Court Opinion

ID: 4324174
Source: CourtListenerOpinion
Date Created: 2018-10-24 21:00:18.090329+00
Date Added: 2024-06-11T07:49:13.126248
License: Public Domain

United States Court of Appeals
                        For the First Circuit

No. 16-1275
                       RACHEL C. WILLIAMS,
       on behalf of herself and others similarly situated,

                        Plaintiff, Appellant,

                                  v.

                 AMERICAN HONDA FINANCE CORPORATION,

                         Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

              [Hon. Leo T. Sorokin, U.S. District Judge]

                                Before

                  Torruella, Thompson, and Kayatta,
                           Circuit Judges.

     John Roddy, with whom Elizabeth Ryan, Bailey & Glasser LLP,
Steven R. Striffler, and Law Office of Steven R. Striffler were on
brief, for appellant.
     Stuart T. Rossman, National Consumer Law Center, and Jennifer
P. Nelson on brief for National Consumer Law Center, amicus curiae
in support of appellant.
     Eric S. Mattson, with whom Daniel R. Thies, Sidley Austin
LLP, Tracy M. Waugh, and Wilson Elser Moskowitz Edelman & Dicker,
LLP were on brief, for appellee.
     Frederick S. Levin, John C. Redding, Ali M. Abugheida, and
Buckley Sandler LLP, on brief for American Financial Services
Association, amicus curiae in support of appellee.
October 24, 2018
            KAYATTA, Circuit Judge.         Rachel Williams brought this

putative    class   action,   alleging      that   American   Honda   Finance

Corporation ("Honda") violated Massachusetts consumer protection

laws by affording her inadequate loan-deficiency notifications

after she fell behind on her automobile-loan payments. This appeal

followed the district court's entry of summary judgment in favor

of Honda.    Recognizing that Williams's claims hinge entirely on

questions of Massachusetts law, we certified three questions to

the Massachusetts Supreme Judicial Court.               After the Supreme

Judicial Court issued an opinion responding to our questions, see

Williams v. Am. Honda Fin. Corp., 98 N.E.3d 169 (Mass. 2018), the

parties filed supplemental briefs addressing the ramifications of

those answers.      For the reasons explained herein, we now reverse

the district court's findings that Honda's notices were compliant

with Massachusetts law, vacate its dismissal of Williams's claims

under the Massachusetts UCC and chapter 93A, and otherwise affirm

its judgment.

                              I.   Background

            The pertinent facts are set out in Williams v. Am. Honda

Fin. Corp., 858 F.3d 700 (1st Cir. 2017).              In brief, Williams

purchased a Honda Accord in 2007, which she partly financed through

a retail-installment-sale contract with Honda.                After Williams

failed to make her loan payments, Honda repossessed the automobile

and sent her a post-repossession notice that advised her of Honda's

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intent to sell the car at auction.                  The notice also described

Williams's deficiency liability as follows:               "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."

            At auction, Honda fetched $8,900.00 for the automobile.

Honda then sent Williams a second notice that apprised her of the

sale and of her deficiency balance, calculated in accordance with

the post-repossession notice by subtracting the price obtained at

auction from her outstanding loan balance plus the additional costs

associated with repossessing and selling the automobile.

            Williams claims that Honda's notices violate provisions

of   the   Massachusetts       version   of   the    Uniform    Commercial     Code

("UCC"),    Mass.    Gen.   Laws    ch. 106,    §§ 9-614,       9-616,   and    the

Massachusetts       consumer     protection    statute,        Mass.   Gen.    Laws

ch. 93A, § 2(A), by telling Williams that her deficiency liability

would be calculated using the automobile's sale price obtained at

auction (rather than its fair market value).               The district court

rejected this challenge to Honda's notices for two reasons. First,

it noted that Honda's pre-sale notice "track[ed] the safe harbor

language in section 9-614(3)," which uses auction-sale proceeds as

the measure of a debtor's deficiency.               Williams v. Am. Honda Fin.

Corp., No. 14-CV-12859, 2014 WL 11090919, at *8 (D. Mass. July 3,

2014).     Further, the court concluded that Williams had presented

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"no    evidence   that   the   auction    proceeds   were    less   than   the

[automobile's] fair market value."         Id.   1

       On appeal, Williams argues that summary judgment dismissing

her challenges to Honda's notices was improper.               She maintains

that Massachusetts law requires a lender to give credit for the

fair market value of the car -- determined using a car's estimated

retail-market value -- when calculating deficiencies owed, and she

therefore challenges the district court's conclusion that Honda's

use of the auction-sale price in its deficiency notices was

accurate and reasonable under the circumstances.              Acknowledging

that a resolution of Williams's claims would require this court to

reconcile Massachusetts's Motor Vehicle Retail Installment Sales

Act ("MVRISA"), Mass. Gen. Laws ch. 255B, § 20B, with provisions

of    the   Massachusetts   UCC,   we    certified   the    following   three

questions to the Massachusetts Supreme Judicial Court:

       1
       Honda would seem to have us read the second of the two
reasons the district court provided as sufficient, by itself, to
find its pre- and post-sale notices to be compliant with
sections 9-614 and 9-616. This makes no sense at all, nor does
Honda explain how it might make sense; i.e., how deficient notices
could be deemed compliant with the statutory-notice requirements
merely because the auction sale netted a price that is in line
with the collateral's fair market value. We therefore read the
district court's holding as saying that the notices must both be
facially compliant and the sale proceeds need be equal to fair
market value. Whether it is correct that an otherwise compliant
notice could be rendered noncompliant by a defective sale, we need
not -- and do not -- decide because, as we will explain, it is now
clear that the notices did not accord with sections 9-614 and 9-
616.

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     1. Whether the "fair market value" of collateral under
     Massachusetts General Laws chapter 255B, section 20B, is
     the fair market retail value of that collateral?

     2. Whether, and in what circumstances, a pre-sale notice
     is "sufficient" under UCC section 9-614(4) and (5), and
     "reasonable" under UCC section 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 MVRISA?

     3. Whether, and in what circumstances, a post-sale
     deficiency explanation is "sufficient" under UCC
     section 9-616 where the deficiency is not calculated
     based on the "fair market value" of the collateral, and
     the transaction is governed by MVRISA?

Williams, 858 F.3d at 703.

     In June, the Supreme Judicial Court issued an opinion that

addressed our questions.      Williams, 98 N.E.3d at 171.         In brief,

the Supreme Judicial Court answered the first question in the

negative, concluding that "the Legislature did not dictate the

creditor's market choice in the first instance."             Id. at 179–80.

Nevertheless,   the   court   opined   that,    in    disputed    cases,   a

rebuttable presumption exists that the estimated retail-market

value of the repossessed collateral is its fair market value in

MVRISA-governed transactions.     Id. at 174.        As to the second and

third questions, the Supreme Judicial Court concluded that notices

provided   under   sections 9-614   and   9-616      "must    describe   the

[debtor's] deficiency as the difference between the fair market

value of the collateral and the debtor's outstanding balance."

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Id. at 179.    Applying these answers, we now address the merits of

Williams's appeal.

                                II.    Analysis

                                       A.

      We    first   address    the    district    court's    conclusion   that

Williams failed to offer any evidence to show that Honda sold her

vehicle for less than fair market value in violation of MVRISA

§ 20B.     See Williams, 2014 WL 11090919, at *7.           In so ruling, the

district    court   rejected    as    unauthenticated   the    only   evidence

Williams offered to prove fair market value, retail or otherwise.

Id.   We review evidentiary decisions at the summary judgment stage

for abuse of discretion. See Hoffman v. Applicators Sales & Serv.,

Inc., 439 F.3d 9, 13 (1st Cir. 2006) ("[T]he Court should review

the district court's evidentiary rulings made as part of its

decision on summary judgment for abuse of discretion." (citing

Alt. Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 31 (1st

Cir. 2004))).

      We see no reason to upset the district court's conclusion

concerning the adequacy of Williams's proof.            On appeal, Williams

offers no argument at all that the court abused its discretion in

finding that Williams did not authenticate the sole exhibit -- a

National Automobile Dealers Association values printout -- that

she offered to support her claim that Honda sold her vehicle for

less than fair market value.          Her challenge to the court's ruling

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that Honda sold the car for fair market value is therefore waived.

See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990)

("[I]ssues adverted to in a perfunctory manner, unaccompanied by

some effort at developed argumentation, are deemed waived.").2

                                     B.

      We turn now to the main issue in this case: Williams's

challenge to the district court's determination that the post-

repossession and post-sale notices Honda sent to Williams complied

with the requirements of Massachusetts law.           See Williams, 2014

WL 11090919, at *8.

      The Massachusetts Supreme Judicial Court has now opined that

the post-repossession and post-sale notices of the type Honda sent

to   Williams   must   "expressly    describe   the   deficiency   as   the

difference between the amount owed on the loan and the fair market

value of the vehicle."     Williams, 98 N.E.3d at 171; see also id.

at 179 ("The notice . . . must describe the deficiency as the

      2Williams does briefly contend on appeal that other evidence
in the record filled the gap in proof that the exclusion of her
exhibit created. She never made this argument below, so we deem
it forfeited. See Davila v. Corporación de Puerto Rico para la
Difusión Pública, 498 F.3d 9, 14 (1st Cir. 2007) (deeming forfeited
an argument not raised before the district court).         And with
Williams having made no attempt on appeal to explain how she
satisfies the demanding plain-error test, "[w]e are under no
obligation to do [her] work for [her]." United States v. Morosco,
822 F.3d 1, 22 (1st Cir. 2016), cert. denied, 137 S. Ct. 251
(2016).

                                    - 8 -
difference between the fair market value of the collateral and the

debtor's outstanding balance.").

     Honda's   notices   to   Williams,   which   describe   Williams's

deficiency as the difference between "the amount you owe" and

"[t]he money received from the sale," plainly do not provide this

necessary express description, and therefore do not comply with

the requirements of Mass. Gen. Laws ch. 106, §§ 9-614, 9-616.

     Honda argues that, under the facts presented here, "fair

market value" is no different than the auction price and, thus,

its notices, which parrot the so-called safe-harbor language in

Mass. Gen. Laws ch. 106, § 9-614(3), "conveyed the 'fair market

value' concept."   The Supreme Judicial Court, however, has now

made it clear that a creditor's use of the UCC safe-harbor language

in deficiency notifications is inadequate under Massachusetts law.

See Williams, 98 N.E.3d at 179.

     In the wake of the Supreme Judicial Court's opinion, Honda

argues for the first time that applying the Supreme Judicial

Court's interpretation of Mass. Gen. Laws ch. 106, §§ 9-614, 9-

616 to notices sent before the court announced its decision would

violate its "constitutional right to due process."      But Williams's

challenge to Honda's notices -- and the prospect that a court might

read the ambiguous statutory requirements adversely to Honda just

as the Supreme Judicial Court did -- has been pending since 2014.

Yet, in neither the district court nor in this court nor before

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the Supreme Judicial Court did Honda raise this due process

argument.    Accordingly, the argument is three-times waived to the

extent Honda would rely on it to establish that its notices were

compliant.    See Lawless v. Steward Health Care Sys., LLC, 894 F.3d

9, 25 (1st Cir. 2018) (finding an argument waived when a party

failed to raise it in their opening brief); Nat'l Ass'n of Soc.

Workers v. Harwood, 69 F.3d 622, 627 (1st Cir. 1995) ("Ordinarily,

an appellant who has not proffered a particular claim or defense

in the district court 'may not unveil it in the court of appeals.'"

(quoting United States v. Slade, 980 F.2d 27, 30 (1st Cir. 1992))).

     Given the above, entry of summary judgment on Williams's UCC

notice and chapter 93A claims was improper.               Whether and to what

extent Honda acted in good faith and whether and to what extent

good faith provides any defense or mitigation in connection with

any claims or remedies, we leave to the district court to determine

on remand.

                                      III.

             For   the   foregoing   reasons,     we    reverse    the    district

court's     findings     that   Honda's      notices    were     compliant     with

Massachusetts law, we vacate its dismissal of Williams's claims

under     chapter 93A     and   Massachusetts'         version    of     the   UCC,

challenging the adequacy of Honda's notices, and we otherwise

affirm its judgment.       Costs are awarded to Williams.

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