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Delaney v. First Financial of Charleston, Inc.

Supreme Court of South Carolina

May 8, 2019

Otha Delaney, Petitioner,
v.
First Financial of Charleston, Inc., Respondent. Appellate Case No. 2017-000683

          Heard November 8, 2018

          Appeal from Charleston County Stephanie P. McDonald, Circuit Court Judge

         ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

          Philip L. Fairbanks, of The Law Offices of Philip Fairbanks, PC, Kathy D. Lindsay, of Kathy D. Lindsay, PA, and Frederick M. Corley, all of Beaufort, for Petitioner.

          Stephen Lynwood Brown, Russell Grainger Hines, and Perry McPherson Buckner IV, all of Young Clement Rivers, LLP, of Charleston, for Respondent.

          HEARN, JUSTICE

         This case concerns when a claim for deficient notice of disposition of collateral under Article 9 of the Uniform Commercial Code accrues for statute of limitation purposes. The circuit court held the limitations period began upon receipt of the allegedly deficient notice, and the court of appeals affirmed in a split decision. Delaney v. First Fin. of Charleston, Inc., 418 S.C. 209, 791 S.E.2d 546 (Ct. App. 2016). We hold the limitations period begins only upon disposition; accordingly, we reverse.

         FACTS/PROCEDURAL BACKGROUND

         In October of 2007, Petitioner Otha Delaney bought a 2003 Chevrolet pickup truck from Coliseum Motors pursuant to a retail installment sales contract. The dealership subsequently assigned the contract to Respondent First Financial of Charleston, Inc., which acquired a security interest under the UCC. After Delaney failed to make payments, First Financial lawfully repossessed the truck, and on May 2, 2008, it sent Delaney a letter entitled, "Notice of Private Sale of Collateral." Over seven months later, on December 15, 2008, First Financial sold the truck.

         On October 3, 2011, more than three years after sending notice but less than three years from the sale of the truck, Delaney filed suit against First Financial, seeking to represent a class of individuals who had received notice that allegedly failed to comply with certain requirements in Article 9. Accordingly, Delaney asserted he was entitled to the statutory penalty under section 36-9-625(c)(2) of the South Carolina Code (2003). First Financial moved to dismiss pursuant to Rule 12(b)(6), SCRCP, asserting the statute of limitations had expired. Before the trial court, the parties disputed whether the appropriate limitations period was one, three, or six years.[1]

         After a hearing, the trial court found: (1) the remedy Delaney sought pursuant to section 36-9-625(c)(2) was a statutory penalty; (2) the six-year Article 2 limitations period did not apply because Delaney failed to plead breach of contract, the claim solely concerned deficient notice under Article 9, and even if Article 2 applied, the more specific limitations period on penalties governed; and finally, (3) under either limitation period, Delaney's claim was time-barred as his action accrued upon receipt of the allegedly deficient notice.

         The court of appeals affirmed in a split decision, holding that because the claim concerned deficient notice, it accrued upon receipt of the notice. Delaney, 418 S.C. at 222, 791 S.E.2d at 552. Concluding Delaney's claim was untimely under either the one or three-year limitations period for an action upon a statutory penalty, the court affirmed. Id. at 222, 791 S.E.2d at 552. Judge Thomas concurred in the majority's decision that Article 2's six-year limitations period did not apply, but dissented on the issue as to when Delaney's cause of action accrued, finding that it accrued upon disposition of the collateral. Id. at 222, 791 S.E.2d at 552-53 (Thomas, J., dissenting). Delaney sought a writ of certiorari, which we granted.

         ISSUES

         Does the statute of limitations for an Article 9 deficient notice of disposition of collateral claim begin to when notice is ...


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