Minor v. Chase Auto Fin. Corp.

• Decision Date: 20 May 2010
• Docket Number: No. 09–801.,09–801.
• Citation: 2010 Ark. 246,372 S.W.3d 762,72 UCC Rep.Serv.2d 610
• Parties: Mose MINOR, Appellant, v. CHASE AUTO FINANCE CORPORATION, Appellee.
• Court: Arkansas Supreme Court

2010 Ark. 246

372 S.W.3d 762

72 UCC Rep.Serv.2d 610

Mose MINOR, Appellant,

v.CHASE AUTO FINANCE CORPORATION, Appellee.

No. 09–801.

Supreme Court of Arkansas.

May 20, 2010.

Sanford Law Firm, PLLC, by: Vanessa Kinney, Russellville, for appellant.

Kutak Rock LLP, by: David L. Williams and Katherine M. Hingtgen, Little Rock, for appellee.

RONALD L. SHEFFIELD, Justice.

The Arkansas Court of Appeals certified this case to us pursuant to Arkansas Supreme Court Rule 1–2(b)(1), (4), and (5) (2009), as a case involving an issue of first impression, having a substantial public interest and needing clarification or development of the law. We have been asked to determine whether nonwaiver and no-unwritten-modifications clauses in a financing agreement preclude a creditor from waiving future strict compliance with the agreement by accepting late payments. In Mercedes–Benz Credit Corp. v. Morgan, 312 Ark. 225, 850 S.W.2d 297 (1993), this court explicitly reserved ruling on this question until it had been properly raised and argued in an appropriate case. The question is now ripe for our review.

On March 15, 2003, Appellant, Mose Minor (Minor), entered into a Simple Interest Motor Vehicle Contract and Security Agreement with Appellee, Chase Auto Finance Corporation (Chase), to finance the purchase of a 2003 Toyota Tundra. By the terms of the agreement, Minor was to make sixty-six payments of $456.99 on the fourteenth of each month. The payments would start on April 14, 2003, and end on September 14, 2008. The agreement also included the following relevant provisions:

G. Default: If you breach any warranty or default in the performance of any promise you make in this contract or any other contract you have with us, including, but not limited to, failing to make any payments when due, or become insolvent, or file any proceeding under the U.S. Bankruptcy Code, ... we may at our option and without notice or demand (1) declare all unpaid sums immediately due and payable subject to any right of reinstatement as required by law (2) file suit against you for all unpaid sums (3) take immediate possession of the vehicle (4) exercise any other legal or equitable remedy.... Our remedies are cumulative and taking of any action shall not be a waiver or prohibit us from pursuing any other remedy. You agree that upon your default we shall be entitled to recover from you our reasonable collection costs, including, but not limited to, any attorney's fee. In addition, if we repossess the vehicle, you grant to us and our agents permission to enter upon any premises where the vehicle is located. Any repossession will be performed peacefully.

....

J. Other Agreements of Buyer: ... (2) You agree that if we accept moneys in sums less than those due or make extensions of due dates of payments under this contract, doing so will not be a waiver of any later right to enforce the contract terms as written.... (12) All of the agreements between us and you are set forth in this contract and no modification of this contract shall be valid unless it is made in writing and signed by you and us....

K. Delay in Enforcement: We can delay or waive enforcement of any of our rights under this contract without losing them.

Minor's first payment was late, as were several subsequent payments. At times he failed to make any payment for months. Chase charged a late fee for each late payment, and sent several letters requesting payment and offering to assist Minor with his account. Chase also warned Minor that continued failure to make payments would result in Chase exercising its legal options available under the agreement, including repossession of the vehicle. Minor claims he never received these letters. At one point, Minor fell so far behind in his payments that Chase was on the verge of repossessing the vehicle. However, on October 19, 2004, the parties agreed to a two-month extension of the agreement, such that the final installment would be due on November 14, 2008. The extension agreement indicated that all other terms and conditions of the original contract would remain the same.

On November 2, 2004, Minor filed for Chapter 7 bankruptcy in the Eastern District of Arkansas. In his petition, Minor stated that the value of the vehicle was $5000.00.¹ On February 24, 2005, Chase sent Minor a letter acknowledging that Minor's debt to Chase had been discharged in bankruptcy. The letter further stated that Chase still had a valid lien on the vehicle, and if Minor wished to keep the vehicle, he would have to continue to make payments to Chase. Otherwise, Chase would repossess the vehicle. Chase sent a similar letter to Minor on May 22, 2006, and to Minor's bankruptcy attorney on November 16, 2004. Minor claimed he never received any of these letters.

On September 28, 2006, a repossession agent, Joshua Niles of Chamras Asset Recovery Specialists, arrived at Minor's home some time in the afternoon to repossess the vehicle. The repossession agent checked the VIN number of the vehicle and began to hoist it on his truck. There were no fences, gates, or garages barring the agent's access to the vehicle. When Minor objected to the repossession, the agent gave him a telephone number for Chase to call to obtain more information. Minor returned to his house to make the phone call, and spoke to a representative of Chase, who told him that Chase was repossessing the car because he was three months behind on his payments. Minor objected to the Chase representative and insisted that he could provide proof of payment in the form of money-order receipts. The repossession agent waited outside for several minutes, but when Minor did not return from inside his house, the agent removed Minor's possessions from the vehicle and towed it away. Chase sold the vehicle. The amount of the purchase price was reflected on Minor's account on November 17, 2006.

On January 7, 2008, Minor filed a complaint against Chase in the Johnson County Circuit Court. In the complaint, Minor alleged that, during the course of the contract, the parties had altered the provisions of the contract regarding Chase's right to repossess the vehicle and Chase had waived the right to strictly enforce the repossession clause. Minor further claimed that the repossession agent committed trespass and repossessed the vehicle forcibly, without Minor's permission, and through trickery and deceit, in violation of Arkansas Code Annotated section 4–9–609(b)(2) (Repl.2001). Also, Minor asserted that he was not in default on his payments, pursuant to the repayment schedule, at the time Chase authorized repossession. Therefore, according to Minor, Chase committed conversion, and breached the Arkansas Deceptive Trade Practices Act, specifically Arkansas Code Annotated section 4–88–107(a)(10) (Supp.2007), and enhanced by Arkansas Code Annotated section 4–88–202 (Repl.2001), because Minor is an elderly person. Minor sought compensatory and punitive damages.

A jury trial was held on February 19, 2009. At the close of Minor's case, Chase moved for a directed verdict. Chase argued that Minor had not asserted sufficient grounds for an award of punitive damages because the act of conversion, alone, does not constitute sufficient grounds for an award of punitive damages, and Minor had not provided any evidence that there had been a breach of the peace. Chase further maintained that, by Minor's own admission when he testified before the circuit court, he was at least three payments past due at the time of the repossession. Therefore, under the terms of the contract, Chase asserted that it had a right to repossess the vehicle peacefully, and Minor's argument that he should have receivednotice that Chase would require strict compliance with the contract failed because the contract included nonwaiver and no-unwritten modification clauses. Chase argued that the case upon which Minor relied, Mercedes–Benz Credit Corp. v. Morgan, 312 Ark. 225, 850 S.W.2d 297 (1993), was distinguishable, and instead the holding of Westlund v. Melson, 7 Ark.App. 268, 647 S.W.2d 488 (1983), indicated that Chase's acceptance of late payments had not effected a waiver of its right to demand future strict compliance. Finally, Chase asserted that Minor had failed to show that Chase had committed deception or false pretense in order to sustain a claim for a violation of the Arkansas Deceptive Trade Practices Act.

In response, Minor argued that the jury should be allowed to rule on the evidence because there was a question of whether Minor was in default at the time of the repossession, since the evidence indicated that Chase had failed to properly credit his account. What is more, Minor maintained that Chase was aware of this error but repossessed the vehicle anyway, against Minor's will, an action that constituted an intentional and willful violation of Minor's rights, warranting an award of punitive damages. Also, according to Minor, his request that the repossession agent stop the repossession constituted a confrontation rising to the level of a breach of the peace. Further, Minor asserted that he had presented sufficient evidence that he had a right to possess the vehicle, and that, by continually accepting late payments, Chase had established a course of dealing that modified the contract and waived Chase's right to repossess the vehicle without notice to Minor that Chase would require strict compliance in the future. Minor cited Mercedes–Benz Credit Corp. v. Morgan, 312 Ark. 225, 850 S.W.2d 297 (1993), and Ford Motor Credit Co. v. Ellison, 334 Ark. 357, 974 S.W.2d 464 (1998), as support for this position. Finally, Minor argued that Chase had violated the Arkansas Deceptive Trade Practices Act by repossessing the vehicle over Minor's objections and failing to timely acknowledge payments Minor had made.

After hearing these arguments, the circuit court ruled that Minor had presented no evidence that the conduct of Chase or the repossession agent...