SunTrust Bank v. Venable

• Decision Date: 12 September 2016
• Docket Number: S16G0664
• Citation: 299 Ga. 655,791 S.E.2d 5
• Parties: Suntrust Bank v. Venable.
• Court: Georgia Supreme Court

299 Ga. 655

791 S.E.2d 5

Suntrust Bank

v.Venable.

S16G0664

Supreme Court of Georgia.

Decided: September 12, 2016

Craig B. Lefkoff, Kristina Lynn Smith Williams, Lefkoff, Rubin, Gleason & Russo P.C., 5555 Glenridge Connector, Suite 900, Atlanta, Georgia 30342, for Appellant.

Kris K. Skaar, Justin Tharpe Holcombe, Skaar & Feagle, LLP, 133 Mirramont Lake Drive, Woodstock, Georgia 30189, James Marvin Feagle, Skaar & Feagle, LLP, 2374 Main Street, Suite B, Tucker, Georgia 30084, for Appellee.

Charles R. Bliss, Atlanta Legal Aid Society, Inc., 151 Spring Street. NW, Atlanta, Georgia 30309, Anne E. Bunton Carder, Atlanta Legal Aid Society, Inc., 151 Spring St., NW, Atlanta, Georgia 30302–2097, Angela Joyce Riccetti, Atlanta Legal Aid Society, Inc., 1325 Deerwood Drive, Decatur, Georgia 30030–4513, David Alfred Webster, 127 Peachtree Street N.E., # 415, Atlanta, Georgia 30303–1810, Jon Erik Heath, J. Erik Heath, Attorney at Law, 100 Bush Street, Suite 1800, San Francisco, California 94104, for Amicus Appellee.

THOMPSON

, Chief Justice.

We issued a writ of certiorari in this appeal which arises out of a deficiency action brought by appellant SunTrust Bank (“SunTrust”) as the assignee under a motor vehicle conditional sales contract following its repossession and sale of a motor vehicle purchased by appellee Mattie Venable. The issue to be decided is whether the four year statute of limitation set forth in OCGA § 11–2–725 (1)

applicable to actions on contracts for the sale of goods or the six year statute of limitation generally applicable to actions on simple written contracts applies to the deficiency action filed by SunTrust. See OCGA § 9–3–24. We conclude that the action is subject to the four year statute of limitation found in OCGA § 11–2–725 (1).

This appeal comes before us from the Court of Appeals' reversal of the grant of summary judgment in favor of SunTrust on its deficiency claim. See Venable v. SunTrust Bank, 335 Ga.App. 344, 780 S.E.2d 793 (2015)

. “On appeal from the grant of summary judgment this Court conducts a de novo review of the evidence to determine whether there is a genuine issue of material fact and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.” (Citation and punctuation omitted.) Giles v. Swimmer, 290 Ga. 650, 725 S.E.2d 220 (2012). See OCGA § 9–11–56 (c).

Viewed in that light, the evidence on summary judgment showed that in March 2006, Venable entered into a “Simple Interest Conditional Sale Contract with Options for Balloon Payment and Vehicle Return” (the “Contract”), when she purchased a minivan from Team Ford of Marietta (the “dealership”). The Contract identified the dealership as the “Seller” and Venable as the “Purchaser” and granted the dealership a security interest in the purchased vehicle, which interest it assigned to SunTrust shortly after the Contract was executed. After Venable stopped making payments in November 2007, SunTrust repossessed the minivan, sold it at auction for an amount less than the amount owed under the Contract, and filed suit against Venable on October 15, 2012 to recover the deficiency amount. Venable answered, and in defense, she asserted that the deficiency action was barred by the four year statute of limitation applicable to contracts for the sale of goods. See OCGA § 11–2–725 (1)

. Without expressly addressing the question of the applicable statute of limitation, the trial court granted SunTrust's motion for summary judgment. The Court of Appeals reversed, concluding that SunTrust's deficiency action was barred by OCGA § 11–2–725 (1)'s four year period of limitation, and therefore, SunTrust was not entitled to summary judgment on its deficiency claim. We granted SunTrust's petition for writ of certiorari, and for the reasons set forth below, we affirm the decision of the Court of Appeals.

OCGA § 9–3–24

sets out a general six year period of limitation applicable in actions on a simple written contract. It provides, in pertinent part, that

[a]ll actions upon simple contracts in writing shall be brought within six years after the same become due and payable. However, this Code section shall not apply to actions for the breach of contracts for the sale of goods under Article 2 of Title 11.

OCGA § 9–3–24

. Article 2 of Title 11, Georgia's enactment of the Uniform Commercial Code, applies to actions for the breach of a contract involving the sale of goods and requires such actions to “be commenced within four years after the cause of action has accrued.”¹ OCGA § 11–2–725 (1). Resolution of this appeal, therefore, turns on the determination of whether the Contract between Venable and the dealership constitutes a contract for the sale of a good.

The Court of Appeals, applying well-established Georgia law, concluded that Article 2's four year statute of limitation applied because the primary purpose of the conditional sales contract executed by Venable was the sale of a good. See Venable, 335 Ga.App. at 347, 780 S.E.2d 793

. This Court has not previously considered the issue of which statute of limitation applies to a deficiency action arising from a contract for the sale of a motor vehicle that also granted a security interest. It is well established, however, that the provisions of Article 2 are applicable both to a contract that involves only the sale of goods and a contract that contains a blend of sale and non-sale elements “if the dominant purpose behind the contract reflects a sales transaction.” (Citation and punctuation omitted.) Ole Mexican Foods, Inc. v. Hanson Staple Co., 285 Ga. 288, 290, 676 S.E.2d 169 (2009). To make the determination of the “dominant purpose,” a court “must look to the primary or overall purpose of the transaction.” (Citation and punctuation omitted.) Id. at 290, 676 S.E.2d 169.

“When presented with two elements of a contract, each absolutely necessary if the subject matter is to be of any significant value to the purchaser, it is a futile task to attempt to determine which component is ‘more necessary.’ Thus, [we must look] to the predominant purpose, the thrust of the contract as it would exist in the minds of reasonable parties. There is no surer way to provide for predictable results in the face of a highly artificial classification system.” [Cit.]

J. Lee Gregory v. Scandinavian House, L.P., 209 Ga.App. 285, 288, 433 S.E.2d 687 (1993)

.

Applying these principles in this case, we conclude that the primary purpose of the contract between Venable and the dealership was the sale of a good. It is undisputed that the minivan constituted a “good,”² that the Contract, which was labeled “Conditional Sale Contract,” identified the dealership and Venable as “Seller” and “Purchaser,” and that the Contract provided for the sale of the minivan in exchange for Venable's agreement to pay a sum certain. Although the Contract also granted the dealership a security interest in the vehicle sold, it, by its plain language, constituted both a sales transaction and a secured transaction, creating a dual relationship between Venable and the dealership as both buyer and seller and obligor and secured party. Its predominant purpose of selling a good, however, is evidenced by its title, the designation of the parties as buyer and seller, Venable's testimony that her primary reason for executing the Contract was to purchase the minivan, and the fact that the sales price of the vehicle was $29,626.00, whereas no separate fee was required for the granting of the security interest to be held by the dealership. See Ole Mexican Foods, Inc., 285 Ga. at 291, 676 S.E.2d 169

(stating that although “the label the contracting parties affix to an agreement is not necessarily determinative of the agreement's predominant purpose,” it “ ‘is a good barometer of the parties' intentions' ” and “can constitute potent evidence of that purpose.”); Paramount Contracting Co. v. DPS Industries, Inc., 309 Ga.App. 113, 116, 709 S.E.2d 288 (2011) (finding sale of good was the predominant purpose of a contract providing for both the sale and delivery of dirt, in part because the contract did not provide separate pricing for the delivery of the dirt and the delivery cost accounted for, at best, only 20 percent of the value of the dirt); Southern Tank & Equipment Co. v. Zartic, Inc., 221 Ga.App. 503, 505, 471 S.E.2d 587 (1996) (holding the predominant purpose of a contract containing both sale and non-sale aspects was the sale of goods in part because the portion of the cost attributable to non-sale elements was less than one half of the total contract price); J. Lee Gregory, 209 Ga.App. at 288 (1), 433 S.E.2d 687 (predominant purpose of contract for sale and installation of windows was sale of a good where two-thirds of the cost of the transaction was allocated to the sale of the windows and contract failed to segregate the price of the windows from the price for services to be rendered).

Our determination that the predominant purpose of the Contract was the sale of a good is also supported by our consideration of the nature of the action filed by SunTrust. SunTrust's deficiency action reflects its decision to seek payment of the full purchase price, an element we find more closely related to the sales aspect of the Contract. As described by the New Jersey Supreme Court in Associates Discount Corp. v. Palmer, 47 N.J. 183, 219 A.2d 858, 861 (1966)

, a deficiency suit

is nothing but a simple in personam action for that part of the sales price which remains unpaid after the seller has exhausted his rights [as the holder of a security interest] by selling the collateral; it is an action to enforce the obligation of the buyer to pay the full sale price to the seller, an obligation which is an essential element of all sales and which exists whether or not the sale is accompanied by a security arrangement.

We agree with this characterization of a deficiency action and with those courts, like Palmer

, which have described...