LEGAL


Missouri Supreme Court Rulings Produce Positive Outcomes for Banking By Keith Thornburg, Vice President and General Counsel


Since its establishment in 1891, MBA has been “the principal advocate for the Missouri banking industry,” as shared in our mission statement. We take pride in our mission and our service to you.


MBA advocacy is most publicly exhibited in Congress and the Missouri General Assembly in our support for laws that present positive change and in our opposition to harmful or misguided proposals. MBA is your advocate before executive agencies as we guide administration of the law and the development of policy and rulemaking.


MBA also advocates for you in our courts. Judicial advocacy typically takes the form of “friend of court” briefs also referred to as amicus curiae. We have filed briefs in state and federal courts, including both the U.S. Supreme Court and the Missouri Supreme Court. Two recent cases where MBA represented you and the successful outcomes follow.


The Central Trust Bank v. Barbara Branch, et al. Central Bank asserted the trial court erred when it determined certified mail, returned, was insufficient notice of deficiency aſter a repo sale. Te bank also asserted the trial court erred when it determined the repo sale notice was in error when the bank designated a dealer-only auction a “private sale.” Te borrowers also challenged the pre-sale notice that was sent first class U.S. mail. Tese claims by the borrower exposed the bank to potential class action damages.


On Sept. 12, the Missouri Supreme Court reversed the lower court’s ruling. Aſter an extensive review of the facts and the law, the court held that the pre-sale notice (U.S. mail first class – presumption of delivery and borrowers admitted notice received) was “reasonable notification” under UCC 400.9- 504(3) and that the bank complied with its post-sale notice of deficiency (even though the certified mail notice was returned). Finally, the court held that a “dealer-only” auction was properly designated a private sale.


Tis case, if ruled differently, would have disrupted banking, consumer finance and increased costs to all consumers. Te case also resolved inter- and intra-circuit conflicts and affirmed existing appellate cases on these issues. Lenders and consumers benefit by clear rules for notice and sale procedures, as well as efficient and secure means to obtain sale and disposition of collateral on the best terms. MBA associate member Stinson LLP represented MBA in this case (Missouri Supreme Court No. SC99297).


Bridgecrest Acceptance Corporation v. Donaldson Bridgecrest is a large nonbank lender that acquires retail sale installment contracts from Missouri automotive dealerships. MBA-member banks brought this case to MBA because of the common issues for all lenders in Missouri. Tis case was decided favorably July 12 and modified Aug. 30 (the modification addressed and distinguished a recent U.S. Supreme Court decision).


MBA filed an amicus brief in this case in support of the lender. Tis is an auto finance case out of the Missouri eastern district that challenges the compliance of UCC-9 pre- and post-sale collateral/deficiency notices and alleged error in the computation and notice of deficiency interest based on a distorted reading of the Missouri consumer loan act. Te most controversial issue before the court, however, is whether a separate written and executed arbitration agreement incorporated by reference in the retail installment sale and financing contract is enforceable. Te court affirmed and upheld the agreement.


Tis case attained statewide and national attention. Both the U.S. and Missouri Chambers of Commerce filed an amicus brief, and the American Financial Services Association also filed a brief. MBA was joined in its brief by the Heartland Credit Union Association and the Missouri Installment Lenders Association. Te Missouri Trial Attorneys Association and American Association for Justice filed as amici for the borrowers. MBA associate member Husch Blackwell LLP represented MBA in this case (Missouri Supreme Court No. SC99269 and SC99270).


THE MISSOURI BANKER 9


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