Citizens Finance Co. v. Travis L. Bickford

IN THE COURT OF APPEALS OF IOWA
No. 13-1445
Filed May 14, 2014
CITIZENS FINANCE CO.,
Plaintiff-Appellant,
vs.
TRAVIS L. BICKFORD,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Jackson County, Thomas G.
Reidel, Judge.
Citizens Finance Company appeals the district court’s dismissal of its
petition against Travis Bickford. AFFIRMED.
Nathan D. Runde of Clemens, Walters, Conlon & Meyer, L.L.P., Dubuque,
for appellant.
Steven J. Kahler of Schoenthaler, Bartelt, Kahler & Reicks, Maquoketa, for
appellee.
Considered by Vogel, P.J., and Doyle and Mullins, JJ.
2
VOGEL, P.J.
Citizens Finance Company appeals the district court’s dismissal of its
petition for suit on a note, claiming the court improperly found Citizens Finance
failed to comply with the mandatory notice requirements of Iowa Code sections
554.9611–13 (2011) when serving Travis Bickford. We agree with the district
court that Citizens Finance did not prove it acted in a commercially reasonable
manner when allegedly providing notice to Travis, and therefore the court
properly dismissed Citizens Finance’s petition. Consequently, we affirm.
Travis and Jessica Bickford purchased a Chevy Trailblazer in June 2009.
The couple subsequently divorced. Jessica was awarded the Trailblazer and
was responsible for the payments on the vehicle. On July 25, 2011, Jessica and
Travis together refinanced the vehicle with Citizens Finance.1 However, Jessica
failed to make payments, triggering a notice of right to cure default, allegedly
mailed on January 10, 2012, in accordance with the promissory note’s terms.
Although both Jessica and Travis’s names appear on the notice, no addresses
appear. The Trailblazer was repossessed on May 5, 2012, by an independent
company, and Citizens Finance claimed to have mailed a notice regarding its
intent to sell the car. Two “Notice[s] of our Plan to Sell Property” appear in the
record. Both show Jessica and Travis as “Debtor;” one has Jessica’s address;
one has Travis’s address.
1
We note the marital status section of the credit application shows the “applicant”
(Jessica) and “other party” (Travis) as “married;” however, it also lists them with separate
addresses. Travis testified he did not believe he would be responsible on the loan
because “I was going by my divorce decree that she was liable for it.”
3
The car was sold at auction on June 28 for less than the amount owed on
the note. Citizens Finance claimed it mailed a statement of final accounting to
both Jessica and Travis, summarizing the outstanding loan balance and various
fees. Citizens Finance also claimed it mailed a final notice of the right to cure the
default to both Jessica and Travis on July 20, 2012. No payments on the
outstanding balance were made.
Citizens Finance filed suit against Travis and Jessica for the deficiency on
the note on September 19, 2012. It requested the court order both parties to pay
the outstanding loan balance and accrued interest, totaling $9954.90. A default
judgment was entered against Jessica on December 11, 2012. A trial was held
on August 5, 2013, regarding Travis’s obligation to Citizens Finance. At trial,
Travis testified he did not remember if he received any of the notices. The
district court entered an order dismissing Citizens Finance’s petition on August 6,
finding that it had failed to comply with the notice requirements of Iowa Code
sections 554.9611–13. Citizens Finance appeals.
We review the district court’s decision following an action tried at law for
correction of errors at law. Sille v. Shaffer, 297 N.W.2d 379, 381 (Iowa 1980).
The district court’s findings of fact are binding if supported by substantial
evidence. Reiss v. ICI Seeds, Inc., 548 N.W.2d 170, 173 (Iowa Ct. App. 1996).
Substantial evidence is such quantity and quality of evidence that a reasonable
person could accept as adequate to reach the same findings. Id. We will not
reweigh the evidence or second-guess the trial court’s explicit or implicit findings
regarding the credibility of witnesses. Id.4
Iowa Code section 554.9611(2) states “a secured party that disposes of
collateral . . . shall send to the persons specified in subsection 3 a reasonable
authenticated notification of disposition.” Thus, “commercial reasonableness and
notification [is] mandatory for the secured creditor.” Hartford-Carlisle Sav. Bank
v. Shivers, 566 N.W.2d 877, 880 (Iowa 1997). When the creditor fails to send
notice in a commercially reasonable manner, it cannot succeed on its petition to
collect the remaining debt. See Beneficial Finance Co. of Black Hawk
Cty. v. Reed, 212 N.W.2d 454, 457–60 (Iowa 1973) (holding notice that did not
comply with statutory requirements was not commercially reasonable and
therefore creditor was not entitled to recover any deficiency from debtor, and
further noting that “lack of notice itself suggests [the creditor] did not act in a
commercially reasonable manner”).
In its order, the district court stated:
Neither Sherry Kaiser [loan officer] nor Curtiss Pint [loan officer]
were able to verify that the Notice of Our Plan to Sell Property or
Notice of Redemption were actually mailed. The plaintiff elected
not to call Destiny Ortmann, who Curtiss Pint testified would have
had the responsibility of mailing the notice. Ms. Kaiser and Mr. Pint
merely speculate the notices were mailed. Travis testified he did
not receive these notices.[2] The Court finds Travis to be credible.
Travis was forthright with his answers and his body language and
demeanor did not indicate any falsehoods in his testimony. Travis
acknowledged, concerning prior Notices of Right to Cure, that he
simply could not remember whether he did or did not receive them,
but in regard to the Notice of Our Plan to Sell Property and Notice
of Redemption, he specifically testified he did not receive the same.
Travis was also very forthcoming in regard to the numerous phone
calls he received from Curtiss Pint concerning Jessica’s failure to
2
This finding and a subsequent finding in this paragraph are not accurate. Travis
testified he did not remember seeing or receiving the various notices. This erroneous
finding of fact by the district court does not affect our holding, though, because actual
receipt of notice is not required for a finding of commercial reasonableness. See
Beneficial Finance Co., 212 N.W.2d at 458.
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make payments. It is also relevant that the Notice of Our Plan to
Sell Property and Notice of Redemption are the only two
documents that Destiny Ortmann was tasked with the responsibility
of mailing out. The other documents were mailed personally by
either Curtiss Pint or Sherry Kaiser. Based on these factors, the
Court determines that Citizens has failed to satisfy its burden of
proof that proper notifications were made.
Citizens Finance contests this disposition, claiming it met its burden
showing the notices had been mailed to Travis due to their routine practice of not
scanning a document to their file unless it had been mailed to the proper parties.
In asserting it has carried its burden of proving proper notification, Citizens
Finance analogizes this situation to the business records exception to the
hearsay rule. See generally State v. Reynolds, 746 N.W.2d 837, 841 (Iowa
2008) (noting the business records exception to the hearsay rule states evidence
may be admitted if it is a business record made at or near the time of the act,
made by a person with knowledge of the activity, and it was made and kept in the
regular course of business activity).
However, the district court made a specific finding of credibility with regard
to Travis’s testimony that he did not remember if he received the notices, and
further noted Citizens Finance did not call as a witness the person responsible
for actually mailing the notices. With only the assumption the notices had been
mailed, the court concluded Citizens Finance had failed to meet its burden of
proof. As the court in Beneficial Finance noted, “the record provided this court is
devoid of evidence that any notification whatever was in fact properly mailed to
[the debtor].” 212 N.W.2d at 458. Though lack of actual receipt of the notice is
not a prerequisite for a finding of a lack of commercial reasonableness, see id.,we agree with the district court Citizens Finance did not meet its burden showing
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it acted in a commercially reasonable manner in sending the requisite notices to
Travis. The court’s findings of fact are supported by substantial evidence.
Consequently, we affirm the dismissal of Citizen Finance’s petition.
AFFIRMED.