GUEST EDITORIAL
As I have been saying since the last week of March (2020), there is no definitive ruling from the federal or any state government determining that secured lending enforcement officers (a/k/a: repossessors) are considered “essential workers” in the Financial Services Industry sector of the workforce allowed to work during the current federal and state declared states-of-emergency. The answer to this question will most likely vary between states and federal courts of different jurisdiction; and it certainly will not be answered for you until a case climbs up through the courts system in your locale.
This is the reason I have been advising Allied Members to know the risks of continuing to operate during this time, and strongly suggesting to you that any activity other than redemption and personal property returns are to be considered “high risk” for you while the state of emergency is pending. When pressed further, I have told many of you directly, and the others of you in letters like this one, that impounds might be considered lower risk, but if you want to avoid the higher risk activities you should avoid anything that could be construed as taking collateral directly from a consumer during the lockdown.
The “consumer protection” attorneys have been making noise for at least 60 days now that a “breach of peace” claim would be a great idea based on any repossession activity taken during a state of emergency. I have been telling everyone who would listen to me that they even intend to make such a claim in the case of a “voluntary” repossession.
I have one more piece of advice regarding claims made against you for “breach of peace” based upon repossession work you performed during the economic shut-down caused by coronavirus: the client (including forwarder and/or lender) that sent you out to work a repossession account, whether it was an impound, voluntary or involuntary repossession, should bear the risk of such a claim with you.
You know I am always harping about getting mutual indemnification clauses in all of your Repossession Services Agreements. And if I have ever reviewed an Agreement for you, I have penciled in a provision demanding that the client/forwarder warrant and guarantee that they have the right to immediate possession of the collateral at all times while the account is open with your office. Today, I hope it becomes clear (from a contract perspective) why I constantly nag about these two items.
Whether a repossession of any kind is proper during the state of emergency goes directly to the question of whether the lender had the right to take possession of the collateral by self-help means. A “breach of peace” claim in a lawsuit that is based upon the fact that the country is shut down—and so all rights to take self-help possession is suspended—is a claim against the lender having a right to send you out after the collateral. It is NOT a claim against your activity in the field. When a client/forwarder in a contract: (1) warrants that they have the right to send you, and (2) commits to being responsible to defend and pay for any claim against their right to take possession, you can (and should) put the client/forwarder on notice that you expect them to defend the claim and indemnify you for any costs to you because of the that claim.
By: O. Machelle Morris
Legal Counsel,
Allied Finance Adjusters
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