Rand v. Porsche Fin. Servs., 216 Ariz. 42

• Decision Date: 18 September 2007
• Citation: 216 Ariz. 424,167 P.3d 111
• Court: Arizona Court of Appeals

216 Ariz. 424

167 P.3d 111

NEIL RAND and SHIRLENE RAND, husband and wife, Plaintiffs-Appellants, v. PORSCHE FINANCIAL SERVICES, Defendant-Appellee.

1 CA-CV 06-0636

COURT OF APPEALS OF ARIZONA, DIVISION ONE, DEPARTMENT B

September 18, 2007, Filed

Neil and Shirlene Rand, Appellants , In Propia Persona, Buckeye.

For Appellee: John G. Sestak, Jr. , John J. Egbert , Matthew J. Mansfield , Jennings Strouss & Salmon, PLC , Phoenix.

SHELDON H. WEISBERG , Judge. CONCURRING: DONN KESSLER , Presiding Judge, ANN A. SCOTT TIMMER , Judge.

WEISBERG , Judge

P1 Neil and Shirlene Rand appeal the trial court's grant of summary judgment in favor of Porsche Financial Services ("PFS") dismissing the Rands' claims of civil rights violations under 42 U.S.C. § 1983 and trespass and granting PFS a deficiency judgment arising out of the Rands' lease of a Porsche financed by PFS. For the following reasons, we reverse the trial court's rulings dismissing the Rands' § 1983 claim and trespass claim, but we affirm its ruling granting PFS a deficiency judgment.

FACTS AND PROCEDURAL HISTORY

P2 On November 14, 2002, Neil Rand entered into a lease agreement for a 2003 Porsche, with financing provided by PFS. Under the terms of the lease agreement, Rand was to make monthly payments of $ 2,531.56. The failure to pay any monthly payment was a default. In the event of a default, PFS was granted the following remedies:

REMEDIES. If you are in Default, Lessor may terminate this Lease and Lessor may exercise any of its rights or remedies at law or as provided in this Lease, including recovering charges for early termination. If you are in Default, Lessor also has the right to take possession of the Vehicle. Lessor may, without use of force or other breach of the peace, enter the premises where the Vehicle is and take immediate possession of the Vehicle, including any equipment or accessories. If Lessor takes possession, you are not released from any obligation under this lease.

The lease also provided that if PFS terminated the lease early because of a default, it would be entitled to certain charges, including Early Termination Liability to be calculated as specified in the agreement. In calculating the Early Termination Liability, PFS was to subtract "the Realized Value of the Vehicle, which is the net amount, if any, Lessor receives from the sale of the Vehicle, sold at wholesale in a commercially reasonable manner." The agreement further stated:

If you disagree with the Realized Value of the Vehicle, within 14 days after you are given notice of your Early Termination Liability, you may obtain, at your own expense, from an independent third party agreeable to both you and Lessor, a professional appraisal of the wholesale value of the Vehicle which could be realized at sale. The appraised value shall then be used as the Realized Value.

P3 Rand failed to make the monthly payments for September through December 2004. In January 2005, PFS engaged Interstate Recovery, Inc., an automobile repossession company, to enter the Rands' premises and take the vehicle, pursuant to the lease agreement. Interstate Recovery recovered the vehicle on January 7, 2005.

P4 Neil Rand filed this action on January 10, 2005. The complaint alleged that PFS hired a car repossession company and authorized that company to enter his property to remove the vehicle. In so doing, the complaint further alleged that the repossession company breached the peace and committed trespass. Finally, the complaint alleged that, because he physically resisted the repossession, the Glendale police were called, that police involvement constituted state action, and that Rand's civil rights were therefore violated pursuant to 42 U.S.C. § 1983.

P5 PFS issued a notice on January 12, 2005, that the vehicle would be sold at private sale. Later, by letter dated March 24, 2005, PFS notified Neil Rand that the vehicle had been sold on March 18, 2005 for $ 103,900.00 and that under the terms of the lease agreement, he owed a deficiency amount of $ 49,044.38. On March 29, 2005, PFS filed its answer to the complaint and a counterclaim for the deficiency amount. The parties subsequently stipulated to amend the complaint to add Shirlene Rand as a plaintiff. The amended complaint, answer, and counterclaim were otherwise essentially unchanged. PFS filed three motions for partial summary judgment: on the § 1983 claim, on the trespass claim, and on its counterclaim for the deficiency amount.

P6 In its motion for summary judgment on the Rands' § 1983 claim, PFS argued that the repossession was pursuant to the contract and not under color of law. In their response, the Rands alleged that when they attempted to stop the repossession, individuals from the repossession company, Interstate Recovery, told them that they had contacted the Glendale Police Department and expected the police to come to assist in the repossession. The Rands also asserted that when the police arrived minutes later, they forced the Rands to allow the repossession of the vehicle. The Rands argued that, because the police were involved, the repossession constituted a breach of the peace and occurred under color of law. The Rands provided no affidavit or other evidence to support their factual assertions.

P7 The court granted partial summary judgment to PFS on the § 1983 claim. The court stated that the "repossession was made pursuant to the contractual agreement between the parties" and that there was no evidence that the repossession caused the private parties to be "jointly engaged with state officials." In addition, the court found that "Plaintiffs present[ed] no admissible evidence to support such a claim."

P8 In its motion for partial summary judgment on the Rands' trespass claim, PFS asserted that it had an operable agreement with Interstate Recovery under which PFS might from time-to-time engage Interstate Recovery to repossess designated property financed by PFS. Pursuant to the agreement, entitled "Code of Conduct and Indemnification Agreement," Interstate Recovery was an independent contractor and agreed not to repossess property if to do so would require committing a trespass, breaching the peace, or violating a customer's rights. PFS asserted that it exercised no control over the actual performance of Interstate Recovery's services. PFS reasoned that it could not be held liable for the acts of an independent contractor and, because Interstate Recovery was an independent contractor, PFS could not be held liable if Interstate Recovery committed trespass while repossessing the vehicle.

P9 The Rands responded that PFS was responsible for the acts of Interstate Recovery, and based on a statement by Jim Ray, a PFS employee, asserted that PFS reserved control over how Interstate Recovery conducted the repossession. Ray had stated that PFS engaged Interstate Recovery "to enter Mr. Rand's premises and take the 2003 Porsche automobile." The Rands also asserted the applicability of the "nondelegable duty exception," which would make PFS liable for the trespass of its independent contractor.

P10 The trial court granted partial summary judgment to PFS on the trespass claim. The court found, based on the declaration of another PFS employee and the documentation PFS provided, that "[PFS] did not exercise control over how, when, or where" Interstate Recovery repossessed the vehicle and that Interstate Recovery was an independent contractor. The court also noted that the Rands had not produced controverting evidence.

P11 PFS next moved for summary judgment on its counterclaim for a deficiency judgment. The Rands argued that, in calculating their Early Termination Liability, PFS did not deduct the appropriate amount as the Realized Value, which they asserted was the wholesale value as determined by an independent appraisal. The Rands provided a printout from edmunds.com, an online appraiser, as evidence of the actual trade-in value of a vehicle of the same year and make as the repossessed vehicle.

P12 The court granted PFS summary judgment on its counterclaim in the amount of $ 49,044.38. The court found that the Rands did not dispute their failure to make monthly payments, and that such failure amounted to a default, which allowed for the early termination of the agreement. The court also found that nothing in the written agreement supported the Rands' contention that they were not in default because of their alleged ongoing efforts to negotiate "either a trade-in of the vehicle or an early termination buy-out." The court then discussed the method in the agreement by which another appraisal would be made to ascertain the "Realized Value" of the vehicle, but that "[t]here [was] no evidence that the 'Edmunds.com' information was derived and provided pursuant to the agreement." The court therefore concluded that PFS was entitled to judgment as a matter of law on its claim for a deficiency judgment.

P13 The Rands then filed a motion for leave to file a supplemental pleading, asserting that material facts had occurred since the complaint had been filed, specifically the sale of the vehicle. PFS objected and filed a request for attorneys' fees pursuant to the contract and Arizona Revised Statutes ("A.R.S.") section 12-341.01(A) (2003) in the amount of $ 31,862.00 and costs.

P14 The court denied the Rands' motion for leave to file a supplemental pleading and entered formal judgment on August 30, 2006, granting summary judgment on all claims to PFS, plus its attorneys' fees in the amount of $ 31,862.00 and costs in the amount of $ 342.00. The Rands timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).

STANDARD OF REVIEW

P15 Summary judgment may be granted when "there is no genuine issue as to any material fact and [] the moving party is entitled to judgment as a matter of law."Ariz. R. Civ. P. 56(c)(1). In reviewing a motion for summary judgment, we determine de novo whether any genuine issues of material fact exist...