How did DEALER SERVICES CORPORATION takes their Unlicensed Lending show to the California Court of Appeals?
Dealer Services Corporation says car theft is sanctioned by the Uniform Commercial Code. After being convicted of the conversion of Behyar Fariba’s cars by a San Diego jury in May 2008, DSC filed an appeal.
DSC claims that they had no knowledge of Fariba’s consignment agreement at the time DSC gave loans in 2005. However, DSC ran off with over fifty employees of Automotive Finance Corporation, another floor plan lender, who had just finished making loans.
However, Fariba probably didn’t know that both DSC and their cohorts AFC were both unlicensed as lenders in California at that time. AFC did not obtain a California Finance Lenders License until August 7, 2007. DSC just got their California Finance Lenders License on May 27, 2009. AFC made loans in California for more than eight years before obtaining a license, DSC only waited a short four years.
How can a UCC1 be used like this to steal cars that DSC and AFC don’t have the titles to?
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One comment
BLCOHEN529 on October 29, 2009 at 4:37 am
Richard,
Your question left out several key details of the series of transactions. That said, the Court would resolve issues of title under Article 9 (Secured Transactions) of the Uniform Commercial Code as adopted in California. Furthermore, the matter of California licensing
would not have likely played any significant role.
The UCC is designed to establish an open public recording of property interests based upon time of filing priority system.
The fact a legal entity did not legally possess the licensing right to engage in a particular business does not deny claims of title or authority to transfer title.
The UCC-1 is a public filed documents that can be readily found in public records and even the internet. It gives legal notice to one of potential title claim.