Motors Acceptance Corp. v. Rozier (In re Rozier)

Franklin Rozier (debtor) purchased a vehicle in Georgia and obtained financing through Motors Acceptance Corporation (creditor). When Rozier failed to make his required payments, Motors Acceptance repossessed Rozier’s vehicle. A few days after the repossession, Rozier filed a chapter 13 bankruptcy petition. Rozier then asked Motors Acceptance to return the vehicle, but Motors Acceptance refused. Rozier filed a contempt motion, and the bankruptcy court granted the motion, finding that Motors Acceptance was in willful contempt of 11 U.S.C. § 362’s automatic stay of creditor activity against the debtor. A federal district court affirmed. The district court found that under Georgia law, legal title and the right of redemption of a vehicle remain with a debtor even after a creditor’s repossession. The district court reasoned that because Rozier retained ownership of the vehicle after the repossession, the vehicle was part of Rozier’s bankruptcy estate and should have been returned. Motors Acceptance appealed to the United States Court of Appeals for the Eleventh Circuit, arguing that the district court had improperly interpreted Georgia law. According to Motors Acceptance, Georgia law allowed debtors to retain only a right of redemption of a vehicle after repossession, while legal title passed to the creditor. The appellate court recognized that 11 U.S.C. §§ 541 and 542 allow courts to order third parties to turn property over to a bankruptcy estate if that property is “property of the estate,” defined to include all of a debtor’s legal or equitable interests in property as of the start of the bankruptcy proceedings. To determine whether a vehicle that was repossessed prior to the commencement of a bankruptcy proceeding could be considered property of the estate, the appellate court needed to determine definitively whether, under Georgia law, legal ownership of a vehicle passed to the creditor at the time of repossession. The court thus certified a question to the Georgia Supreme Court regarding whether legal title or any other ownership interest in a vehicle passed to a creditor upon repossession. The Georgia Supreme Court answered that ownership does not pass to the creditor upon repossession; rather, ownership remains with the debtor until the creditor complies with the procedures for disposition or retention of collateral under Georgia’s Uniform Commercial Code (UCC). Motors Acceptance had not complied with the UCC procedures following the repossession of Rozier’s vehicle. [Editor’s Note: The Eleventh Circuit’s decision certifying the question to the Georgia Supreme Court is published at 348 F.3d 1305 (2003).]