Court of Appeals Finds that Missouri Credit Union Violated Missouri’s Repossession Laws
On February 6, 2018, the Missouri Court of Appeals ruled against Missouri Credit Union in the following case involving Missouri’s repossession laws. This appeals court opinion could have a significant impact on Missouri Credit Union and other auto lenders who have failed to provide proper notice under Missouri’s repossession laws.
Notice of Default
In 2015, Missouri Credit Union loaned $30,719.73 to Nicole Diaz and Matthew Weir to purchase a Kia Optima. Diaz and Weir defaulted on the loan, and Missouri Credit Union sent to them a notice of their right to cure the default by making payment by August 2, 2015. Diaz and Weir failed to make payment by that date, and Missouri Credit Union repossessed the vehicle and sold it for $19,500.00 at auction.
Notice of Deficiency
Missouri Credit Union then notified Diaz and Weir that the vehicle was sold at auction and demanded that they pay the deficiency balance of $11,833.49 (the difference between the total amount due under the loan and the amount for which the vehicle sold at auction). The deficiency notice stated that interest would accrue at the rate of $1.27 per day. Diaz and Weir did not respond to the notice, and Missouri Credit Union filed suit against them in the Boone County Circuit Court for the deficiency. Diaz and Weir filed a counterclaim claiming that the notices provided to them by Missouri Credit Union failed to comply with Missouri’s repossession laws. The circuit court entered judgment against Diaz and Weir, and they appealed.
Statutory Notice
Diaz and Weir asserted in their appeal that the default notice sent to them by Missouri Credit Union failed to clearly state the amount required to cure their default of the loan. Missouri statute §408.554 provides that after a borrower under an auto loan is in default for ten days, the lender may deliver or mail to the borrower a notice of the borrower’s right to cure the default. The statute requires the notice to conspicuously provide certain information about the loan, including the amount that must be paid to cure the default and the date by which such amount must be paid. (This notice must be given to the borrower before the lender repossesses the vehicle.)
Missouri Credit Union Failed to Comply with Missouri’s Repossession Laws
Auto loan lenders must strictly follow the requirements of Missouri’s repossession laws. The appeals court found that the notice provided by Missouri Credit Union to Diaz and Weir failed to comply with the requirements of the statute, because the notice did not clearly state the amount that Diaz and Weir were required to pay to cure the default.
Additionally, the appeals court found that Missouri Credit Union failed to comply with the deficiency notice requirements of Missouri statute §400.9-616. Specifically, the post auction notice failed to describe the future credits or debits that could affect the deficiency balance owed by Diaz and Weir. The deficiency notice provided by Missouri Credit Union identified interest at the rate of $1.27 per day as the only item that would alter the deficiency balance in the future. Yet, at trial, Missouri Credit Union’s collections manager testified that the deficiency amount had been reduced by a certain refund and rebate and that it had been increased by a detail fee and by attorney’s fees, none of which were mentioned in the deficiency notice.
Accordingly, the appeals court reversed the judgment and sent the case back to the circuit court. Under Missouri’s repossession laws, Diaz and Weir are entitled to recover their actual damages, punitive damages, and their reasonable attorney’s fees. Stay tuned. We’ll update this article once the circuit court has ruled on the counterclaim of Diaz and Weir.
Michael Sewell, JD, MBA has litigated more than 100 lawsuits since 2005 in federal and state courts. This article is for general informational purposes only, and it is not intended as legal advice. Please contact Michael Sewell at (314) 942-3232 or at michael@sewelllaw.net for information about Missouri’s repossession laws.
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