Present: All the Justices 

R.K. CHEVROLET, INC. 

v. Record No. 971907 OPINION BY JUSTICE ELIZABETH B. LACY 

 June 5, 1998 

BANK OF THE COMMONWEALTH 

FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON 

Wilford Taylor, Jr., Judge 

 In this appeal, we consider whether the trial court 

properly awarded damages against an automobile dealership for 

breaching its agreement with a lender by incorrectly titling a 

motor vehicle. 

 In July 1995, John H. Kauffman and Janice S. Carter 

purchased a 1995 Chevrolet Camaro Z-28 from R.K. Chevrolet, 

Inc. (RK). To finance the purchase, Kauffman obtained a loan 

in the amount of $24,398.87 from the Bank of the Commonwealth 

(the Bank). As a part of the loan transaction, the Bank 

required that the Camaro be titled in Kauffman's name and that 

a first lien in the Bank's favor be recorded on the 

certificate of title. The Bank issued a check for the 

purchase price of the car, showing Kauffman and RK as payees. 

The reverse side of the check contained a legend reciting the 

obligation of the payees.1 Kauffman and RK endorsed the check; 

 1

 The legend read as follows: "The endorsement of this 

check by the payee constitutes an obligation to the Bank of 

the Commonwealth that the payee will record a first lien in 

favor of the Bank of the Commonwealth, on one 1995 Chevrolet 

Z-28 Camaro Identification No. 2G1FP22PXS2151739 Title in the 

Name of John H. Kauffman In the amount of $23,828.00 Secured 

by a Security Agreement Dated July 25, 1995." 
2

however, the car was titled in the name of Janice Carter, not 

Kauffman.

 Approximately one year later, the Bank discovered the 

titling error and contacted RK and Carter. Although both the 

Bank and RK tried to convince Carter to re-execute the title 

to the Camaro and add Kauffman's name, she refused.

 The Bank filed this action on September 24, 1996, 

alleging that RK and Kauffman breached their contractual 

obligations to the Bank by failing to properly title and 

secure the Bank's lien on the Camaro.2 The trial court entered 

judgment in favor of the Bank, imposing joint and several 

liability on RK and Kauffman in the amount of $19,131.75 plus 

interest.

RK appeals the trial court's judgment on three grounds. 

First, RK asserts that even though it breached its contractual 

duties to the Bank, the Bank sustained no damages as a result 

of RK's breach. Any damages suffered by the Bank, RK claims, 

were caused by Kauffman's failure to make payments on his 

loan.3 We disagree. 

 2

 Kauffman filed a cross-claim against RK, and RK filed an 

amended third-party motion for judgment against Carter. 

Neither of these claims is at issue in this appeal. 

3

 At the time the suit was filed, the Bank had notified 

Kauffman that some payments were late, but had not declared 

the loan in default. At trial in May 1997, the Bank's 

evidence showed that the loan payments were paid through 

February 1997.
3

 When a motor vehicle dealer breaches its contractual 

warranty with a lender by not properly titling a vehicle, the 

lender is damaged because it loses its security for the loan. 

United Virginia Bank of Fairfax v. Dick Herriman Ford, Inc., 

215 Va. 373, 375, 210 S.E.2d 158, 161 (1974). The amount of 

the lender's recovery is limited to the lesser of the value of 

the vehicle at the time of the breach and the amount of the 

intended lien. The lender's recovery is also diminished by 

any loan payments actually received. Id. at 375-76, 210 

S.E.2d at 161. 

 Here, like the dealer in Dick Herriman Ford, RK breached 

its contract with the Bank. While the record is not clear as 

to the precise calculations made by the trial court in 

reaching the damage amount, it does show that the amount of 

the intended lien was $23,828.00 and that the value of the 

collateral at the time of purchase was $24,289.45.4 RK does 

not dispute the Bank's representations that the trial court 

decreased the award by the loan payments received by the Bank. 

 RK seeks to distinguish Dick Herriman Ford by asserting 

that in that case, the bank suffered "actual damages as a 

direct proximate result" of the dealership's breach because 

the borrower stopped making payments on the loan and took the 

vehicle out of the state. This factual distinction is not 
4

material to the holding in Dick Herriman Ford. In both cases, 

the vehicle was mistitled and the lenders could not enforce 

their liens, regardless of the location of the vehicles or the 

status of the loan payments. The injury suffered was the loss 

of the collateral for the loan, not the failure to make 

payments on the loan or the location of the vehicle. 

 RK next asserts that, even if the Bank were entitled to 

damages, the trial court erred in granting the Bank a "full 

monetary judgment" because the Bank failed to mitigate its 

damages. In support of this claim, RK refers to evidence of 

the Bank's contacts with Carter through its collection manager 

and the Bank's release of its lien on a duplicate title issued 

for the Camaro. The Bank responds that the evidence showed 

that its collection manager tried to convince Carter to reexecute the title and add Kauffman's name, that Carter 

testified she was not going to sign any documents changing the 

title to the Camaro, that RK requested and handled the 

paperwork on the duplicate title, and that even though the 

original title reflected a lien in favor of the Bank, the Bank 

had no legal interest in the Camaro. 

 Mitigation of damages is an affirmative defense for which 

RK bears the burden of proof. Marefield Meadows, Inc. v. 

Lorenz, 245 Va. 255, 266, 427 S.E.2d 363, 369 (1993); Foreman 

 4

 The purchase price as shown on the title application is 

conclusive evidence of the vehicle's value. Dick Herriman 
5

v. E. Caligari & Co., Inc., 204 Va. 284, 289-90, 130 S.E.2d 

447, 451 (1963). Whether RK has satisfied its burden of 

showing that the Bank failed to mitigate its damages is a 

factual determination based on the evidence produced. 

Considering this record, we cannot say that the trial court 

erred in failing to find that the Bank did not mitigate its 

damages. 

 Finally, RK argues that the award against it includes 

amounts attributable to late fees, interest, and collection 

costs of $674.62 which should have been assessed against 

Kauffman only.5 Because, as we noted above, the record does 

not show how the award was calculated, the record is 

insufficient to address this claim. 

 For the above reasons, we will affirm the judgment of the 

trial court. 

Affirmed.

 

Ford, 215 Va. at 376, 21 S.E.2d at 161. 

5

 RK apparently bases this amount on a past due notice 

sent Kauffman which was introduced as an exhibit. That 

notice, however, shows late charges of only $180.63 and the 

loan amount past due as $493.99, for a total amount due of 

$674.62.