Ford Motor Credit Co. v. Dale

582 F.3d 568 (5th Cir. 2009)

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Nature of the Case

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Facts

P purchased a 2006 Ford F150 pick-up truck. The truck had a cash price of $38,291.42. D financed the sale under a retail sales contract and retained a security interest in the vehicle to secure the unpaid balance of the total sale price. P traded in a 2003 Ford Expedition. That vehicle had negative equity, with P owing $4,760 more on the vehicle than its then-market value. As per Texas law, D paid off this negative equity before accepting P's trade-in and included the sum in the new vehicle's total sale price. The total sale price also included a gap insurance premium of $576.84; taxes not included in the cash price totaling $1,450.03; fees totaling $162.73; and an extended warranty charge of $3,030. P financed this entire amount totaling $48,271.02 through D at 0% interest. Less than a year later, P filed for Chapter 13. P proposed to pay D $ 23,900 over 37 months at 10.25% interest. The remaining amount owed would be paid pro-rata with other unsecured claims. D objected and filed a proof of claim in the amount of $41,834.94, secured by the truck. The bankruptcy court declined P's Chapter 13 plan. The court ruled that D's purchase-money security interest did not extend to those portions of the vehicle loan attributable to the pay-off of negative equity, the gap insurance premium, and the extended warranty charge. The district court reversed. The court held that D had a purchase-money security interest in the entire Sales Contract, including those portions attributable to negative equity, gap insurance, and the extended warranty. P appealed.