790 S.E.2d 417
S.C. Ct. App.2016Background
- In May 2008 Brown bought a vehicle from a dealership under a retail installment sales contract that created a security interest; the dealership immediately assigned the contract to Coastal Federal Credit Union (CFCU).
- Brown defaulted; CFCU repossessed the vehicle in Oct. 2009, sold it at auction in Nov. 2009, and notified Brown of a deficiency balance.
- CFCU sued Brown for the deficiency on Oct. 21, 2013; Brown asserted a statute-of-limitations defense and moved for summary judgment under the three-year statute.
- CFCU argued the claim was a breach of contract under SCUCC Article 2 (six-year limitations) because it was enforcing the sales contract as assignee; it contended SCCPC and FDCPA were inapplicable.
- The circuit court granted Brown summary judgment, held the three-year statute applied, and also ruled (unnecessarily) that the SCCPC and FDCPA applied; CFCU appealed.
Issues
| Issue | Plaintiff's Argument (Brown) | Defendant's Argument (CFCU) | Held |
|---|---|---|---|
| Whether SCCPC and FDCPA apply | Brown asserted court’s ruling was incidental and not relied on | CFCU argued it is exempt from SCCPC and not a "debt collector" under FDCPA | Court vacated the SCCPC/FDCPA ruling as unnecessary (not relied on) |
| Which statute of limitations applies (3 yrs v. 6 yrs) | Action is a deficiency/debt-collection tied to Article 9; general 3-yr statute applies | As assignee to the sales contract, claim is for breach of sale governed by Article 2 (6-yr) | Court held Article 2 governs; reversed grant of summary judgment to Brown (six-year statute applies) |
| Effect of repossession/sale on sales remedy | Brown: repossession/sale converts suit into a security/debt collection action | CFCU: repossession under Article 9 does not extinguish assignee’s sales-contract rights | Court: assignee may pursue rights under both Articles 2 and 9 (no double recovery) |
| Appealability of denial of CFCU summary judgment | Brown: denial not independently appealable | CFCU: denial is appealable because it accompanies an appealable grant to Brown | Court held denial of summary judgment is not appealable and dismissed that issue |
Key Cases Cited
- Brading v. County of Georgetown, 327 S.C. 107 (1997) (vacating an unnecessary ruling not relied on to decide the case)
- Ballenger v. Bowen, 313 S.C. 476 (1994) (denial of summary judgment is generally not directly appealable)
- Worrel v. Farmers Bank of Del., 430 A.2d 469 (Del. 1981) (holding Article 2 controls contractual rights in hybrid sale/security transactions)
- Assocs. Disc. Corp. v. Palmer, 47 N.J. 183 (1966) (deficiency actions are in personam actions for unpaid portion of sales price governed by Article 2)
- Barnes v. Cmty. Trust Bank, 121 S.W.3d 520 (Ky. Ct. App. 2003) (applying Article 2 statute of limitations to deficiency claim)