In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 02-3811

AUTOMOTIVE FINANCE CORPORATION,

Plaintiff-Appellee,

v.

SMART AUTO CENTER, INC. AND CARL SCHWIBINGER,

Defendants-Appellants.

____________

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 00 C 556—Larry J. McKinney, Chief Judge.

____________

ARGUED MAY 19, 2003—DECIDED JULY 2, 2003

____________

BeforeEASTERBROOK,ROVNER,andEVANS, Circuit Judges.

EVANS, Circuit Judge. This case arises out of the efforts of Automotive Finance Corporation (AFC) to collect

on loans it made to Carl Schwibinger, a used car dealer,

and Smart Auto Center, Inc., his dealership. Before filing

suit, AFC tried a little self-help—repossessing a number

of Smart Auto cars and attempting to take others that

Schwibinger purchased individually. Smart Auto and

Schwibinger (whom we’ll refer to together as Schwibinger)

filed counterclaims based on these previous collection

efforts and, after a bench trial, won about $12,000 in

damages. AFC may have lost a couple of battles to
2 No. 02-3811

Schwibinger, but it won the war when the district court

awarded it roughly $165,000 for the balance of the

loans and costs associated with the collection action.

Schwibinger appeals.

The agreement between the parties was fairly simple.

AFC issued Schwibinger a line of credit to purchase used

cars at auto auctions. Each car purchase was treated as a

separate loan for the purposes of calculating payment due

dates. Schwibinger had to either pay the balance of each

loan within 45 days or pay a “curtailment” to extend the

loan another 45 days. Once Schwibinger sold a vehicle, he

had to repay the loan within 48 hours. If he failed to do

so, the vehicle was considered to be “out of trust.”

Apparently the used car business was not going well

for Schwibinger and, around November 1999, he was behind in his payments and some of his vehicles were out

of trust. In December 1999, two representatives from AFC

paid him a visit to discuss getting his account current. AFC

arranged a “swap out,” taking the titles to 11 vehicles

that Schwibinger owned outright in exchange for a new

loan. The new loan was used to pay off the out-of-trust

vehicles and put a second curtailment on the past-due

vehicles. AFC did not otherwise alter the payment terms

of the note. During the meeting, Schwibinger told AFC

that he was selling his dealership and inventory to another car dealer in mid-January.

By the end of December, Schwibinger was again in default and AFC believed that more vehicles were out of

trust. Schwibinger attempted to put off AFC’s collection

efforts. He sent AFC a check that bounced (although he

later made good on it), and he made promises (which he

didn’t keep) that he would wire AFC payments, deliver

cashier’s checks, send confirmation of the sale of the

dealership, and fax copies of payment checks. AFC’s

regional manager, Chad Hopkins, told Schwibinger to
No. 02-3811 3

relinquish possession of the vehicles that served as collateral for the loans. Although Schwibinger initially agreed, he

later changed his mind.

At this point, AFC decided to take matters into its own

hands. On January 18, 2000, it sent America Auto Recovery (AAR) to Schwibinger’s lot to repossess vehicles.

Schwibinger arrived on the scene after AAR had taken 16

vehicles. While his wife called the police, Schwibinger

pursued a more confrontational strategy. He blocked the

driveway with his car and confronted the AAR tow truck

drivers. An altercation ensued and, once the sheriff’s

department arrived, Schwibinger was arrested for disorderly conduct. AAR repossessed 4 more vehicles for a

total of 20. Because the repossessed vehicles didn’t cover

the outstanding loan balance, AFC also attempted to

take four vehicles in North Dakota that Schwibinger

owned individually.

In March 2000, Schwibinger tried to settle his differences with AFC, offering it roughly $265,000 to cover the

amount owed on the vehicles and fees for the repossession.

The money was to come from the sale of Smart Auto,

and Schwibinger wanted AFC to give his attorney the

vehicles under a bailment agreement until the deal

closed. AFC requested a hold harmless clause in the

agreement for any claims based on the repossession, but

Schwibinger refused. Ultimately, the deal fell through.

AFC sold nine of the repossessed vehicles at auto auctions. As it turns out, the 11 other vehicles had odometer

or title problems because they were from Canada. These

vehicles would not have fetched a good price at an auction because they would have had to be sold “mileage

unknown.” Therefore, AFC sold these cars to a dealer (with

whom it had a lending relationship) who knew how to

handle Canadian vehicles with unknown mileage. AFC

received $160,000 for all of the vehicles, leaving a loan

balance due of $117,000.
4 No. 02-3811

AFC brought suit to recover the remaining balance on

the loans plus costs and fees associated with collection.

Schwibinger responded that he had not defaulted on the

loans and AFC failed to mitigate its damages by refusing

to allow him to redeem his vehicles and then selling

them for too low a price. He also counterclaimed that AFC

had repossessed the vehicles over his objection and interfered with his ownership of other vehicles. Following

a bench trial, the district court found that AFC was entitled to repossess the vehicles because Schwibinger had

been in default on the loans and that it had properly

handled the vehicles after repossessing them. Schwibinger

was entitled to damages, however, for the four cars

that AAR had taken over his objection and for AFC’s

attempt to take the North Dakota cars that Schwibinger

had purchased individually. Schwibinger appeals both

the court’s holding as to AFC’s claim and its determination of the amount of damages to award him on his

claims.

We review the district court’s findings of fact for clear

error and its legal conclusions de novo. See Cerros v. Steel

Tech, Inc., 288 F.3d 1040, 1044 (7th Cir. 2002). To set

aside a finding of fact, we must have “a definite and

firm conviction that a mistake has been committed.” Cohen

Dev. Co. v. JMJ Prop., Inc., 317 F.3d 729, 735 (7th Cir.

2003) (citations omitted). In a case arising under our

diversity jurisdiction, we apply the law of the forum

state, Merrill v. Trump Indiana, Inc., 320 F.3d 729, 731

(7th Cir. 2003), and here that’s Indiana.

We’ll start with Schwibinger’s arguments relating to

AFC’s claim. Schwibinger says that he didn’t default on

the loans and, even if he did, AFC did not properly handle the vehicles that it repossessed. We can quickly

put Schwibinger’s first contention, that he was not in

default on the loans, to rest. The gist of this theory is that

AFC told Schwibinger that his payment deadlines were
No. 02-3811 5

extended to January 20, 2000, and, under the doctrine of

equitable estoppel, AFC should be barred from relying

on an earlier payment deadline or enforcing the 48-hour

payment rule for sold vehicles.

To be successful on an equitable estoppel defense,

Schwibinger must show, among other things, that AFC

either concealed or made a misrepresentation regarding

the payment deadlines, that he was ignorant of the possibility that AFC would enforce the earlier payment

deadlines, and that he relied on AFC’s misrepresentations to his detriment. See Clark v. Crowe, 778 N.E.2d 835,

840 (Ind. Ct. App. 2002) (setting out elements of equitable estoppel). The district court found that AFC didn’t

say it was changing the note’s repayment terms and

that Schwibinger’s attempts to pay off the loans prior

to January 20, 2000, show that he knew he had to pay

before that date. We agree. Chad Hopkins, the AFC regional manager who visited Schwibinger in December, said

that he didn’t verbally agree to alter the payment terms

of the note, and the note itself says that it can only be

modified in writing. The only writings that Schwibinger

points to are an email from Brian Geitner, AFC’s vicepresident of operations for the Midwest, approving the

swap-out agreement and a December 6, 1999, AFC document discussing the details of Schwibinger’s account. The

Geitner email said that the swap-out gave Schwibinger

an extra 30 days to move his inventory—which would

have changed the payment dates to early January, not

January 20. The December 6, 1999, AFC document did

say that payments were due on January 20, but those

dates were created as a result of a glitch in AFC’s computer systems. AFC sent Schwibinger a corrected document the next day. Even if these writings showed

that payments on unsold vehicles had been extended,

Schwibinger doesn’t point to any writing or representation from AFC giving him more than the standard 48
6 No. 02-3811

hours to pay off loans on the vehicles that he sold.

In addition, the district court heard testimony that

Schwibinger promised to pay off vehicles on several occasions prior to the repossession and agreed to voluntarily

relinquish some vehicles in January—showing that he

knew that his account was delinquent. These facts don’t

add up to equitable estoppel. Schwibinger was in default

on the loans.

Schwibinger next argues that, even if he was in default

on the loans, he is entitled to a new trial on damages

because AFC mishandled the repossessed vehicles. First,

Schwibinger contends that AFC wrongly rejected his

offer to buy the cars back because he refused to add a

hold harmless clause to the agreement for any claims

arising from the repossession. Under the Indiana Uniform Commercial Code, a debtor can redeem collateral

by tendering the full amount due. See Ind. Code § 26-1-9.1-

623. While the Indiana Supreme Court, in an opinion

that is a little less than clear, seems to indicate that a

creditor may not defeat a debtor’s right to redeem his

collateral by insisting that redemption be contingent

upon signing a release, see Star Bank, N.A. v. Laker, 637

N.E.2d 805, 807 (Ind. 1994), a debtor must nevertheless

tender the full amount due. Schwibinger never did that

as his offer was contingent on the sale of his dealership,

Smart Auto. He essentially only offered to enter into a

new agreement extending his payment time on the loans.

What he did falls short of “tendering payment” which

requires more than a new promise to perform an existing promise. “Tendering payment” means offering “payment in full of all monetary obligations then due and

performance in full of all other obligations then matured,”

Ind. Code § 26-1-9.1-623, comment 2. Since Schwibinger

never tendered payment, AFC was not required to release the vehicles.
No. 02-3811 7

Schwibinger also argues that AFC mishandled the

repossessed vehicles by failing to dispose of them in a

commercially reasonable manner as required by Ind. Code

§ 26-1-9.1-610(b). The heart of Schwibinger’s argument

is that AFC didn’t get enough money for the vehicles. Even

if that is true, it doesn’t entitle Schwibinger to victory—

AFC did not have to get the best possible price for the

collateral. “The fact that a greater amount could have

been obtained . . . is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was

made in a commercially reasonable manner.” Ind. Code

§ 26-1-9.1-627(a). AFC sold nine of the vehicles at auction—its normal method of disposing of repossessed vehicles. This was commercially reasonable because a secured party is protected if it does something in its usual

manner on a recognized market, see Ind. Code § 26-1-9-

627(b)(1), and, under Indiana law, auctions are typically

found reasonable, see LaSalle Motor Car Sales, Inc. v.

Calumet Nat’l Bank, 440 N.E.2d 9, 12 (Ind. Ct. App. 1982).

AFC also acted reasonably with regard to the Canadian

vehicles. An auction wouldn’t have yielded a good price

for them because of their mileage problems, so AFC

sold them to someone who knew how to deal with such

vehicles. That AFC had a prior relationship with the

dealer, without more, does not make the disposal commercially unreasonable. See id. at 13.

We now turn to the district court’s assessment of

Schwibinger’s damages. Part of Schwibinger’s damages

award came from AAR’s repossession of some of the vehicles over his objection. The district court determined

that Schwibinger arrived at the lot around 10 p.m., after

AAR had taken 16 vehicles, and objected to the repossession at that point. AAR should have stopped taking vehicles when Schwibinger objected, but it proceeded to repossess four more. Citing the testimony of AAR’s owner,
8 No. 02-3811

Eric Pedersen, Schwibinger contends that he and AAR

both arrived at the lot around 10 p.m., so AAR didn’t have

any vehicles under its control before he objected. It’s

true that Pedersen said that he arrived at the lot at

10 p.m. But Pedersen also said that he had been working for an hour before Schwibinger arrived. It seems a

little fishy for Schwibinger to rely on Pedersen’s helpful

evidence (his arrival time) while discounting his harmful

evidence (the number of cars he had taken before

Schwibinger’s arrival). Furthermore, Schwibinger himself wasn’t certain he arrived at 10 p.m. He thought it

was closer to 10 p.m. than 11 p.m., but he said that the

time was “[j]ust a guess.” Schwibinger’s statement that

AAR was “getting ready to remove my cars from the

premises” when he arrived does not negate Pedersen’s

testimony that he had already taken some cars and, in

any event, the district court could have chosen to find

this testimony not credible. Schwibinger characterizes

Pedersen’s testimony as ambiguous, but we don’t see

anything ambiguous about it. It was not clearly erroneous for the district court to conclude that 16 of 20 vehicles were repossessed before Schwibinger arrived and

lodged his objection.

The remainder of Schwibinger’s damages award came

from AFC’s attempt to take vehicles that he owned individually. He also says that AFC stopped auctions from selling

to him. His damages expert, Margaret Suralik, testified

that Schwibinger lost $170,000 due to these actions because he couldn’t restock his dealership. The district

court awarded him $5,078.32 for AFC’s wrongful attempt

to repossess the four vehicles, but Schwibinger faults

the court for not making any specific findings regarding damages that AFC’s actions may have caused him in

terms of restocking his dealership. It’s true that Federal

Rule of Civil Procedure 52(a) requires the district court

to “find the facts specially” and the district court did
No. 02-3811 9

not address Schwibinger’s restocking argument head-on.

But we may consider a trial court’s failure to make findings of fact nonreversible error if it can be ascertained

from the record that the prevailing party was clearly

entitled to judgment. See Donaldson v. Taylor Prod. Div. of

Tecumseh Prod. Co., 620 F.2d 155, 158 (7th Cir. 1980); see

also Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d

1234, 1246 (10th Cir. 2001). That’s the situation in this

case. There’s no evidence that AFC controlled whether

auction houses sold cars to Schwibinger. One auction

house said that it barred Schwibinger from buying

cars because he had a reputation as a slow payer and

someone who bounced checks. As to the roughly onemonth delay in getting the four North Dakota cars, we

think it is wholly implausible that this alone caused

Schwibinger to lose $170,000 when he sold his dealership. The failure of the district court to make specific

findings on this subject constitutes nonreversible error.

For all these reasons, the judgment of the district court

is AFFIRMED. One final matter remains: AFC is entitled

to appellate attorney fees under its contract with

Schwibinger. Within 15 days, AFC should submit a statement of the attorney fees it incurred in connection with

this appeal. Schwibinger may, if desired, file an opposing

brief within 10 days thereafter.

AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—7-2-03