Court Opinion

ID: 8892684
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:27:09.17731+00
Date Added: 2024-06-11T17:07:18.080905
License: Public Domain

BYRNE, District Judge
(dissenting).
Both Adams and Hampton sought relief under 42 U.S.C. § 1983 on the grounds that the creditor banks acted “under color of law” and deprived them of “due process of law” by repossessing their automobiles pursuant to Cal.Comm.C. § 9503 and selling those vehicles pursuant to Cal.Comm.C. § 9504. The majority opinion holds in favor of the creditor banks on the “under color of law” issue and apparently considered it unnecessary to discuss the “due process of law” issue. It is my view that the debtors should prevail on both issues.
Regarding the “due process of law” issue, even the creditors appear to concede that, if they did act “under color of law,” the debtors were deprived of due process of law because no judicial hearing was conducted prior to the summary self-help procedures utilized.
Undoubtedly, the creditors’ apparent concession on the “due process of law” issue is compelled by the recent case of Fuentes v. Shevin, 407 U.S. 67, 86-87, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) where the Supreme Court stated:
“The appellants who signed conditional sales contracts lacked full legal title to the replevied goods. The Fourteenth Amendment’s protection of ‘property,’ however, has never been interpreted to safeguard' only the rights of undisputed ownership. Rather, it has been read broadly to extend protection to ‘any significant property interest,’ Boddie v. Connecticut, 401 U.S. 371, at 379 [91 S.Ct. 780, 28 L.Ed.2d 113], including statutory entitlements. See Bell v. Burson, *339402 U.S. 535, at 539, 91 S.Ct. 1586, 29 L.Ed.2d 90; Goldberg v. Kelly, 397 U.S. [254] at 262 [90 S.Ct. 1011, 25 L.Ed.2d 287].
“The appellants were deprived of such an interest in the replevied goods —the interest in continued possession and use of the goods. See Sniadach v. Family Finance Corp., 395 U.S. [337] at 342 [89 S.Ct. 1820, 23 L.Ed.2d 349] (Harlan, J., concurring). They had acquired this interest under the conditional sales contracts that entitled them to possession and use of the chattels before transfer of title. In exchange for immediate possession, the appellants had agreed to pay a major financing charge beyond the basic price of the merchandise. Moreover, by the time the goods were summarily repossessed, they had made substantial installment payments. Clearly, their possessory interest in the goods, dearly bought and protected by contract, was sufficient to invoke the protection of the Due Process Clause.
“Their ultimate right to continued possession was, of course, in dispute. If it were shown at a hearing that the appellants had defaulted on their contractual obligations, it might well be that the sellers of the goods would' be entitled to repossession. But even assuming that the appellants had fallen behind in their installment payments, and that they had no other valid defenses, that is immaterial here. The right to be heard does not depend upon an advance showing that one will surely prevail at the hearing. ‘To one who protests against the taking of his property without due process of law, it is no answer to say that in his particular case due process of law would have led to the same result because he had no adequate defense upon the merits.’ Coe v. Armour Fertilizer Works, 237 U.S. 413, 424 [35 S.Ct, 625, 59 L.Ed. 1027]. It is enough to invoke the procedural safeguards of the Fourteenth Amendment that a significant property interest is at stake, whatever the ultimate outcome of a hearing on the contractual right to continued possession and use of the goods.”
By its nature, the “under color of law” issue is very conceptual and readily susceptible to purposeful interpretation by both the creditors and the debtors. Admittedly, Judge Trask, writing for the majority, supports his holding on this issue with adequate logic and case authority. He mentions each of the debtors’ five arguments in opposition to his holding and he distinguishes the case authority which they offer in support of those arguments. However, in doing so, he seems to purposefully characterize §§ 9503 and 9504 as being mere codifications of previously-existing commercial law. Indeed, such a purposeful reasoning process could likewise justify a contrary holding and thereby protect debtors such as Adams and Hampton from the well-known creditor abuses which often occur when those summary self-help provisions are utilized.
Such a contrary holding can be justified by .the debtors’ “state encouragement argument” and supported by Reitman v. Mulkey, 387 U.S. 369, 87 S.Ct. 1627, 18 L.Ed.2d 830 (1967). Both that argument and that ease are discussed in the majority opinion. The majority claims that Reitman is distinguishable from the instant two cases for the following two reasons: (1) In Reitman, the State of California was involved to “a far greater degree” because it approved Proposition 14 and thereby reversed previously-existing law. In the instant two cases, the legislature enacted §§ 9503 and 9504 in order to codify previously-existing law rather than to reverse it; and (2) In Reitman, California’s “subjective intent” in approving Proposition 14 was to indirectly circumvent individual constitutional rights and to encourage racial discrimination in housing. In the instant two cases, the debtors have failed to show that the State harbored such an insidious “subjective intent.”
*340The majority’s asserted distinctions do not render Reitman inapplicable to the instant two cases. The first alleged distinction is merely a bare conclusion, i. e., that the State was involved to “a far greater degree” in Reitman, is justified by an insignificant factual difference, i. e., §§ 9503 and 9504 merely codified previously-existing law rather than reversing it. The second asserted distinction seems to suggest that the debtors must prove an improvable fact, i. e., that California’s subjective intent in enacting §§ 9503 and 9504 was to deprive debtors such as Adams and Hampton of due process of law. Such an argument tends to obscure the more important fact that the creditor banks relied on those statutory provisions in order to deprive the debtors of their proprietary interests in the automobiles without due process of law.
The State of California deliberately chose to follow a State policy of encouraging the repossession and sale of collateral without a prior judicial hearing. It embodied such a policy in §§ 9503 and 9504. The creditors admit that they acted pursuant to those sections .when they repossessed and sold the collateral. The State meaningfully encouraged the repossessions and sales and thus became significantly involved within the meaning of Reitman v. Mulkey, 387 U.S. 369, 87 S.Ct. 1627, 18 L.Ed.2d 830 (1967).
It is clear that the creditors acted under color of State law and it follows that they deprived the debtors of “due process of law” by repossessing their automobiles pursuant to that law.
I would affirm in Adams and reverse in Hampton.