Facts
- Kenneth G. Thrash and Kathryn Thrash financed a used vehicle through a retail-installment contract and security agreement granting Credit Acceptance Corporation (CAC) a security interest.
- The agreement permitted CAC to repossess the vehicle by legal process or self-help, but required that, in doing so, CAC not breach the peace or unlawfully enter onto the debtors’ premises.
- The Thrashes made January and February 1997 payments but missed March and April payments; they testified CAC agreed they could make the March and April payments by the end of April.
- Before the end of April, CAC hired Gulf Coast Recovery Services & Storage, Inc. (GCRS) to repossess the vehicle and instructed GCRS not to contact the Thrashes beforehand.
- In the early morning of April 24, 1997, GCRS entered the property and attempted to drag the vehicle from under a carport; because the front wheels were locked, GCRS poured liquid dish-washing soap on the driveway to reduce friction.
- GCRS did not inform anyone that it had placed the slippery liquid on the driveway.
- During the repossession, Kathryn called Kenneth at work believing the vehicle was being stolen; Kenneth returned home, ran toward the back door, stepped in the soap, fell, and allegedly suffered severe injuries.
- The Thrashes sued CAC and GCRS for negligence and wantonness based on leaving a clear lubricant on the carport/driveway.
- The trial court granted CAC summary judgment; the Thrashes settled with GCRS and appealed only the judgment for CAC.
Issues
- Whether a secured creditor that contractually conditions self-help repossession on not breaching the peace or unlawfully entering the debtor’s premises assumes a nondelegable duty, permitting liability for acts of an independent-contractor repossession company.
- Whether evidence that the repossession company created an undisclosed slippery hazard on the debtor’s premises created a genuine issue of material fact on negligence or wantonness sufficient to defeat summary judgment for the creditor.
Decision
- The Supreme Court of Alabama reversed the summary judgment for CAC and remanded.
- The court held that CAC’s contractual self-help repossession right, expressly limited by prohibitions on breach of the peace and unlawful entry, imposed a nondelegable duty concerning the manner of repossession.
- The court held the record contained sufficient evidence for a reasonable factfinder to conclude that duty was breached through GCRS’s repossession conduct, precluding summary judgment.
Legal Principles
- A party is generally not vicariously liable for an independent contractor’s negligence, but remains liable when the duty at issue is nondelegable.
- A secured creditor’s self-help repossession must be carried out without breaching the peace and without unlawful entry; contractual adoption of these limits can impose a nondelegable duty on the creditor regarding repossession conduct.
- Allegations of breach of the peace or unlawful entry may function as factual predicates supporting negligence or wantonness claims arising from repossession activities.
- Summary judgment is improper when, viewing evidence in the nonmovant’s favor, a genuine dispute exists as to whether repossession conduct created an unreasonable risk of harm on the debtor’s premises.
Conclusion
The Alabama Supreme Court held that CAC could not avoid liability by outsourcing repossession to an independent contractor where CAC’s contract imposed nondelegable limits on self-help repossession, and the evidence permitted a jury to find the repossession was conducted in a way that created a hidden, dangerous condition causing injury.