Dude, Where’s My (Self-Driving) Car? The Legal Implications of the Self-Repossessing Automobile Under Article 9 of the U.C.C.

by James Hardman, Associate Member, University of Cincinnati Law Review Vol. 91

I. Introduction

The rate at which Americans’ cars are being repossessed by lenders now exceeds that seen during the 2008 financial crisis.¹ Under Section 9-609(b) of the Uniform Commercial Code (“U.C.C.”), implemented into the laws of every state,² lenders may repossess automobiles that are collateral for delinquent loans without a court order if they proceed “without breach of the peace.”³ Generally, either the secured creditor or a hired professional repossession agent acting on their behalf carries out these so-called “self-help” repossessions,⁴ but a new nonprovisional patent application⁵ filed by Ford Global Technologies LLC, a wholly owned subsidiary of the Ford Motor Company,⁶ for a self-driving car to autonomously repossess itself steers the law into uncharted territory.

This article explores the legal implications of a self-repossessing automobile in light of existing U.S. law on self-help repossession. Section II provides background on the courts’ approach to Article 9 self-help repossession and the technology described in the patent application. Section III briefly discusses how this technology might comport with existing law and whether the legal system is ready to contend with this new technology. Finally, Section IV concludes by calling on lawmakers and legal drafters to consider whether existing law remains adequate in the face of full throttle technological development.

II. Background

A. The Law of Self-Help Repossession

After default, a creditor with a security interest in tangible, personal property—such as a bank that loaned money to a borrower to buy a new car—may bypass the courts and the sheriff and do its own repossessing.⁷ Courts recognize this so-called “self-help repossession” as a common law right codified in state laws via the U.C.C.⁸ It can be accomplished either through physically retrieving the collateral from the debtor’s premises or leaving it temporarily in the possession of the debtor albeit rendering it “unusable.”⁹ However, it is an ineluctable requirement¹⁰ that the creditor must ensure there is no “breach of the peace” in doing so.¹¹ What actually constitutes a “breach of the peace” is, however, much less clear; the term is neither defined in the U.C.C. nor uniformly approached by different jurisdictions.¹²

Ohio jurisprudence largely focuses on the potential for violence in assessing whether a breach of the peace occurs; for instance, the Ohio Supreme Court held in Morris v. First National Bank & Trust Company of Ravenna that an act which is “likely to produce violence, which reasonably tends to provoke or excite others to break the peace and which is not performed under judicial process” constitutes a breach of the peace.¹³ In this case, a creditor’s refusal to cease a repossession attempt and depart the debtor’s property upon instruction to do so by the owner constituted a breach of the peace because the resulting situation was “fraught with the likelihood of resulting violence.”¹⁴ Mere trespass—such as entering onto someone’s property without permission to repossess a vehicle—is insufficient by itself to constitute a breach of the peace.¹⁵

However, this appears to be a matter of degree: in Kimble v. Universal TV Rental, Inc., an Ohio municipal court held that actually breaking into a debtor’s locked apartment to retrieve a television set—as opposed to merely walking onto a debtor’s property—constituted a breach of the peace because this was “likely to provoke violence and to provoke or incite others to break the peace.”¹⁶ In contrast, a court did not find breach of the peace in Leighty v. Am. Can Credit Union, holding that even though the debtors were disturbed from sleep by the noise of their car being removed from the driveway, because the situation was not likely to either cause violence or cause others to breach the peace, it did not reach the standard established in Morris.¹⁷ Further, a repossessor’s oral misrepresentation—rather than a physical imposition—did not constitute a breach of the peace when it did not “support a potential for immediate violence.”¹⁸

Parallels to these principles exist in other jurisdictions.¹⁹ However, some courts focus instead on maintaining the “self-help” aspect of “self-help repossession;” in other words, they disallow repossession efforts that take on the color of state action by holding that the involvement of state officials (or repossession agents misrepresenting themselves as such) automatically constitutes a breach of the peace.²⁰ Overall, when it comes to breach of the peace in cases of self-help repossession, the general standard observed by experts on the application of the U.C.C. is:

[T]he great majority of courts find unauthorized entries into the debtor’s residence to be breaches of the peace, and may find entry into his garage to be such a breach. As one moves away from the residential threshold to the yard, the driveway, and finally the public street, however, the debtor’s argument becomes progressively more tenuous. We have found no case which holds that the repossession of an automobile from a driveway or a public street (absent other circumstances, such as the debtor’s objection) itself constitutes a breach of the peace, and many cases uphold such a repossession.²¹

Finally, the U.C.C. also provides that secured creditors are liable for the wrongful acts of their agents in repossession; as the official comments conclude, “courts should hold the secured party responsible for the actions of others taken on the secured party’s behalf, including independent contractors engaged by the secured party to take possession of collateral.”²²

B. Ford’s Patent Application for the Self-Repossessing Automobile

According to Ford’s patent application—published on February 23, 2023—a car enabled with the technology described therein could repossess itself as the ultimate step of a “multi-step repossession procedure.”²³ The outputs of the described procedure range from a message notifying the owner or lessee of the delinquency on the vehicle’s infotainment system, to identifying when a vehicle has, for example, “been parked inside a closed garage by the owner . . . of the vehicle . . . in order to foil a repossession operation of the vehicle,” to disabling certain vehicle systems such as the heating, air conditioning or controlling the audio system to emit a loud noise to discourage the owner/lessee from ignoring the delinquency issue, to locking the owner/lessee out of their vehicle altogether.²⁴ The patent also describes modifications to the lockout procedure, such as permitting limited use of the car within certain geofenced areas so the owner may drive to an emergency medical facility or to a place of employment during the week.²⁵

Most interesting are the elements of the patent application dealing with semi-autonomous and autonomous vehicles, such as a process wherein a semi-autonomous vehicle could be instructed to:

[A]utonomously move the vehicle . . . from a first spot to a second spot that is more convenient for a tow truck to tow the vehicle . . . . First spot may, for example, be located inside the property line of the owner . . . (a garage or a driveway, for example) and the second spot may be outside the property line (a public road, for example).²⁶

Similarly, in the case of a fully autonomous vehicle (a technology generally considered still at a preliminary stage of development²⁷) the vehicle could be instructed to drive from the owner’s premises to the repossession agency, the lending institution, an impound lot,²⁸ or, if the market value of the car was determined by the lender’s financial system to be so low that repossession was not financially viable, directly to the junkyard for scrapping.²⁹

III. Discussion

In Ohio, the courts have interpreted the requirement to avoid a breach of the peace as a necessary consideration in avoiding potential violence. Indeed, the opening description in the repossession patent application alludes to this standard, noting dryly that:

After additional warnings, the lender may repossess the vehicle. Typically, the owner is uncooperative at this time and may attempt to impede the repossession operation. In some cases, this can lead to confrontation. . . . It is therefore desirable to provide a solution to address this issue.³⁰

One goal of the technology described in the patent is clearly to reduce the chance of confrontation with the vehicle’s owner. In so doing, creditors would more readily avoid those situations that courts could identify as a “breach of the peace” that make self-help repossession improper under U.C.C. Section 9-609. This has obvious financial benefits for creditors; not only could they avoid paying for the services of the repossession agent—with the bonus of avoiding liability for the agent’s tortious behavior—but the technology may result in a more efficient repossession process. The separate components of the system, working together, inform the creditor when the vehicle is unattended and able to drive itself off of the debtor’s premises to a public area for repossession not in breach of Section 9-609.

Nevertheless, the law has not yet reckoned with the advances that this patent application heralds; principally, it is not clear whether or not a court would find that the creditor’s self-help repossession constitutes a breach of the peace. For example, although a car driving itself away from an owner’s property in a manner calculated to avoid a confrontation (such as in the middle of the night when the owner is not detected in the vicinity) would likely not breach the peace, the courts could find that the unconsented remote interference with the owner’s property was sufficient to make the repossession improper. A court might, for example, analogize the breaches of the peace resulting from breaking into a person’s home or garage with remotely accessing the vehicle’s autonomous driving system, especially if the vehicle were parked on or inside the debtor’s property. If courts chose to address cases involving this technology under the strictest interpretation of Section 9-609, then the courts would neuter the lenders’ envisioned benefits as soon as the first case is heard.

Indeed, it would be conducive to public policy to do so because large financial institutions use of the law to take individuals’ valuable personal property—especially property essential to the individual’s economic well-being—should be sharply scrutinized. By contrast, if the courts mistakenly interpreted the rules narrowly—perhaps due to a limited understanding of the underlying technology—it could wave the starting flag in a race for auto manufacturers to put their self-repossessing features at the service of lenders. Courts should therefore endeavor to understand the broader negative implications of this technology beyond Section 9-609 of the U.C.C., such as for individual privacy; it is unlikely that a typical vehicle owner would consent to a bank (especially one to which they owe money) peering into their private spaces via the cameras built into their car. The external access to cameras and self-driving systems equally raises questions of security: if a financial institution builds in a back-door system to drive a car away in the middle of the night, how long before criminal organizations determine how to do the same? In an extreme hypothetical, hacking a vehicle to drive away while a child remains in the back seat—to be returned only following an online payment in untraceable funds—adds a chilling new definition to the term “ransomware.”

In addition to the jurisprudence suggesting that the technology in Ford’s patent application might breach the peace, there are also issues with statutory limitations on contractual arrangements between creditors and lessees. Although lenders may seek to include exculpatory terms relating to remote access to the vehicles in leasing contracts,³¹ any agreement between the creditor and the owner/lessee of the collateralized vehicle that potentially breaches the peace by permitting the creditor to digitally reach into the vehicle might fail due to the terms of Sections 9-602 and 9-603 of the U.C.C., which forbid parties from waiving the duty not to breach the peace.³²

By contrast, the immobilization procedures described in the patent could be of greater practical use to creditors and present fewer inherent risks to the vehicle owner. Combined with the location-tracking and vehicle-status monitoring technology described in the patent, the creditor could choose to immobilize the vehicle (and subsequently seize it and/or sell it) any time that the owner has removed the car from their premises and parked it in a public space. By monitoring for when the car is left unattended, the creditor could swoop in to seize the car from the public space without risking a breach of the peace. Such technology is already within reach and could make lenders more willing to extend loans to individuals with poor credit, thereby creating new economic opportunities for those previously unable to afford their own motor vehicle.

IV. Conclusion

Fundamentally, this proposed new technology highlights the paradox at the heart of the non-definition of “breach of the peace” in the U.C.C. As technology that permits creditors to reach into our personal property and direct it to remove itself from our possession—and even to send it to the junkyard for scrapping—matures, the law must clarify whether such an intrusion is permitted before such techniques become commonplace. At the same time, the broadness of the language of Section 9-609 gives courts the opportunity to rapidly react to reduce the potential harm that this technology could bring. Therein lies the strength of broadly written language of the U.C.C. in combination with the common law system of judicial interpretation.

Overall, the new technology described in the patent may make it easier for creditors to repossess vehicles subject to delinquency within the parameters established by the U.C.C. This could have positive effects, such as making banks more willing to lend to individuals with poor credit. However, the lack of clarity in the law means that courts could still find such repossession improper. Regardless, the emergence of this new technology represents a golden opportunity to clarify the law in relation to self-repossessing vehicles in particular, heading off the potentially dystopian world of financial organizations ordering debtors’ personal property to drive itself off for repossession in the secured transactions version of Steven King’s classic horror novel Christine.³³ In a United States in which more Americans than ever are losing their vehicles—at times also their livelihoods—to repossession, such a future is one that the law should strive to avoid.

Cover Photo by Decorative Concrete Kingdom on Flickr and licensed under CC BY 2.0.

James Hardman

After graduating from the University of Cambridge with a degree in French and Russian, James Hardman worked for over six years as a consultant investigator for a boutique London investigations firm with a focus on international dispute resolution and cross-border asset tracing. He and his wife moved to Cincinnati in 2020 to be closer to her family and to embark on a new career in law. James is particularly interested in international commercial law and in his free time is an avid player of boardgames.

References

1
Claire Ballentine, Americans Fall Behind on Car Payments at Higher Rate Than in 2009, Bloomberg News (Jan. 27, 2023), https://www.bloomberg.com/news/articles/2023-01-27/car-repossessions-grow-as-inflation-slams-consumers.
2
UCC Article 9, Secured Transactions, Uniform Law Commission, https://www.uniformlaws.org/committees/community-home?CommunityKey=6317f73b-badb-47b2-8a5a-58ee62032ba1 (last visited Mar. 23, 2023).
3
U.C.C. § 9-609 (Am. L. Inst. & Unif. L. Comm’n 2010).
4
Bill Fay, Car Repossession, Debt.org (Mar. 11, 2023), https://www.debt.org/faqs/repossession/.
5
U.S. Patent Application Serial No. 17,408,004 (filed Aug. 20, 2021).
6
Exhibit 21 of Form 10-K for the fiscal year ended December 31, 2022, for the Ford Motor Company, https://s201.q4cdn.com/693218008/files/doc_financials/2021/ar/f42c2517-70ad-46b9-969f-bf057bf4c9cd.pdf (last visited Mar. 21, 2023).
7
Larry Edmonson, Nonjudicial and Self-Help Repossession, 1 Com. Asset-Based Fin. § 5:26 (Feb. 2023).
8
See, e.g., Adams v. Southern Calif. First Nat’l Bank, 492 F.2d 324 (9th Cir. 1973), cert. denied 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974). In Ohio, the right to self-help repossession is codified in Ohio Rev. Code Ann. § 1309.609 (2023).
9
U.C.C. § 9-609(a)(2) (Am. L. Inst. & Unif. L. Comm’n 2010). Although no court cases seem to have elaborated on this particular clause, this provision appears to anticipate immobilizing collateral in place in order that it can be sold in a commercially reasonable sale if it is too difficult to physically move the collateral; examples might include a piece of construction equipment.
10
Under U.C.C. Section 9-602(6), the debtor may not waive the requirement for “a secured creditor that takes possession of collateral without judicial process the duty to do so without breach of the peace.” Similarly, under Section 9-603, parties to a secured transaction may not alter by agreement “the duty under Section 9-609 to refrain from breaching the peace.”
11
U.C.C. § 9-609 (Am. L. Inst. & Unif. L. Comm’n 2010).
12
Thomas M. Quinn & Bryan D. Hull, Self-Help Seizure, 8 Quinn’s UCC Commentary & Law Digest § 9-609[A][3] [Rev] (rev. 2d ed. 2022).
13
254 N.E.2d 683, syl. ¶ 4 (1970).
14
Id. at 686.
15
See, e.g., Ford Motor Credit Co. v. Ryan, 189 Ohio App. 3d 560, 583 (10th Dist. Franklin County 2010).
16
65 Ohio Misc. 17, 24, 417 N.E.2d 597, 603 (Mun. Ct. 1980).
17
No. 44496, 1982 WL 2574 (Ohio Ct. App. Dec. 9, 1982).
18
K.B. Oil Co. v. Ford Motor Credit Co., Inc., 811 F.2d 310 (6th Cir. 1987).
19
See, e.g., Laurel Coal Co. v. Walter E. Heller & Co., Inc., 539 F. Supp. 1006 (W.D. Pa. 1982) (finding breach of the peace where the repossessor broke a window to unlock a door to a debtor’s residence and repossess a piano); Wallace v. Chrysler Credit Corp., 743 F. Supp. 1228 (W.D. Va. 1990) (considering the “stealthy manner” in which the repossession was effected as “calculated to avoid a breach of the peace because the prospect of a confrontation with the plaintiff was less at 2 a.m. than it would have been in the daylight hours or in the early evening”); Wade v. Ford Motor Credit Co., 668 P.2d 183 (Kan. Ct. App. 1983) (holding that despite the “potential for violence” the debtor had previously threatened, the noisy repossession of debtor’s car in the middle of the night had not breached the peace).
20
See, e.g., Marcus v. McCollum, 394 F.3d 813 (10th Cir. 2004) (holding that officers are not state actors during a private repossession if they act only to keep the peace, but the peace is breached if said officers intercede to help the repossessor); Stallworth v. Doss, 280 Ala. 409, 194 So. 2d 566 (1967) (finding that impersonating a law officer constituted a breach of the peace).
21
James J. White & Robert S. Summers, Uniform Commercial Code § 34-7 (4th ed. 1988) (quoted in Callaway v. Whittenton, 892 So. 2d 852, 52 U.C.C. Rep. Serv. 2d 525 (Ala. 2003)).
22
U.C.C. § 9-609, cmt. 3 (Am. L. Inst. & Unif. L. Comm’n 2010).
23
U.S. Patent Application Serial No. 17,408,004, at [0031] (filed Aug. 20, 2021).
24
Id. at [0028], [0022], [0032]-[0038], [0039].
25
Id. at [0041], [0050]-[0054].
26
Id. at [0046].
27
Dan Croutch, The State of Self-Driving Cars: Autonomous Advances, Techspot (Mar. 20, 2023), https://www.techspot.com/article/2644-the-state-of-self-driving-cars/.
28
‘004 Patent at [0047].
29
Id. at [0048].
30
Id. at [001]-[002] (emphasis added).
31
See generally Rebecca Crootof, The Internet of Torts: Expanding Civil Liability Standards to Address Corporate Remote Interference, 69 Duke L.J. 583 (2019) (examining in part how companies seek to protect themselves through contract for remote interference with individuals’ personal property).
32
U.C.C. §§ 9-602(6); 9-603 (Am. L. Inst. & Unif. L. Comm’n 2010).
33
Steven King, Christine (1983). This horror novel describes the tale of a 1958 Plymouth Fury apparently possessed by an evil spirit and thus able to drive itself around.