Case Title: Williams v. American Honda Finance Corp.

Citation: 

Docket Number: SJC-12367

State: massachusetts

Court: Massachusetts Supreme Court

Date: 2018-06-05T00:00:00Z

Document:
NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us 
 
SJC-12367 
 
RACHEL C. WILLIAMS1  vs.  AMERICAN HONDA FINANCE CORPORATION. 
 
 
 
Suffolk.     December 7, 2017. - June 5, 2018. 
 
Present:  Gants, C.J., Gaziano, Lowy, Cypher, & Kafker, JJ. 
 
 
Motor Vehicle Instalment Sales, Repossession, Notice.  Uniform 
Commercial Code, Notice.  Words, "Fair market value." 
 
 
 
 
Certification of questions of law to the Supreme Judicial 
Court by the United States Court of Appeals for the First 
Circuit. 
 
 
 
John J. Roddy (Elizabeth A. Ryan also present) for the 
plaintiff. 
 
Eric S. Mattson, of Illinois (Tracy McDevitt Waugh also 
present) for the defendant. 
 
Fredrick S. Levin, John C. Redding, & Ali M. Abugheida, for 
American Financial Services Association, amicus curiae, 
submitted a brief. 
 
Stuart T. Rossman, for National Consumer Law Center, amicus 
curiae, submitted a brief. 
 
 
 
KAFKER, J.  The primary issue presented in this case is how 
to establish the fair market value of a repossessed automobile 
                                                          
 
 
1 Individually and on behalf of all others similarly 
situated. 
2 
 
 
pursuant to G. L. c. 255B, § 20B.  Under § 20B, a creditor who 
repossesses and sells a vehicle is entitled to recover from the 
debtor the deficiency, if any, that remains after deducting the 
"fair market value" of the vehicle from the debtor's unpaid 
balance.  The plaintiff in this case, Rachel Williams, defaulted 
on her automobile loan, causing the defendant, American Honda 
Finance Corporation (Honda), to repossess and sell the vehicle 
that served as collateral for the loan.  The price for the 
repossessed vehicle was determined at an auction open to 
licensed dealers.  Honda then used that amount to establish the 
fair market value of the repossessed automobile and likewise 
referenced the auction sale amount in presale and postsale 
notices to the debtor.  Williams then sued Honda, alleging that 
the fair market value of her repossessed automobile was the fair 
market retail value of the automobile and Honda's notices to her 
were insufficient under Massachusetts law because of the manner 
in which Honda described and calculated her deficiency.  The 
United States District Court for the District of Massachusetts 
granted summary judgment to Honda, and the plaintiff appealed. 
 
Unsure of the meaning of the statute, the United States 
Court of Appeals for the First Circuit certified to this court 
three questions related to the calculation of "fair market 
value" under § 20B, and the notices that are required with 
respect to this calculation.  The court first asks whether the 
3 
 
 
fair market value of the collateral under § 20B is the fair 
market retail value of the collateral.  The second and third 
questions then relate to the contents of the presale and 
postsale notices that must be sent to the debtors. 
 
We conclude that the Legislature required that deficiency 
calculations for repossessed vehicles be determined based on the 
fair market value of the vehicle, but did not dictate the 
creditor's market choice in the first instance and left the 
ultimate determination of fair market value to the courts in 
contested cases, taking into account both creditor and debtor 
interests, and the means, methods, and markets used to sell the 
vehicle.  As will be explained infra, estimated retail value as 
provided in periodically published trade journals has a very 
limited role in the statute, essentially establishing a 
rebuttable evidentiary presumption that allows a debtor to put 
the fair market value as originally determined by the creditor 
to the test in contested cases.  The approach to determining 
fair market value and deficiencies that we delineate respects 
the plain language of the statute, the legislative history, and 
the practical realities of the automobile repossession market.  
Had the Legislature intended to impose a fair market retail 
value standard, it would have simply said so in the statute or 
the legislative history, and it did not. 
4 
 
 
 
Finally, in response to the second and third questions, 
concerning the notice that is required, we answer that the 
presale and postsale notices provided to the debtor must 
expressly describe the deficiency as the difference between the 
amount owed on the loan and the fair market value of the 
vehicle, not the difference between the amount owed and the sale 
proceeds or the amount owed and the fair market retail value of 
the vehicle. 
 
1.  Background.  The relevant facts and procedural history 
are as follows. 
 
Honda resells tens of thousands of used motor vehicles 
every year -- some after a repossession, but most after they 
have been returned to Honda at the end of a lease.  To sell all 
of these vehicles, Honda uses a process that the plaintiff has 
admitted is "designed to obtain the highest possible price."  
The first step in this process involves an independent auction 
company rating the vehicle's condition on a scale from zero to 
five, with zero representing the "very worst" and five the "very 
best."  With the vehicle's grade in mind, a Honda employee 
consults the Black Book to help establish a baseline value for 
vehicles it resells.  The Black Book is a guidebook used in the 
collections, customer service, and credit industry.  Honda 
determines a "floor price" -- the minimum it intends to accept 
when it sells the vehicle -- based in part on the Black Book's 
5 
 
 
estimated values for a vehicle of the same make, model, year, 
mileage, and condition.  After a floor price is set, the vehicle 
is sold, along with vehicles from other manufacturers, at a 
biweekly auction that is open to licensed dealers. 
 
Honda uses auctions rather than a retail channel to sell 
these vehicles for a variety of reasons.  Honda is not licensed 
to sell at retail, and selling at retail may interfere with the 
legal rights of independent Honda dealers.  It also would take 
Honda a longer time to sell these vehicles at retail than 
selling at the dealer auctions.  This is significant because 
automobiles depreciate rapidly and the longer a creditor retains 
possession of a vehicle, the less it will be worth when it is 
eventually sold. 
 
Honda financed the purchase of the plaintiff's vehicle in 
2007.  Four years later, after the plaintiff defaulted on her 
loan, Honda repossessed the vehicle.2  Honda then provided the 
plaintiff with the following notice: 
 
"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 
                                                          
 
 
2 The plaintiff's account with Honda was delinquent at least 
twenty-four times before Honda repossessed the vehicle. 
6 
 
 
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." 
 
The plaintiff's repossessed vehicle was sold according to the 
auction process.  The independent auction company determined 
that the plaintiff's vehicle was in below average condition.  
For Honda, this meant that the vehicle was in "rough" condition 
for purposes of the Black Book.  According to the Black Book, 
the estimated wholesale value for this vehicle in "rough" 
condition was $7,750 and the estimated retail value was $9,800.  
With these values in mind, Honda set the floor price for the 
plaintiff's vehicle at $8,700 and ultimately sold the vehicle 
for $8,900.  The plaintiff's outstanding balance was $12,858.70, 
and Honda incurred repossession and auction expenses of $754.62, 
leaving the plaintiff with a postsale deficiency of $4,713.32.  
After the auction, Honda notified the plaintiff that her vehicle 
was sold for $8,900 and provided her with a calculation of the 
deficiency that she owed.  There is no indication that Honda, 
once it sold the vehicle and calculated the deficiency, intended 
to file a lawsuit to collect the deficiency.  Indeed, Honda has 
7 
 
 
brought only five or fewer such lawsuits in the past few years 
despite selling thousands of repossessed automobiles. 
 
The plaintiff commenced a putative class action in the 
Superior Court against Honda, claiming that the notices it sent 
to her and other debtors violated the Uniform Commercial Code 
and constituted an unfair and deceptive act or practice in 
violation of G. L. c. 93A.  The plaintiff challenges Honda's 
presale notice because it did not use the term "fair market 
value" in describing her deficiency.  The plaintiff also 
challenges the postsale notice, arguing that it is insufficient 
because it calculated her deficiency as the difference between 
her unpaid balance and the auction proceeds. 
 
Honda removed the case to the United States District Court 
for the District of Massachusetts.  Following discovery, both 
parties moved for summary judgment.  A magistrate judge 
recommended granting summary judgment in favor of Honda, 
concluding that under G. L. c. 255B, § 20B, the plaintiff's 
deficiency must be calculated using the fair market value of the 
collateral and that Honda's notices complied with the Uniform 
Commercial Code because there was no evidence that Honda sold 
the vehicle for less than its fair market value.  The district 
court judge adopted this recommendation and entered judgment in 
favor of Honda. 
8 
 
 
 
The plaintiff appealed to the United States Court of 
Appeals for the First Circuit.  Having determined that the 
outcome of the case depended on unsettled questions of 
Massachusetts law, the First Circuit on its own motion certified 
three questions to this court.  We address each question in 
turn. 
 
2.  Discussion.  a.  Question one.  The first certified 
question asks: 
"1.  Whether the 'fair market value' of collateral under 
[G. L. c. 255B, § 20B,] is the fair market retail value of 
that collateral" (emphasis in original)? 
 
For the reasons detailed infra, we answer this question, "No." 
 
i.  Statutory language.  "[T]he primary source of insight 
into the intent of the Legislature is the language of the 
statute."  International Fid. Ins. Co. v. Wilson, 387 Mass. 841, 
853 (1983).  "Where the language is clear and unambiguous, it is 
to be given its 'ordinary meaning,'" as long as "this 
meaning . . . [is] reasonable and supported by the purpose and 
history of the statute" (citations omitted).  Commonwealth v. 
Mogelinski, 466 Mass. 627, 633 (2013). 
 
By its plain language, G. L. c. 255B, § 20B, calculates the 
deficiency that the creditor can obtain from a defaulting debtor 
based on the fair market value of the collateral.3  Once the 
                                                          
 
 
3 General Laws c. 255B, § 20B (e), provides: 
 
9 
 
 
creditor repossesses and sells the collateral, the creditor 
"shall be entitled to recover from the debtor the deficiency, if 
any, resulting from deducting the fair market value of the 
collateral from the unpaid balance due" in addition to any 
"reasonable repossession and storage costs."  G. L. c. 255B, 
§ 20B (e) (1). 
 
"Fair market value" was not a novel or undefined term when 
the Legislature used it in enacting G. L. c. 255B, § 20B, in 
1973.  As we have repeatedly held, fair market value is "the 
highest price which a hypothetical willing buyer would pay to a 
hypothetical willing seller in an assumed free and open market" 
(citation omitted).  Epstein v. Boston Hous. Auth., 317 Mass. 
297, 299 (1944).  See Boston Gas Co. v. Assessors of Boston, 458 
Mass. 715, 717 (2011), quoting Boston Gas Co. v. Assessors of 
Boston, 334 Mass. 549, 566 (1956) ("the price an owner willing 
                                                                                                                                                                                           
 
 
"(e) (1) If the unpaid balance of the consumer credit 
transaction at the time of default was [$2,000] or more the 
creditor shall be entitled to recover from the debtor the 
deficiency, if any, resulting from deducting the fair 
market value of the collateral from the unpaid balance due 
and shall also be entitled to any reasonable repossession 
and storage costs, provided he has complied with all 
provisions of this section. 
 
 
"(2) In a proceeding for a deficiency the fair market 
value of the collateral shall be a question for the court 
to determine.  Periodically published trade estimates of 
the retail value of goods shall, to the extent they are 
recognized in the particular trade or business, be presumed 
to be the fair market value of the collateral." 
10 
 
 
but not under compulsion to sell ought to receive from one 
willing but not under compulsion to buy"); Bradley v. Hooker, 
175 Mass. 142, 143 (1900) ("the highest price that a normal 
purchaser not under peculiar compulsion will pay at the time and 
place in question in order to get the thing").  In the instant 
case, the collateral was sold in an automobile auction open to 
licensed dealers.  The price set in such an open market is 
compelling, albeit not conclusive evidence, of the fair market 
value of the repossessed automobile.  Compare Matter of Excello 
Press, Inc., 890 F.2d 896, 904-905 (7th Cir. 1989) ("The product 
of a commercially reasonable sale is the fair market 
value. . . .  The price obtained in a commercially reasonable 
sale is not evidence of the market value, which can be 
discounted or thrown out.  It is the market value").  In the 
instant case, it is also admitted that the auction process was 
"designed to obtain the highest possible price." 
 
The statute goes one step further to protect debtors in the 
event that the creditor sues to recover the remaining 
deficiency.  Section 20B (e) (2) provides that, "[i]n a 
proceeding for a deficiency the fair market value of the 
collateral shall be a question for the court to determine."  
When making this determination, the statute introduces an 
evidentiary presumption that "[p]eriodically published trade 
estimates of the retail value of goods shall, to the extent they 
11 
 
 
are recognized in the particular trade or business, be presumed 
to be the fair market value of the collateral."  G. L. c. 255B, 
§ 20B (e) (2).  This presumption puts the creditor's original 
determination of fair market value, and thus the means or market 
selected by the creditor to sell the vehicle and establish the 
fair market value, to the test.  It does so by using retail data 
readily available to debtors and creditors. 
 
A presumption is an evidentiary tool that accepts a certain 
fact as proven in the absence of contradictory evidence.  See 
Mass. G. Evid. § 301(d) (2018).  A presumption "imposes on the 
party against whom it is directed the burden of production to 
rebut or meet that presumption."  Id.  "If that party fails to 
come forward with evidence to rebut or meet that presumption, 
the fact is to be taken by the fact finder as established."  Id.  
If, however, that party introduces evidence that meets or rebuts 
the presumption, "the presumption shall have no further force or 
effect."  Id.  In effect, a presumption simply imposes a burden 
of production on a party as to some fact to be proved.  See 
Mass. G. Evid. § 301(d) & note. 
 
The estimated retail value of the vehicle thus has a very 
limited role in the statute.  When the deficiency or the fair 
market value is disputed, there is a rebuttable presumption that 
the estimated retail value is fair market value.  This 
presumption places the burden on the creditor to prove the fair 
12 
 
 
market value of the vehicle.  The fair market value of the 
vehicle, however, is just that:  the highest price that a 
willing buyer would pay Honda in a fair market for the vehicle.  
See Epstein, 317 Mass. at 299.  And fair market value, not fair 
market retail value, is what the statute provides that the court 
must determine.  The statute does not dictate use of a 
particular market.  If contested, a court must determine the 
fair market value based on all the facts and circumstances, 
including the goods to be sold, the relevant markets, the 
particular creditors and debtors, and the rebuttable 
presumption.  See generally Rapson, Deficient Treatment of 
Deficiency Claims:  Gilmore Would Have Repented, 75 Wash. U. 
L.Q. 491, 522-523 (1997) (discussing different factors that go 
into consideration of fair market value).  See also In re 
Roberts, 210 B.R. 325, 330-331 (N.D. Iowa 1997) (exclusive 
reliance on industry guides alone is disfavored and may 
contradict court's duty to value specific collateral at issue). 
 
Indeed, if the Legislature had intended fair market value 
to be fair market retail value, it would have simply said so, as 
other provisions in the General Laws demonstrate that the 
Legislature is capable of specifying retail or wholesale markets 
and values in statutes when it intends to do so.  See, e.g., 
13 
 
 
G. L. c. 127, § 67 ("wholesale market price"); G. L. c. 159C, 
§ 5A (a) ("retail market value of the goods or services").4 
 
Our interpretation of the statutory language leads to the 
conclusion that fair market value, not fair market retail value, 
is to be used when calculating a deficiency under G. L. c. 255B, 
§ 20B. 
 
ii.  Legislative history.  The limited legislative history 
available supports the plain language interpretation of fair 
market value and does not even mention fair market retail value.5 
                                                          
 
 
4 Other examples include G. L. c. 6, § 197 ("wholesale 
market price of such device prevailing at the time of sale"); 
G. L. c. 127, § 58 ("shall conform as nearly as may be to the 
wholesale market rates for similar goods"); and G. L. c. 64H, 
§ 1 (referencing "retail sales market in the commonwealth" and 
"every person engaged in the making of retail sales at 
auction"). 
 
 
5 The dissent accuses the court of largely ignoring the 
relevant legislative history in this case.  Post at    .  Quite 
the contrary, it is the dissent that only selectively references 
portions of the legislative history.  The dissent relies on the 
recommendation from the Consumers' Council (council), an 
executive agency that would propose multiple bills each 
legislative session, and this reliance is misplaced for several 
reasons.  First, the dissent's position that the council "first 
recommended for legislative action" the bill that the 
Legislature eventually enacted, see post at    -   , is simply 
wrong.  The council's recommendation recycled proposals from 
earlier legislative sessions, and the bill that eventually 
passed the House, see 1973 House Doc. No. 6884, was the product 
of at least three separate proposed bills that were being 
considered by the committee.  Id.  The dissent wholly ignores 
the three years of proposed legislation that preceded the 
council's recommendation, some of which contained provisions 
 
14 
 
 
 
The Legislature enacted the current provisions in G. L. 
c. 255B, §§ 20A and 20B, in 1973.  St. 1973, c. 629.  The 
Legislature began considering proposals to amend these 
provisions as early as 1970.  See 1970 House Doc. No. 3814 ("An 
Act restricting deficiency judgments in motor vehicle 
installment sales").  From 1970 to 1973, the Legislature 
considered at least eight different bills to amend §§ 20A and 
20B.6 
 
There were at least five different proposals for how to 
calculate or limit deficiencies.7  Most significantly, none of 
                                                                                                                                                                                           
that were eventually enacted.  See note 6, infra (list of 
proposed legislation predating council's recommendation).  
Additionally, the council's proposal does not mention fair 
market value, fair market retail value, or even the rebuttable 
presumption of estimated retail value, the key language that the 
court is interpreting in this case.  See 1973 House Doc. No. 66.  
Instead, the council's proposal contained a completely different 
mechanism for calculating deficiencies that does not involve 
fair market value or the estimated retail value.  Therefore, the 
dissent's treatment of the council's recommendation as 
conclusive as to legislative intent, see post at    , is 
erroneous and misleading. 
 
 
6 See 1973 House Doc. No. 6884; 1973 House Doc. No. 66; 1972 
House Doc. No. 6111; 1971 House Doc. No. 5470; 1971 House Doc. 
No. 2767; 1970 House Doc. No. 5533; 1970 House Doc. No. 4574; 
1970 House Doc. No. 3814.  Several additional bills filed during 
this period appear to be refilings of earlier proposals.  See 
1973 House Doc. No. 2833 (refiling of 1972 House Doc. No. 6111); 
1972 House Doc. No. 2775 (refiling of 1971 House Doc. No. 5470). 
 
 
7 One bill proposed abolishing deficiencies altogether, 
limiting the creditor's recovery to the proceeds of the sale of 
 
15 
 
 
these prior proposals considered using the estimated retail 
value of the collateral.  At least one proposed bill, however, 
used the fair market value of the collateral without any 
reference to retail value.  See 1970 House Doc. No. 5533 ("buyer 
shall not be liable for any deficiency or part of a deficiency 
which results from a difference between the proceeds of the sale 
and the fair market value of the motor vehicle at the time of 
repossession or surrender"). 
 
The current method for calculating deficiencies in § 20B 
was not proposed in the Legislature until 1973.  See 1973 House 
Doc. No. 6884.  It appears that the Legislature took this 
approach from the National Consumer Act (NCA), a draft model act 
proposed by the National Consumer Law Center in 1970 that uses 
almost the same language as G. L. c. 255B, § 20B.  As the 
comments to the NCA suggest, this approach to calculating 
deficiencies is "the more equitable approach" that properly 
balances the concerns of creditors left with large unpaid 
                                                                                                                                                                                           
the collateral.  See 1971 House Doc. No. 2767.  Two separate 
bills proposed prohibiting a creditor from collecting a 
deficiency where the cash price of the collateral was below a 
certain amount.  See 1971 House Doc. No. 5470 (debtor not liable 
where cash price was equal to or less than $4,000); 1970 House 
Doc. No. 4574 (debtor not liable where cash price was equal to 
or less than $2,000).  Another proposal provided that the debtor 
would not be liable "for any deficiency or part of a deficiency 
which results from a difference between the proceeds of the sale 
and the fair market value of the collateral at the time of 
repossession or surrender."  1970 House Doc. No. 5533. 
16 
 
 
balances when a consumer defaults after purchase and the 
interest in shielding consumers from unnecessary or 
unnecessarily inflated deficiency claims.  See NCA § 5.211 
comment (1970).  See also Rubin, Deficiency Judgments:  A 
Louisiana Overview, 69 La. L. Rev. 783, 786 (2009) (rules 
regulating deficiencies balance interests of debtors, creditors, 
and public policy).  The approach to calculating fair market 
value discussed supra preserves and protects that balance.  
Regardless, nothing in the legislative history imposes a fair 
market retail value standard. 
 
iii.  Automobile repossession market.  Our interpretation 
of the statutory language and legislative history is also 
consistent with the practical realities of the automobile 
repossession market.  As evidenced by an extensive study of the 
automobile repossession market by the Federal Trade Commission 
in the 1970s, creditors have an incentive to obtain the highest 
possible price for collateral that they repossess.  Federal 
Trade Commission, Trade Regulation; Credit Practices; Final 
Rule, 49 Fed. Reg. 7740, 7783 (Mar. 1, 1984).8  This study also 
concluded that using fair market retail value to calculate 
deficiencies "has several defects that make it completely 
impractical."  See Federal Trade Commission, Report of the 
                                                          
 
 
8 As discussed supra, G. L. c. 255B, § 20B, was enacted in 
1973.  See St. 1973, c. 629. 
17 
 
 
Presiding Officer on Proposed Trade Regulation Rule:  Credit 
Practices, at 238 (1978) (FTC Report).  The commercial realities 
of today's market, as described in the record, confirm both of 
these propositions. 
 
Creditors generally do not sue to collect the deficiency.  
See FTC Report, supra at 220 ("Testimony and evidence presented 
by many witnesses at the hearings showed that deficiency 
judgments were not often sought and that recoveries of 
deficiencies did not provide creditors with a significant amount 
of revenue").  See also id. at 221-222 ("Creditor-repossessors 
on an average filed no more than one suit for every five cars 
repossessed . . ."); J.J. White & R.S. Summers, Uniform 
Commercial Code § 25-10, at 919 (4th ed. 1995) ("In many cases 
in which cars are repossessed and resold -- perhaps in the large 
majority -- no claim for deficiency is filed").  Indeed, Honda 
has filed lawsuits to collect the deficiencies fewer than five 
times over the past few years even though it sells tens of 
thousands of motor vehicles each year, of which approximately 
twenty to thirty per cent are repossessed vehicles.  It is also 
unlikely that the creditor will recover much, if any, of the 
resulting deficiency.  See National Consumer Law Center, 
Repossessions § 12.1.1 (9th ed. 2017) ("Creditors know they are 
able to collect only a small percentage of deficiency 
judgments").  The FTC found that creditors only collected 
18 
 
 
between five and fifteen per cent of these deficiencies.  See 49 
Fed. Reg. at 7783.  In this case, the evidence suggests that 
Honda has collected less than ten per cent of the deficiency 
judgments that it does obtain.9  These realities all incentivize 
a creditor to maximize the sale price.  Thus, for the creditor, 
the repossession and disposition of the collateral is almost 
always the last opportunity to minimize the loss caused by a 
consumer defaulting.  See Matter of Excello Press, Inc., 890 
F.2d at 901 ("[W]hy would [a secured party] forgo a dollar today 
for the chance to enforce a deficiency judgment tomorrow?"). 
 
There are also practical problems with imposing a retail 
market price.  In the motor vehicle industry, retail sales 
require capital, facilities, and personnel, which creditors 
often lack.  FTC Report, supra at 229-231.  Moreover, selling a 
                                                          
 
 
9 The dissent's concern about, and heavy reliance upon, the 
"cooperative, perhaps unwitting, consumer," post at note 1, who 
would default on instalment payments but then pay the entire 
outstanding balance after repossession and sale but before the 
creditor sues to collect the debt, has absolutely no support in 
either this record or the extensive record considered by the 
Federal Trade Commission when it rejected a fair market retail 
value standard on policy grounds.  See Federal Trade Commission, 
Trade Regulation; Credit Practices; Final Rule, 49 Fed. Reg. 
7740, 7783 (Mar. 1, 1984).  The record supports the exact 
opposite conclusion, that defaulting debtors who have had their 
automobiles repossessed do not "simply pay" the deficiency.  
See, e.g., id. (creditors on average collect five to fifteen per 
cent of deficiencies); National Consumer Law Center, 
Repossessions § 12.1.1 (9th ed. 2017) ("Creditors know they are 
able to collect only a small percentage of deficiency 
judgments"). 
19 
 
 
repossessed motor vehicle at retail entails further costs, such 
as storage, overhead, and most importantly, reconditioning of 
the vehicle for sale at retail.  Id. at 247 (noting "convincing 
evidence that many repossessed automobiles, and probably the 
overwhelming majority, require extensive reconditioning or 
repair to make them suitable for sale at retail").  As the FTC 
noted, when the creditors who repossess vehicles are retailers, 
they will usually sell the vehicle at retail.  See 49 Fed. Reg. 
at 7784.  When they are not retailers, however, the retail 
market may be neither practical nor fair.10  Indeed, Honda is not 
                                                          
 
 
10 The dissent's fair market retail value standard has been 
described, after exhaustive study, as "manifestly and patently 
unfair to creditors."  Federal Trade Commission, Report of the 
Presiding Officer on Proposed Trade Regulation Rule:  Credit 
Practices, at 239 (1978).  The dissent nonetheless contends that 
the Legislature intended to impose this commercially 
unreasonable standard, a standard that has "no generally 
accepted meaning," id. at 237, and that is not mentioned 
anywhere in the General Laws or our case law.  In an attempt to 
support this highly unusual standard, the dissent argues that 
the Legislature would not have gone from a commercially 
reasonable standard to a fair market value standard as described 
by the court, as the two standards are too similar in the 
dissent's view.  Post at    -   .  The dissent then goes further 
and misreads the court's decision as stating that the court has 
concluded that these two standards are the same.  Id. at    .  
This is incorrect.  We recognize that there is great overlap 
between "fair market value" and "commercially reasonable," but 
emphasize that there are meaningful differences between a 
commercially reasonable standard and a fair market value 
standard.  For example, under the Uniform Commercial Code, the 
fact that a creditor could have obtained a higher price does not 
necessarily mean that a disposition was commercially 
unreasonable.  See G. L. c. 106, § 9-627 (a).  Under a fair 
market value standard, however, the creditor must obtain "the 
 
20 
 
 
licensed to sell on the retail market and may interfere with the 
legal rights of independent Honda dealers. 
 
Finally, the fact that industry guides, such as the Black 
Book used by Honda, provide different estimated prices simply 
reflects the reality that consumers, wholesalers, and retailers 
each add varying amounts of value to the vehicle that are built 
into the different sale prices that each can obtain from 
consumers.  See Lawless & Ferris, Economics and the Rhetoric of 
Valuation, 5 J. Bankr. L. & Prac. 3, 5 (1995) ("The reasons for 
the price difference result from the manner in which the retail 
and wholesale automobile markets operate, not because the same 
automobile can have two different values").  For example, the 
difference between the estimated retail value of an automobile 
and the estimated wholesale value of an automobile is often a 
result of the costs of retailing.  See id. at 18 ("inflated 
retail price includes value-adding activities by the retailer").  
See also FTC Report, supra at 230-231. 
 
Imposing a fair market retail value on sales by all 
creditors would also appear to have unintended consequences.  It 
                                                                                                                                                                                           
highest price which a hypothetical willing buyer would pay to a 
hypothetical willing seller in an assumed free and open market" 
or credit the debtor with that amount.  Epstein v. Boston Hous. 
Auth., 317 Mass. 297, 299 (1944).  Regardless, reframing and 
refining a commercially reasonable standard to be a fair market 
value standard is quite different from imposing a commercially 
unreasonable standard, the approach recommended by the dissent. 
21 
 
 
would likely increase the cost of borrowing because many 
creditors lack the means, and some, like Honda, the legal right, 
to sell repossessed vehicles at retail.  See 49 Fed. Reg. at 
7784.  In the end, these costs would invariably be passed on to 
all consumers.  The result would likely be more expensive 
financing even for the vast majority of borrowers who pay off 
their vehicle loans. 
 
In sum, the Legislature did not dictate a particular market 
and left the determination of fair market value to the courts in 
contested cases.  The plain language of the statute, the 
legislative history, and the realities of the automobile 
repossession market all support this approach to the 
determination of fair market value. 
 
b.  Questions two and three.  Questions two and three are 
closely related, as each asks whether the notice required by the 
Uniform Commercial Code can be sufficient even if it does not 
describe the debtor's deficiency as the difference between the 
outstanding balance and the fair market value of the collateral.  
Specifically, these questions ask: 
"2.  Whether, and in what circumstances, a pre-sale notice 
is 'sufficient' under [the Uniform Commercial Code, G. L. 
c. 106, § 9-614 (4) and (5)], and 'reasonable' under [the 
Uniform Commercial Code, G. L. c. 106, § 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 [G. L. c. 255B]? 
 
22 
 
 
"3.  Whether, and in what circumstances, a post-sale 
deficiency explanation is 'sufficient' under [the Uniform 
Commercial Code, G. L. c. 106, § 9-616,] where the 
deficiency is not calculated based on the 'fair market 
value' of the collateral, and the transaction is governed 
by [G. L. c. 255B]?" 
 
We conclude that the notice that is required by the Uniform 
Commercial Code is never sufficient where the deficiency is not 
calculated based on the fair market value of the collateral and 
the notice fails to accurately describe how the deficiency is 
calculated. 
 
The Uniform Commercial Code provisions in G. L. c. 106, 
§§ 9-600, generally govern defaults in secured transactions.  
General Laws c. 106, § 9-614, requires that notice be given to a 
debtor prior to the disposition of repossessed collateral, and 
G. L. c. 106, § 9-616, requires that notice be provided after 
the collateral is sold.  Under each section, the notices must 
include certain information to be sufficient, including a 
description of any deficiency that the debtor will owe.  See 
G. L. c. 106, § 9-614 (1) (B); G. L. c. 106, § 9-616 (b) (1).  
The Uniform Commercial Code also provides standard form 
language, including the following statement for presale notices:  
"The money that we get from the sale (after paying our costs) 
will reduce the amount you owe.  If we get less money than you 
owe, you (will or will not, as applicable) still owe us the 
difference.  If we get more money than you owe, you will get the 
23 
 
 
extra money, unless we must pay it to someone else."  G. L. 
c. 106, § 9-614 (3).  A notification following the above form 
"is sufficient, even if additional information appears at the 
end of the form."  G. L. c. 106, § 9-614 (4). 
 
General Laws c. 255B, § 20B (d), provides that the Uniform 
Commercial Code applies "unless displaced by the provisions of 
[§ 20B] and [§ 20A]."  General Laws c. 255B, § 20B, calculates 
the deficiency using the fair market value of the vehicle, 
whereas the Uniform Commercial Code calculates deficiencies 
using the proceeds of a "commercially reasonable" sale.  See 
G. L. c. 106, § 9-615.  Because the Uniform Commercial Code and 
G. L. c. 255B, § 20B, calculate deficiencies differently, the 
use of the Uniform Commercial Code safe harbor language is 
inconsistent with Massachusetts law.  The notice that is 
required by G. L. c. 106, § 9-614, and G. L. c. 106, § 9-616, 
must describe the deficiency as the difference between the fair 
market value of the collateral and the debtor's outstanding 
balance because this is what is required by § 20B. 
 
Therefore, when creditors are providing notice prior to 
disposing of the collateral under § 9-614 (3), the notice should 
include language similar to the following statement: 
"The fair market value of your vehicle will be used to 
reduce the amount you owe, which is your outstanding 
balance plus the reasonable costs of repossessing and 
selling the vehicle.  If the fair market value of your 
vehicle is less than you owe, you (will or will not, as 
24 
 
 
applicable) still owe us the difference.  If the fair 
market value of your vehicle is more than you owe, you will 
get the extra money, unless we must pay it to someone 
else."  (Emphasis added.) 
 
Additionally, when providing notice of the deficiency after the 
sale under § 9-616, the notice should clearly identify the fair 
market value of the vehicle in the calculation of the 
deficiency.  This statement replaces the description of "the 
amount of proceeds of the disposition" that is currently 
required by § 9-616 (c) (2).  Ultimately, the notice required by 
the Uniform Commercial Code will only be considered sufficient 
if it accurately describes the deficiency under G. L. c. 255B, 
§ 20B. 
 
3.  Conclusion.  In transactions governed by G. L. c. 255B, 
a debtor's deficiency liability must be calculated as the 
difference between the debtor's unpaid balance and the fair 
market value of the repossessed collateral.  In determining fair 
market value, the Legislature did not dictate the creditor's 
market choice in the first instance and left the ultimate 
determination of fair market value to the courts in contested 
cases, taking into account both creditor and debtor interests, 
the means, methods, and markets used to sell the vehicle, and a 
rebuttable presumption of estimated retail value as provided in 
periodically published trade journals to put the market choice 
and valuation of the creditor to the test.  In presale notices 
25 
 
 
and postsale deficiency explanations, creditors must describe 
and calculate the debtor's deficiency as based on "the fair 
market value" of the vehicle. 
 
The Reporter of Decisions is directed to furnish attested 
copies of this opinion to the clerk of this court.  The clerk in 
turn will transmit one copy, under the seal of the court, to the 
clerk of the United States Court of Appeals for the First 
Circuit, as the answers to the questions certified, and will 
also transmit a copy to each party. 
 
 
 
 
GANTS, C.J. (dissenting).  I respectfully dissent. 
 
Most American consumers purchase their motor vehicles on 
credit, in many cases by entering into a retail instalment 
contract.  See Federal Reserve, Report on the Economic Well-
Being of U.S. Households in 2015, at 42 (2016).  Under a typical 
retail instalment contract, the consumer makes an initial down 
payment and promises to pay the remainder of the purchase price, 
plus interest and fees, in regular instalments.  The consumer 
can keep the vehicle as long as he or she continues to make 
these payments or otherwise repays the loan in full; if the 
consumer falls behind on payments or stops making them, the 
creditor can repossess the vehicle and sell it to satisfy the 
unpaid debt.  If, after the vehicle is sold, some part of the 
debt remains unpaid, the consumer may be liable for that 
deficiency. 
 
In Massachusetts, this process of repossession and sale is 
governed by the Retail Instalment Sales of Motor Vehicles Act 
(act), G. L. c. 255B, §§ 20A and 20B, and the Uniform Commercial 
Code (UCC), G. L. c. 106, §§ 9-601 to 9-628.  Under § 20B of the 
act, a creditor who repossesses and sells a vehicle may be 
entitled to recover from the consumer the deficiency, if any, 
that remains after deducting the "fair market value" of the 
vehicle from the consumer's unpaid balance.  G. L. c. 255B, 
§ 20B (e) (1).  Section 20B also establishes a presumption, in 
2 
 
 
deficiency proceedings, that trade estimates of retail value -- 
such as those found in the Black Book -- reflect the vehicle's 
"fair market value."  G. L. c. 255B, § 20B (e) (2). 
 
Based on this presumption, and on the commercial realities 
that underlie this statute, as well as its purpose and 
legislative history, I would hold that the "fair market value" 
of a vehicle under § 20B is the fair market retail value of that 
vehicle.  The court, however, concludes that the term "fair 
market value" in § 20B does not necessarily mean retail value, 
and that it is only presumed to have that meaning when a 
creditor sues a consumer for a deficiency.  See ante at    .  I 
do not agree with this interpretation for three reasons. 
 
First, the court's interpretation of § 20B disregards the 
commercial realities of the motor vehicle market.  The United 
States Court of Appeals for the First Circuit has asked us 
"[w]hether the 'fair market value' of collateral under [G. L. 
c. 255B, § 20B,] is the fair market retail value of that 
collateral," recognizing that, in the motor vehicle market, 
prices hinge on whether the vehicle is sold at wholesale or at 
retail.  Here, for example, at the time that the plaintiff's 
vehicle was sold, the Black Book listed the wholesale value for 
a comparable vehicle as $7,750, and its retail value as $9,800.  
In response, the court answers that "fair market value" means 
fair market value.  Ante at    .  This is not a helpful answer 
3 
 
 
to the First Circuit's reported question.  Nor will it aid a 
judge or jury asked to determine the amount of a deficiency at 
trial.  It is hardly helpful to recite the classic definition of 
"fair market value," stating that it is the "highest price that 
a willing buyer would pay . . . in a fair market for the 
vehicle," when that price will depend on whether that willing 
buyer is a wholesale dealer or a retail consumer.  Ante at    .  
And the court's additional guidance -- that "[i]f contested, a 
court must determine the fair market value based on all the 
facts and circumstances, including the goods to be sold, the 
relevant markets, the particular creditors and debtors, and the 
rebuttable presumption" -- will not be any more illuminating to 
a judge or jury.  Id. 
 
The Legislature recognized the commercial realities of the 
motor vehicle market when it established a presumption in 
§ 20B (e) (2), providing that in deficiency proceedings, 
"[p]eriodically published trade estimates of the retail value of 
goods shall . . . be presumed to be the fair market value of the 
collateral" (emphasis added).  Consequently, where the creditor 
sues the consumer because he or she has failed to pay a 
deficiency, the presumptive fair market value of the vehicle is 
the retail value listed in trade estimates, such as those found 
in the Black Book.  And in the absence of other evidence 
rebutting that presumptive value, the deficiency judgment must 
4 
 
 
deduct this retail value from the unpaid balance.  See Epstein 
v. Boston Hous. Auth., 317 Mass. 297, 302-303 (1944) (where 
presumption is unrebutted, it "retain[s] its force as a rule of 
law requiring the judge" to apply presumption).  See also 9 J.H. 
Wigmore, Evidence § 2487(c), at 295 (Chadbourn rev. ed. 1981) 
("[A] presumption creates for the opponent a duty of producing 
evidence, in default of which he loses as a matter of legal 
ruling"). 
 
Where the Legislature has established trade estimates of 
retail value as the presumed fair market value of the collateral 
in a deficiency proceeding, I believe it must have intended that 
"fair market value" be the retail value.  Indeed, if the 
Legislature had intended the term "fair market value" to mean 
something other than retail value, it would make no sense -- 
given that trade estimates typically include retail, wholesale, 
and trade-in values -- to choose trade estimates of retail value 
as a presumptive starting point.  National Consumer Law Center, 
Repossessions § 10.9.5.1, at 341-342 (9th ed. 2017).  To be 
sure, the presumption in § 20B (e) (2) is rebuttable, but only 
with evidence that the trade estimates do not reflect the 
collateral's actual fair market retail value, for example, 
because the condition of the vehicle is especially poor.  The 
creditor can provide an alternative measure of retail value, but 
5 
 
 
the ultimate value to be determined must still be the fair 
market retail value. 
 
The court takes the position that § 20B "does not dictate 
use of a particular market" and that the term "fair market 
value" need not categorically refer to either wholesale or 
retail value.  Ante at    .  I agree with the court that the 
determination of actual fair market value in any given 
deficiency proceeding will depend on the specific facts.  Ante 
at    .  But the meaning of the term itself is a legal question, 
which the First Circuit has asked us to resolve.  See Wright vs. 
United States, U.S. Ct. App., Nos. 90-5089 & 90-5096 (Fed. Cir. 
Feb. 12, 1991) ("How fair market value is defined is a legal 
question; what constitutes fair market value in a particular 
case is a factual matter").  "[F]air market value is . . . to be 
determined [not] in a rarefied realm of abstract calculation, 
but from the perspective of a hypothetical buyer in the real 
world," Portland Natural Gas Transmission Sys. v. 19.2 Acres of 
Land, 195 F. Supp. 2d 314, 321 (D. Mass. 2002), and in the real 
world, the value of a vehicle typically depends -- as we can see 
from the Black Book and other trade manuals -- on whether it is 
sold in a wholesale market or in a retail market. 
 
Second, the court's interpretation of § 20B would have 
practical results that I am confident the Legislature did not 
intend.  Under the court's reading, a consumer's deficiency is 
6 
 
 
presumed to be based on retail value only at a deficiency 
proceeding, but not where the consumer decides to voluntarily 
pay the deficiency.  Not only does this interpretation create a 
significant difference between the amount the creditor could 
demand from the consumer and the amount it would likely be 
awarded at a deficiency proceeding in a court of law, but it 
would also provide an incentive for a consumer to refuse to pay 
a deficiency, knowing that the creditor would likely be entitled 
to receive less at a deficiency proceeding.1  I do not believe 
that in enacting this presumption the Legislature intended to 
penalize consumers who pay their debts and reward those who do 
not.  See Attorney Gen. v. School Comm. of Essex, 387 Mass. 326, 
336 (1982) ("We assume the Legislature intended to act 
reasonably"). 
                                                          
 
1 To illustrate the practical results of the court's 
interpretation, consider this example:  if a consumer's vehicle 
is repossessed because of an unpaid balance of $20,000, and is 
sold at an auction for $8,000 when its estimated Black Book 
retail value is $10,000, under this reading the creditor could 
demand a deficiency of $12,000.  The cooperative, perhaps 
unwitting, consumer would simply pay the $12,000.  The 
uncooperative, perhaps more savvy, consumer who refuses to pay 
may be sued by the creditor for the deficiency, but in such a 
lawsuit he or she would benefit from the statutory presumption 
of the estimated Black Book retail value and, unless that 
presumption was rebutted by the creditor, would be ordered to 
pay only $10,000 in a deficiency judgment.  Thus, a consumer who 
just pays the deficiency when asked will likely pay more than a 
consumer who waits to be sued. 
7 
 
 
 
Third, the court's interpretation is at odds with the 
purpose and history of the act.  In order to ascertain the 
meaning of § 20B (e), it is crucial to understand the statutory 
scheme that it replaced and the reasons behind this change.  
Because the court has largely ignored this history, I summarize 
it here. 
 
The predecessor to the current § 20B of the act was first 
enacted in 1966, together with an amended § 20A.  St. 1966, 
c. 284, § 3.  As originally enacted, these twin provisions gave 
creditors wide latitude in the repossession and sale of vehicles 
purchased under retail instalment contracts.  Notice of the 
intent to repossess was not required:  a creditor could either 
notify the consumer fourteen days before repossessing, in which 
case the creditor was entitled to the reasonable costs of 
repossession, storage, and sale, or it could simply repossess 
without prior notice, in which case it would forgo recovery of 
those costs.  See former G. L. c. 255B, § 20A (A), (C) (1)-(2), 
inserted by St. 1966, c. 284, § 3.  Following repossession, the 
consumer could redeem the collateral only by paying the full 
amount due under the contract.  See former G. L. c. 255B, § 20B 
(B)-(C), inserted by St. 1966, c. 284, § 3.  If the consumer 
failed to redeem, and the collateral was sold, the act 
contemplated that the consumer would be liable for any 
deficiency, see former G. L. c. 255B, § 20A (D), inserted by 
8 
 
 
St. 1966, c. 284, § 3, but was silent as to how that deficiency 
would be calculated.  As a result, the background rules of the 
Uniform Commercial Code (UCC) applied, and the creditor could 
claim a deficiency equal to the difference between the 
outstanding loan balance and the sale proceeds as long as the 
sale was "commercially reasonable."  See former G. L. c. 106, § 
9-504 (1)-(3), inserted by St. 1957, c. 765, § 1.  See generally 
Queenan, The New Consumer Repossession Law, 58 Mass. L. Q. 412, 
416-417 (1973) (Queenan). 
 
Sections 20A and 20B were substantially amended in 1973, 
see St. 1973, c. 629, § 2, at a time when public concern over 
abusive consumer credit practices was mounting.  Consumer 
instalment credit had swelled nationwide, more than doubling 
from $42 billion outstanding in 1960 to $102 billion in 1970.  
Federal Reserve, Financial and Business Statistics, 59 Fed. Res. 
Bull. A56 (1973).  Consumers in 1970 shouldered more than $35 
billion of debt in order to finance the purchase of motor 
vehicles -- more than one-half of the vehicles purchased in the 
United States were purchased on credit -- and another $31 
billion for other consumer goods.  See id.; United States Bureau 
of the Census, Statistical Abstract of the United States 549 
(94th ed. 1973).  When consumers defaulted on these loans, 
creditors had a broad range of remedies to choose from, 
including repossession of the collateral and lawsuits for 
9 
 
 
deficiency, which typically resulted in default judgments 
against consumers because of their failure to appear.  See 
National Commission on Consumer Finance, Consumer Credit in the 
United States 23-42 (1972).  Some creditors engaged in 
especially aggressive repossession tactics, seizing collateral 
in the middle of the night or under false pretenses.  See, e.g., 
Whaley v. United States, 324 F.2d 356, 356-357 (9th Cir. 1963), 
cert. denied, 376 U.S. 911 (1964) (private repossessor 
impersonated Federal law enforcement agent); Boland v. Essex 
County Bank & Trust Co., 361 F. Supp. 917, 921 (D. Mass. 1973) 
(repossessions involved "stealthful reclamation of motor 
vehicles during the nighttime").  See also Firmin & Simpson, 
Business As Usual:  An Empirical Study of Automobile Deficiency 
Judgment Suits in the District of Columbia, 3 Conn. L. Rev. 511, 
512 & n.5 (1971) (Firmin & Simpson) (in study of 106 motor 
vehicle deficiency suits in District of Columbia courts, ninety-
five per cent of repossessions were carried out between midnight 
and 6 A.M.). 
 
With the rapid growth of consumer credit, various efforts 
were undertaken to protect consumers from overreaching 
creditors.  In a pair of landmark decisions, the United States 
Supreme Court took substantial steps to limit creditors' 
remedies, holding that creditors could not, absent notice or a 
hearing, enforce debts by garnishing debtors' wages, Sniadach v. 
10 
 
 
Family Fin. Corp. of Bay View, 395 U.S. 337, 342 (1969), or by 
seizing collateral under a writ of replevin, Fuentes v. Shevin, 
407 U.S. 67, 96 (1972).  See Clark & Landers, Sniadach, Fuentes 
and Beyond:  The Creditor Meets the Constitution, 59 Va. L. Rev. 
355, 355-362 (1973).  Meanwhile, the Federal Trade Commission 
(FTC) in 1973 launched a two-year investigation into the 
consumer credit industry, during which it identified several 
patterns of abusive practices.  See Federal Trade Commission, 
Annual Report 29 (1974).  In particular, the FTC found that 
"many creditors abuse the deficiency judgment mechanism by 
selling repossessed goods at prices substantially below their 
fair market retail value."  40 Fed. Reg. 16,347, 16,348 (1975).  
The FTC's findings were consistent with several empirical 
studies from the time, which indicated that repossessed motor 
vehicles were sold for little more than one-half of their retail 
value.2  Although creditors attributed these low resale values to 
                                                          
 
 
2 Researchers in three separate studies concluded that 
repossessed motor vehicles were sold, on average, for only fifty 
to sixty-five per cent of their retail value, as listed in trade 
manuals.  See Note, I Can Get It for You Wholesale:  The 
Lingering Problem of Automobile Deficiency Judgments, 27 Stan. 
L. Rev. 1081, 1084-1085 (1975) (study of 216 motor vehicle 
deficiency suits filed in Alameda County, California); Firmin & 
Simpson, Business As Usual:  An Empirical Study of Automobile 
Deficiency Judgment Suits in the District of Columbia, 3 Conn. 
L. Rev. 511, 512, 518 (1971) (study of 106 motor vehicle 
deficiency suits filed in the District of Columbia); Schuman, 
Profit on Default:  An Archival Study of Automobile Repossession 
 
11 
 
 
the poor condition of repossessed vehicles -- as well as to the 
fact that many creditors lacked the facilities or resources to 
sell directly to the retail market -- consumer advocates claimed 
that creditors profited from the practice.  See Federal Trade 
Commission, Report of the Presiding Officer on Proposed Trade 
Regulation Rule:  Credit Practices 224-237 (1978).  Some dealers 
and finance companies were believed to engage in the practice of 
"churning" vehicles, whereby the same vehicle would be 
repossessed, sold at a low price to the original dealer, sold 
again at a higher price to another consumer, then repossessed 
again upon default, and so on, repeating the process of 
repossession and sale several times, with hefty deficiency 
judgments obtained against each new defaulting consumer.3  See 
id. at 233-234.  See also Firmin & Simpson, supra at 517-518 
                                                                                                                                                                                           
and Resale, 22 Stan. L. Rev. 20, 31 (1969) (study of eighty-
three motor vehicle deficiency suits filed in Connecticut). 
 
3 To give an example of how the "churning" process works, 
suppose a consumer purchases a motor vehicle from a dealer for 
$30,000, financing the full amount through a retail instalment 
contract.  The dealer then assigns that contract to an 
affiliated finance company.  When the consumer defaults, her 
unpaid balance is $20,000.  The finance company repossesses the 
vehicle and sells it back to the dealer for $15,000, then sues 
the consumer, recovering a deficiency of $5,000.  Meanwhile, the 
dealer sells that same vehicle to another consumer for $25,000.  
As a result, the finance company is made whole, having received 
the $15,000 in sale proceeds and a $5,000 deficiency judgment, 
in full satisfaction of the debt, while its affiliated dealer 
makes a $10,000 profit, having purchased the vehicle at 
wholesale for $15,000 and sold it at retail for $25,000.  This 
process can be repeated several times with the same vehicle. 
12 
 
 
(creditors who engaged in "churning" were found to sell and 
finance same vehicle at least three times). 
 
Against this background, the Massachusetts Legislature in 
1973 undertook to strengthen the rights of consumers in consumer 
credit transactions.  "An Act relative to taking possession of 
collateral and deficiency judgments," St. 1973, c. 629, was 
first recommended for legislative action by the Massachusetts 
Consumers' Council (council), an independent agency charged with 
acting as a public advocate for consumer interests.  See St. 
1963, c. 773.  As the council explained in its recommendation, 
"[the] proposed legislation" was intended to "clarify and secure 
a debtor's rights."  1973 House Doc. No. 59.  Specifically, the 
council stated that "[the] proposed bill," by limiting 
creditors' rights to repossess collateral and recover 
deficiencies from consumers, "will stop the practice of constant 
sale, repossession, deficiency judgment, resale, etc., now 
engaged in by some unscrupulous merchants, and will greatly 
enhance the protection afforded the unsuspecting consumer."  Id.4  
                                                          
 
 
4 The original version of the 1973 legislation proposed by 
the Massachusetts Consumers' Council (council) would have 
required a judicial determination before a creditor could 
repossess collateral and would have also eliminated the 
consumer's deficiency liability where the "cash price" of the 
repossessed collateral was $4,000 or less.  See 1973 House Doc. 
No. 59; 1973 House Doc. No. 66, § 4.  It was an amended version 
of the council's proposed bill, based also on two other bills on 
the same topic, which was subsequently enacted without 
 
13 
 
 
As eventually enacted, the 1973 legislation "impose[d] 
substantially greater restrictions on the rights of secured 
creditors in consumer credit transactions," amending not only 
the laws governing motor vehicle retail instalment sales, G. L. 
c. 255B, §§ 20A and 20B, but also the laws governing loans 
secured by consumer goods, G. L. c. 255, §§ 13I and 13J, and 
other retail instalment sales and services, G. L. c. 255D, §§ 21 
and 22.  Queenan, supra at 412. 
 
The 1973 legislation amended §§ 20A and 20B of the act to 
benefit consumers in five significant ways.  First, it 
strengthened notice requirements.  Section 20A, as amended, no 
longer gives creditors a choice whether to notify consumers 
before repossession; rather, it provides that a creditor cannot 
take possession of a vehicle unless the creditor gives the 
consumer notice, in writing, conspicuously stating the 
consumer's rights upon default, including the right to redeem 
the collateral after repossession.  G. L. c. 255B, § 20A (b)-
(c).  Second, the 1973 legislation limited the remedies 
available to creditors in the event of default.  Section 20A now 
provides that, after giving notice of the intent to repossess, a 
creditor must wait at least twenty-one days before repossessing 
the vehicle or bringing an action against the consumer.  G. L. 
                                                                                                                                                                                           
substantial change.  See 1973 House Doc. No. 6884; St. 1973, 
c. 629. 
14 
 
 
c. 255B, § 20A (d).  During that period, a creditor also may not 
accelerate the debt; thus, whereas previously a consumer could 
cure the default only by paying the full debt, under the amended 
§ 20A, a consumer need only make the overdue payments to cure 
the default and avoid repossession.  G. L. c. 255B, § 20A (d)-
(e).  Third, § 20B now limits creditors' right to repossess, 
allowing repossessions without a prior hearing only where they 
can be carried out "without use of force [or] breach of peace," 
and, if repossession requires entry onto the consumer's 
property, only with the consumer's consent.  G. L. c. 255B, 
§ 20B (a).  Fourth, the amended § 20B extends from fifteen to 
twenty days the period during which the consumer may redeem the 
collateral after repossession.  Compare G. L. c. 255B, 
§ 20B (c), with former G. L. c. 255B, § 20B (A), inserted by 
St. 1966, c. 284, § 3. 
 
Fifth, and of most relevance here, the 1973 legislation 
significantly narrowed the scope of consumers' deficiency 
liability.  Although under the UCC a consumer would have been 
liable for any deficiency following a "commercially reasonable" 
sale of the collateral, see former G. L. c. 106, § 9-504 (2)-
(3), inserted by St. 1957, c. 765, § 1, § 20B was amended to 
provide that a consumer whose unpaid balance is $2,000 or less 
cannot be held liable for any deficiency.  G. L. c. 255B, § 20B 
(d).  Section 20B was also amended to change the rules for 
15 
 
 
calculating a consumer's deficiency.  Whereas under the UCC, the 
consumer's deficiency would have been the difference between the 
unpaid balance and the proceeds from a "commercially reasonable" 
sale, see former G. L. c. 106, § 9-504 (1)-(2), inserted by St. 
1957, c. 765, § 1, § 20B now specifically states that the 
deficiency is the difference between the unpaid balance and "the 
fair market value of the collateral."  G. L. c. 255B, § 20B (e) 
(1). 
 
It is evident from the statutory evolution of § 20B, as 
well as its legislative history and historical context, that it 
was intended broadly to protect the rights of consumers and, 
more specifically, to protect consumers from potential abuse by 
creditors who would repossess their vehicles, sell them at 
distressed prices, and then claim large deficiencies.  
Consistent with this legislative purpose, the term "fair market 
value" in § 20B (e) (1) must be read to mean the fair market 
retail value of the vehicle.  Calculating a consumer's 
deficiency based on retail value, rather than auction proceeds, 
diminishes the risk of abuse and specifically the risk of 
"churning," not only because it incentivizes creditors to sell 
the repossessed vehicle for the highest possible price, but also 
because -- in cases where the creditor fails to do so -- it 
16 
 
 
places the cost of that failure on the creditor, shielding 
consumers from excessive deficiency claims.5 
 
It is also evident that, in making these amendments, the 
Legislature intended to displace the UCC provisions governing 
deficiency liability.  Any doubt on this issue was resolved in 
2001, when the Legislature made explicit that it intended to 
displace the UCC in this respect, adding to § 20B the language, 
"[n]otwithstanding the provisions of [UCC, G. L. c. 106, §§ 9-
601 to 9-628]."  St. 2001, c. 26, § 48.  The court appears to 
adopt Honda's view that § 20B (e) (1) must be read together with 
the UCC, and that the term "fair market value" refers to the 
proceeds of a "commercially reasonable" sale, citing Matter of 
Excello Press, Inc., 890 F.2d 896, 904-905 (7th Cir. 1989), for 
the proposition that "[t]he product of a commercially reasonable 
sale is the fair market value."  Ante at    .6  But if the 
                                                          
 
 
5 The court takes issue with my reading of the legislative 
history of § 20B, claiming that it "selectively references 
portions of the legislative history," that is, the proposal from 
the council and its accompanying recommendation.  Ante at note 
5.  See 1973 House Doc. No. 59; 1973 House Doc. No. 66.  The 
court is correct that by 1973 the Legislature had considered 
several different proposals on the issue of consumer 
deficiencies, and that none of the proposed bills -- including 
the council's proposal -- referenced retail value.  Ante at note 
5.  And I do not claim otherwise.  See note 4, supra.  I rely on 
the council's proposal only to the extent that, in its 
accompanying recommendation, it sheds light on the consumer 
protection concerns that motivated the amendments. 
 
6 In addition, the court declares that "[t]he fair market 
value of the vehicle . . . is just that:  the highest price that 
 
17 
 
 
Legislature had intended a consumer's deficiency to be 
calculated based on the proceeds of a "commercially reasonable" 
sale, as was already the case under the UCC, why would it have 
bothered to enact § 20B (e) (1) at all?  The court offers no 
explanation for why the Legislature would have enacted this 
provision if it intended only to preserve the status quo, or why 
it chose to use the term "fair market value," rather than keep 
the "commercially reasonable" language already found in the UCC, 
G. L. c. 106, § 9-610, if, in practice, it meant the same thing.  
The court's failure to do so is especially perplexing given that 
it later acknowledges, in its answer to the First Circuit's 
second and third questions, that the two standards are not the 
same.  Ante at     ("the Uniform Commercial Code and G. L. c.  
255B, § 20B, calculate deficiencies differently"). 
 
Unsurprisingly, the court's interpretation of § 20B (e) (1) 
is also at odds with contemporary understandings of the statute 
when it was amended in 1973.  James F. Queenan, Jr., a 
commercial law practitioner and later a United States Bankruptcy 
                                                                                                                                                                                           
a willing buyer would pay Honda in a fair market for the 
vehicle" (emphasis added).  Ante at    .  But, as the court has 
emphasized, Honda sells all its repossessed vehicles at auction 
and does not have access to the retail market.  Ante at    .  In 
declaring that the fair market value of the vehicle is the 
highest price paid to Honda, then, the court implicitly declares 
that the fair market value is the wholesale value that Honda 
obtains at auction, as long as the auction is commercially 
reasonable. 
18 
 
 
Court judge, summarized the 1973 amendments to §§ 20A and 20B 
immediately after their approval, writing: 
"Under the Uniform Commercial Code a secured party may 
claim a deficiency based upon the proceeds of the resale 
less expenses so long as the resale is 'commercially 
reasonable.'  Now as to consumer goods the amount of the 
deficiency is computed solely with reference to the 'fair 
market value of the collateral' less 'reasonable 
repossession and storage costs.' . . . No longer will a 
secured party be entitled to rely on the wholesale price in 
computing his deficiency."  (Emphasis added; footnote 
omitted.) 
 
Queenan, supra at 417. 
 
In support of its interpretation, the court contends that, 
because creditors do not generally sue for deficiencies, and are 
unlikely to recover them even if they do, Honda and other 
creditors already have every incentive to obtain the highest 
possible price for repossessed vehicles.  Ante at    -   .  The 
court also contends that many creditors lack access to the 
retail market and therefore, as a practical matter, cannot 
obtain a price approximating retail value.  Id. at    .  As an 
empirical matter, this may very well be true.  But legally, it 
is irrelevant.  To interpret the meaning of § 20B (e) (1), this 
court need not evaluate the auction methods of Honda or any 
other creditor.  We need not inquire into the creditors' 
incentives, or seek to ascertain the incidence of deficiency 
suits or the subsequent likelihood of recovery.  Ante at    -   
.  All that we have been asked to determine is what the 
19 
 
 
Legislature intended in 1973, and in 1973 the Legislature 
enacted § 20B to protect "unsuspecting consumer[s]" from 
"unscrupulous merchants" engaged in "the practice of constant 
sale, repossession, deficiency judgment, [and] resale," 1973 
House Doc. No. 59, in the belief that crediting the consumer 
with the fair market retail value of the vehicle was the fair 
way to accomplish that goal. 
 
Finally, the court also warns that, if deficiencies are 
calculated based on fair market retail value, the costs of 
borrowing would rise and "[i]n the end, these costs would 
invariably be passed on to all consumers."  Ante at    .  Even 
if it were this court's task to determine whether this is the 
case -- and it is not -- I am skeptical that this would be the 
"invariable" consequence.  If, as the court states, "the 
repossession and disposition of the collateral is almost always 
the last opportunity" for a creditor to recover a debt after 
default, and creditors therefore have no real expectation of 
recovering the deficiency, ante at    , then it should not 
matter much to creditors, when setting their interest rates, how 
deficiencies are calculated.  If deficiencies are rarely paid, 
then reducing the amount of those deficiencies by the fair 
market retail value of the vehicle would have little or no 
impact on the interest rates that a creditor would charge for a 
motor vehicle loan. 
20 
 
 
 
Consistent with the commercial realities underlying § 20B, 
and with its purpose and history, I would hold that a consumer's 
deficiency liability must be calculated as the difference 
between the consumer's unpaid balance and the fair market retail 
value of the vehicle.  Accordingly, I would also hold that in 
their presale and postsale deficiency explanations, creditors 
must describe and calculate the consumer's deficiency liability 
as such.  I would therefore answer "Yes" in response to the 
first certified question, and "Never" to the second and third 
certified questions.