Repossession of motor vehicle, security interests, commercially reasonable manner, and parties necessary: HARRINGTON V. ASSET ACCEPTANCE, LLC (COA 10/10/2008)

HARRINGTON
V. ASSET ACCEPTANCE, LLC
COMMERCIAL LAW:  Repossession motor vehicle; security interest;
necessary party; commercially reasonable manner

2007-CA-002400
PUBLISHED: REVERSING AND REMANDING
PANEL:  MOORE, PRESIDING; THOMPSON, HENRY CONCUR
COUNTY: OLDHAM
DATE RENDERED: 10/10/2008

The Court reversed and remanded a summary judgment in favor of appellee on appellee’s claim to recover a deficiency balance on a simple interest note and security agreement. Appellee purchased appellant’s account after appellant’s vehicle was repossessed and sold by the bank that retained the security interest in the 7 vehicle. The Court held that the circuit court erred in granting appellee’s motion for summary judgment and in denying appellant’s motion for summary judgment. Appellee failed to prove that it was entitled to collect on the debt evidenced by the note and security agreement between appellant and the bank, as promissory notes are specifically excluded from the definition of account in KRS 355.9-102(1)(b)(3)(a). Therefore, even if appellee purchased the account, it did not necessarily include the right to collect on the note without evidence that it also purchased the note. The Court also held that appellee was not entitled to summary judgment on its claim that the vehicle was sold in a commercially reasonable manner pursuant to KRS 355.9-627. The bank was the secured party at the time the vehicle was sold and was not made a party to the action. Further, there was no evidence presented by appellee to show that the bank’s sale of the vehicle was commercially reasonable. The Court finally held that appellant was entitled to summary judgment, as appellee failed to present evidence that it had the right to collect the deficiency.

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