In Santander Bank, N.A. v. Moody Leasing, 2016 WL 3906808, at *1-2 (W.D.Mo., 2016), Judge Kays entered judgment for an automobile finance company on tow-truck leases, despite the fact that the collateral had not yet been liquidated. The facts were as follows:
On February 14, 2011, Santander,1 a Delaware-based bank, entered into a loan agreement with Moody Leasing. The agreement provided that Santander would finance the purchase of a tow truck and accompanying equipment in exchange for Moody Leasing making monthly loan payments. To secure payment, Santander obtained a first priority purchase-money security interest in the truck and carrier body. At the same time, the Moodys and ABC personally guaranteed repayment. From March 9, 2011, to February 14, 2014, Santander and Moody Leasing entered into eight additional loans, or “schedules,” under the original loan agreement. The terms of these schedules mirrored the initial loan’s terms. All of the loan agreements included a New York choice-of-law provision, an acceleration provision, and a provision entitling Santander to immediately repossess the collateral upon default. They also provide that in the event of default, Moody Leasing would be responsible for any remaining principal, default interest, administrative charges, and costs and expenses (including attorneys’ fees) (Doc. 78-2). Moody Leasing subsequently defaulted on the loans. Santander exercised the loan agreements’ acceleration provisions and demanded the collateral’s return, but Moody Leasing refused to return it. Santander then filed this lawsuit. On July 30, 2015, the Court entered default against Moody Leasing for failing to timely respond to discovery or designate a corporate representative for depositions. Later, as part of a partial settlement with some of the other Defendants, Santander agreed to sell one of the tow trucks to Defendants Elwood and Bryan Rahns. Now Santander seeks to have a final judgment order entered against Moody Leasing in the amount of $818,814.36. Santander asserts that Moody Leasing owes it a total of $818,814.36, which is broken down as follows: the principal amount due is $568,272.65 (Doc. 84-1 ¶ 12); the total amount of default interest due as of December 31, 2015, is $157,721.77 (Id. ¶ 17); expenses for titles and inspections total $1,300.00 (Id. ¶ 18); and attorneys’ fees and costs as of January 19, 2016, total $91,519.94 (Doc. 86 at 2). These amounts do not reflect an offset for the tow truck (Doc. 84-1 ¶ 22) sold to the Rahns because that sale has not been finalized.
The District Court found that the fact that the automobile finance company had not yet liquidated the collateral was not an impediment to entry of judgment on the debt.
Finally, Moody Leasing argues that Santander’s claimed damages do not account for collateral returned or purchased. Def.’s Br. at 4. It cites Missouri law in support of this argument. Id. at 5. Santander responds that New York law should apply, and that under New York law a creditor may exercise its rights to repossess the collateral and reduce a claim to judgment simultaneously and cumulatively. . . Under New York law, a secured party may, after default, “reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure.” N.Y. U.C.C. Law § 9-601(a)(1) (McKinney). A secured party in possession of collateral may also sell the collateral and apply money or funds received from the collateral to reduce the secured obligation. See id. §§ 9-601(b); 9-207(c)(2). These remedies are cumulative and may be exercised simultaneously. Id. § 9-601(c). Thus, if Santander is in possession of the collateral pursuant to a partial settlement with the Rahns, it need not liquidate this collateral before a final judgment may be entered against Moody Leasing. See Center Capital Corp. v. JR Lear 60-099, LLC, 674 F. Supp. 2d 569, 572 (D. Del. 2009) (applying New York law) (holding that a creditor need not liquidate its collateral before seeking judgment against a debtor).