Christopher Dawan Eldridge v. Title Max of Alabama, Inc.

• Court: Court of Appeals for the Eleventh Circuit
• Decided: September 10, 2021
• Docket: 21-11457
• Status: Unpublished

Opinion

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 21-11457 Non-Argument Calendar ________________________

D.C. Docket No. 1:20-cv-00133-JB-B, Bkcy No. 1:19-bk-12443

In re: CHRISTOPHER DAWAN ELDRIDGE,

Debtor. __________________________________________________________________

CHRISTOPHER DAWAN ELDRIDGE,

Plaintiff-Appellant,

versus

TITLE MAX OF ALABAMA, INC.,

Defendant-Appellee. ________________________

Appeal from the United States District Court for the Southern District of Alabama ________________________

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Before JILL PRYOR, BRANCH, and BRASHER, Circuit Judges.

PER CURIAM:

Christopher Eldridge, a debtor in bankruptcy, appeals an order releasing a

Jeep Grand Cherokee as property of his bankruptcy estate. TitleMax of Alabama,

Inc., filed a motion in the bankruptcy court arguing that it owned the car, the

bankruptcy court agreed, and the district court affirmed. After careful review, we

also affirm.

BACKGROUND

Eldridge pawned his car’s certificate of title to TitleMax of Alabama in 2015

for $1,800. In Alabama, “money-lending transactions involving the transfer of

automobile certificates of title for the purpose of giving security are ‘pawn’

transactions.” Blackmon v. Downey, 624 So. 2d 1374, 1376 (Ala. 1993).

The pawn agreement did not require Eldridge to repay the loan. Instead, the

agreement allowed Eldridge to forfeit the car’s title, redeem the title by repaying the

loan within 30 days (i.e., the loan’s maturity date), redeem the title by paying a fee

and repaying the loan within 60 days, or extend the deadline to redeem the title by

paying a fee within 60 days and renewing the agreement. The “pawn ticket”

explained that the “Pledged Goods not redeemed on or before the Maturity Date,

shall be held by us for 30 days following that date and may be redeemed or

repurchased by you within the period by the payment of the redemption price (the

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amount disclosed as the Total of Payments above), plus the payment of an additional

pawnshop charge.” The agreement further provided that “Pledged Goods not

redeemed within 30 days following the Maturity Date shall be forfeited to us and

absolute right, title, and interest in and to the goods shall vest in us, unless you

request and we agree to enter into a new pawn ticket, in which case you will retain

title to the Pledged Goods.” The upshot is that, if Eldridge did nothing for 60 days,

the car’s title and, with it, the car would become TitleMax’s property.

Eldridge timely renewed the pawn agreement several times. But on July 26,

2016, the pawn agreement lapsed. Nonetheless, because Eldridge did not want to

lose his car, he asked TitleMax to allow him to renew the agreement late. The

original “pawn ticket” and all subsequent pawn tickets provided that TitleMax “may

waive or delay enforcing [its] rights without losing them.” TitleMax agreed to the

late renewal and charged Eldridge the standard renewal fee and issued another

“pawn ticket” on July 29, 2016.

Eldridge continued to renew the agreement—sometimes on time and

sometimes late—until 2019. There is no evidence that his renewal fee or renewal

documents changed based on whether his renewal was timely or late. His final 60-

day period expired on June 2, 2019.

Eldridge filed for bankruptcy on July 18, 2019. In his proposed Chapter 13

plan, he listed the car as his property and TitleMax as a secured creditor with a lien

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on the car. He proposed to repay TitleMax’s original loan in monthly installments

over the life of the plan. TitleMax objected to the plan and filed a motion to declare

the car exempt from the automatic stay. It argued that it owned the car by operation

of law because Eldridge had failed to redeem or renew the pawn agreement by June

2, 2019. Eldridge argued that the original pawn transaction lapsed in 2016, and

TitleMax sold the car to him subject to a lien. After an evidentiary hearing, the

bankruptcy court agreed with TitleMax, Eldridge appealed, and the district court

affirmed.

Eldridge timely appealed to this Court. Because the bankruptcy court’s order

is a final judgment, we have jurisdiction. See In re Dixie Broad., Inc., 871 F.2d 1023,

1026 (11th Cir. 1989).

STANDARD OF REVIEW

When a district court affirms a bankruptcy court’s decision, we review the

bankruptcy court’s decision, applying the same standards of review as the district

court. L. Sols. of Chi. LLC v. Corbett, 971 F.3d 1299, 1304 (11th Cir. 2020). We

review the bankruptcy court’s legal conclusions de novo and its findings of fact for

clear error. See In re Chase & Sanborn Corp., 904 F.2d 588, 593 (11th Cir. 1990).

DISCUSSION

Eldridge argues that the bankruptcy court should have denied TitleMax’s

motion because the car was part of his bankruptcy estate. Section 541 of the

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Bankruptcy Code specifies the property interests that make up a bankruptcy estate.

11 U.S.C. § 541. In relevant part, Section 541 states that a debtor’s estate comprises

“all legal or equitable interests of the debtor in property as of the commencement of

the case.” Id. at (a)(1). So, if title to the car had already passed to TitleMax at the

time of the bankruptcy filing, then the bankruptcy court was correct to grant

TitleMax’s motion.

Because state law determines property rights in bankruptcy, whether TitleMax

owned the car’s title when Eldridge filed for bankruptcy turns on Alabama pawnshop

law. Alabama law defines a “pawn transaction” as “[a]ny loan on the security of

pledged goods or any purchase of pledged goods on condition that the pledged goods

are left with the pawnbroker and may be redeemed or repurchased by the seller for

a fixed price within a fixed period of time.” Ala. Code § 5-19A-2(3). In a pawn

transaction, the debtor does not promise to pay anything going forward and has no

personal liability for the loan. See Ala. Code § 5-19A-8(7) (prohibiting pawn

agreement from “requiring the personal liability of a pledgor or seller”); Id. § 5-19A-

6 (“A pledgor shall have no obligation to redeem pledged goods or make any

payment on a pawn transaction.”). Instead, the pawnshop has only the pawned

collateral to pay off its loan, which it owns by operation of law if the debtor does not

redeem the collateral by some predetermined time. Specifically, Alabama law

provides that pawned “goods not redeemed within 30 days following the originally

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fixed maturity date shall be forfeited to the pawnbroker and absolute right, title, and

interest in and to the goods shall vest in the pawnbroker.” Ala. Code § 5-19A-6.

If the parties engaged in a “pawn transaction,” Eldridge’s car became

TitleMax’s car when he failed to redeem it in 2019, before he filed for bankruptcy.

Cf. In re Northington, 876 F.3d 1302, 1311 (11th Cir. 2017). No one disputes that

their relationship began as a “pawn transaction.” TitleMax and Eldridge signed a

pawn agreement, Eldridge paid a pawn fee, and TitleMax loaned Eldridge some

money and took the title to his car as collateral. But Eldridge argues that the parties’

relationship changed in 2016 when the pawn agreement lapsed without being timely

renewed. See Cosby v. Cash Pawn Shop, Inc., 702 So.2d 175 (Ala. Civ. App. 1997)

(authorizing renewals during the redemption period of a pawn agreement). At that

point, Eldrige argues, TitleMax owned the car’s title by operation of law, and the

parties’ relationship became something other than a pawn transaction.

We agree with the bankruptcy court and the district court that the parties’

relationship remained a pawn transaction even after the belated renewal.

Specifically, we see the parties’ 2016 agreement as a waiver of TitleMax’s

ownership right in the car’s title followed by a new pawn agreement. There is no

question that, on July 27, 2016, TitleMax owned the absolute right, title, and interest

in and to the car’s title. Under Alabama law, Eldridge “had no rights in the car,

possessory or otherwise.” Northington, 876 F.3d at 1315. But, on July 29, 2016,

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when Eldridge requested and TitleMax agreed to extend the pawn agreement, both

parties mutually waived Eldridge’s forfeiture, TitleMax released its claim to an

ownership interest in the vehicle, and Eldridge renewed the pawn agreement for

another fixed period. This transaction happened again several times, where TitleMax

allowed Eldridge to renew the pawn agreement for a fee after he had otherwise lost

any right to the car.

Eldridge argues that the 2016 transaction and the other belated renewal

transactions are best viewed as sales that left TitleMax with a lien on the car. We

disagree. The text of the parties’ agreements and their conduct establish that both

parties intended the 2016 transaction to be treated as a pawn transaction, not a sale

secured by a lien. The 2016 agreement and all subsequent agreements were standard

pawn agreements. Under these agreements, Eldridge had no obligation to make any

payments and was free to give up the car’s title and walk away without personal

liability for repaying the loan. Each transaction was for a fixed 30-day period

followed by an additional 30-day redemption period. And TitleMax maintained

possession of the certificate of title throughout. These are the key attributes of a

pawn transaction under Alabama law. See Ala. Code § 5-19A-2(3) & 6.

Finally, Eldridge argues that Alabama law forbids TitleMax from waiving or

releasing its ownership interest as part of a pawn transaction. 1 The general rule in

1 Eldridge also argues that these transactions are prohibited acts under the Alabama Pawnshop Act 7 USCA11 Case: 21-11457 Date Filed: 09/10/2021 Page: 8 of 9

Alabama and elsewhere is that “[a] party may waive any provision, either of a

contract or of a statute, intended for his benefit.” Shutte v. Thompson, 82 U.S. 151,

159 (1872). See, e.g., Lay v. State, 82 So.3d 9, 13 (Ala. Crim. App. 2011). Here, the

automatic right of ownership—in both the statute and the contract—is a provision

that benefits TitleMax, which it can freely waive absent an express prohibition. And

we discern nothing in Alabama law that voids a pawn transaction because a

pawnshop waives or releases its statutory or contractual rights. The relevant statute

prohibits pawnshops from reducing the minimum 30-day period for a pawn

transaction or the additional redemption period of 30 days. Ala. Code § 5-19A-8(7).

But the statute does not forbid mutual agreements to extend these periods for the

debtor’s benefit. See Cosby, 702 So. 2d at 175. Although Alabama law expressly

identifies two actions that void a pawn transaction (charging excessive interest and

operating without a license), neither are relevant here. Ala. Code § 5-19A-7(b) &

13(e).

In short, we conclude that the relationship between Eldridge and TitleMax

started as a pawn transaction and concluded as a pawn transaction. Accordingly, the

bankruptcy court correctly granted TitleMax’s motion and declared the car’s title to

be TitleMax’s property at the time Eldrige filed for bankruptcy.

for which TitleMax could be fined or lose its pawnshop license. See Ala. Code § 5-19A-8. We take no position on that question. See Pattans Ventures, Inc. v. Williams, 959 So. 2d 115, 123 (Ala. Civ. App. 2006) (holding that the power to enforce the Alabama Pawnshop Act lies with the State Banking Department, not private parties). 8 USCA11 Case: 21-11457 Date Filed: 09/10/2021 Page: 9 of 9

CONCLUSION

We AFFIRM the district court.