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Chrysler Financial Co. v. Bergstrom9/9/2005
On review from the Iowa Court of Appeals.
Consumer appealed district court judgment denying his claim against creditor for violating consumer credit code by suing him in the wrong county, and court of appeals reversed. DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED.
The Iowa Consumer Credit Code provides remedies for Iowa consumers against creditors who violate certain provisions of the Code. See Iowa Code §§ 537.5201-.5203 (2003). This appeal concerns a violation involving filing a lawsuit against a consumer in the wrong venue and the statutory defense that relieves the creditor of liability for the violation if the creditor shows the violation was unintentional and was the result of a bona fide error that occurred even though the creditor had a procedure in place "reasonably adapted to avoid the error." Id. § 537.5201(7). We vacate the decision of the court of appeals and affirm the decision of the district court.
I. Background Facts and Proceedings
Jon Bergstrom leased a vehicle from Chrysler Financial Company in 1997. He subsequently fell behind on his lease payments, and Chrysler gave him notice of his right to cure the default. See id. § 537.5110 (providing for consumer's right to cure default and stating that giving notice of the right to cure default is a prerequisite to suit); id. § 537.5111 (requiring creditor to give consumer notice of right to cure default). Bergstrom did not cure the default within the time he was allowed to cure. See id. (stating consumer has twenty days from receiving notice of the right to cure to pay the delinquency). Thus, Chrysler accelerated the debt, sold the vehicle following repossession, and filed an action against Bergstrom for a deficiency judgment of $7690.46.
Under the consumer credit code, Chrysler was required to bring the action in the county of Bergstrom's residence. Id. § 537.5113. Bergstrom resided just outside Riceville, Iowa, but Riceville was his designated city of residence.
Riceville is located on the border of Howard and Mitchell Counties in northeast Iowa. The western portion of Riceville is in Mitchell County, and the eastern portion of Riceville is in Howard County. Bergstrom lives near the portion of Riceville that lies in Mitchell County. However, Chrysler filed the action in Howard County.
Bergstrom filed a motion for a change of venue to Mitchell County and requested attorney fees and costs for the motion. Chrysler consented to transferring the case to Mitchell County. However, it contested Bergstrom's claim for attorney fees and costs on the basis that it "exercised due diligence in attempting to ascertain the proper venue, the error was harmless and the Defendant was not unduly prejudiced" by the mistake. The district court in Howard County transferred the case to Mitchell County, ordered Chrysler to pay Bergstrom's court costs, and held the issue of attorney fees in abeyance.
After the transfer to Mitchell County, Bergstrom filed an answer to Chrysler's petition, along with a counterclaim. The counterclaim alleged Chrysler violated the consumer credit code by bringing the action in the wrong county. It sought, among other items, statutory damages under Iowa Code section 537.5201. Chrysler replied to Bergstrom's counterclaim, asserting that its violation of the consumer credit code was not intentional and resulted from a bona fide error. On that basis, it claimed it could not be held liable for statutory damages. The case proceeded to a bench trial.
The district court ultimately entered a deficiency judgment for $7690.46 for Chrysler against Bergstrom. However, the focus in this appeal is solely on Bergstr
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