In New v. CitiFinancial Auto Credit, Inc., 2011 WL 3503128 (M.D.Ala. 2011), Judge Watkins found that a consumer’s delivery of a vehicle to a dealer on consignment extinguished the consumer’s ownership interest in the vehicle, depriving the consumer of any rights to the vehicle – or against the consumer’s finance company – when the consignment dealer failed to pay off the lien and sold the vehicle to a bona fide purchaser.  The facts and brief holder were as follows:


On August 29, 2005, Plaintiff purchased on credit a new 2006 GM Hummer H3 (the “Hummer”). The Hummer was financed for 72 months through CitiFinancial. (Compl.¶ 5.) Until November 2008, Plaintiff made timely payments to CitiFinancial as required by the promissory note that Plaintiff executed in CitiFinancial’s favor. (Compl.¶¶ 6, 7, 12.) However, around November 2008, Plaintiff entrusted the Hummer to Mr. Saylors and PAC, merchants in the business of selling automobiles, through a consignment agreement whereby Mr. Saylors and PAC would offer the Hummer for sale to the public. (Compl.¶ 7.) One provision of the alleged consignment agreement was that Mr. Saylors and PAC would pay the balance of Plaintiff’s note to CitiFinancial.FN1 (Compl.¶¶ 8, 27.) Mr. Saylors and PAC tendered to CitiFinancial a “check that was drafted on an account with insufficient funds to cover said check.” (Compl .¶ 8.) CitiFinancial failed to verify that the checking account had sufficient funds, and released the Hummer’s title to Mr. Saylors and PAC, which was then transferred to the third-party purchaser, who purchased the Hummer from Mr. Saylors and PAC. (Compl.¶ 9.)  . . . ¶  Thus, Plaintiff’s entrustment of the Hummer by delivering possession of the Hummer to Mr. Saylors and PAC—merchants who deal in used automobiles (Compl.¶ 7)—and Mr. Saylors’s and PAC’s subsequent sale of the Hummer to a buyer in the ordinary course of business, had the effect of extinguishing Plaintiff’s rights in the Hummer. The fact that CitiFinancial released the Hummer’s title and it passed with the Hummer to the buyer in the ordinary course of business had no effect on the end result: that Plaintiff’s “rights and interests” in the Hummer have now vanished.FN3 Thus, any breach of a duty owed to Plaintiff by CitiFinancial did not proximately cause Plaintiff’s harm: his loss of the Hummer. CitiFinancial is entitled to judgment on the pleadings on Count II of Plaintiff’s Complaint