Simmonds & Narita, LLP

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Missouri jury finds in favor of Simmonds & Narita debt buyer client

Following a week-long trial in St. Joseph, Missouri, a jury found in favor of Simmonds & Narita’s debt buyer client (“the client”) on all six counterclaims brought by a consumer. The debt purchaser sued to recover an unpaid automobile deficiency related to the purchase of a 15-year-old vehicle with more than 150,000 miles from a buy here, pay here dealership.  After driving the car for eight months and putting more than 5,000 miles on it, the consumer returned the vehicle to the dealership, contending that the car had experienced intermittent mechanical issues that the dealership had failed to fix.  The finance company treated the return as a voluntary repossession and sold the vehicle at auction.  After the proceeds of the sale were applied against the consumer’s financing contract, a deficiency remained.  The finance company sent the consumer an explanation of deficiency (a post-sale notice), showing how the amount of the deficiency was calculated.  The deficiency balance was later sold to the client, who initiated a lawsuit against the consumer to collect the balance due.


In response, the consumer asserted numerous claims against the client, seeking to hold it liable under the “Holder Rule” based on the conduct of the dealership and its affiliated finance company.  First, the consumer brought claims under the Missouri Merchandising Practices Act, for fraud, and for breach of warranty based on the dealership’s conduct, alleging that the dealer’s representative had misrepresented the vehicle’s condition and failed to honor various warranties during the time she owned the car.  Next, the consumer brought claims based on the finance company’s failure to comply with Missouri’s UCC provisions governing the deficiency notice.  Lastly, the consumer sought to hold the debt buyer liable for its own actions in attempting to collect the deficiency and for filing and pursuing an improper lawsuit, all of which she maintained was improper because the post-sale notice did not comply with Missouri’s UCC provisions.  Prior to the commencement of the trial, the trial court granted summary judgment in favor of the consumer on the debt buyer’s deficiency petition, ruling that the post-sale notice did not comply with Missouri law.


After a day of jury selection, a panel of twelve jurors and two alternates were selected from more than 60 potential jurors.  Following opening statements, the consumer presented the first two of her witnesses – a husband and wife who had purchased a similarly-aged vehicle from the same dealer and supposedly experienced similar issues as the consumer (in fact, this couple had similar claims pending against the client, in a separate case).  Over the course of two days, the consumer offered testimony from herself and nine other witnesses, including people who owned the same vehicle before and after her, others who drove the vehicle and claimed to have experienced the same problems with it that the consumer did, and a representative of the client.  The consumer attempted to show that the dealership had a practice of buying cars at auction, doing little to inspect or repair them prior to sale, repossessing the cars and then re-selling them, and that the finance company engaged in a pattern and practice of sending defective post-sale notices.  As to the client, the consumer maintained that it failed to properly evaluate the accounts it purchased from the finance company to determine whether they were collectible, and improperly filed and continued prosecuting the action against her after being notified that she raised issues about the sales transaction, the car itself, and the defective post-sale notice.  In a focused days’ worth of testimony, two representatives of the client explained the company’s business, the extensive due diligence process it undergoes when acquiring auto deficiency balances generally and specifically as to the accounts at issue, and its collection practices and policies.  The president of dealership and the finance company also testified in support of the client.


After being instructed and the delivery of closing arguments, the jury retired at 3:00 p.m. on Friday afternoon to deliberate.  Two hours later, the jury returned its verdict on all six counterclaims, voting 12-0 in favor of the client as to five of the counterclaims, and 9-3 (the minimum required) in favor of the client on the remaining counterclaim for a pattern-and-practice violation of the Missouri UCC provision regarding the post-sale notice.  The foreperson later commended the client’s counsel for being “smooth, under control, and very professional.”



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