Court Opinion

ID: 4175948
Source: CourtListenerOpinion
Date Created: 2017-06-08 20:03:25.426957+00
Date Added: 2024-06-11T14:38:31.473674
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]
         [Hon. Jennifer C. Boal, U.S. Magistrate 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.
June 8, 2017
             Per     Curiam.         American        Honda    Finance   Corporation

("Honda") loaned Rachel Williams money to buy a car.                            After

Williams defaulted on the debt by failing to repay the loan as

agreed, Honda repossessed the vehicle and sent Williams two notices

in connection with its efforts to sell the car and collect any

deficiency owed on the loan, a pre-sale notice and (after selling

the car at auction) a post-sale notice.

             Williams thereupon filed this putative class action,

claiming    that     each    of    the   two    notices      violated   the   Uniform

Commercial     Code    and     Massachusetts         consumer    protection     laws.

Williams faults the pre-sale notice because instead of saying that

the credit due to her in calculating the deficiency would be the

"fair market value of the car," the notice used terms such as

"money received from the sale (after paying our costs)," "auction

proceeds," and "proceeds of sale."               She also faults the post-sale

notice     because    it     calculated        her    deficiency    obligation     by

reference to the auction proceeds, which she contends do not

represent the fair market value of the car.

             The outcome of this case hinges entirely on questions of

Massachusetts law concerning which the Massachusetts courts have

not spoken.    Therefore, even though the parties have not requested

it,   we   certify    three       questions     to    the    Massachusetts    Supreme

Judicial Court pursuant to Massachusetts Supreme Judicial Court

Rule 1:03.    See Fortin v. Titcomb, 671 F.3d 63, 66 (1st Cir. 2012).

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Some    context   for   those    questions,    along   with   the    questions

themselves, follows.

                                      I.

              Honda financed Williams's purchase of a Honda Accord in

2007.    Four years later, Williams defaulted on her loan.               After

repossessing the car, Honda sent Williams the first notice that is

the subject of this appeal.        It stated:

                    We have [your vehicle] because you broke
              promises in our agreement, and we will sell it
              at a private sale sometime after October 11,
              2011.
                    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. If we receive more money than you
              owe, you will receive a refund, unless we must
              pay it to someone else. If you would like a
              written explanation on how the amount you owe
              was determined, or need additional information
              about the sale, please send your request to
              the address below.
                    You can get the property back at any time
              before we sell it by paying the full payoff
              amount, including our expenses. As of today,
              the payoff amount is $13,366.78, which is
              subject to change due to the addition of
              applicable fees and/or finance charges.

              After Williams failed to make the payoff, Honda retained

an auction company to grade the vehicle's condition and the cost

of repairing any damage.         It then consulted the so-called "Black

Book,"    a    periodically     published    trade   manual   that   provides

estimated values for automobiles. Based on the vehicle's condition

and the Black Book data, Honda set a floor price of $8700, below

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which Honda would not accept an offer.   It then sold the car at an

auction open only to licensed dealers, receiving $8900.

          Honda then sent Williams the second notice that is the

subject of this appeal.   It stated as follows:

          On October 27, 2011 [the 2007 Honda Accord]
          was sold at a Private Sale. . . . The above
          referenced personal property was sold for
          $8,900.00.   The following is the balance on
          your contract:

     Principal amount:                        =     $12,546.06
     Accrued but unpaid Finance Charges       +         172.68
     for Simple Interest contracts only
     (through the date of sale)
     Accrued Late Charges                     +         125.00
     Dishonored Payment Charges               +          14.96
     Other:                                   +           0.00
                                  Subtotal:   =     $12,858.70
         . . . .
                          Total Deductions:   =          $0.00
     Gross Balance owing prior to sale        =     $12,858.70
     Proceeds of Sale                         =      $8,900.00
     Gross Balance owing prior to sale less   =      $3,958.70
     Proceeds of Sale (Balance after Sale)
     Expenses from repossession,              -         490.00
     transporting and storage
     Preparing for disposition                -           0.00
     Title and Registration                   -           0.00
     Auction Fees                             -         264.62
     Legal Expenses                           -           0.00
     Other:                                   -           0.00
                            Total Expenses:   =        $754.62
     Balance after Sale plus Allowable
     Expenses less credits
                           TOTAL AMOUNT DUE   =      $4,713.32
     TOTAL SURPLUS AMOUNT                     =          $0.00
     TOTAL DEFICIENCY AMOUNT                  =      $4,713.32

          . . . .

          If a TOTAL DEFICIENCY AMOUNT is shown above,
          the TOTAL DEFICIENCY AMOUNT IS NOW DUE AND

                               - 5 -
             OWING TO AMERICAN HONDA FINANCE CORPORATION.
             Please   remit   the   amount   shown   above
             immediately to the address shown below.

             Should you have any questions or need
             assistance, please contact us at [telephone
             number].

             In filing this putative class action, Williams alleges

that the two letters Honda sent to her (and the similar letters it

sent to other consumers) render Honda liable under Massachusetts

General Laws chapter 106 ("UCC"), sections 9-614(4) and 9-614(5)

or section 9-611, and chapter 93A.          To support this claim, she

points to Massachusetts's Motor Vehicle Retail Installment Sales

Act ("MVRISA"), Mass. Gen. Laws ch. 255B, § 20B, which the parties

agree provides that the credit due a consumer debtor upon sale of

a repossessed motor vehicle is the "fair market value" of the car,

which is presumptively the car's "retail value" in a deficiency

proceeding.

             Resolving this claim requires that we reconcile the

provision of a safe-harbor form of notice under UCC section 9-614

with MVRISA's mandate concerning the credit due upon sale of the

car.    To assist us in deciding this case, we therefore certify to

the    Massachusetts   Supreme   Judicial   Court   the   following   three

questions:

             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?

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             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?

             The Clerk is directed to forward to the Massachusetts

Supreme Judicial Court, under the official seal of this court, a

copy of the certified questions and this opinion, along with copies

of the briefs and appendices filed by the parties.            We retain

jurisdiction over this issue pending resolution of these certified

questions.

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