Court Opinion

ID: 8295922
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:03:22.380561+00
Date Added: 2024-06-11T16:44:04.205174
License: Public Domain

SHORT, J.,
concurring in part and dissenting in part:
I concur with the majority in its disposition of the first and third issues. As to the second issue, I respectfully dissent.
*554The second issue in this case is whether the applicable statute of limitations is the statute of limitations in Article 2 (governing the sale of goods) or the statute of limitations for the default on a security interest (governed by general statutes because Article 9 does not contain its own statute of limitations). Considering the applicable statute of limitations under facts similar to those presented in this case, the Court of Appeals of North Carolina in North Carolina National Bank v. Holshouser, 38 N.C.App. 165, 247 S.E.2d 645, 647 (1978), found the Article 2 statute of limitations did not apply. The court found Article 2 would apply to the sales aspects of such a transaction and Article 9 would apply to the security aspects of the transaction. Id. Because Article 9 contains no statute of limitations, the court in Holshouser looked to other statutes of limitations in North Carolina. Id.
I recognize many courts have applied the Article 2 statute of limitations to an action on a secured transaction similar to this action. See Richard H. Nowka, The Secured Party Fiddles While the Article 2 Statute of Limitations Clock Ticks — Why the Article 2 Statute of Limitations Should Not Apply to Deficiency Actions, 7 Fla. St. U. Bus. Rev. 1, 39-40 (2008) (explaining many courts have ignored the Official Comments to Article 2 and summarily cited Associates Discount Corp. v. Palmer, 47 N.J. 183, 219 A.2d 858 (1966) in finding Article 2 applies under similar facts); id. at 2 n.4 (listing cases that have applied the Article 2 statute of limitations); Daimler-Chrysler Servs. N. Am., LLC v. Ouimette, 175 Vt. 316, 830 A.2d 38, 42 (2003) (citing multiple jurisdictions applying the Article 2 statute of limitations to a suit for default on a motor vehicle retail installment sales contract). However, I agree with the rationale of the North Carolina Court of Appeals in Holshouser and find the circuit court did not err when it found the three-year statute of limitations applied in this case.
The sales transaction between Brown and Johnny’s Subaru Isuzu, LLC (Johnny’s) was for the sale of goods, namely the vehicle. Johnny’s assigned the Retail Installment Sale Contract (the Contract) to CFCU. The Contract provided the financing terms and created a security interest. As a transaction for the sale of goods, CFCU correctly contends the SCUCC applied to the sale of the vehicle. See S.C. Code Ann. § 36-2-102 (2003) (“Chapter [2 of the SCUCC] applies to *555transactions in goods; it does not apply to any transaction ... intended to operate only as a security transaction _”). However, in my view, CFCU’s cause of action does not arise from a breach of the sales contract under the SCUCC; rather, it is a debt collection action on the security interest, not arising under the SCUCC. See BancOhio Nat’l Bank v. Freeland, 13 Ohio App.3d 245, 468 N.E.2d 941, 944 (1984) (finding an action based on the note secured by a vehicle was not governed by Article 2 where the financer was not the seller of the vehicle); see also Gray v. Suttell & Assocs., 123 F.Supp.3d 1283, 1289-90 (E.D. Wash. 2015) (distinguishing between a hybrid agreement, which constituted both a contract for sale and a secured transaction and was subject to Article 2, and a financing agreement separate from the sale of goods, which was not subject to Article 2); S.C. Code Ann. § 36-1-201(35) (Supp. 2015) (“ ‘Security interest’ means an interest in personal property or fixtures, which secures payment or performance of an obligation.”).
Based on the analysis in Holshouser, I would find the circuit court properly granted Brown’s motion for summary judgment. See McMaster v. Dewitt, 411 S.C. 138, 143, 767 S.E.2d 451, 453 (Ct. App. 2014) (“Summary judgment is appropriate when a plaintiff does not commence an action within the applicable statute of limitations.”). Accordingly, I would affirm the second issue.