Metzger v. Americredit Financial Services, No. A05A0577.

• Decision Date: 30 March 2005
• Docket Number: No. A05A0577.
• Citation: Metzger v. Americredit Financial Services, 615 S.E.2d 120, 273 Ga. App. 453 (Ga. App. 2005)
• Parties: METZGER v. AMERICREDIT FINANCIAL SERVICES, INC.
• Court: Georgia Court of Appeals

273 Ga. App. 453

615 S.E.2d 120

METZGER v.AMERICREDIT FINANCIAL SERVICES, INC.

No. A05A0577.

Court of Appeals of Georgia.

March 30, 2005.

Reconsideration Denied May 27, 2005.

Jerome Lee, Hernan, Taylor & Lee, Roswell, for appellant.

Craig B. Lefkoff, Lefkoff, Rubin & Gleason, P.C., Atlanta, for appellee.

BERNES, Judge.

Theresa Metzger appeals from an order entered by the Superior Court of Clayton County granting partial summary judgment to Americredit Financial Services, Inc. on her claim for conversion based on the alleged wrongful repossession of her vehicle.Metzger contends that the superior court erred by failing to conclude that she took her vehicle free of Americredit's security interest under the special good faith purchaser rule for goods covered by a certificate of title set forth in OCGA § 11-9-337(1).We agree and reverse.¹

The underlying facts are not in dispute.On or about October 1, 2002, Americredit repossessed a 1997Ford Taurus from Metzger, who had purchased the vehicle from a used car dealership in March 2002.Metzger did not realize that Americredit had a prior lien on the vehicle or that it had been repossessed.As a result, she reported the vehicle as stolen to the police.

Metzger later learned that Americredit had obtained a security interest in the vehicle in 1998, when the company financed James Strong's purchase of the vehicle in the State of New York.The New York certificate of title issued to Strong reflected Americredit's security interest in the vehicle.

Strong later moved from New York to Georgia and submitted a "MV1Z" application form, along with the existing title and the required fee, to the Cobb County tag agent for the Georgia Department of Motor Vehicles("DMV") in order to convert the existing New York certificate of title to a Georgia one.The DMV processed the application, but as a result of a clerical data entry error, the DMV issued a Georgia certificate of title that did not reflect Americredit's security interest in the vehicle.

Strong later transferred the vehicle to an automobile dealer owner, and the vehicle thereafter passed through a nondealer owner and additional dealer owners before Metzger purchased it in March 2002.None of the subsequent Georgia certificates of title issued for the vehicle in connection with these transfers reflected Americredit's security interest.

After Metzger purchased the vehicle and registered it with the DMV, Americredit, having finally located the vehicle, repossessed it from Metzger's residence and sold it at auction.Once she learned from the police department that her vehicle had been repossessed rather than stolen, Metzger filed suit against Americredit in the Superior Court of Clayton County.She contended that Americredit wrongfully repossessed her vehicle and kept her personal belongings contained therein, and, as a consequence, should be held liable for conversion, negligence, deceptive trade practices, breach of the peace, breach of good faith, racketeering, unjust enrichment, and breach of sale.

Metzger subsequently filed a motion seeking partial summary judgment on her claim of conversion.Americredit filed its response and a cross-motion for summary judgment on all of Metzger's claims.The superior court denied Metzger's motion for partial summary judgment and granted summary judgment in favor of Americredit on Metzger's conversion claim only.The superior court concluded that Americredit had a perfected security interest in the vehicle that it could enforce against Metzger.Metzger now appeals from that order.

"When reviewing the grant or denial of a motion for summary judgment, this Court conducts a de novo review of the law and the evidence."(Citation omitted.)Osman v. Olde Plantation Apartments on Montreal, LLC,270 Ga.App. 627, 607 S.E.2d 236(2004).In order to establish a claim for conversion, "the complaining party must show (1) title to the property or the right of possession, (2) actual possession in the other party, (3) demand for return of the property, and (4) refusal by the other party to return the property."(Citation omitted.)Johnson v. First Union Nat. Bank,255 Ga.App. 819, 823(4), 567 S.E.2d 44(2002).The sole issue regarding Metzger's conversion claim is whether Metzger had the exclusive right of possession to the vehicle, making Americredit's seizure unlawful, or whether Americredit's security interest instead empowered it to practice self-help and repossess the vehicle from Metzger.See, e.g., Fulton v. Anchor Savings Bank, FSB,215 Ga.App. 456, 468(5), 452 S.E.2d 208(1994).Because the material facts are undisputed, resolution of this issue turns on our interpretation of the applicable statutory framework.

"[I]n construing [Georgia statutes], we apply the fundamental rules of statutory construction that require us to construe a statute according to its terms, to give words their plain and ordinary meaning, and to avoid a construction that makes some language mere surplusage."(Citation omitted.)Slakman v. Continental Cas. Co.,277 Ga. 189, 191, 587 S.E.2d 24(2003).See alsoCity of Atlanta v Yusen Air & Sea Svc. Holdings,263 Ga.App. 82, 84(1), 587 S.E.2d 230(2003).With these rules in mind, we turn to the Motor Vehicle Certificate of Title Act, OCGA § 40-3-1 et seq.(the "Act"), which provides the exclusive procedure for perfecting a security interest in a motor vehicle in Georgia.Staley v. Phelan Finance Corp.,116 Ga.App. 1, 1-2, 156 S.E.2d 201(1967).

Under the Act, a security interest in a motor vehicle is perfected, at the latest, on the date when the application documents for obtaining a certificate of title are delivered to the DMV or local tag agent, so long as the application documents properly reflect the existence of the security interest:

(b)(1) A security interest is perfected by delivery to the commissioner or to the county tag agent of the county in which the seller is located, of the county in which the sale takes place, of the county in which the vehicle is delivered, or of the county wherein the vehicle owner resides, of the required fee and:

(A) The existing certificate of title, if any, and an application for a certificate of title containing the name and address of the holder of a security interest; or

(B) A notice of security interest on forms prescribed by the commissioner.

OCGA § 40-3-50.Perfection occurs on that date, irrespective of whether the certificate of title subsequently issued by the DMV fails to reflect the security interest:

(b)(2) The security interest is perfected as of the time of its creation if the initial delivery of the application or notice to the commissioner or local tag agent is completed within 20 days thereafter, regardless of any subsequent rejection of the application or notice for errors; otherwise, as of the date of the delivery to the commissioner or local tag agent.The local tag agent shall issue a receipt or other evidence of the date of filing of such application or notice.When the security interest is perfected as provided for in this subsection, it shall constitute notice to everybody of the security interest of the holder.

OCGA § 40-3-50."Compliance with the filing requirements of the Act has the effect of imputing constructive notice to all who may subsequently acquire an interest in or lien against the property."(Citation and punctuation omitted.)Cobb Center Pawn etc., v. Gordon,242 Ga.App. 73, 75(2), 529 S.E.2d 138(2000).

Based on this statutory language and case law, it might appear that because Strong delivered proper application forms reflecting Americredit's security interest to the Cobb County tag agent, Americredit could enforce its security interest against Metzger, who under OCGA § 40-3-50(b)(2) would have constructive notice of the security interest despite the clerical error contained in the Georgia certificate of title that was later issued.However, OCGA § 40-3-50 contains three statutory exceptions:

(a)Except as provided in Code Sections11-9-303, 11-9-316, and 11-9-337, the security interest in a vehicle of the type for which a certificate of title is required shall be perfected and shall be valid against subsequent creditors of the owner, subsequent transferees, and the holders of security interests and liens on the vehicle by compliance with this chapter.

(Emphasis supplied.)

Significantly, one of those exceptions, OCGA § 11-9-337, states:

If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this state issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security interests not shown on the certificate:

(1)A buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest.

(Emphasis supplied.)²An explanation of this provision is set forth in Comment 2 to Uniform Commercial Code§ 9-337:

This section affords protection to certain good-faith purchasers for value who are likely to have relied on a "clean" certificate of title, i.e., one that neither shows that the goods are subject to a particular security interest nor contains a statement that they may be subject to security interests not shown on the certificate.Under this section, a buyer can take free of, and the holder of a conflicting security interest can acquire priority over, a security interest that is perfected by any method under the law of another jurisdiction.

UCC § 9-337 cmt.2.³

In the present case, the undisputed evidence of record shows that the six requirements of the statutory exception contained in OCGA § 11-9-337(1) have been met.First, the parties agree that, at the time that Strong filed his application for a Georgia certificate of title...