The Cent. Tr. Bank v. Branch, SC99297

CourtUnited States State Supreme Court of Missouri
Writing for the CourtPATRICIA BRECKENRIDGE, JUDGE.
PartiesTHE CENTRAL TRUST BANK, Appellant, v. BARBARA BRANCH and ALEXIS BRANCH, Respondents.
Docket NumberSC99297
Decision Date13 September 2022

THE CENTRAL TRUST BANK, Appellant,
v.

BARBARA BRANCH and ALEXIS BRANCH, Respondents.

No. SC99297

Supreme Court of Missouri, En Banc

September 13, 2022


APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY The Honorable Matthew H. Hearne, Judge.

PATRICIA BRECKENRIDGE, JUDGE.

The Central Trust Bank appeals a judgment in favor of Barbara and Alexis Branch on its petition for a deficiency judgment in relation to a promissory note and security agreement financing the Branches' 2010 Chevrolet Impala (the "vehicle"). The Bank claims the circuit court erred in finding it failed to provide the Branches with "reasonable notification" after the sale of the vehicle. The Bank also asserts the circuit court erred in determining it did not strictly comply with the requirement that it send a pre-sale notice of disposition stating the method of intended disposition. The Bank's pre-sale notice of disposition stated the vehicle would be sold at a private sale, but the circuit court held the dealers-only auction at which the vehicle was sold was a public sale. Because the Bank

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properly sent a post-sale explanation of deficiency and the dealers-only auction was not a public sale, the circuit court's judgment is reversed, and the cause is remanded.

Factual and Procedural Background

The Branches entered into a retail installment contract and security agreement for the purchase of the vehicle from a dealership in 2014. The security agreement identified the address of the Branches' principal residence in St. Louis and provided all correspondence would be sent to that address. The security agreement was eventually sold and assigned to the Bank.

The Branches defaulted on the loan, and, in January 2015, the Bank sent the Branches a notice of their default and right to cure. Following the notice of right to cure, the Branches made a payment but again defaulted. So, in May 2015, the Bank sent the Branches a second notice of their default and right to cure. The Branches made a payment but again defaulted and missed multiple monthly payments.

In January 2018, the Bank repossessed the vehicle and sent the Branches, via certified mail, a notice with the heading "confirmation of repossession notices of intent to apply for repossessed title and to sell collateral" (the "pre-sale notice"). In the pre-sale notice, the Bank advised the Branches, among other things, that it: (1) had repossessed the vehicle, (2) intended to apply for a repossession title 10 or more days after January 11, and (3) intended to sell the vehicle "by private sale" 15 or more days after January 11. The pre-sale notice further advised the Branches of the amount owed, the manner in which proceeds of the sale would be distributed, the possibility of a deficiency, and their rights to regain possession of the vehicle by paying the amounts owed in full prior to the sale.

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Finally, the pre-sale notice informed the Branches of their right to have the Bank explain in writing how it calculated the amount owed. The notice included all the information required by section 400.9-614[1] and substantially tracked the form set forth therein and the pre-disposition form published by the Missouri division of finance. The Branches admit they received the pre-sale notice.

In February 2018, the Bank sold the vehicle at an auction conducted by a third party and open only to automobile dealers licensed in Missouri. The vehicle sold for less than the balance owed, and, in March 2018, the Bank sent the Branches a written explanation of the deficiency (the "post-sale explanation"). The post-sale explanation advised the vehicle had been sold, stated the Branches owed a deficiency of approximately $8,600, explained how the Bank calculated the deficiency, and stated the Bank "reserved the right to pursue legal action" if the deficiency was not paid. The post-sale explanation included all the information required under sections 400-9.616(a)(1) and 400.9-616(c) and followed the form published by the Missouri division of finance.

The Bank sent the post-sale explanation via certified mail to the Branches at their last known address. Postal records showed delivery of the post-sale explanation was unsuccessful and a notice of attempted delivery was left at the address. The Branches never claimed the post-sale explanation, and, after several weeks, it was returned to the Bank. The Bank took no further action to mail or deliver the post-sale explanation.

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In May 2019, the Bank filed a petition in the associate division of the circuit court, under chapter 517, seeking to recover the deficiency with interest. The circuit court held a bench trial in February 2020, after which it entered a judgment denying the Bank's petition with written findings of fact and conclusions of law. The circuit court found the Bank was not entitled to recover a deficiency for two independent reasons: (1) the Bank failed to provide "reasonable notification" of the sale of collateral and (2) the pre-sale notice failed to comply with sections 400.9-614(1)(A) and 400.9-613(1)(C), (E) in that it stated the vehicle would be sold at a private sale when the circuit court found the dealers-only auction constituted a public sale. The Bank appealed, and this Court granted transfer after an opinion by the court of appeals. Mo. Const. art. V, sec. 10.

Standard of Review

The circuit court's judgment will be affirmed unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Additionally, matters of statutory interpretation are reviewed de novo. Holmes v. Steelman, 624 S.W.3d 144, 149 (Mo. banc 2021). A lender's right to a deficiency judgment accrues only if there is strict compliance with statutory requirements. State ex rel. Gen. Credit Acceptance Co., LLC v. Vincent, 570 S.W.3d 42, 48 n.4 (Mo. banc 2019). Doubts regarding statutory compliance are resolved in the debtor's favor. Mancuso v. Long Beach Acceptance Corp., 254 S.W.3d 88, 92 (Mo. App. 2008).

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Bank Sent Post-Sale Explanation

The Bank asserts the circuit court erred in determining it failed to send "reasonable notification" of the sale of collateral because the Bank sent, and the Branches admit they received, a pre-sale notice of its intent to sell the vehicle and the Bank complied with section 400.9-616(b) when it sent the Branches the post-sale explanation by certified mail to an address reasonable under the circumstances.

The Bank's claim of error requires an examination of the circuit court's judgment. The circuit court ruled the Bank was not entitled to a deficiency judgment because it found (1) the Bank mailed "notices to [the Branches] by certified mail to their last known address and those letters were unclaimed"; (2) "there was no evidence that [the Branches] received any notice of sale"; and (3) the Bank's failure, thereafter, to make "additional efforts to locate or notify the [Branches]" was a failure to "give reasonable notification of the sale of collateral as mandated by § 400.9-504(3)," RSMo 2000. The circuit court's judgment included a bolded finding that "where the creditor learns prior to the sale that the debtor did not receive the notice, it is no longer reasonable to assume that the debtor has been given the opportunity to protect her interests at the sale." (Italics added). The circuit court found the Bank's failure to give, prior to the sale, notice of its intent to sell the vehicle precluded it from obtaining a deficiency judgment.

Review of the circuit court's findings of fact and conclusions of law show these conclusions were based on mistakes of fact and law. There is no evidence in the record that either the first or second notices of the Branches' defaults and rights to cure were undelivered or unclaimed. The record also shows the Bank sent via certified mail, and the

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Branches admit they received, the pre-sale notice of the Bank's intent to sell the vehicle. The only evidence of unclaimed correspondence between the Bank and the Branches related to the post-sale explanation, which all parties agree was not delivered and was eventually returned to the Bank. The circuit court's finding that the Branches did not receive the Bank's pre-sale notice of its intent to sell the vehicle is rejected because it is not supported by any evidence in the record. See Belleville v. Dir. of Revenue, 825 S.W.2d 623, 624 (Mo. banc 1992).

Upon erroneously finding the Branches did not receive any pre-sale notice, the circuit court misstated the law when it determined the effect of the Bank's failure to send pre-sale notice. The circuit court found the Bank failed to provide "reasonable notification of the sale of collateral as mandated by § 400.9-504(3)," RSMo 2000, and "defined in section 400.1-201(26)." As noted, the Branches admit they received the Bank's pre-sale notice. And even if they had not, the statute the circuit court found mandated "reasonable notification" of the sale of collateral, section 400.9-504(3), RSMo 2000, was repealed in 2001.[2] The circuit court's factual findings and conclusions of law that the Bank was precluded from receiving a deficiency judgment because it failed to give pre-sale notice were erroneous.

This Court, however, will affirm if the circuit court reached the correct result for the wrong reason. In other words, the Court will affirm on any ground supporting the circuit

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