Williams v. American Honda Finance Corp. ( 2017 )

United States Court of Appeals
For the First Circuit
No. 16-1275
RACHEL C. WILLIAMS,
on behalf of herself and others similarly situated,
Plaintiff, Appellant,
v.
AMERICAN HONDA FINANCE CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Leo T. Sorokin, U.S. District Judge]
[Hon. Jennifer C. Boal, U.S. Magistrate Judge]
Before
Torruella, Thompson, and Kayatta,
Circuit Judges.
John Roddy, with whom Elizabeth Ryan, Bailey & Glasser LLP,
Steven R. Striffler, and Law Office of Steven R. Striffler were on
brief, for appellant.
Stuart T. Rossman, National Consumer Law Center, and Jennifer
P. Nelson on brief for National Consumer Law Center, amicus curiae
in support of appellant.
Eric S. Mattson, with whom Daniel R. Thies, Sidley Austin
LLP, Tracy M. Waugh, and Wilson Elser Moskowitz Edelman & Dicker,
LLP were on brief, for appellee.
June 8, 2017
Per Curiam. American Honda Finance Corporation
("Honda") loaned Rachel Williams money to buy a car. After
Williams defaulted on the debt by failing to repay the loan as
agreed, Honda repossessed the vehicle and sent Williams two notices
in connection with its efforts to sell the car and collect any
deficiency owed on the loan, a pre-sale notice and (after selling
the car at auction) a post-sale notice.
Williams thereupon filed this putative class action,
claiming that each of the two notices violated the Uniform
Commercial Code and Massachusetts consumer protection laws.
Williams faults the pre-sale notice because instead of saying that
the credit due to her in calculating the deficiency would be the
"fair market value of the car," the notice used terms such as
"money received from the sale (after paying our costs)," "auction
proceeds," and "proceeds of sale." She also faults the post-sale
notice because it calculated her deficiency obligation by
reference to the auction proceeds, which she contends do not
represent the fair market value of the car.
The outcome of this case hinges entirely on questions of
Massachusetts law concerning which the Massachusetts courts have
not spoken. Therefore, even though the parties have not requested
it, we certify three questions to the Massachusetts Supreme
Judicial Court pursuant to Massachusetts Supreme Judicial Court
Rule 1:03. See Fortin v. Titcomb, 671 F.3d 63, 66 (1st Cir. 2012).
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Some context for those questions, along with the questions
themselves, follows.
I.
Honda financed Williams's purchase of a Honda Accord in
2007. Four years later, Williams defaulted on her loan. After
repossessing the car, Honda sent Williams the first notice that is
the subject of this appeal. It stated:
We have [your vehicle] because you broke
promises in our agreement, and we will sell it
at a private sale sometime after October 11,
2011.
The money received from the sale (after
paying our costs) will reduce the amount you
owe. If the auction proceeds are less than
what you owe, you will still owe us the
difference. If we receive more money than you
owe, you will receive a refund, unless we must
pay it to someone else. If you would like a
written explanation on how the amount you owe
was determined, or need additional information
about the sale, please send your request to
the address below.
You can get the property back at any time
before we sell it by paying the full payoff
amount, including our expenses. As of today,
the payoff amount is $13,366.78, which is
subject to change due to the addition of
applicable fees and/or finance charges.
After Williams failed to make the payoff, Honda retained
an auction company to grade the vehicle's condition and the cost
of repairing any damage. It then consulted the so-called "Black
Book," a periodically published trade manual that provides
estimated values for automobiles. Based on the vehicle's condition
and the Black Book data, Honda set a floor price of $8700, below
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which Honda would not accept an offer. It then sold the car at an
auction open only to licensed dealers, receiving $8900.
Honda then sent Williams the second notice that is the
subject of this appeal. It stated as follows:
On October 27, 2011 [the 2007 Honda Accord]
was sold at a Private Sale. . . . The above
referenced personal property was sold for
$8,900.00. The following is the balance on
your contract:
Principal amount: = $12,546.06
Accrued but unpaid Finance Charges + 172.68
for Simple Interest contracts only
(through the date of sale)
Accrued Late Charges + 125.00
Dishonored Payment Charges + 14.96
Other: + 0.00
Subtotal: = $12,858.70
. . . .
Total Deductions: = $0.00
Gross Balance owing prior to sale = $12,858.70
Proceeds of Sale = $8,900.00
Gross Balance owing prior to sale less = $3,958.70
Proceeds of Sale (Balance after Sale)
Expenses from repossession, - 490.00
transporting and storage
Preparing for disposition - 0.00
Title and Registration - 0.00
Auction Fees - 264.62
Legal Expenses - 0.00
Other: - 0.00
Total Expenses: = $754.62
Balance after Sale plus Allowable
Expenses less credits
TOTAL AMOUNT DUE = $4,713.32
TOTAL SURPLUS AMOUNT = $0.00
TOTAL DEFICIENCY AMOUNT = $4,713.32
. . . .
If a TOTAL DEFICIENCY AMOUNT is shown above,
the TOTAL DEFICIENCY AMOUNT IS NOW DUE AND
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OWING TO AMERICAN HONDA FINANCE CORPORATION.
Please remit the amount shown above
immediately to the address shown below.
Should you have any questions or need
assistance, please contact us at [telephone
number].
In filing this putative class action, Williams alleges
that the two letters Honda sent to her (and the similar letters it
sent to other consumers) render Honda liable under Massachusetts
General Laws chapter 106 ("UCC"), sections 9-614(4) and 9-614(5)
or section 9-611, and chapter 93A. To support this claim, she
points to Massachusetts's Motor Vehicle Retail Installment Sales
Act ("MVRISA"), Mass. Gen. Laws ch. 255B, § 20B, which the parties
agree provides that the credit due a consumer debtor upon sale of
a repossessed motor vehicle is the "fair market value" of the car,
which is presumptively the car's "retail value" in a deficiency
proceeding.
Resolving this claim requires that we reconcile the
provision of a safe-harbor form of notice under UCC section 9-614
with MVRISA's mandate concerning the credit due upon sale of the
car. To assist us in deciding this case, we therefore certify to
the Massachusetts Supreme Judicial Court the following three
questions:
1. Whether the "fair market value" of
collateral under Massachusetts General Laws
chapter 255B, section 20B, is the fair market
retail value of that collateral?
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2. Whether, and in what circumstances, a
pre-sale notice is "sufficient" under UCC
section 9-614(4) and (5), and "reasonable"
under UCC section 9-611(b), where the notice
does not describe the consumer's deficiency
liability as the difference between what the
consumer owes and the "fair market value" of
the collateral, and the transaction is
governed by MVRISA?
3. Whether, and in what circumstances, a
post-sale deficiency explanation is
"sufficient" under UCC section 9-616 where the
deficiency is not calculated based on the
"fair market value" of the collateral, and the
transaction is governed by MVRISA?
The Clerk is directed to forward to the Massachusetts
Supreme Judicial Court, under the official seal of this court, a
copy of the certified questions and this opinion, along with copies
of the briefs and appendices filed by the parties. We retain
jurisdiction over this issue pending resolution of these certified
questions.
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