Court of Appeals (Ohio) Says Car Dealer Who Could Not Obtain Financing for Customer within 30-Days Acted Properly Repossessing the Vehicle Thereafter And, Also, in Not Issuing an NOI

In Loury v. Westside Auto. Grp., 2022-Ohio-3673, ¶¶ 28-32 (Ct. App.), the Court of Appeals found no error in a car dealer repossessing a vehicle after a 30-day contract period within which it was supposed to obtain financing.

As previously stated, the parties’ Conditional Delivery Agreement provides that Loury is entitled to take immediate possession of the car while Westside endeavors to assign the Retail Installment Sale Contract to a bank for financing. The agreement further provides that if Westside is unable to obtain financing within 30 days, then the contract may be canceled by either Westside or Loury. The agreement then provides that the “limited right to cancel will end at the earlier of (i) the date [Westside] obtain[s] financing from the Lender or assign[s] the Contract or (ii) the end of the stated time period.” Because Westside did not cancel the contract within the 30-day time period, Loury asserts that Westside should have transferred title to the car to her despite the fact that she was unable to obtain financing to pay for it. Indeed, the trial court concluded that because Westside did not cancel the contract within the 30-day period, it waived its right to cancel the contract.  The plain language of the limited right to cancel suggests that unless the contract is canceled within 30 days, cancellation is no longer an option. But such a conclusion would lead to an absurd result if, by the end of the 30 days, the buyer had neither paid for the car nor been able to obtain financing to purchase the car. We cannot reasonably conclude that Westside intended to give the car to Loury for free in the event that the contract is not timely canceled, and Loury was unable to obtain financing.  In interpreting contracts, “‘[c]ourts must give common words their ordinary meaning unless manifest absurdity would result or some other meaning is clearly evidenced from the face or overall contents of the written instrument.'” Goss v. USA Cycling, Inc., 8th Dist. Cuyahoga No. 111084, 2022-Ohio-2500, ¶ 25, 193 N.E.3d 599, quoting JP Morgan Chase Bank, Natl. Assn. v. Heckler, 3d Dist. Union No. 14-12-26, 2013-Ohio-2388, ¶ 20, citing In re All Kelley & Ferraro Asbestos Cases, 104 Ohio St. 3d 605, 2004-Ohio-7104, 821 N.E.2d 159, ¶ 29. The second paragraph of the Conditional Delivery Agreement (following the limited right-to-cancel provision) states: “You understand that the consummation of the transaction is specifically contingent on your credit worthiness and your ability to be financed for the amount stated.” This language clearly provides that the contract is contingent on Loury obtaining financing. If Loury is unable to obtain financing, the transaction is automatically canceled due to Loury’s inability to perform her end of the bargain. This is a more reasonable interpretation of the parties’ intentions than a literal interpretation of the limited right-to-cancel language that suggests otherwise. And because it is undisputed that Loury was unable to obtain financing, she was not entitled to keep the car, and Westside was not required to transfer title of the car to her. Therefore, Westside did not commit a deceptive or unfair act by failing to transfer title to the car to Loury.

The Court of Appeals also held that the Dealer did not have to issue an NOI after it repossessed the vehicle.

Finally, Loury argues that Westside violated the CSPA by failing to provide written notice of her redemption rights after it repossessed the vehicle.  The failure to send the consumer notice of his or her right to redeem collateral is an unfair, deceptive, and unconscionable act in violation of R.C. 1345.02 and 1345.03. Sonn v. Taylor, 4th Dist. Athens No. 1527, 1993 Ohio App. LEXIS 5051 (Sept. 28, 1993), citing Compton v. RPM Auto Sales, Adams C.P. No. 88-CIV-221 (Feb. 24, 1992). However, Loury was not entitled to redemption because the transaction was never consummated due to lack of financing. This is not a case where a buyer obtained secured financing, made some payments to establish equity in the vehicle, and later defaulted. Because Loury never obtained secured financing, there was no collateral for redemption. She was, therefore, not entitled to written notice of any right of redemption. Having found no evidence that Westside violated any provision of the CSPA, the first assignment of error is overruled.