2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 9 - Secured Transactions › Part 6 - DEFAULT › Subpart 2 - NONCOMPLIANCE WITH ARTICLE › Section 55-9-625 - Remedies for secured party's failure to comply with article.

(a) If it is established that a secured party is not proceeding in accordance with Chapter 55, Article 9 NMSA 1978, a court may order or restrain collection, enforcement or disposition of collateral on appropriate terms and conditions.
(b) Subject to Subsections (c), (d) and (f) of this section, a person is liable for damages in the amount of any loss caused by a failure to comply with Chapter 55, Article 9 NMSA 1978. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.
(c) Except as otherwise provided in Section 55-9-628 NMSA 1978:
(1) a person that, at the time of the failure, was a debtor, was an obligor or held a security interest in or other lien on the collateral may recover damages under Subsection (b) of this section for its loss; and
(2) if the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this part may recover for that failure in any event an amount not less than the credit service charge plus ten percent of the principal amount of the obligation or the time-price differential plus ten percent of the cash price.
(d) A debtor whose deficiency is eliminated under Section 55-9-626 NMSA 1978 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under Section 55-9-626 NMSA 1978 may not otherwise recover under Subsection (b) of this section for noncompliance with the provisions of Sections 55-9-601 through 55-9-628 NMSA 1978 relating to collection, enforcement, disposition or acceptance.
(e) In addition to any damages recoverable under Subsection (b) of this section, the debtor, consumer obligor or person named as a debtor in a filed record, as applicable, may recover five hundred dollars ($500) in each case from a person that:
(1) fails to comply with Section 55-9-208 NMSA 1978;
(2) fails to comply with Section 55-9-209 NMSA 1978;
(3) files a record that the person is not entitled to file under Subsection (a) of Section 55-9-509 NMSA 1978;
(4) fails to cause the secured party of record to file or send a termination statement as required by Subsection (a) or (c) of Section 55-9-513 NMSA 1978;
(5) fails to comply with Paragraph (1) of Subsection (b) of Section 55-9-616 NMSA 1978 and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or
(6) fails to comply with Paragraph (2) of Subsection (b) of Section 55-9-616 NMSA 1978.
(f) A debtor or consumer obligor may recover damages under Subsection (b) of this section and, in addition, five hundred dollars ($500) in each case from a person that, without reasonable cause, fails to comply with a request under Section 55-9-210 NMSA 1978. A recipient of a request under Section 55-9-210 NMSA 1978 that never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.
(g) If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Section 55-9-210 NMSA 1978, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.
History:
1978 Comp., § 55-9-625, enacted by Laws 2001, ch. 139, § 122.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
1. Source. Former section 9-507.
2. Remedies for Noncompliance; Scope. Subsections (a) and (b) provide the basic remedies afforded to those aggrieved by a secured party's failure to comply with this article. Like all provisions that create liability, they are subject to section 9-628, which should be read in conjunction with section 9-605. The principal limitations under this part on a secured party's right to enforce its security interest against collateral are the requirements that it proceed in good faith (section 1-203), in a commercially reasonable manner (sections 9-607 and 9-610), and, in most cases, with reasonable notification (sections 9-611 through 9-614). Following former section 9-507, under subsection (a) an aggrieved person may seek injunctive relief, and under subsection (b) the person may recover damages for losses caused by noncompliance. Unlike former section 9-507, however, subsections (a) and (b) are not limited to noncompliance with provisions of this part of article 9. Rather, they apply to noncompliance with any provision of this article. The change makes this section applicable to noncompliance with sections 9-207 (duties of secured party in possession of collateral), 9-208 (duties of secured party having control over deposit account), 9-209 (duties of secured party if account debtor has been notified of an assignment), 9-210 (duty to comply with request for accounting, etc.), 9-509(a) (duty to refrain from filing unauthorized financing statement), and 9-513(a) (duty to provide termination statement). Subsection (a) also modifies the first sentence of former section 9-507(1) by adding the references to "collection" and "enforcement." Subsection (c)(2), which gives a minimum damage recovery in consumer goods transactions, applies only to noncompliance with the provisions of this part.
3. Damages for Noncompliance with This Article. Subsection (b) sets forth the basic remedy for failure to comply with the requirements of this article: A damage recovery in the amount of loss caused by the noncompliance. Subsection (c) identifies who may recover under subsection (b). It affords a remedy to any aggrieved person who is a debtor or obligor. However, a principal obligor who is not a debtor may recover damages only for noncompliance with section 9-616, inasmuch as none of the other rights and duties in this article run in favor of such a principal obligor. Such a principal obligor could not suffer any loss or damage on account of noncompliance with rights or duties of which it is not a beneficiary. Subsection (c) also affords a remedy to an aggrieved person who holds a competing security interest or other lien, regardless of whether the aggrieved person is entitled to notification under part 6. The remedy is available even to holders of senior security interests and other liens. The exercise of this remedy is subject to the normal rules of pleading and proof. A person who has delegated the duties of a secured party but who remains obligated to perform them is liable under this subsection. The last sentence of subsection (d) eliminates the possibility of double recovery or other over-compensation arising out of a reduction or elimination of a deficiency under section 9-626, based on noncompliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance. Assuming no double recovery, a debtor whose deficiency is eliminated under section 9-626 may pursue a claim for a surplus. Because section 9-626 does not apply to consumer transactions, the statute is silent as to whether a double recovery or other over-compensation is possible in a consumer transaction.
Damages for violation of the requirements of this article, including section 9-609, are those reasonably calculated to put an eligible claimant in the position that it would have occupied had no violation occurred.
See
section 1-106. Subsection (b) supports the recovery of actual damages for committing a breach of the peace in violation of section 9-609, and principles of tort law supplement this subsection.
See
section 1-103. However, to the extent that damages in tort compensate the debtor for the same loss dealt with by this article, the debtor should be entitled to only one recovery.
4. Minimum Damages in Consumer-Goods Transactions. Subsection (c)(2) provides a minimum, statutory, damage recovery for a debtor and secondary obligor in a consumer-goods transaction. It is patterned on former section 9-507(1) and is designed to ensure that every noncompliance with the requirements of part 6 in a consumer goods transaction results in liability, regardless of any injury that may have resulted. Subsection (c)(2) leaves the treatment of statutory damages as it was under former article 9. A secured party is not liable for statutory damages under this subsection more than once with respect to any one secured obligation (see section 9-628(e)), nor is a secured party liable under this subsection for failure to comply with section 9-616 (see section 9-628(d)).
Following former section 9-507(1), this article does not include a definition or explanation of the terms "credit service charge," "principal amount," "time-price differential," or "cash price," as used in subsection (c)(2). It leaves their construction and application to the court, taking into account the subsection's purpose of providing a minimum recovery in consumer-goods transactions.
5. Supplemental Damages. Subsections (e) and (f) provide damages that supplement the recovery, if any, under subsection (b). Subsection (e) imposes an additional $500 liability upon a person who fails to comply with the provisions specified in that subsection, and subsection (f) imposes like damages on a person who, without reasonable excuse, fails to comply with a request for an accounting or a request regarding a list of collateral or statement of account under section 9-210. However, under subsection (f), a person has a reasonable excuse for the failure if the person never claimed an interest in the collateral or obligations that were the subject of the request.
6. Estoppel. Subsection (g) limits the extent to which a secured party who fails to comply with a request regarding a list of collateral or statement of account may claim a security interest.
ANNOTATIONS
Effective dates.
— Laws 2001, ch. 139, § 155 makes the act effective July 1, 2001.
Am. Jur. 2d, A.L.R. and C.J.S. references. —
68A Am. Jur. 2d Secured Transactions § 737 et seq.
Rights in proceeds of vehicle collision policy, under "loss-payable" clause, of conditional seller, chattel mortgagee or the like, of vehicle where there has been improper repossession or foreclosure after the damage, 46 A.L.R.2d 992.
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.
Liability of secured creditor under Uniform Commercial Code to third party on ground of unjust enrichment, 27 A.L.R.5th 719.
79 C.J.S. Secured Transactions § 185 et seq.