MS LLC v. Richard L. Lindeborn (2013)

MEMORANDUM OF DECISION

This matter was tried to the court on April 11, 2013.   Thereafter, in lieu of oral argument, the parties presented post-trial briefs, the last of which was filed on May 30, 2013.   After consideration, the court issues this memorandum of decision.

I

Background

In this retail installment contract matter, involving a loan for the purchase of a used 2004 Coachman Rendevous Motor Home (Coachman), the plaintiff, Mountain States Adjustment, A Division of MS Services, LLC, seeks to recover an alleged amount owed by the defendant/borrower, Richard L. Lindeborn.   The defendant argues that the plaintiff lacks standing and has not proved the amount allegedly owed.

The court finds the following facts and credits the following evidence, except as noted below.   As alleged in the revised complaint, paragraphs 1 and 2, and admitted by the defendant, on July 26, 2007, the defendant entered into a retail installment contract and security agreement (Consumer Security Agreement), Plaintiff's Exhibit 1, with Essex Credit Corporation of Walnut Creek, California (Essex), for the purchase of the Coachman, for $61,426.40.   By promissory note, he agreed to make 180 monthly payments until the balance was paid in full.   See plaintiff's Exhibit 2 (note).

Pursuant to a servicing agreement between Essex and Bank of the West, a California banking corporation (BOW), dated effective October 3, 2005, BOW was retained by Essex to assume servicing responsibilities for Essex's recreational vehicle loans.   See plaintiff's Exhibit 6 (Servicing Agreement), Exhibit B thereto.   BOW's services included performing collection, repossession and foreclosure services.   See Exhibit B to Servicing Agreement, paragraph 1g.   Paragraph 9a of the Servicing Agreement provided that nothing therein “create [d] any agency relationship except to the extent that the Services provided by BOW with regard to the Essex loans being serviced are being performed on behalf of Essex.”  (Emphasis added.)

The defendant defaulted in making payments.   The defendant agreed to a voluntary repossession of the vehicle.   He surrendered possession thereof in Connecticut.   On November 25, 2008, BOW sent him a notice of its plan to sell the Coachman by private sale.   See plaintiff's Exhibit 7 (notice).   Therein, the redemption amount due was listed as $59,772.43.

The Coachman was sold at an auction in Ohio on January 9, 2009, by ADESA Cincinnati/Dayton of Franklin, Ohio, for $26,000.00.   BOW received the net sum of $24,477.59.   See plaintiff's Exhibit 9. By deficiency notice, dated January 23, 2009, BOW demanded payment from the defendant in the amount of $35,906.35.   See plaintiff's Exhibit 8.

In February 2010, BOW executed an affidavit and assignment of account, stating that the defendant was indebted to BOW, and that it assigned the account to the plaintiff, as assignee.   See plaintiff's Exhibit 10.   Thereafter, the plaintiff commenced this action.

The court discusses the evidence further below.

II

Discussion

“In a case tried before a court, the trial judge is the sole arbiter of the credibility of the witnesses and the weight to be given specific testimony.”   (Internal quotation marks omitted.)  Gianetti v. Norwalk Hospital, 304 Conn. 754, 780, 43 A.3d 567 (2012).  “A trier of fact is free to reject testimony even if it is uncontradicted ․ and is equally free to reject part of the testimony of a witness even if other parts have been found credible.”   (Internal quotation marks omitted.)  Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 12, 662 A.2d 89 (1995).  “[T]he credibility of witnesses, the findings of fact and the drawing of inferences are all within the province of the trier of fact.”  (Internal quotation marks omitted.)   Keeney v. Buccino, 92 Conn.App. 496, 513, 885 A.2d 1239 (2005).

A

“It is a basic principle of law that a plaintiff must have standing for the court to have jurisdiction.   Standing is the legal right to set judicial machinery in motion.   One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy ․ [W]hen standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue and not whether the controversy is otherwise justiciable, or whether, on the merits, the [party] has a legally protected interest [that may be remedied] ․ It is well settled that one who [is] neither a party to a contract nor a contemplated beneficiary thereof cannot sue to enforce the promises of the contract ․” (Citations omitted;  internal quotation marks omitted.)  Dow & Condon, Inc. v. Brookfield Development Corp., 266 Conn. 572, 579, 833 A.2d 908 (2003).

The plaintiff contends that the documentary evidence creates a chain of title and intention to assign the defendant's account to the plaintiff for collection.   The defendant argues that the plaintiff lacks standing.

“Succession by an assignee to an exclusive ownership of all or part of the assignor's rights respecting the subject matter of the assignment, and a corresponding extinguishment of those rights in the assignor, is precisely the effect of a valid assignment.”  Bouchard v. People's Bank, 219 Conn. 465, 473, 594 A.2d 1 (1991).

“An assignment is a contract between the assignor and the assignee, and is interpreted or construed according to rules of contract construction ․ [W]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law.”   Schoonmaker v. Lawrence Brunoli, Inc., 265 Conn. 210, 227, 828 A.2d 64 (2003).

“Generally, to constitute an assignment there must be a purpose to assign or transfer the whole or a part of some particular thing, debt, or chose in action, and the subject matter of the assignment must be described with such particularity as to render it capable of identification ․ The right to bring an action to collect a debt ․ is a chose in action ․ Under the hornbook law of assignments, [t]he assignee of a chose in action stands in the shoes of the assignor.”  (Citations omitted;  internal quotation marks omitted.)  Id., 227–28.

“[U]nder the doctrine of assignment for collection, the assignor does in fact retain an equitable ownership, and therefore, substantial rights, in the action assigned ․ [W]e distinguish between two kinds of assignments.   On the one hand, a creditor/assignor can assign his or her claim against a debtor in such a way as to effect a complete sale of the claim.   An example is the business that sells a group of accounts receivable;  frequently, it will convey its entire ownership interest in exchange for a cash payment ․ On the other hand, a creditor/assignor can assign his or her claim against a debtor for purposes of collection.   Such an assignment transfers legal title to the claim, so the assignee can sue in his or her own name ․ [T]his leaves equitable ownership with the creditor/assignor ․ The resultant split in ownership gives rise to a fiduciary relationship between the assignor and assignee ․ and the relationship generally is one of principal-agent.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Id., 228.

“No words of art are required to constitute an assignment;  any words that fairly indicate an intention to make the assignee owner of a claim are sufficient ․” (Internal quotation marks omitted.)  Sunset Gold Realty, LLC v. Premier Building & Development, Inc., 133 Conn.App. 445, 452–53, 36 A.3d 243, cert. denied, 304 Conn. 912, 40 A.3d 319 (2012).

Here, as provided in the Servicing Agreement, Essex engaged BOW to perform collection, repossession and foreclosure services concerning its recreational vehicle loans, such as that at issue.   Paragraph 9a of the Servicing Agreement states that BOW's services were provided as Essex's agent to the extent that the “loans being serviced are being performed on behalf of Essex.”   See plaintiff's Exhibit 6. Essex's claim against the defendant was assigned to BOW for purposes of collection.

BOW subsequently assigned the account to the plaintiff for collection.   Notwithstanding its reference to the assignment having occurred on the day before its date of execution, BOW's affidavit and assignment of account evidence BOW's intent to and assignment of the defendant's account to the plaintiff for collection.   See plaintiff's Exhibit 10, pursuant to which BOW reserved the “equitable title in and to the proceeds collected, subject only to assignee's lien against the proceeds for his collection fee as previously agreed upon by the parties.”   See Sunset Gold Realty, LLC v. Premier Building & Development, Inc., supra, 133 Conn.App. 452 (where court relies on facts outside of the agreement in ascertaining the intent of the parties, “the validity of the assignment of the obligations undertaken in the contract is a mixed question of law and fact.”).

Accordingly, as assignee of the account for collection, the plaintiff has standing.   See Dow & Condon, Inc. v. Brookfield Development Corp., supra, 266 Conn. 579.

B

The defendant contends that the plaintiff has not met its burden to prove the amount of the debt, noting the net amount recovered in January 2009, $24,477.59, compared with the July 2007 sale price of $61,426.40.   The plaintiff cites the testimony of its witness, Judy Drury, as to the “softness” of the recreational vehicle market at the time of the sale in 2009.

In its complaint, paragraph 1, the plaintiff alleged that the transaction between Essex and the defendant was a retail installment contract.   Resale of the vehicle was subject to Connecticut's Retail Installment Sales Financing Act, §§ 36a–770 et seq.  (RISFA), including General Statutes § 36a–785.   Pursuant to RISFA, such transactions are also subject to the Uniform Commercial Code, title 42a.   See General Statutes § 36a–770(a).  General Statutes § 42a–9–610(b), provides, in relevant part, “[e]very aspect of a disposition of collateral, including the method, manner, time, place and other terms, must be commercially reasonable.”  General Statutes § 42a–9–627(b) provides, in pertinent part, “A disposition of collateral is made in a commercially reasonable manner if the disposition is made:  ․ in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.”

Where, as here, the debtor challenges the commercial reasonableness of the sale, the creditor has the burden of establishing commercial reasonableness.   See Gaynor v. Union Trust Co., 216 Conn. 458, 478, 582 A.2d 190 (1990).

Proof of commercial reasonableness “generally requires evidence of such things as the amount of advertising done, the number of people contacted, normal commercial practices in disposing of the particular collateral, the length of time between the repossession and the sale, whether any deterioration in the collateral has occurred, the number of bids received, and the price obtained.”  (Internal quotation marks omitted.)  Gaynor v. Union Trust Co., supra, 216 Conn. 478.   Such evidence is not required “in each and every case.”  Id. “The reasonableness of a commercial resale is ordinarily a question of fact.”  Id.

As the trier of fact, the court is unpersuaded by Ms. Drury's testimony concerning the auction of the Coachman and the reasonableness of the amount realized from its sale.   Her knowledge of what occurred at the auction and what was done to market the Coachman was vague.   She stated that she had never attended an auction.   Her knowledge of market conditions at, the time of the sale appeared to be limited and based on hearsay statements from remarketers.   Accordingly, the court discounts her testimony as to the value of the Coachman at the time of its sale in 2009.

Under these circumstances, the plaintiff has not met its burden to prove that the claimed deficiency is owed by the defendant.   Since the plaintiff has not prevailed, the court need not consider its request for an award of attorneys fees.   See Brookfield v. Candlewood Shores Estates, Inc., 201 Conn. 1, 14–15, 513 A.2d 1218 (1986).

CONCLUSION

Based on the foregoing reasons, judgment may enter for the defendant.   It is so ordered.

BY THE COURT

ROBERT B. SHAPIRO

JUDGE OF THE SUPERIOR COURT

Shapiro, Robert B., J.