Woman wins repossession appeal against towing company

The 7th Circuit Court of Appeals on Wednesday reversed in favor of an Indianapolis woman who was restrained by law enforcement while her car was being repossessed.

After Nichole Richards defaulted on her car loan, her lender hired PAR, Inc., to repossess the vehicle through its subcontractor, Lawrence Towing. When the towing company arrived on the front lawn of her Indianapolis home to repossess the vehicle, Richards protested and ordered them off her property.

The towers called the police, who then handcuffed Richards and threatened her with arrest, not releasing her until after the vehicle had been towed.

Richards subsequently sued PAR and Lawrence Towing for violating §1692f(6)(A) of the Fair Debt Collection Practices Act, conceding that although she did default on her loan and that the security interest was valid, the defendants lacked a present right to possess the vehicle because Indiana law authorizes nonjudicial repossession only if the repossession “proceeds without breach of the peace.”

The U.S. District Court for the Southern District of Indiana, however, found the claim to be an improper attempt to repackage a state-law violation as a violation of the FDCPA and entered summary judgment for PAR and Lawrence Towing. But the 7th Circuit Court of Appeals reversed in Nichole L. Richards v. PAR, Inc., and Lawrence Towing, LLC, 19-1184.

“Drawing inferences in Richards’s favor, a reasonable jury could conclude that a breach of the peace occurred during the repossession attempt. At that point the towing company no longer had a present right to possession, but its employees took Richards’s Tahoe anyway. The record is factually and legally sufficient to proceed on a claim for violation of § 1692f(6)(A),” Circuit Judge Diane Sykes wrote for the 7th Circuit.

Specifically, the 7th Circuit found Richards’ case similar to Seeger v. AFNI, Inc., 548 F.3d 1107, 1111 (7th Cir. 2008) and Suesz v. Med-1 Sols., Inc., 757 F.3d 636 (7th Cir. 2014) (en banc), noting that a repossession of property without judicial process violates § 1692f(6)(A) unless the property is collateral under an enforceable security interest and the repossessor has a “present right to possession.”

“The statute doesn’t supply its own rule for determining whether a repossessor had a present right to possess the property when it was seized; that question can be answered only by reference to state law. In Indiana a repossessor has a present right to take possession of collateral without judicial process only if he proceeds without a breach of the peace,” the 7th Circuit concluded. “Richards has a sound legal theory and enough evidence to present her § 1692f(6)(A) claim to a jury.”