtor and Debtor's counsel testified that they each called Defendant's manager, Mr. Friedman, on September 22, 2006 requesting the return of Debtor's vehicle. Debtor filed a Chapter 13 petition at 6:00 p.m. on September 22, 2006. Debtor testified that she called Defendant's office at 8:00 a.m. and later went into the office on September 22, 2006 looking for Mr. Friedman. She testified that she was never told the car was sold. Debtor's counsel testified that he called Mr. Friedman that evening and Mr. Friedman refused to return the vehicle. Debtor's counsel also stated that Mr. Friedman did not indicate that the vehicle had been sold. Mr. Friedman testified that Defendant had no sale records of the vehicle and none were produced as part of Debtor's discovery request. (Plaintiffs Exhibit 4).

Mr. Friedman initially testified that he did not recall speaking with Debtor's counsel on September 22, 2006. Debtor's counsel refreshed his recollection with Plaintiffs Exhibit 6, and Mr. Friedman testified that the vehicle was sold prior to Debtor's counsel's telephone call and before the receipt of Debtor's counsel's letter requesting turnover of the vehicle (Plaintiff's Exhibit 6).

Mr. Friedman testified that he did not know the sale amount of Debtor's vehicle. He recalled that the vehicle was sold with approximately four other cars to Raymond Kunata in Naples, Florida. There is no contract of sale for the vehicles. Mr. Friedman was paid by check for the vehicles. There is no copy of the check. Mr. Friedman has no record of the amount of the sale or the time of the sale. Mr. Friedman testified that he routinely sells cars to Mr. Kunata by oral contract, and no written contract for the sale of Debtor's vehicle existed. Plaintiffs Exhibit 3, the Title Loan History, includes a line item dated September 22, 2006 that states "Write Off." Mr. Friedman explains that the "Write Off computer entry is typically entered after a vehicle is sold. No evidence was provided as to what time of day the "Write Off entry was entered.

The Court heard testimony as to the value of Debtor's vehicle from Debtor, Phillip Elvitt, a former new and used car salesman, and Mr. Friedman. Debtor testified that she purchased the 1997 BMW for $7,000.00 in October of 2005. Debtor stated the car was in excellent condition with many features, including a leather interior, sunroof, and tinted windows. When Debtor purchased the vehicle it had 132,000 miles on it. She paid $3,000.00 for a new transmission six weeks after her purchase. She testified that the original purchase price was low when compared to similar cars on popular used car websites such as CarMax. Debtor testified that the vehicle at the time of purchase was worth between $12,000.00 to $15,000.00. She believed that she got a lower price because she bought the vehicle from a co-worker who wanted to help her.

Debtor also testified' on cross examination that she borrowed money from Georgia Telco Credit Union for the purchase of the 1997 BMW in the amount of $7,000.00. Debtor consented to a judgment against her for $5,566.21 in a npndischargeability adversary proceeding brought by Georgia Telco Credit Union, Adversary Proceeding No. 06-6569, entered November 29, 2006.

Mr. Elvitt was certified as an expert for the retail sale of new and used cars, and valued the Debtor's vehicle at the time of trial to be between $8,500.00 to $9,000.00. Mr. Elvitt never saw Debtor's car and his assessment was based upon facts relayed to him by Debtor or Debtor's counsel. His valuation was based on the excellent condition of the car, the addition of a new transmission, a comparable car analysis on a popular used car website, AutoTrader, and reference to Edmunds. Mr. Elvitt testified that the vehicle would have had to be involved in a major accident for the $2,500.00 to $3,500.00 valuation by Defendant to be accurate. On cross examination, Mr. Elvitt stated that he had no experience in the used car wholesale industry.

Debtor also testified that personal property in the vehicle was not returned to her. A new camera, three to four lawn chairs, cell phone attachments, and her son's sports equipment, jerseys, and shoes were in the car. Debtor's counsel's demand letter to Defendant on September 22, 2006 did not mention any personal property. (Plaintif...