MenuGiles v. First Virginia Credit Services (560 S.E.2d 557, No. COA00-1252)
In a case concerning a self-help repossession of an automobile, owners of the car suited lender for wrongful repossession and related claims, including that the repossession was a breach of the peace violating NCGS § 25-9-503 (later replaced by 25-9-609 in the revised UCC Article 9). The car was repossessed from the owner's driveway by the lender First Virginia Credit Services in middle of the night. The trial court granted partial summary judgment in favor of the lender, and the plantiff-owners appealed.
Among items at issue on appeal was the scope of a "breach of the peace" and whether determination of a breach was an issue for the jury that could not be resolved on summary judgment. The court notes that the General Assembly deliberately did not define "breach of the peace" within the statutes, choosing instead to allow judicial development its meaning. North Carolina has recognized breach of the peace as improper conduct in a self-help repossession long before the UCC was adopted.
To explain the meaning of breach of the peace, the court looks first at dictionary and criminal law definitions, before citing courts in other jurisdictions as providing examples. The court summarizes other state's decisions as finding "a breach of the peace when actions by a creditor incite violence or are likely to incite violence," citing examples of threats, entering residences without permission, seizing over objection, and physical confrontation with oral protest. Furthermore, the court notes that other states have gone beyond the criminal law definition of breach of the peace. In some states, mere oral protest at the time of repossession leads to a breach of the peace if the creditor continues. While breaking and entering is generally a breach of the peace, removal of collateral from a driveway is not, nor is noise alone a breach.
The court adopts a five-factor balancing test: "(1) where the repossession took place, (2) the debtor's express or constructive consent, (3) the reactions of third parties, (4) the type of premises entered, and (5) the creditor's use of deception." In doing so, the court declined to require subjective analysis of every situation, which would have required jury determinations of breach. The court applied the balancing test, and upheld the trial court's determination that there was no breach of the peace as a matter of law.
The court also considered the plantiff's contention that self-help repossessions were unconstitutional. However, the court held that there was no state-action involved, so that fourteenth amendment due process rights do not apply.
