## Facts

- Susanne L. Valentino bought a used 1996 Nissan Maxima from Glendale Nissan, Inc. and financed the purchase through a retail installment contract.
- The contract granted the seller a purchase-money security interest in the vehicle and allowed Article 9 remedies, including self-help repossession upon default.
- Glendale assigned the installment contract to First Bank (also known as U.S. Bank).
- First Bank perfected its security interest by notation as first lienholder on the vehicle title; the perfection was undisputed.
- Valentino (through counsel) asserted seller-related misconduct and purported to revoke acceptance of the vehicle, notifying First Bank that she would stop making payments.
- After Valentino stopped paying, First Bank repossessed the vehicle without judicial process.

## Issues

1. Whether a buyer’s security interest arising from revocation of acceptance under UCC Article 2 has priority over a previously perfected purchase-money security interest, making repossession conversion.
2. Whether the FTC Holder Rule subjects an assignee-creditor to seller-based claims and defenses in a way that alters UCC priority rules or defeats an assignee’s Article 9 repossession rights.
3. Whether the buyer stated viable conversion and Illinois Consumer Fraud and Deceptive Business Practices Act claims against the assignee based on the repossession.

## Decision

- The appellate court affirmed dismissal of the conversion and consumer-fraud counts against First Bank.
- First Bank’s perfected purchase-money security interest had priority over any Article 2 security interest arising from Valentino’s alleged revocation of acceptance.
- Valentino’s nonpayment constituted a default under the installment contract, triggering First Bank’s contractual and Article 9 right to repossess.
- The FTC Holder Rule did not change lien priority or prevent First Bank from enforcing a properly perfected security interest through repossession.
- Because the repossession was authorized and privileged, Valentino could not plead conversion or an actionable consumer-fraud claim against First Bank on these facts.

## Legal Principles

- A buyer’s UCC Article 2 security interest (arising after revocation of acceptance) is subordinate to a previously perfected purchase-money security interest in the same goods.
- Perfection and priority of a security interest in a motor vehicle are governed by the applicable vehicle title-notification system; a properly noted lien maintains priority absent a statutory basis to reorder it.
- After default, a secured party with a superior, perfected security interest may repossess collateral through Article 9 self-help remedies if permitted by contract and law.
- The FTC Holder Rule preserves a consumer’s ability to assert seller-based claims and defenses against an assignee, but it does not reorder UCC priority rules or eliminate an assignee’s repossession rights under a perfected security interest.
- A repossession undertaken pursuant to a superior security interest and lawful Article 9 remedies is privileged and cannot support conversion; related consumer-fraud allegations fail where enforcement conduct is within lawful rights and not deceptive.

## Conclusion

The court held that the assignee-bank’s perfected purchase-money lien remained superior despite the buyer’s attempted revocation of acceptance, and that the FTC Holder Rule did not prevent the bank from exercising Article 9 repossession rights after default; therefore, the buyer’s conversion and consumer-fraud claims against the bank were properly dismissed.


Valentino v. Glendale Nissan, Inc., 740 N.E.2d 538 (Ill. App. Ct. 2d Dist. 2000)