Williams v. American Honda Finance Corp.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Leo T. Sorokin, U.S. District Judge]

          John Roddy, with whom Elizabeth Ryan, Bailey & Glasser LLP, Steven R. Striffler, and Law Office of Steven R. Striffler were on brief, for appellant.

          Stuart T. Rossman, National Consumer Law Center, and Jennifer P. Nelson on brief for National Consumer Law Center, amicus curiae in support of appellant.

          Eric S. Mattson, with whom Daniel R. Thies, Sidley Austin LLP, Tracy M. Waugh, and Wilson Elser Moskowitz Edelman & Dicker, LLP were on brief, for appellee.

          Frederick S. Levin, John C. Redding, Ali M. Abugheida, and Buckley Sandler LLP, on brief for American Financial Services Association, amicus curiae in support of appellee.

          Before Torruella, Thompson, and Kayatta, Circuit Judges.

          KAYATTA, CIRCUIT JUDGE

         Rachel Williams brought this putative class action, alleging that American Honda Finance Corporation ("Honda") violated Massachusetts consumer protection laws by affording her inadequate loan-deficiency notifications after she fell behind on her automobile-loan payments. This appeal followed the district court's entry of summary judgment in favor of Honda. Recognizing that Williams's claims hinge entirely on questions of Massachusetts law, we certified three questions to the Massachusetts Supreme Judicial Court. After the Supreme Judicial Court issued an opinion responding to our questions, see Williams v. Am. Honda Fin. Corp., 98 N.E.3d 169 (Mass. 2018), the parties filed supplemental briefs addressing the ramifications of those answers. For the reasons explained herein, we now reverse the district court's findings that Honda's notices were compliant with Massachusetts law, vacate its dismissal of Williams's claims under the Massachusetts UCC and chapter 93A, and otherwise affirm its judgment.

         I. Background

         The pertinent facts are set out in Williams v. Am. Honda Fin. Corp., 858 F.3d 700 (1st Cir. 2017). In brief, Williams purchased a Honda Accord in 2007, which she partly financed through a retail-installment-sale contract with Honda. After Williams failed to make her loan payments, Honda repossessed the automobile and sent her a post-repossession notice that advised her of Honda's intent to sell the car at auction. The notice also described Williams's deficiency liability as follows: "The money received from the sale (after paying our costs) will reduce the amount you owe. If the auction proceeds are less than what you owe, you will still owe us the difference."

         At auction, Honda fetched $8, 900.00 for the automobile. Honda then sent Williams a second notice that apprised her of the sale and of her deficiency balance, calculated in accordance with the post-repossession notice by subtracting the price obtained at auction from her outstanding loan balance plus the additional costs associated with repossessing and selling the automobile.

         Williams claims that Honda's notices violate provisions of the Massachusetts version of the Uniform Commercial Code ("UCC"), Mass. Gen. Laws ch. 106, §§ 9-614, 9-616, and the Massachusetts consumer protection statute, Mass. Gen. Laws ch. 93A, § 2(A), by telling Williams that her deficiency liability would be calculated using the automobile's sale price obtained at auction (rather than its fair market value). The district court rejected this challenge to Honda's notices for two reasons. First, it noted that Honda's pre-sale notice "track[ed] the safe harbor language in section 9-614(3)," which uses auction-sale proceeds as the measure of a debtor's deficiency. Williams v. Am. Honda Fin. Corp., No. 14-CV-12859, 2014 WL 11090919, at *8 (D. Mass. July 3, 2014). Further, the court concluded that Williams had presented "no evidence that the auction proceeds were less than the [automobile's] fair market value." Id. ^[1]

         On appeal, Williams argues that summary judgment dismissing her challenges to Honda's notices was improper. She maintains that Massachusetts law requires a lender to give credit for the fair market value of the car -- determined using a car's estimated retail-market value -- when calculating deficiencies owed, and she therefore challenges the district court's conclusion that Honda's use of the auction-sale price in its deficiency notices was accurate and reasonable under the circumstances. Acknowledging that a resolution of Williams's claims would require this court to reconcile Massachusetts's Motor Vehicle Retail Installment Sales Act ("MVRISA"), Mass. Gen. Laws ch. 255B, § 20B, with provisions of the Massachusetts UCC, we certified the following three questions to the Massachusetts Supreme Judicial Court:

1. Whether the "fair market value" of collateral under Massachusetts General Laws chapter 255B, section 20B, is the fair market retail ...