Page 65 - CARS Standard Program

Quinn’s Uniform Commercial Code Commentary and Law Digest states: the secured party using deceit in order to affect an Article 9 (self-help) repossession is well advised to check out the developing law in this area and to proceed with caution.
In considering Breach of Peace, many courts will look at whether violence might “conceivably” occur “during” the repossession. In Jordan v. Citizens & So. Nat’l Bank of S.C., 35 U.C.C. Rep. 722 (S.C. 1982), creditors Recovery Agent seized a truck in the middle of the night and drove away; the debtors awoke and chased the Recovery Agent in another vehicle for 30 minutes. The court found no Breach of Peace occurred because the repossession occurred peacefully. The conduct following the repossession was not considered incident to the actual repossession.
Courts will virtually always find a Breach of the Peace when a Recovery Agent is accompanied by a law enforcement officer during a self-help repossession and the law enforcement officer does not have authorization by the court (Replevin, etc.) Courts usually refer to such acts as being committed under “Color of Law.” Under Title 18 USC, Section 242 (Deprivation of Rights Under Color of Law). This federal law makes it a crime for any person acting under color of law, statute, ordinance, regulation, or custom to willfully deprive or cause to be deprived from any person those rights, privileges, or immunities secured or protected by the Constitution and laws of the United States.
Acts under “Color of Law” includes acts not only done by federal, state or local officials within the bounds or limits of their lawful authority, but also acts done without and beyond the bounds of their lawful authority: providing that, in order for unlawful acts of any official to be done under “Color of Law”, the unlawful acts must be done while such official is purporting or pretending to act in the performance of his/her official duties. In the self-help repossession process such cases of “Color of Law” usually result from a law enforcement officer assisting a Recovery Agent when the law enforcement officer does not have authorization (as stated above). Such action clearly gives the impression of legal authority and is usually considered to be a Breach of the Peace resulting in a Wrongful Repossession.
Another important aspect of Wrongful Repossession is the requirement by some states that certain written notices, often referred to as “cure notices,” be sent to the debtor prior to the attempt to repossess. The Recovery Agent and Recovery Agency owner should be familiar with whether that is a requirement in their area(s) of operation and whether those required notices have been sent. It is possible for creditors to neglect this requirement on occasion and they will appreciate the Recovery Agent bringing it to their attention.
Caution also must be observed by the creditor and Recovery Agent as to statements made at, or near, the time of repossession. The creditor may be bound by representations made by the creditor’s employees or by the Recovery Agent, and this can lead to a charge of Wrongful Repossession or a loss of the creditor’s deficiency rights. The Recovery Agent should make no statements to the debtor regarding redemption rights or deficiencies without the express written permission of the creditor.