The brother-in-law of your finance company’s manager is a member of the local police force. Occasionally, when you have a repo that looks like it might get dicey — maybe the debtor has had an unpleasant go-around or two with your collectors — you send him over a dozen Krispy Kremes, and invite him to drop by the debtor’s house at the time the repossession is to take place “just to keep everyone calm.”

Just a prudent precaution? Or a violation of law? As always, when things get to court, it will depend on the facts. Let us tell you a little story.

After Carlos Albertorio-Santiago defaulted on his auto financing agreement with Reliable Financial Services, Reliable determined that it would repossess Santiago’s 2000 Ford Explorer, the subject of the financing agreement. Now, in most states, a creditor that wishes to repossess a vehicle can go to court and file a court action, usually called a replevin, to recover the vehicle, or, alternatively, the creditor can engage in what is referred to as “self-help” repossession. In this case, Reliable elected to go the self-help route, and Reliable’s agent, Ricardo Acevedo-Correa, conducted the repossession with a police officer escort.

Albertorio-Santiago’s son, Feliciano, who was present during the repossession, protested and told Acevedo-Correa to wait for his father. When Feliciano began to walk toward Acevedo-Correa to get his attention, one of the police officers approached Feliciano and told him to calm down.

At this point, had anyone called Reliable’s lawyer, he or she might have smelled trouble. The “calm down” remark could possibly qualify the incident as a breach of the peace. But that call apparently didn’t get made, and the repossession proceeded.

Albertorio-Santiago sued Reliable under federal law, specifically 42 U.S.C. § 1983, alleging a violation of his right to due process under the Fourteenth Amendment. Santiago argued that Reliable was a state actor for purposes of Section 1983 by virtue of Acevedo-Correa’s joint action with the police officers in effecting repossession.

Santiago also asserted a negligence claim on the grounds that the repossession was not effected without a breach of the peace. Applicable Puerto Rico law allows self-help repossession provided there is no breach of the peace. Chances are, the laws of your state are similar to those of Puerto Rico in this regard. Reliable moved for summary judgment.

The U.S. District Court for the District of Puerto Rico denied Reliable’s motion. The court found that the presence and involvement of the police officer in the repossession precluded a finding that Reliable was not a state actor as a matter of law. With respect to the negligence claim, the court noted that “if law enforcement is needed, then a breach of the peace has occurred, and the creditor must secure judicial intervention to carry out the repossession.”

We can think of a couple of additional arguments that Reliable might have faced on these facts (he might, for instance, have claimed a violation of the Uniform Commercial

Code and/or a violation of Puerto Rico’s retail installment sales act, assuming that Puerto Rico has enacted those laws), but the court identified all the reasons you would need to keep the Krispy Kremes for yourself next time.

Albertorio-Santiago v. Reliable Financial Services, 2009 U.S. Dist. LEXIS 37982 (D.P.R. May 4, 2009)

Thomas B. Hudson, Esq. ([email protected]) is the author of several books, available at He is also the publisher of Spot Delivery, a monthly legal newsletter for auto dealers, and CARLAW, a monthly report of legal developments in all states for the auto finance and leasing industry. He is also a partner in the Maryland office of Hudson Cook LLP. For information, call 410-865-5411 or visit Copyright 2009, all rights reserved. Based on an article from Spot Delivery. Single print publication rights only, to Special Finance magazine. HC# 4834-3985-7667 (6/09).