Serra v. Ford Motor Credit Co., 80-501-A
| Decision Date | 13 July 1983 |
| Docket Number | No. 80-501-A,80-501-A |
| Citation | 463 A.2d 142 |
| Parties | 36 UCC Rep.Serv. 1011 Matthew J. SERRA v. FORD MOTOR CREDIT COMPANY et al. 1 ppeal. |
| Court | Rhode Island Supreme Court |
This is an appeal from a judgment in the Superior Court ordering the defendant to return an automobile to the plaintiff and to pay nominal compensatory and punitive damages. On appeal, the defendant challenges the trial justice's findings concerning the possessory rights of the parties in respect to the automobile, his denial of the defendant's midtrial motion to amend its answer to add a counterclaim, and his award of punitive damages. The facts that gave rise to the present controversy are as follows.
In January 1979 plaintiff, Matthew J. Serra (Serra), purchased a 1979 Lincoln Continental Mark V from Suburban Ford Lincoln Mercury (Suburban). Serra financed this purchase by trading in a used car, paying a portion of the purchase price in cash that he borrowed from a bank, and agreeing to pay the balance before taking possession of the Lincoln. Even though the car remained on the premises of the dealership, Serra obtained a title certificate, registered the car, and paid the required sales tax.
Prior to this transaction, Suburban had entered into a wholesale-financing agreement with defendant, Ford Motor Credit Company (Ford Credit). This agreement enabled Suburban to stock its new car inventory by using funds that Ford Credit supplied. In return, Ford Credit received a security interest 2 "in all such merchandise now owned or hereafter acquired" by the dealer and in the proceeds from sales of Suburban's inventory and the other listed items of collateral. The parties simultaneously entered into a capital-loan-security agreement, under which Ford Credit provided working capital to Suburban. The dealer's inventory and the proceeds thereof were among the items of collateral listed in this agreement. Ford Credit filed a Uniform Commercial Code (UCC) financing statement with the office of the Secretary of State for both the wholesale-financing agreement and the capital-loan-security agreement.
At the time Serra purchased the Lincoln in January 1979 Suburban was still bound by the terms of the wholesale-financing agreement. The final payment under the capital-loan-security agreement came due the previous fall. Apparently Suburban did not fully repay this loan because on April 13, 1979, Suburban and Ford Credit executed an agreement entitled "supplement to capital loan security agreement." This agreement obliged Suburban to repay the outstanding balance on the original capital-loan-security agreement and an additional loan over the course of approximately two years. According to the terms of the supplemental agreement, the same items that were used to secure the original capital loan served as collateral for the supplemental loan. These items included Suburban's inventory and proceeds from the sale of that inventory.
Serra intended to store his Lincoln for several years without driving it because it was one in a collectors' series. He had no room in his garage, however, so Suburban agreed to keep it on its lot. The car remained there from a date in January 1979 until sometime in the early spring of 1980. At that time, Ford Credit repossessed Suburban's entire inventory because the dealership had defaulted under the whole-sale-financing agreement. Subsequently, Suburban was placed into receivership.
In April 1980 an accident involving the car that Serra drove regularly caused him to seek delivery of the Lincoln. When Serra arrived at Suburban, he learned that the car had been driven to a barn in Connecticut owned by the dealership's president. Despite assurances from the president and Serra's willingness to pay the money that he still owed on the Lincoln, his efforts to take delivery were fruitless. Eventually, the car was transported to defendant's agent, Colony Ford Truck Sales (Colony).
Thereupon, Serra filed a complaint in the Superior Court alleging that Ford Credit and Colony were wrongfully in possession of the Lincoln. The complaint was accompanied by a motion for issuance of writ of replevin. Thereafter, the parties agreed to a conditional dismissal of the complaint. On May 6, 1980, a Superior Court justice ordered defendant to return the Lincoln to plaintiff upon plaintiff's payment of $2,844.76, the amount that the court found was still due on the Lincoln. The plaintiff, however, did not comply with this order. The defendant therefore moved that the order be set aside and that the case be placed on the nonjury trial calendar. A Superior Court justice granted this motion.
A nonjury trial resulted in judgment for plaintiff on July 3, 1980. The defendant was ordered to return the Lincoln to plaintiff within a week from the time of the judgment. In addition, the Superior Court judgment ordered defendant to pay nominal compensatory damages and $2,500 punitive damages. While filing a notice of appeal to this court, defendant also moved that the Superior Court stay the portion of the judgment that ordered the return of the Lincoln to plaintiff. Although a justice of the Superior Court granted defendant's motion on a temporary basis on August 1, 1980, after a hearing another justice denied the motion approximately two weeks later.
On appeal, defendant contends that the trial justice erred in several respects. We summarize these contentions as follows. The defendant asserts that the trial justice's denial of defendant's midtrial motion to amend its answer to add a counterclaim constitutes an abuse of discretion. Next, defendant contends that the trial justice erred when determining the parties' possessory rights in the Lincoln. In essence, this contention is twofold: that the trial justice incorrectly found that plaintiff was a buyer in the ordinary course of business and that defendant had not perfected its security interest in Suburban's inventory. Lastly, defendant claims that the trial justice abused his discretion when he awarded punitive damages because the trial justice misconceived material evidence in concluding that defendant's conduct was willful, reckless and malicious. Although we have set forth these assertions in the order in which they appear in defendant's brief, we shall address the issue concerning the parties' possessory rights in the Lincoln first. We shall then address the propriety of the trial justice's ruling concerning defendant's midtrial motion to amend its answer and the trial justice's award of punitive damages.
At trial, defendant attempted to prove that its possession of the Lincoln was consistent with its rights as a secured creditor under the wholesale-financing and capital-loan-security agreements that defendant and Suburban had executed. The defendant introduced both documents into evidence. In addition, defendant introduced a certified copy of two financing statements that covered both agreements. Financing statements are required to "perfect" security interests under G.L.1956 (1969 Reenactment) § 6A-9-302, P.L.1979, ch. 172, § 4.
The plaintiff did not seriously contest defendant's assertion of a perfected security interest in Suburban's inventory. Instead, plaintiff contended that his possessory rights to the Lincoln were superior to any security interest of defendant in the vehicle because he had purchased the car from Suburban as a buyer in the ordinary course of business. Such a buyer "takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence." Section 6A-9-307(1).
The general definitional section of the UCC defines buyer in the ordinary course of business as
"a person who in good faith and without knowledge that the [sale] to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind * * *." Section 6A-1-201(9), P.L.1979, ch. 172, § 1.
The primary piece of evidence that plaintiff introduced to establish his super-priority status as a buyer in the ordinary course of business was the title certificate that Suburban had issued in plaintiff's name in January 1979. Under the motor vehicle laws of this state a title certificate is prima facie evidence that the party named on the certificate owns the vehicle to which it applies. See G.L.1956 (1982 Reenactment) § 31-3.1-7(d). As further proof that he was a buyer in the ordinary course of business, plaintiff introduced into evidence a registration and title application, the dealer's statement of sale, a private-passenger-car registration card, license plate "green tags," and documents indicating that plaintiff had financed a portion of the purchase through a bank.
The defendant did not attempt to controvert this evidence directly. Rather, defendant introduced into evidence the dealer's vehicle invoice for the transaction at issue. The invoice indicated that plaintiff still owed a substantial sum to the dealer for the purchase of the Lincoln at the time the dealer supplied him with the title certificate. Furthermore, one of defendant's witnesses, Mr. James DeMarco (DeMarco), who was general manager of the dealership at the time of the transaction, testified that the vehicle invoice disclosed a written agreement between plaintiff and Suburban for the purchase of the Lincoln but that pla...
To continue reading
Request your trial
-
Harodite Indus. Inc. v. Warren Electric Corp..
...held that trial justices should liberally allow amendments to the pleadings.”25Medeiros, 911 A.2d at 253 (quoting Serra v. Ford Motor Credit Co., 463 A.2d 142, 150 (R.I.1983)); see also Manocchia, 658 A.2d at 909 (“It is well settled in Rhode Island that amendments under [ Rule 15] are allo......
-
Regan v. Cherry Corp.
...that justifies the imposition of punitive damages is particularly unclear under Rhode Island case law. In the 1983 case of Serra v. Ford Motor Credit Co., 463 A.2d 142, the Rhode Island Supreme Court held that punitive damages may be awarded "when the offending party's actions are so willfu......
-
Chopmist Hill Fire Dep't v. Town of Scituate
...certificate is prima facie evidence that the party named on the certificate owns the vehicle to which it applies.” Serra v. Ford Motor Credit Co., 463 A.2d 142, 145 (R.I.1983); R.I. Gen. Laws § 31–3.1–7. At the hearing, Plaintiff conceded that the Town owns the 1987 and 2005 fire engines an......
-
Bourdon's, Inc. v. Ecin Industries, Inc.
...amendments and "has consistently held that trial justices should liberally allow amendments to the pleadings." Serra v. Ford Motor Credit Co., 463 A.2d 142, 150 (R.I.1983). In Inleasing Corp. v. Jessup, 475 A.2d 989, 992 (R.I.1984), for example, we observed that this permissive rule promote......