Page 65 - Microsoft Word - NEW 2017 Standard Program.docx

And to creditors, an additional warning; such litigation can include punitive damages
and your Recovery Agency insurance contract does not cover punitive damages.

In lieu of a clear and concise definition of when a Breach of the Peace may have occurred,
many courts apply a two-part test:

1. Was the debtor’s premises “entered” by the creditor or creditor’s agent; and if so,
2. Did the debtor, or another, acting on the debtor’s behalf refuse to consent to the
entry and repossession?

The question of “entry” is also not clearly defined by the courts. However, it is very
clear that entry into a debtor’s home for the purpose of repossession will almost always
be an “entry.” Further, the courts will virtually always find a Breach of the Peace if the
Recovery Agent enters a garage that is attached to a residence or a closed garage or
structure whether it is attached to the residence or a stand-alone structure.

Another factor considered by the courts is the “means of entry,” such as the breaking of
a door even if there is no objecting person present. Examine the following cases:
qq Davenport v. Chrysler Credit Corp., 818 S.W. 2d 23 (Tenn. App. 1991), states
that a Breach of the Peace occurred when the creditor entered a closed garage and
cut a padlock chaining the vehicle to a post.
qq Bloomquist v. First Nat. Bank of Elk River, 378 N.W. 2d 81 (Minn. App.
1985), the court found that the unauthorized entry into the debtor’s place of
business by removing a window pane constituted a Breach of the Peace under
UCC, Article 9.

qq Laurel Coal Co. v. Walter E. Heller & Co., Inc., 539 F. Supp. 1006 (W.D.
Penn. 1982), states, in part, “that the actual breaking of a lock or fastener securing
property, even commercial property, constitutes a Breach of the Peace.” However,
courts might look differently at opening an unlocked gate to a fence surrounding
the residence.

“Pretext” or deceitful schemes by Recovery Agents are usually prohibited by creditors.
Further, with the passage of the Gramm-Leach-Bliley Act (GLBA) and the Telephone
Records & Privacy Protection Act, pre-texting is greatly discouraged.

A Recovery Agent is acting at his own risk when employing deceitful or fraudulent
schemes. Since courts across the country are holding creditors directly responsible
for the actions of the Recovery Agent, employing fraudulent or deceitful schemes
invites litigation against the Recovery Agent, the Recovery Agency, the creditor and
the insurance carrier.