Last month, the Ohio Court of Appeals handed down a decision involving the disposition of collateral in SAC Fin., Inc. v. Deaton, 2013-Ohio-2126. SAC Finance brought a claim against Tamara and Melvin Deaton in Darke County Municipal Court for money owed on a retail installment contract and security agreement for the purchase of a 2000 Pontiac Sunfire.  The trial court overruled SAC’s motion for summary judgment and ruled in favor of the Deatons at trial.  The trial court’s ruling was based on the Deatons testimony that they did not receive a notice of disposition of collateral before the repossessed car was sold.  An employee of SAC Finance testified that the notice was sent to each of the Deatons by certified mail, as required by law, but did not have the return receipt in hand to prove that it was sent.

Chapter 1317.16(B) of the Ohio Revised Code states that the secured party must notify the debtor of intent to sell collateral at least ten days prior to the sale by certified mail, return receipt requested, to the debtor’s last known address.  The Supreme Court of Ohio has also ruled on this subject, stating that “…the statutes [R.C. 1309.47 and R.C. 1317.16] nowhere require the secured party to delay its sale until return of the certified mail receipt… In fact, no statute or controlling case law specifies that the debtor must actually sign the notice, indicating actual receipt.”  Ford Motor Credit Co. v. Potts, 47 Ohio St.3d 97, 548 N.E.2d 223 (1989).  Using the above mentioned law for support, the Ohio Court of Appeals reversed the trial court’s decision in SAC Financial v. Deaton and remanded the case back to the trial court for further proceedings.

The Court of Appeals was not able to determine whether or not proper notice was sent as requested by SAC Finance because the trial court’s judgment entry is vague as to the reasoning behind the decision entered.  The Court of Appeals specifically stated that “[the court] can safely determine, from the judgment entry, that the trial court erred, as a matter of law, by concluding that proof of receipt of the notice was required. We cannot determine that this error was harmless, because it is not clear that the trial court discredited Holder’s testimony and found that the notice was not sent. Therefore, the only course open to us is to reverse the judgment and remand this cause for further proceedings.”

The Full Text of the Opinion May Be Found at:

Many thanks to Brittany Page for her contributions to this article.  Brittany is a paralegal with Slovin & Associates Co., L.P.A.