Singleton v. Stokes Motors, Inc.
| Decision Date | 12 April 2004 |
| Docket Number | No. 25804.,25804. |
| Citation | 358 S.C. 369,595 S.E.2d 461 |
| Parties | Randolph SINGLETON, Respondent, v. STOKES MOTORS, INC. d/b/a Stokes Toyota, Petitioner, And also Valerie Singleton, Respondent, v. Stokes Motors, Inc. d/b/a Stokes Toyota, Petitioner. |
| Court | South Carolina Supreme Court |
H. Fred Kuhn, Jr., of Moss & Kuhn P.A., of Beaufort, for Petitioner.
Philip Fairbanks and Kathy D. Lindsay, both of Fairbanks & Lindsay P.A., of Beaufort, for Respondents.
This Court granted certiorari to review the Court of Appeals' unpublished opinion (1) affirming the trial judge's decision to award each plaintiff minimum statutory damages under Uniform Commercial Code ("UCC" or "Code") § 36-9-507(1) (Supp. 2000); and (2) reversing the trial judge's finding that the UCC and the South Carolina Unfair Trade Practices Act ("SCUTPA") causes of action were factually inconsistent. We affirm.
On March 27, 1997, Randolph and Valerie Singleton (Singletons) decided to purchase a used 1993 Chevrolet Silverado pickup truck from Stokes Motors (Stokes) in Beaufort, South Carolina. To carry out the transaction, they signed a note and purchase money security agreement (sales contract). As part of the purchase price, the Singletons were to trade-in their Dodge Dakota and make a cash down payment of $1600. The sales contract did not indicate that the sale was contingent upon credit approval.
That same day, the Singletons signed a second document, a bailment agreement, which unlike the sales contract, provided that they were accepting the Silverado subject to credit approval. If their credit was not approved, the Singletons were required, under the terms of the bailment agreement, to return the Silverado to Stokes "immediately upon notice or verbal communication."
After signing both documents, the Singletons drove off the lot in the Silverado, having given Stokes the Dakota trade-in and only $800 of the $1600 required cash down payment.
Nearly three weeks later, on April 16, 1997, the Singletons returned to Stokes because Stokes claimed that the loan paperwork could not be completed due to Mr. Singleton's failure to produce proof of income. Mrs. Singleton explained that her husband had lost his job but that he would soon be able to produce proof of income from his new job. The Singletons also admitted that they could not afford to pay the remaining $800 of the down payment. The salesperson told the Singletons to "forget about it," and they signed an entirely new sales contract.
The new sales contract, like the initial sales contract, reflected that the Dodge Dakota had been traded in, but it showed $800 as the required cash down payment. And even though the Singletons had yet to produce Mr. Singleton's proof of income, Stokes told them that their credit had been approved. Finally, Stokes never asked the Singletons to sign another bailment agreement during this second meeting. So after signing the new sales contract and paying nothing further in cash, the Singletons were permitted to drive away in the Silverado.
Ultimately, Stokes could not verify Mr. Singleton's employment. In addition, contrary to Stokes's statements at the second meeting, the Singletons' credit was never approved. Therefore, Stokes repossessed the Silverado from the Singleton home before the first payment on the truck was even due.
After the Silverado was repossessed, Mrs. Singleton went to Stokes to demand the return of the $800 down payment and the Dakota trade-in. Stokes refused to return either, claiming that it had already spent approximately $800 repairing the trade-in and had already paid off the Singletons' existing loan on the Dakota. For the return of the Dakota, Stokes told the Singletons that they would need to secure another loan. But because they could not secure a loan, the Singletons were left without a vehicle and without their $800.
Stokes subsequently resold the Silverado to another customer without notifying the Singletons. And eventually, Stokes sold the Dakota trade-in.1
The Singletons filed separate, identical complaints, alleging causes of action based on the UCC and the SCUTPA.2 The UCC claim stemmed from Stokes's failure to notify the Singletons in writing that Stokes intended to sell the repossessed Silverado. Because the Singletons did not receive such notice, they claimed that they were entitled to collect the minimum statutory penalty provided under the UCC. The SCUPTA claim stemmed from Stokes's (1) failure to return the $800 cash down payment and the Dodge Dakota and (2) failure to inform the Singletons that the Silverado was being resold. The trial judge initially found for the Singletons on both claims. As to the UCC claim, the judge found that the Singletons were entitled to notice of Stokes's disposition of the Silverado. Because they did not receive such notice, the judge awarded Mr. and Mrs. Singleton $10,881 each as directed by the UCC minimum statutory penalty provision. As to the SCUTPA claim, the judge found that Stokes's refusal to return the Dakota and the $800 cash constituted a violation of the act. Therefore, the judge awarded the Singletons $8,029 in actual damages (the $800 cash deposit plus the net value of the Dodge Dakota), then trebled the award for a total of $24,087.
After the order was issued, Stokes filed a motion to reconsider, arguing that the UCC and the SCUTPA causes of action were factually inconsistent. In other words, Stokes argued that the facts required to prove one cause of action necessarily negated the facts necessary to prove the other cause of action. The trial judge agreed with Stokes and issued an order reducing the award in the initial judgment.
In this second order, the trial judge reasoned that for the SCUTPA cause of action to succeed, he must find that the sale of the Silverado to the Singletons was never finalized. If the sale were final, then the Dakota trade-in and the $800 cash down payment belonged to Stokes, and Stokes could dispose of either as it wished. It was impossible, the judge reasoned, for Stokes to violate SCUTPA for refusing to return its own property.
At the same time, for the UCC claim to survive, a sale must have occurred. And because the judge found that a sale had taken place, the Singletons' no longer had a valid SCUTPA claim. Therefore, the trial judge found that the UCC and the SCUTPA claims were factually inconsistent, and he reduced the damages to reflect the UCC award only.
The Court of Appeals affirmed the trial court's award to both Singletons for the UCC violation but reversed the trial court's finding that the UCC and SCUTPA causes of action were factually inconsistent. The court found that the UCC and SCUTPA claims were separate and distinct, permitting the Singletons to recover under both. This Court granted certiorari to review the Court of Appeals' decision and the following issues:
Stokes argues that the Court of Appeals erred in affirming the trial judge's decision to award UCC damages to both Mr. and Mrs. Singleton. We disagree.
The UCC outlines the rights, remedies, and duties of parties to secured transactions. In particular, Article 9, Part 5,3 prescribes the procedures that a secured party must follow when a debtor defaults under a security agreement. S.C.Code Ann. § 36-9-501—36-9-607 (Supp.2000). Upon default, a secured party may re-sell the collateral. S.C.Code Ann. § 36-9-504(1) (Supp.2000). In most circumstances, a debtor is entitled to reasonable notification of the time and place of sale or other intended disposition of repossessed collateral is to be made. S.C.Code Ann. § 36-9-504(3) (Supp.2000).4 If no such notice is given, the debtor has a statutory right to recover. S.C.Code Ann. § 36-9-507(1) (Supp.2000).
This right to recover and the formula used to calculate the amount of recovery are outlined in the Code as follows:
If the disposition has occurred the debtor or any person entitled to notification or whose security interest has been made known to the secured party prior to the disposition has a right to recover from the secured party any loss caused by a failure to comply with the provisions of this part. If the collateral is consumer goods, the debtor has a right to recover in any event an amount not less than the credit service charge plus ten percent of the principal amount of the debt or the time price differential plus ten percent of the cash price.
S.C.Code Ann. § 36-9-507(1) (Supp.2000) (emphasis added).
Further, the Code defines "debtor" as "the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral...." S.C.Code Ann. § 36-9-105(d) (Supp.2000).
In the present case, Stokes concedes that it violated the Code's notice requirement by failing to notify the Singletons that it was re-selling the Silverado. Stokes also concedes that the Singletons were entitled to recover the minimum statutory damages according to the formula set forth in section 36-9-507(1) above. But what Stokes argues is that both Singletons should not have been able to recover for violations concerning one secured transaction.
Consequently, the issue before this Court is whether the term "debtor" includes each debtor in a secured transaction, such that both Mr. and Mrs. Singleton were entitled, individually, to recover damages under the Code.
The statutory language of section 36-9-507(1) (Supp.2000), on its face, suggests that as debtors, both Singletons were entitled to recover. The statute plainly states that "the debtor or anyone" who is...
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