A major Arizona bank acted improperly in repossessing a vehicle, the state Court of Appeals has ruled.
The judges pointed out that Stephanie and Roy Engram, after having been warned by JPMorgan Chase Bank, went to a branch and brought the payments current. More to the point, two bank officials assured them that move would preclude their vehicle from being seized.
Judge Diane Johnsen, writing for the unanimous court, also said the bank acted improperly in trying to get the couple to pay off the difference between what was owed and the price the vehicle sold for at auction. She said the bank never proved that it sold the car "in a commercially reasonable manner.''
The appellate ruling overturns the decision of Maricopa County Superior Court Judge John Buttrick who had concluded the bank did nothing improper.
Court records show the couple bought the car in 2005 with total costs at $13,277. They put down $3,500 with the dealer agreeing to finance the balance.
The dealer eventually transferred that contract to Chase.
Johnsen said the evidence shows the Engrams were repeatedly late but Chase accepted those payments and late charges.
As of late June, however, they were $908.50 past due. On July 7 someone at the bank talked to Mrs. Engram about handing the vehicle over.
On July 10, she went to a Chase branch and asked what was needed to bring the account current. She paid the $908.50.
She said both the teller and another employee told her that the main office said the account was now in order. The receipt was time stamped at 10:13 a.m.
The payment, however, did not post immediately and the bank repossessed the vehicle that evening.
After being informed the next day that the payment had, in fact, been made, a bank official checked with the insurance company and found out that coverage had been canceled for nonpayment. That, according to the bank's lawyers, put the couple into default on the loan regardless of the payment and the bank refused to return the vehicle.
The couple sued. But Buttrick found in favor of the bank which had countersued for the $6,941 deficiency judgment -- the amount owing after the vehicle was sold -- plus $30,000 in legal fees.
On appeal, Chase said it had the right to repossess the vehicle despite the payment based on a provision in the contract giving it that right if the loan was "insecure,'' meaning that the prospects for future payments were impaired.
But Johnsen said there was no evidence the couple was hiding the car and they had brought payments current. She said that made it improper for Buttrick to summarily rule in favor of the bank without letting the case go to a jury.
The judge also brushed aside the bank's argument that the failure to maintain insurance entitled it to repossess the vehicle.
She said a jury could take into account that the bank told Mrs. Engram three times -- once on the phone July 5 and twice at the bank -- that if she brought the loan current she did not have to do anything else to prevent repossession. Johnsen said jurors might conclude, based on that, the bank had waived any right to now claim the unpaid insurance premiums gave it the right to the vehicle.
The ruling sends the case back to Buttrick for trial to give the couple a chance to make the case to a jury.
A Chase spokeswoman said the bank has no comment on the ruling.