{"id":104,"date":"2014-09-17T00:42:06","date_gmt":"2014-09-17T00:42:06","guid":{"rendered":"https:\/\/courses.candelalearning.com\/buslegalenv\/?post_type=chapter&p=104"},"modified":"2015-04-21T21:59:38","modified_gmt":"2015-04-21T21:59:38","slug":"11-5-cases","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-buslegalenv\/chapter\/11-5-cases\/","title":{"raw":"Cases","rendered":"Cases"},"content":{"raw":"

Perfection by Mere Attachment; Priorities<\/h2>\r\n
\r\n
\r\n\r\nIn re NICOLOSI\r\n\r\n4 UCC Rep. 111 (Ohio 1966)\r\n
\r\n

Preliminary Statement and Issues<\/h3>\r\nThis matter is before the court upon a petition by the trustee to sell a diamond ring in his possession free of liens.\u2026Even though no pleadings were filed by Rike-Kumler Company, the issue from the briefs is whether or not a valid security interest was perfected in this chattel as consumer goods, superior to the statutory title and lien of the trustee in bankruptcy.\r\n\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n
\r\n

Findings of Fact<\/h3>\r\nThe [debtor] purchased from the Rike-Kumler Company, on July 7, 1964, the diamond ring in question, for $1237.35 [about $8,500 in 2010 dollars], as an engagement ring for his fianc\u00e9e. He executed a purchase money security agreement, which was not filed. Also, no financing statement was filed. The chattel was adequately described in the security agreement.\r\n\r\nThe controversy is between the trustee in bankruptcy and the party claiming a perfected security interest in the property. The recipient of the property has terminated her relationship with the [debtor], and delivered the property to the trustee.\r\n\r\n<\/div>\r\n
\r\n

Conclusion of Law, Decision, and Order<\/h3>\r\nIf the diamond ring, purchased as an engagement ring by the bankrupt, cannot be categorized as consumer goods, and therefore exempted from the notice filing requirements of the Uniform Commercial Code as adopted in Ohio, a perfected security interest does not exist.\r\n\r\nNo judicial precedents have been cited in the briefs.\r\n\r\nUnder the commercial code, collateral is divided into tangible, intangible, and documentary categories. Certainly, a diamond ring falls into the tangible category. The classes of tangible goods are distinguished by the primary use intended. Under [the UCC] the four classes [include] \u201cconsumer goods,\u201d \u201cequipment,\u201d \u201cfarm products\u201d and \u201cinventory.\u201d\r\n\r\nThe difficulty is that the code provisions use terms arising in commercial circles which have different semantical values from legal precedents. Does the fact that the purchaser bought the goods as a special gift to another person signify that it was not for his own \u201cpersonal, family or household purposes\u201d? The trustee urges that these special facts control under the express provisions of the commercial code.\r\n\r\nBy a process of exclusion, a diamond engagement ring purchased for one\u2019s fianc\u00e9e is not \u201cequipment\u201d bought or used in business, \u201cfarm products\u201d used in farming operations, or \u201cinventory\u201d held for sale, lease or service contracts. When the [debtor] purchased the ring, therefore, it could only have been \u201cconsumer goods\u201d bought \u201cprimarily for personal use.\u201d There could be no judicial purpose to create a special class of property in derogation of the statutory principles.\r\n\r\nAnother problem is implicit, although not covered by the briefs.\r\n\r\nBy the foregoing summary analysis, it is apparent that the diamond ring, when the interest of the debtor attached, was consumer goods since it could have been no other class of goods. Unless the fianc\u00e9e had a special status under the code provision protecting a bona fide buyer, without knowledge, for value, of consumer goods, the failure to file a financing statement is not crucial. No evidence has been adduced pertinent to the scienter question.\r\n\r\nIs a promise, as valid contractual consideration, included under the term \u201cvalue\u201d? In other words, was the ring given to his betrothed in consideration of marriage (promise for a promise)? If so, and \u201cvalue\u201d has been given, the transferee is a \u201cbuyer\u201d under traditional concepts.\r\n\r\nThe Uniform Commercial Code definition of \u201cvalue\u201d\u2026very definitely covers a promise for a promise. The definition reads that \u201ca person gives \u2018value\u2019 for rights if he acquires them\u2026generally in return for any consideration sufficient to support a simple contract.\u201d\r\n\r\nIt would seem unrealistic, nevertheless, to apply contract law concepts historically developed into the law of marriage relations in the context of new concepts developed for uniform commercial practices. They are not, in reality, the same juristic manifold. The purpose of uniformity of the code should not be defeated by the obsessions of the code drafters to be all inclusive for secured creditors.\r\n\r\nEven if the trustee, in behalf of the unsecured creditors, would feel inclined to insert love, romance and morals into commercial law, he is appearing in the wrong era, and possibly the wrong court.\r\n\r\nOrdered, that the Rike-Kumler Company holds a perfected security interest in the diamond engagement ring, and the security interest attached to the proceeds realized from the sale of the goods by the trustee in bankruptcy.\r\n
\r\n

Case Questions<\/h3>\r\n
\r\n
    \r\n\t
  1. Why didn\u2019t the jewelry store, Rike-Kumler, file a financing statement to protect its security interest in the ring?<\/li>\r\n\t
  2. How did the bankruptcy trustee get the ring?<\/li>\r\n\t
  3. What argument did the trustee make as to why he should be able to take the ring as an asset belonging to the estate of the debtor? What did the court determine on this issue?<\/li>\r\n<\/ol>\r\n<\/section><\/div>\r\n<\/div>\r\n
    \r\n

    Repossession and Breach of the Peace<\/h2>\r\nPantoja-Cahue v. Ford Motor Credit Co.\r\n\r\n872 N.E.2d 1039 (Ill. App. 2007)\r\n\r\nPlaintiff Mario Pantoja-Cahue filed a six-count complaint seeking damages from defendant Ford Motor Credit Company for Ford\u2019s alleged breach of the peace and \u201cillegal activities\u201d in repossessing plaintiff\u2019s automobile from his locked garage.\u2026\r\n\r\nIn August 2000, plaintiff purchased a 2000 Ford Explorer from auto dealer Webb Ford. Plaintiff, a native Spanish speaker, negotiated the purchase with a Spanish-speaking salesperson at Webb. Plaintiff signed what he thought was a contract for the purchase and financing of the vehicle, with monthly installment payments to be made to Ford. The contract was in English. Some years later, plaintiff discovered the contract was actually a lease, not a purchase agreement. Plaintiff brought suit against Ford and Webb on August 22, 2003, alleging fraud. Ford brought a replevin action against plaintiff asserting plaintiff was in default on his obligations under the lease. In the late night\/early morning hours of March 11\u201312, 2004, repossession agents [from Doe Repossession Services] entered plaintiff\u2019s locked garage and removed the car\u2026\r\n\r\nPlaintiff sought damages for Ford and Doe\u2019s \u201cunlawful activities surrounding the wrongful repossession of Plaintiff\u2019s vehicle.\u201d He alleged Ford and Doe\u2019s breaking into plaintiff\u2019s locked garage to effectuate the repossession and Ford\u2019s repossession of the vehicle knowing that title to the car was the subject of ongoing litigation variously violated section 2A-525(3) of the [Uniform Commercial] Code (count I against Ford), the [federal] Fair Debt Collection Practices Act (count II against Doe),\u2026Ford\u2019s contract with plaintiff (count V against Ford) and section 2A-108 of the Code (count VI against Ford and Doe).\u2026\r\n
    \r\n

    Uniform Commercial Code Section 2A-525(3)<\/h3>\r\nIn count I, plaintiff alleged \u201ca breach of the peace occurred as [Ford]\u2019s repossession agent broke into Plaintiff\u2019s locked garage in order to take the vehicle\u201d and Ford\u2019s agent \u201crepossessed the subject vehicle by, among other things, breaking into Plaintiff\u2019s locked garage and causing substantial damage to Plaintiff\u2019s personal property in violation of [section 2A-525(3)]\u201d:\r\n\r\n\u201cAfter a default by the lessee under the lease contract * * * or, if agreed, after other default by the lessee, the lessor has the right to take possession of the goods. * * *\r\n\r\nThe lessor may proceed under subsection (2) without judicial process if it can be done without breach of the peace<\/em> or the lessor may proceed by action.\u201d [emphasis added.]\r\n\r\n[U]pon a lessee\u2019s default, a lessor has the right to repossess the leased goods in one of two ways: by using the judicial process or, if repossession could be accomplished without a breach of the peace, by self-help [UCC Section 2A-525(3)]. \u201cIf a breach of the peace is likely, a properly instituted civil action is the appropriate remedy.\u201d [Citation] (interpreting the term \u201cbreach of the peace\u201d in the context of section 9-503 of the Code, which provides for the same self-help repossession as section 2A-525 but for secured creditors rather than lessors).\r\n\r\nTaking plaintiff\u2019s well-pleaded allegations as true, Ford resorted to self-help, by employing an agent to repossess the car and Ford\u2019s agent broke into plaintiff\u2019s locked garage to effectuate the repossession. Although plaintiff\u2019s count I allegations are minimal, they are sufficient to plead a cause of action for a violation of section 2A-525(3) if breaking into a garage to repossess a car is, as plaintiff alleged, a breach of the peace. Accordingly, the question here is whether breaking into a locked garage to effectuate a repossession is a breach of the peace in violation of section 2A-525(3).\r\n\r\nThere are no Illinois cases analyzing the meaning of the term \u201cbreach of the peace\u201d as used in the lessor repossession context in section 2A-525(3). However, there are a few Illinois cases analyzing the term as used in section 9-503 of the Code, which contains a similar provision providing that a secured creditor may, upon default by a debtor, repossess its collateral either \u201c(1) pursuant to judicial process; or (2) without judicial process, if it proceeds without breach of the peace.\u201d The seminal case, and the only one of any use in resolving the issue, is Chrysler Credit Corp. v. Koontz,<\/em> 277 Ill.App.3d 1078, 214 Ill.Dec. 726, 661 N.E.2d 1171 (1996).\r\n\r\nIn Koontz,<\/em> Chrysler, the defendant creditor, sent repossession agents to repossess the plaintiff\u2019s car after the plaintiff defaulted on his payments. The car was parked in the plaintiff\u2019s front yard. The plaintiff heard the repossession in progress and ran outside in his underwear shouting \u201cDon\u2019t take it\u201d to the agents. The agents did not respond and proceeded to take the car. The plaintiff argued the repossession breached the peace and he was entitled to the statutory remedy for violation of section 9-503, denial of a deficiency judgment to the secured party, Chrysler.\u2026\r\n\r\nAfter a thorough analysis of the term \u201cbreach of the peace,\u201d the court concluded the term \u201cconnotes conduct which incites or is likely to incite immediate public turbulence, or which leads to or is likely to lead to an immediate loss of public order and tranquility. Violent conduct is not a necessary element. The probability of violence at the time of or immediately prior to the repossession is sufficient.\u201d\u2026[The Koontz<\/em> court] held the circumstances of the repossession did not amount to a breach the peace.\r\n\r\nThe court then considered the plaintiff\u2019s argument that Chrysler breached the peace by repossessing the car under circumstances constituting criminal trespass to property. Looking to cases in other jurisdictions, the court determined that, \u201cin general, a mere trespass, standing alone, does not automatically constitute a breach of the peace.\u201d [Citation] (taking possession of car from private driveway does not, without more, constitute breach of the peace), [Citation] (no breach of the peace occurred where car repossessed from debtor\u2019s driveway without entering \u201cany gates, doors, or other barricades to reach\u201d car), [Citation] (no breach of the peace occurred where car was parked partially under carport and undisputed that no door, \u201cnot even one to a garage,\u201d on the debtor\u2019s premises was opened, much less broken, to repossess the car), [Citation] (although secured party may not break into or enter homes or buildings or enclosed spaces to effectuate a repossession, repossession of vehicle from parking lot of debtor\u2019s apartment building was not breach of the peace), [Citation] (repossession of car from debtor\u2019s driveway without entering any gates, doors or other barricades was accomplished without breach of the peace).\u2026\r\n\r\nAlthough the evidence showed the plaintiff notified Chrysler prior to the repossession that it was not permitted onto his property, the court held Chrysler\u2019s entry onto the property to take the car did not constitute a breach of the peace because there was no evidence Chrysler entered through a barricade or did anything other than drive the car away. [Citation] \u201cChrysler enjoyed a limited privilege to enter [the plaintiff\u2019s] property for the sole and exclusive purpose of effectuating the repossession. So long as the entry was limited in purpose (repossession), and so long as no gates, barricades, doors, enclosures, buildings, or chains were breached or cut, no breach of the peace occurred by virtue of the entry onto his property.\u201d\r\n\r\n\u2026[W]e come to essentially the same conclusion: where a repossession is effectuated by an actual breaking into the lessee\/debtor\u2019s premises or breaching or cutting of chains, gates, barricades, doors or other barriers designed to exclude trespassers, the likelihood that a breach of the peace occurred is high.\r\n\r\nDavenport v. Chrysler Credit Corp.<\/em>, [Citation] (Tenn.App.1991), a case analyzing Tennessee\u2019s version of section 9-503 is particularly helpful, holding that \u201c\u2018[a] breach of the peace is almost certain to be found if the repossession is accompanied by the unauthorized entry into a closed or locked garage.\u2019\u201d\u2026This is so because \u201cpublic policy favors peaceful, non-trespassory repossessions when the secured party has a free right of entry\u201d and \u201cforced entries onto the debtor\u2019s property or into the debtor\u2019s premises are viewed as seriously detrimental to the ordinary conduct of human affairs.\u201d Davenport<\/em> held that the creditor\u2019s repossession of a car by entering a closed garage and cutting a chain that would have prevented it from removing the car amounted to a breach of the peace, \u201c[d]espite the absence of violence or physical confrontation\u201d (because the debtor was not at home when the repossession occurred). Davenport<\/em> recognized that the secured creditors\u2019 legitimate interest in obtaining possession of collateral without having to resort to expensive and cumbersome judicial procedures must be balanced against the debtors\u2019 legitimate interest in being free from unwarranted invasions of their property and privacy interests.\r\n\r\n\u201cRepossession is a harsh procedure and is, essentially, a delegation of the State\u2019s exclusive prerogative to resolve disputes. Accordingly, the statutes governing the repossession of collateral should be construed in a way that prevents abuse and discourages illegal conduct which might otherwise go unchallenged because of the debtor\u2019s lack of knowledge of legally proper repossession techniques\u201d [Citation].\r\n\r\nWe agree with [this] analysis of the term \u201cbreach of the peace\u201d in the context of repossession and hold, with regard to section 2A-525(3) of the Code, that breaking into a locked garage to effectuate a repossession may constitute a breach of the peace.\r\n\r\nHere, plaintiff alleges more than simply a trespass. He alleges Ford, through Doe, broke into his garage to repossess the car. Given our determination that breaking into a locked garage to repossess a car may constitute a breach of the peace, plaintiff\u2019s allegation is sufficient to state a cause of action under section 2A-525(3) of the Code. The court erred in dismissing count I of plaintiff\u2019s second amended complaint and we remand for further proceedings.\r\n\r\n<\/div>\r\n
    \r\n

    Uniform Commercial Code Section 2A-108<\/h3>\r\nIn count VI, plaintiff alleged the lease agreement was unconscionable because it was formed in violation of [the Illinois Consumer Fraud Statute, requiring that the customer verify that the negotiations were conducted in the consumer\u2019s native language and that the document was translated so the customer understood it.]\u2026Plaintiff does not quote [this] or explain how the agreement violates [it]. Instead, he quotes UCC section 2A-108 of the Code, as follows:\r\n\r\n\u201cWith respect to a consumer lease, if the court as a matter of law finds that a lease contract or any clause of a lease contract has been induced by unconscionable conduct or that unconscionable conduct has occurred in the collection of a claim arising from a lease contract, the court may grant appropriate relief.\r\n\r\nBefore making a finding of unconscionability under subsection (1) or (2), the court, on its own motion or that of a party, shall afford the parties a reasonable opportunity to present evidence as to the setting, purpose, and effect of the lease contract or clause thereof, or of the conduct.\u201d\r\n\r\nHe then, in \u201cviolation one\u201d under count VI, alleges the lease was made in violation of [the Illinois Consumer Fraud Statute] because it was negotiated in Spanish but he was only given a copy of the contract in English; he could not read the contract and, as a result, Webb Ford was able to trick him into signing a lease, rather than a purchase agreement; such contract was induced by unconscionable conduct; and, because it was illegal, the contract was unenforceable.\r\n\r\nThis allegation is insufficient to state a cause of action against Ford under section 2A-108.\u2026First, Ford is an entirely different entity than Webb Ford and plaintiff does not assert otherwise. Nor does plaintiff assert that Webb Ford was acting as Ford\u2019s agent in inducing plaintiff to sign the lease. Plaintiff asserts no basis on which Ford can be found liable for something Webb Ford did. Second, there is no allegation as to how the contract violates [the statute], merely the legal conclusion that it does, as well as the unsupported legal conclusion that a violation of [it] is necessarily unconscionable.\u2026[Further discussion omitted.]\r\n\r\nFor the reasons stated above, we affirm the trial court\u2019s dismissal of counts IV, V and VI of plaintiff\u2019s second amended complaint. We reverse the court\u2019s dismissal of count I and remand for further proceedings. Affirmed in part and reversed in part; cause remanded.\r\n
    \r\n

    Case Questions<\/h3>\r\n
    \r\n
      \r\n\t
    1. Under what circumstances, if any, would breaking into a locked garage to repossess a car not<\/em> be considered a breach of the peace?<\/li>\r\n\t
    2. The court did not decide that a breach of the peace had occurred. What would determine that such a breach had occurred?<\/li>\r\n\t
    3. Why did the court dismiss the plaintiff\u2019s claim (under UCC Article 2A) that it was unconscionable of Ford to trick him into signing a lease when he thought he was signing a purchase contract? Would that section of Article 2A make breaking into his garage unconscionable?<\/li>\r\n\t
    4. What alternatives had Ford besides taking the car from the plaintiff\u2019s locked garage?<\/li>\r\n\t
    5. If it was determined on remand that a breach of the peace had occurred, what happens to Ford?<\/li>\r\n<\/ol>\r\n<\/section><\/div>\r\n<\/div>\r\n
      \r\n

      Defenses of the Principal Debtor as against Reimbursement to Surety<\/h2>\r\nFidelity and Deposit Co. of Maryland v. Douglas Asphalt Co.\r\n\r\n338 Fed.Appx. 886, 11th Cir. Ct. (2009)\r\n
      \r\n

      Per Curium:Latin for \u201cby the court.\u201d A decision of an appeals court as a whole in which no judge is identified as the specific author.<\/span><\/h3>\r\nThe Georgia Department of Transportation (\u201cGDOT\u201d) contracted with Douglas Asphalt Company to perform work on an interstate highway. After Douglas Asphalt allegedly failed to pay its suppliers and subcontractors and failed to perform under the contract, GDOT defaulted and terminated Douglas Asphalt. Fidelity and Deposit Company of Maryland and Zurich American Insurance Company had executed payment and performance bonds in connection with Douglas Asphalt\u2019s work on the interstate, and after Douglas Asphalt\u2019s default, Fidelity and Zurich spent $15,424,798 remedying the default.\r\n\r\nFidelity and Zurich, seeking to recover their losses related to their remedy of the default, brought this suit against Douglas Asphalt, Joel Spivey, and Ronnie Spivey. The Spiveys and Douglas Asphalt had executed a General Indemnity Agreement in favor of Fidelity and Zurich.They promised to reimburse the surety for its expenses and hold it harmless for further liability.<\/span>\r\n\r\nAfter a bench trial, the district court entered judgment in favor of Fidelity and Zurich for $16,524,798. Douglas Asphalt and the Spiveys now appeal.\r\n\r\nDouglas Asphalt and the Spiveys argue that the district court erred in entering judgment in favor of Fidelity and Zurich because Fidelity and Zurich acted in bad faith in three ways.\r\n\r\nFirst, Douglas Asphalt and the Spiveys argue that the district court erred in not finding that Fidelity and Zurich acted in bad faith because they claimed excessive costs to remedy the default. Specifically, Douglas Asphalt and the Spiveys argue that they introduced evidence that the interstate project was 98% complete, and that only approximately $3.6 million was needed to remedy any default. But, the district court found that the interstate project was only 90%\u201392% complete and that approximately $2 million needed to be spent to correct defective work already done by Douglas Asphalt. Douglas Asphalt and the Spiveys have not shown that the district court\u2019s finding was clearly erroneous, and accordingly, their argument that Fidelity and Zurich showed bad faith in claiming that the project was only 90% complete and therefore required over $15 million to remedy the default fails.\r\n\r\nSecond, Douglas Asphalt and the Spiveys argue that Fidelity and Zurich acted in bad faith by failing to contest the default. However, the district court concluded that the indemnity agreement required Douglas Asphalt and the Spiveys to request a contest of the default, and to post collateral security to pay any judgment rendered in the course of contesting the default. The court\u2019s finding that Douglas Asphalt and the Spiveys made no such request and posted no collateral security was not clearly erroneous, and the sureties had no independent duty to investigate a default. Accordingly, Fidelity and Zurich\u2019s failure to contest the default does not show bad faith.\r\n\r\nFinally, Douglas Asphalt and the Spiveys argue that Fidelity and Zurich\u2019s refusal to permit them to remain involved with the interstate project, either as a contractor or consultant, was evidence of bad faith. Yet, Douglas Asphalt and the Spiveys did not direct the district court or this court to any case law that holds that the refusal to permit a defaulting contractor to continue working on a project is bad faith. As the district court concluded, Fidelity and Zurich had a contractual right to take possession of all the work under the contract and arrange for its completion. Fidelity and Zurich exercised that contractual right, and, as the district court noted, the exercise of a contractual right is not evidence of bad faith.\r\n\r\nFinding no error, we affirm the judgment of the district court.\r\n
      \r\n

      Case Questions<\/h3>\r\n
      \r\n
        \r\n\t
      1. Why were Douglas Asphalt and the Spiveys supposed to pay the sureties nearly $15.5 million?<\/li>\r\n\t
      2. What did the plaintiffs claim the defendant sureties did wrong as relates to how much money they spent to cure the default?<\/li>\r\n\t
      3. What is a \u201ccontest of the default\u201d?<\/li>\r\n\t
      4. Why would the sureties probably not<\/em> want the principal involved in the project?<\/li>\r\n<\/ol>\r\n<\/section><\/div>\r\n
        <\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>","rendered":"

        Perfection by Mere Attachment; Priorities<\/h2>\n
        \n
        \n

        In re NICOLOSI<\/p>\n

        4 UCC Rep. 111 (Ohio 1966)<\/p>\n

        \n

        Preliminary Statement and Issues<\/h3>\n

        This matter is before the court upon a petition by the trustee to sell a diamond ring in his possession free of liens.\u2026Even though no pleadings were filed by Rike-Kumler Company, the issue from the briefs is whether or not a valid security interest was perfected in this chattel as consumer goods, superior to the statutory title and lien of the trustee in bankruptcy.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

        \n

        Findings of Fact<\/h3>\n

        The [debtor] purchased from the Rike-Kumler Company, on July 7, 1964, the diamond ring in question, for $1237.35 [about $8,500 in 2010 dollars], as an engagement ring for his fianc\u00e9e. He executed a purchase money security agreement, which was not filed. Also, no financing statement was filed. The chattel was adequately described in the security agreement.<\/p>\n

        The controversy is between the trustee in bankruptcy and the party claiming a perfected security interest in the property. The recipient of the property has terminated her relationship with the [debtor], and delivered the property to the trustee.<\/p>\n<\/div>\n

        \n

        Conclusion of Law, Decision, and Order<\/h3>\n

        If the diamond ring, purchased as an engagement ring by the bankrupt, cannot be categorized as consumer goods, and therefore exempted from the notice filing requirements of the Uniform Commercial Code as adopted in Ohio, a perfected security interest does not exist.<\/p>\n

        No judicial precedents have been cited in the briefs.<\/p>\n

        Under the commercial code, collateral is divided into tangible, intangible, and documentary categories. Certainly, a diamond ring falls into the tangible category. The classes of tangible goods are distinguished by the primary use intended. Under [the UCC] the four classes [include] \u201cconsumer goods,\u201d \u201cequipment,\u201d \u201cfarm products\u201d and \u201cinventory.\u201d<\/p>\n

        The difficulty is that the code provisions use terms arising in commercial circles which have different semantical values from legal precedents. Does the fact that the purchaser bought the goods as a special gift to another person signify that it was not for his own \u201cpersonal, family or household purposes\u201d? The trustee urges that these special facts control under the express provisions of the commercial code.<\/p>\n

        By a process of exclusion, a diamond engagement ring purchased for one\u2019s fianc\u00e9e is not \u201cequipment\u201d bought or used in business, \u201cfarm products\u201d used in farming operations, or \u201cinventory\u201d held for sale, lease or service contracts. When the [debtor] purchased the ring, therefore, it could only have been \u201cconsumer goods\u201d bought \u201cprimarily for personal use.\u201d There could be no judicial purpose to create a special class of property in derogation of the statutory principles.<\/p>\n

        Another problem is implicit, although not covered by the briefs.<\/p>\n

        By the foregoing summary analysis, it is apparent that the diamond ring, when the interest of the debtor attached, was consumer goods since it could have been no other class of goods. Unless the fianc\u00e9e had a special status under the code provision protecting a bona fide buyer, without knowledge, for value, of consumer goods, the failure to file a financing statement is not crucial. No evidence has been adduced pertinent to the scienter question.<\/p>\n

        Is a promise, as valid contractual consideration, included under the term \u201cvalue\u201d? In other words, was the ring given to his betrothed in consideration of marriage (promise for a promise)? If so, and \u201cvalue\u201d has been given, the transferee is a \u201cbuyer\u201d under traditional concepts.<\/p>\n

        The Uniform Commercial Code definition of \u201cvalue\u201d\u2026very definitely covers a promise for a promise. The definition reads that \u201ca person gives \u2018value\u2019 for rights if he acquires them\u2026generally in return for any consideration sufficient to support a simple contract.\u201d<\/p>\n

        It would seem unrealistic, nevertheless, to apply contract law concepts historically developed into the law of marriage relations in the context of new concepts developed for uniform commercial practices. They are not, in reality, the same juristic manifold. The purpose of uniformity of the code should not be defeated by the obsessions of the code drafters to be all inclusive for secured creditors.<\/p>\n

        Even if the trustee, in behalf of the unsecured creditors, would feel inclined to insert love, romance and morals into commercial law, he is appearing in the wrong era, and possibly the wrong court.<\/p>\n

        Ordered, that the Rike-Kumler Company holds a perfected security interest in the diamond engagement ring, and the security interest attached to the proceeds realized from the sale of the goods by the trustee in bankruptcy.<\/p>\n

        \n

        Case Questions<\/h3>\n
        \n
          \n
        1. Why didn\u2019t the jewelry store, Rike-Kumler, file a financing statement to protect its security interest in the ring?<\/li>\n
        2. How did the bankruptcy trustee get the ring?<\/li>\n
        3. What argument did the trustee make as to why he should be able to take the ring as an asset belonging to the estate of the debtor? What did the court determine on this issue?<\/li>\n<\/ol>\n<\/section>\n<\/div>\n<\/div>\n
          \n

          Repossession and Breach of the Peace<\/h2>\n

          Pantoja-Cahue v. Ford Motor Credit Co.<\/p>\n

          872 N.E.2d 1039 (Ill. App. 2007)<\/p>\n

          Plaintiff Mario Pantoja-Cahue filed a six-count complaint seeking damages from defendant Ford Motor Credit Company for Ford\u2019s alleged breach of the peace and \u201cillegal activities\u201d in repossessing plaintiff\u2019s automobile from his locked garage.\u2026<\/p>\n

          In August 2000, plaintiff purchased a 2000 Ford Explorer from auto dealer Webb Ford. Plaintiff, a native Spanish speaker, negotiated the purchase with a Spanish-speaking salesperson at Webb. Plaintiff signed what he thought was a contract for the purchase and financing of the vehicle, with monthly installment payments to be made to Ford. The contract was in English. Some years later, plaintiff discovered the contract was actually a lease, not a purchase agreement. Plaintiff brought suit against Ford and Webb on August 22, 2003, alleging fraud. Ford brought a replevin action against plaintiff asserting plaintiff was in default on his obligations under the lease. In the late night\/early morning hours of March 11\u201312, 2004, repossession agents [from Doe Repossession Services] entered plaintiff\u2019s locked garage and removed the car\u2026<\/p>\n

          Plaintiff sought damages for Ford and Doe\u2019s \u201cunlawful activities surrounding the wrongful repossession of Plaintiff\u2019s vehicle.\u201d He alleged Ford and Doe\u2019s breaking into plaintiff\u2019s locked garage to effectuate the repossession and Ford\u2019s repossession of the vehicle knowing that title to the car was the subject of ongoing litigation variously violated section 2A-525(3) of the [Uniform Commercial] Code (count I against Ford), the [federal] Fair Debt Collection Practices Act (count II against Doe),\u2026Ford\u2019s contract with plaintiff (count V against Ford) and section 2A-108 of the Code (count VI against Ford and Doe).\u2026<\/p>\n

          \n

          Uniform Commercial Code Section 2A-525(3)<\/h3>\n

          In count I, plaintiff alleged \u201ca breach of the peace occurred as [Ford]\u2019s repossession agent broke into Plaintiff\u2019s locked garage in order to take the vehicle\u201d and Ford\u2019s agent \u201crepossessed the subject vehicle by, among other things, breaking into Plaintiff\u2019s locked garage and causing substantial damage to Plaintiff\u2019s personal property in violation of [section 2A-525(3)]\u201d:<\/p>\n

          \u201cAfter a default by the lessee under the lease contract * * * or, if agreed, after other default by the lessee, the lessor has the right to take possession of the goods. * * *<\/p>\n

          The lessor may proceed under subsection (2) without judicial process if it can be done without breach of the peace<\/em> or the lessor may proceed by action.\u201d [emphasis added.]<\/p>\n

          [U]pon a lessee\u2019s default, a lessor has the right to repossess the leased goods in one of two ways: by using the judicial process or, if repossession could be accomplished without a breach of the peace, by self-help [UCC Section 2A-525(3)]. \u201cIf a breach of the peace is likely, a properly instituted civil action is the appropriate remedy.\u201d [Citation] (interpreting the term \u201cbreach of the peace\u201d in the context of section 9-503 of the Code, which provides for the same self-help repossession as section 2A-525 but for secured creditors rather than lessors).<\/p>\n

          Taking plaintiff\u2019s well-pleaded allegations as true, Ford resorted to self-help, by employing an agent to repossess the car and Ford\u2019s agent broke into plaintiff\u2019s locked garage to effectuate the repossession. Although plaintiff\u2019s count I allegations are minimal, they are sufficient to plead a cause of action for a violation of section 2A-525(3) if breaking into a garage to repossess a car is, as plaintiff alleged, a breach of the peace. Accordingly, the question here is whether breaking into a locked garage to effectuate a repossession is a breach of the peace in violation of section 2A-525(3).<\/p>\n

          There are no Illinois cases analyzing the meaning of the term \u201cbreach of the peace\u201d as used in the lessor repossession context in section 2A-525(3). However, there are a few Illinois cases analyzing the term as used in section 9-503 of the Code, which contains a similar provision providing that a secured creditor may, upon default by a debtor, repossess its collateral either \u201c(1) pursuant to judicial process; or (2) without judicial process, if it proceeds without breach of the peace.\u201d The seminal case, and the only one of any use in resolving the issue, is Chrysler Credit Corp. v. Koontz,<\/em> 277 Ill.App.3d 1078, 214 Ill.Dec. 726, 661 N.E.2d 1171 (1996).<\/p>\n

          In Koontz,<\/em> Chrysler, the defendant creditor, sent repossession agents to repossess the plaintiff\u2019s car after the plaintiff defaulted on his payments. The car was parked in the plaintiff\u2019s front yard. The plaintiff heard the repossession in progress and ran outside in his underwear shouting \u201cDon\u2019t take it\u201d to the agents. The agents did not respond and proceeded to take the car. The plaintiff argued the repossession breached the peace and he was entitled to the statutory remedy for violation of section 9-503, denial of a deficiency judgment to the secured party, Chrysler.\u2026<\/p>\n

          After a thorough analysis of the term \u201cbreach of the peace,\u201d the court concluded the term \u201cconnotes conduct which incites or is likely to incite immediate public turbulence, or which leads to or is likely to lead to an immediate loss of public order and tranquility. Violent conduct is not a necessary element. The probability of violence at the time of or immediately prior to the repossession is sufficient.\u201d\u2026[The Koontz<\/em> court] held the circumstances of the repossession did not amount to a breach the peace.<\/p>\n

          The court then considered the plaintiff\u2019s argument that Chrysler breached the peace by repossessing the car under circumstances constituting criminal trespass to property. Looking to cases in other jurisdictions, the court determined that, \u201cin general, a mere trespass, standing alone, does not automatically constitute a breach of the peace.\u201d [Citation] (taking possession of car from private driveway does not, without more, constitute breach of the peace), [Citation] (no breach of the peace occurred where car repossessed from debtor\u2019s driveway without entering \u201cany gates, doors, or other barricades to reach\u201d car), [Citation] (no breach of the peace occurred where car was parked partially under carport and undisputed that no door, \u201cnot even one to a garage,\u201d on the debtor\u2019s premises was opened, much less broken, to repossess the car), [Citation] (although secured party may not break into or enter homes or buildings or enclosed spaces to effectuate a repossession, repossession of vehicle from parking lot of debtor\u2019s apartment building was not breach of the peace), [Citation] (repossession of car from debtor\u2019s driveway without entering any gates, doors or other barricades was accomplished without breach of the peace).\u2026<\/p>\n

          Although the evidence showed the plaintiff notified Chrysler prior to the repossession that it was not permitted onto his property, the court held Chrysler\u2019s entry onto the property to take the car did not constitute a breach of the peace because there was no evidence Chrysler entered through a barricade or did anything other than drive the car away. [Citation] \u201cChrysler enjoyed a limited privilege to enter [the plaintiff\u2019s] property for the sole and exclusive purpose of effectuating the repossession. So long as the entry was limited in purpose (repossession), and so long as no gates, barricades, doors, enclosures, buildings, or chains were breached or cut, no breach of the peace occurred by virtue of the entry onto his property.\u201d<\/p>\n

          \u2026[W]e come to essentially the same conclusion: where a repossession is effectuated by an actual breaking into the lessee\/debtor\u2019s premises or breaching or cutting of chains, gates, barricades, doors or other barriers designed to exclude trespassers, the likelihood that a breach of the peace occurred is high.<\/p>\n

          Davenport v. Chrysler Credit Corp.<\/em>, [Citation] (Tenn.App.1991), a case analyzing Tennessee\u2019s version of section 9-503 is particularly helpful, holding that \u201c\u2018[a] breach of the peace is almost certain to be found if the repossession is accompanied by the unauthorized entry into a closed or locked garage.\u2019\u201d\u2026This is so because \u201cpublic policy favors peaceful, non-trespassory repossessions when the secured party has a free right of entry\u201d and \u201cforced entries onto the debtor\u2019s property or into the debtor\u2019s premises are viewed as seriously detrimental to the ordinary conduct of human affairs.\u201d Davenport<\/em> held that the creditor\u2019s repossession of a car by entering a closed garage and cutting a chain that would have prevented it from removing the car amounted to a breach of the peace, \u201c[d]espite the absence of violence or physical confrontation\u201d (because the debtor was not at home when the repossession occurred). Davenport<\/em> recognized that the secured creditors\u2019 legitimate interest in obtaining possession of collateral without having to resort to expensive and cumbersome judicial procedures must be balanced against the debtors\u2019 legitimate interest in being free from unwarranted invasions of their property and privacy interests.<\/p>\n

          \u201cRepossession is a harsh procedure and is, essentially, a delegation of the State\u2019s exclusive prerogative to resolve disputes. Accordingly, the statutes governing the repossession of collateral should be construed in a way that prevents abuse and discourages illegal conduct which might otherwise go unchallenged because of the debtor\u2019s lack of knowledge of legally proper repossession techniques\u201d [Citation].<\/p>\n

          We agree with [this] analysis of the term \u201cbreach of the peace\u201d in the context of repossession and hold, with regard to section 2A-525(3) of the Code, that breaking into a locked garage to effectuate a repossession may constitute a breach of the peace.<\/p>\n

          Here, plaintiff alleges more than simply a trespass. He alleges Ford, through Doe, broke into his garage to repossess the car. Given our determination that breaking into a locked garage to repossess a car may constitute a breach of the peace, plaintiff\u2019s allegation is sufficient to state a cause of action under section 2A-525(3) of the Code. The court erred in dismissing count I of plaintiff\u2019s second amended complaint and we remand for further proceedings.<\/p>\n<\/div>\n

          \n

          Uniform Commercial Code Section 2A-108<\/h3>\n

          In count VI, plaintiff alleged the lease agreement was unconscionable because it was formed in violation of [the Illinois Consumer Fraud Statute, requiring that the customer verify that the negotiations were conducted in the consumer\u2019s native language and that the document was translated so the customer understood it.]\u2026Plaintiff does not quote [this] or explain how the agreement violates [it]. Instead, he quotes UCC section 2A-108 of the Code, as follows:<\/p>\n

          \u201cWith respect to a consumer lease, if the court as a matter of law finds that a lease contract or any clause of a lease contract has been induced by unconscionable conduct or that unconscionable conduct has occurred in the collection of a claim arising from a lease contract, the court may grant appropriate relief.<\/p>\n

          Before making a finding of unconscionability under subsection (1) or (2), the court, on its own motion or that of a party, shall afford the parties a reasonable opportunity to present evidence as to the setting, purpose, and effect of the lease contract or clause thereof, or of the conduct.\u201d<\/p>\n

          He then, in \u201cviolation one\u201d under count VI, alleges the lease was made in violation of [the Illinois Consumer Fraud Statute] because it was negotiated in Spanish but he was only given a copy of the contract in English; he could not read the contract and, as a result, Webb Ford was able to trick him into signing a lease, rather than a purchase agreement; such contract was induced by unconscionable conduct; and, because it was illegal, the contract was unenforceable.<\/p>\n

          This allegation is insufficient to state a cause of action against Ford under section 2A-108.\u2026First, Ford is an entirely different entity than Webb Ford and plaintiff does not assert otherwise. Nor does plaintiff assert that Webb Ford was acting as Ford\u2019s agent in inducing plaintiff to sign the lease. Plaintiff asserts no basis on which Ford can be found liable for something Webb Ford did. Second, there is no allegation as to how the contract violates [the statute], merely the legal conclusion that it does, as well as the unsupported legal conclusion that a violation of [it] is necessarily unconscionable.\u2026[Further discussion omitted.]<\/p>\n

          For the reasons stated above, we affirm the trial court\u2019s dismissal of counts IV, V and VI of plaintiff\u2019s second amended complaint. We reverse the court\u2019s dismissal of count I and remand for further proceedings. Affirmed in part and reversed in part; cause remanded.<\/p>\n

          \n

          Case Questions<\/h3>\n
          \n
            \n
          1. Under what circumstances, if any, would breaking into a locked garage to repossess a car not<\/em> be considered a breach of the peace?<\/li>\n
          2. The court did not decide that a breach of the peace had occurred. What would determine that such a breach had occurred?<\/li>\n
          3. Why did the court dismiss the plaintiff\u2019s claim (under UCC Article 2A) that it was unconscionable of Ford to trick him into signing a lease when he thought he was signing a purchase contract? Would that section of Article 2A make breaking into his garage unconscionable?<\/li>\n
          4. What alternatives had Ford besides taking the car from the plaintiff\u2019s locked garage?<\/li>\n
          5. If it was determined on remand that a breach of the peace had occurred, what happens to Ford?<\/li>\n<\/ol>\n<\/section>\n<\/div>\n<\/div>\n
            \n

            Defenses of the Principal Debtor as against Reimbursement to Surety<\/h2>\n

            Fidelity and Deposit Co. of Maryland v. Douglas Asphalt Co.<\/p>\n

            338 Fed.Appx. 886, 11th Cir. Ct. (2009)<\/p>\n

            \n

            Per Curium:Latin for \u201cby the court.\u201d A decision of an appeals court as a whole in which no judge is identified as the specific author.<\/span><\/h3>\n

            The Georgia Department of Transportation (\u201cGDOT\u201d) contracted with Douglas Asphalt Company to perform work on an interstate highway. After Douglas Asphalt allegedly failed to pay its suppliers and subcontractors and failed to perform under the contract, GDOT defaulted and terminated Douglas Asphalt. Fidelity and Deposit Company of Maryland and Zurich American Insurance Company had executed payment and performance bonds in connection with Douglas Asphalt\u2019s work on the interstate, and after Douglas Asphalt\u2019s default, Fidelity and Zurich spent $15,424,798 remedying the default.<\/p>\n

            Fidelity and Zurich, seeking to recover their losses related to their remedy of the default, brought this suit against Douglas Asphalt, Joel Spivey, and Ronnie Spivey. The Spiveys and Douglas Asphalt had executed a General Indemnity Agreement in favor of Fidelity and Zurich.They promised to reimburse the surety for its expenses and hold it harmless for further liability.<\/span><\/p>\n

            After a bench trial, the district court entered judgment in favor of Fidelity and Zurich for $16,524,798. Douglas Asphalt and the Spiveys now appeal.<\/p>\n

            Douglas Asphalt and the Spiveys argue that the district court erred in entering judgment in favor of Fidelity and Zurich because Fidelity and Zurich acted in bad faith in three ways.<\/p>\n

            First, Douglas Asphalt and the Spiveys argue that the district court erred in not finding that Fidelity and Zurich acted in bad faith because they claimed excessive costs to remedy the default. Specifically, Douglas Asphalt and the Spiveys argue that they introduced evidence that the interstate project was 98% complete, and that only approximately $3.6 million was needed to remedy any default. But, the district court found that the interstate project was only 90%\u201392% complete and that approximately $2 million needed to be spent to correct defective work already done by Douglas Asphalt. Douglas Asphalt and the Spiveys have not shown that the district court\u2019s finding was clearly erroneous, and accordingly, their argument that Fidelity and Zurich showed bad faith in claiming that the project was only 90% complete and therefore required over $15 million to remedy the default fails.<\/p>\n

            Second, Douglas Asphalt and the Spiveys argue that Fidelity and Zurich acted in bad faith by failing to contest the default. However, the district court concluded that the indemnity agreement required Douglas Asphalt and the Spiveys to request a contest of the default, and to post collateral security to pay any judgment rendered in the course of contesting the default. The court\u2019s finding that Douglas Asphalt and the Spiveys made no such request and posted no collateral security was not clearly erroneous, and the sureties had no independent duty to investigate a default. Accordingly, Fidelity and Zurich\u2019s failure to contest the default does not show bad faith.<\/p>\n

            Finally, Douglas Asphalt and the Spiveys argue that Fidelity and Zurich\u2019s refusal to permit them to remain involved with the interstate project, either as a contractor or consultant, was evidence of bad faith. Yet, Douglas Asphalt and the Spiveys did not direct the district court or this court to any case law that holds that the refusal to permit a defaulting contractor to continue working on a project is bad faith. As the district court concluded, Fidelity and Zurich had a contractual right to take possession of all the work under the contract and arrange for its completion. Fidelity and Zurich exercised that contractual right, and, as the district court noted, the exercise of a contractual right is not evidence of bad faith.<\/p>\n

            Finding no error, we affirm the judgment of the district court.<\/p>\n

            \n

            Case Questions<\/h3>\n
            \n
              \n
            1. Why were Douglas Asphalt and the Spiveys supposed to pay the sureties nearly $15.5 million?<\/li>\n
            2. What did the plaintiffs claim the defendant sureties did wrong as relates to how much money they spent to cure the default?<\/li>\n
            3. What is a \u201ccontest of the default\u201d?<\/li>\n
            4. Why would the sureties probably not<\/em> want the principal involved in the project?<\/li>\n<\/ol>\n<\/section>\n<\/div>\n
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              Candela Citations<\/h3>\n\t\t\t\t\t
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