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SJC-12367

  RACHEL C. WILLIAMS1   vs.   AMERICAN HONDA FINANCE CORPORATION.



            Suffolk.    December 7, 2017. - June 5, 2018.

   Present:    Gants, C.J., Gaziano, Lowy, Cypher, & Kafker, JJ.


Motor Vehicle Instalment Sales, Repossession, Notice. Uniform
     Commercial Code, Notice. Words, "Fair market value."



     Certification of questions of law to the Supreme Judicial
Court by the United States Court of Appeals for the First
Circuit.


     John J. Roddy (Elizabeth A. Ryan also present) for the
plaintiff.
     Eric S. Mattson, of Illinois (Tracy McDevitt Waugh also
present) for the defendant.
     Fredrick S. Levin, John C. Redding, & Ali M. Abugheida, for
American Financial Services Association, amicus curiae,
submitted a brief.
     Stuart T. Rossman, for National Consumer Law Center, amicus
curiae, submitted a brief.


     KAFKER, J.    The primary issue presented in this case is how

to establish the fair market value of a repossessed automobile

     1 Individually and on behalf of all others similarly
situated.
                                                                   2


pursuant to G. L. c. 255B, § 20B.   Under § 20B, a creditor who

repossesses and sells a vehicle is entitled to recover from the

debtor the deficiency, if any, that remains after deducting the

"fair market value" of the vehicle from the debtor's unpaid

balance.   The plaintiff in this case, Rachel Williams, defaulted

on her automobile loan, causing the defendant, American Honda

Finance Corporation (Honda), to repossess and sell the vehicle

that served as collateral for the loan.   The price for the

repossessed vehicle was determined at an auction open to

licensed dealers.   Honda then used that amount to establish the

fair market value of the repossessed automobile and likewise

referenced the auction sale amount in presale and postsale

notices to the debtor.   Williams then sued Honda, alleging that

the fair market value of her repossessed automobile was the fair

market retail value of the automobile and Honda's notices to her

were insufficient under Massachusetts law because of the manner

in which Honda described and calculated her deficiency.    The

United States District Court for the District of Massachusetts

granted summary judgment to Honda, and the plaintiff appealed.

    Unsure of the meaning of the statute, the United States

Court of Appeals for the First Circuit certified to this court

three questions related to the calculation of "fair market

value" under § 20B, and the notices that are required with

respect to this calculation.   The court first asks whether the
                                                                   3


fair market value of the collateral under § 20B is the fair

market retail value of the collateral.     The second and third

questions then relate to the contents of the presale and

postsale notices that must be sent to the debtors.

    We conclude that the Legislature required that deficiency

calculations for repossessed vehicles be determined based on the

fair market value of the vehicle, but did not dictate the

creditor's market choice in the first instance and left the

ultimate determination of fair market value to the courts in

contested cases, taking into account both creditor and debtor

interests, and the means, methods, and markets used to sell the

vehicle.   As will be explained infra, estimated retail value as

provided in periodically published trade journals has a very

limited role in the statute, essentially establishing a

rebuttable evidentiary presumption that allows a debtor to put

the fair market value as originally determined by the creditor

to the test in contested cases.   The approach to determining

fair market value and deficiencies that we delineate respects

the plain language of the statute, the legislative history, and

the practical realities of the automobile repossession market.

Had the Legislature intended to impose a fair market retail

value standard, it would have simply said so in the statute or

the legislative history, and it did not.
                                                                    4


    Finally, in response to the second and third questions,

concerning the notice that is required, we answer that the

presale and postsale notices provided to the debtor must

expressly describe the deficiency as the difference between the

amount owed on the loan and the fair market value of the

vehicle, not the difference between the amount owed and the sale

proceeds or the amount owed and the fair market retail value of

the vehicle.

    1.   Background.   The relevant facts and procedural history

are as follows.

    Honda resells tens of thousands of used motor vehicles

every year -- some after a repossession, but most after they

have been returned to Honda at the end of a lease.    To sell all

of these vehicles, Honda uses a process that the plaintiff has

admitted is "designed to obtain the highest possible price."

The first step in this process involves an independent auction

company rating the vehicle's condition on a scale from zero to

five, with zero representing the "very worst" and five the "very

best."   With the vehicle's grade in mind, a Honda employee

consults the Black Book to help establish a baseline value for

vehicles it resells.   The Black Book is a guidebook used in the

collections, customer service, and credit industry.    Honda

determines a "floor price" -- the minimum it intends to accept

when it sells the vehicle -- based in part on the Black Book's
                                                                     5


estimated values for a vehicle of the same make, model, year,

mileage, and condition.    After a floor price is set, the vehicle

is sold, along with vehicles from other manufacturers, at a

biweekly auction that is open to licensed dealers.

     Honda uses auctions rather than a retail channel to sell

these vehicles for a variety of reasons.     Honda is not licensed

to sell at retail, and selling at retail may interfere with the

legal rights of independent Honda dealers.     It also would take

Honda a longer time to sell these vehicles at retail than

selling at the dealer auctions.    This is significant because

automobiles depreciate rapidly and the longer a creditor retains

possession of a vehicle, the less it will be worth when it is

eventually sold.

     Honda financed the purchase of the plaintiff's vehicle in

2007.    Four years later, after the plaintiff defaulted on her

loan, Honda repossessed the vehicle.2   Honda then provided the

plaintiff with the following notice:

          "We have [your vehicle] because you broke promises in
     our agreement, and we will sell it at a private sale
     sometime after October 11, 2011.

          "The money received from the sale (after paying our
     costs) will reduce the amount you owe. If the auction
     proceeds are less than what you owe, you will still owe us
     the difference. If we receive more money than you owe, you
     will receive a refund, unless we must pay it to someone

     2 The plaintiff's account with Honda was delinquent at least
twenty-four times before Honda repossessed the vehicle.
                                                                   6


    else. If you would like a written explanation on how the
    amount you owe was determined, or need additional
    information about the sale, please send your request to the
    address below.

         "You can get the property back at any time before we
    sell it by paying the full payoff amount, including our
    expenses. As of today, the payoff amount is $13,366.78,
    which is subject to change due to the addition of
    applicable fees and/or finance charges."

The plaintiff's repossessed vehicle was sold according to the

auction process.   The independent auction company determined

that the plaintiff's vehicle was in below average condition.

For Honda, this meant that the vehicle was in "rough" condition

for purposes of the Black Book.   According to the Black Book,

the estimated wholesale value for this vehicle in "rough"

condition was $7,750 and the estimated retail value was $9,800.

With these values in mind, Honda set the floor price for the

plaintiff's vehicle at $8,700 and ultimately sold the vehicle

for $8,900.   The plaintiff's outstanding balance was $12,858.70,

and Honda incurred repossession and auction expenses of $754.62,

leaving the plaintiff with a postsale deficiency of $4,713.32.

After the auction, Honda notified the plaintiff that her vehicle

was sold for $8,900 and provided her with a calculation of the

deficiency that she owed.   There is no indication that Honda,

once it sold the vehicle and calculated the deficiency, intended

to file a lawsuit to collect the deficiency.   Indeed, Honda has
                                                                   7


brought only five or fewer such lawsuits in the past few years

despite selling thousands of repossessed automobiles.

    The plaintiff commenced a putative class action in the

Superior Court against Honda, claiming that the notices it sent

to her and other debtors violated the Uniform Commercial Code

and constituted an unfair and deceptive act or practice in

violation of G. L. c. 93A.   The plaintiff challenges Honda's

presale notice because it did not use the term "fair market

value" in describing her deficiency.    The plaintiff also

challenges the postsale notice, arguing that it is insufficient

because it calculated her deficiency as the difference between

her unpaid balance and the auction proceeds.

    Honda removed the case to the United States District Court

for the District of Massachusetts.    Following discovery, both

parties moved for summary judgment.    A magistrate judge

recommended granting summary judgment in favor of Honda,

concluding that under G. L. c. 255B, § 20B, the plaintiff's

deficiency must be calculated using the fair market value of the

collateral and that Honda's notices complied with the Uniform

Commercial Code because there was no evidence that Honda sold

the vehicle for less than its fair market value.    The district

court judge adopted this recommendation and entered judgment in

favor of Honda.
                                                                     8


     The plaintiff appealed to the United States Court of

Appeals for the First Circuit.     Having determined that the

outcome of the case depended on unsettled questions of

Massachusetts law, the First Circuit on its own motion certified

three questions to this court.     We address each question in

turn.

     2.    Discussion.   a.   Question one.   The first certified

question asks:

     "1. Whether the 'fair market value' of collateral under
     [G. L. c. 255B, § 20B,] is the fair market retail value of
     that collateral" (emphasis in original)?

For the reasons detailed infra, we answer this question, "No."

     i.    Statutory language.   "[T]he primary source of insight

into the intent of the Legislature is the language of the

statute."    International Fid. Ins. Co. v. Wilson, 387 Mass. 841,

853 (1983).    "Where the language is clear and unambiguous, it is

to be given its 'ordinary meaning,'" as long as "this

meaning . . . [is] reasonable and supported by the purpose and

history of the statute" (citations omitted).      Commonwealth v.

Mogelinski, 466 Mass. 627, 633 (2013).

     By its plain language, G. L. c. 255B, § 20B, calculates the

deficiency that the creditor can obtain from a defaulting debtor

based on the fair market value of the collateral.3      Once the


     3   General Laws c. 255B, § 20B (e), provides:
                                                                   9


creditor repossesses and sells the collateral, the creditor

"shall be entitled to recover from the debtor the deficiency, if

any, resulting from deducting the fair market value of the

collateral from the unpaid balance due" in addition to any

"reasonable repossession and storage costs."   G. L. c. 255B,

§ 20B (e) (1).

    "Fair market value" was not a novel or undefined term when

the Legislature used it in enacting G. L. c. 255B, § 20B, in

1973.   As we have repeatedly held, fair market value is "the

highest price which a hypothetical willing buyer would pay to a

hypothetical willing seller in an assumed free and open market"

(citation omitted).   Epstein v. Boston Hous. Auth., 317 Mass.

297, 299 (1944).   See Boston Gas Co. v. Assessors of Boston, 458

Mass. 715, 717 (2011), quoting Boston Gas Co. v. Assessors of

Boston, 334 Mass. 549, 566 (1956) ("the price an owner willing



         "(e) (1) If the unpaid balance of the consumer credit
    transaction at the time of default was [$2,000] or more the
    creditor shall be entitled to recover from the debtor the
    deficiency, if any, resulting from deducting the fair
    market value of the collateral from the unpaid balance due
    and shall also be entitled to any reasonable repossession
    and storage costs, provided he has complied with all
    provisions of this section.

         "(2) In a proceeding for a deficiency the fair market
    value of the collateral shall be a question for the court
    to determine. Periodically published trade estimates of
    the retail value of goods shall, to the extent they are
    recognized in the particular trade or business, be presumed
    to be the fair market value of the collateral."
                                                                    10


but not under compulsion to sell ought to receive from one

willing but not under compulsion to buy"); Bradley v. Hooker,

175 Mass. 142, 143 (1900) ("the highest price that a normal

purchaser not under peculiar compulsion will pay at the time and

place in question in order to get the thing").     In the instant

case, the collateral was sold in an automobile auction open to

licensed dealers.    The price set in such an open market is

compelling, albeit not conclusive evidence, of the fair market

value of the repossessed automobile.    Compare Matter of Excello

Press, Inc., 890 F.2d 896, 904-905 (7th Cir. 1989) ("The product

of a commercially reasonable sale is the fair market

value. . . .   The price obtained in a commercially reasonable

sale is not evidence of the market value, which can be

discounted or thrown out.   It is the market value").    In the

instant case, it is also admitted that the auction process was

"designed to obtain the highest possible price."

    The statute goes one step further to protect debtors in the

event that the creditor sues to recover the remaining

deficiency.    Section 20B (e) (2) provides that, "[i]n a

proceeding for a deficiency the fair market value of the

collateral shall be a question for the court to determine."

When making this determination, the statute introduces an

evidentiary presumption that "[p]eriodically published trade

estimates of the retail value of goods shall, to the extent they
                                                                    11


are recognized in the particular trade or business, be presumed

to be the fair market value of the collateral."     G. L. c. 255B,

§ 20B (e) (2).   This presumption puts the creditor's original

determination of fair market value, and thus the means or market

selected by the creditor to sell the vehicle and establish the

fair market value, to the test.    It does so by using retail data

readily available to debtors and creditors.

    A presumption is an evidentiary tool that accepts a certain

fact as proven in the absence of contradictory evidence.     See

Mass. G. Evid. § 301(d) (2018).    A presumption "imposes on the

party against whom it is directed the burden of production to

rebut or meet that presumption."    Id.   "If that party fails to

come forward with evidence to rebut or meet that presumption,

the fact is to be taken by the fact finder as established."        Id.

If, however, that party introduces evidence that meets or rebuts

the presumption, "the presumption shall have no further force or

effect."   Id.   In effect, a presumption simply imposes a burden

of production on a party as to some fact to be proved.      See

Mass. G. Evid. § 301(d) & note.

    The estimated retail value of the vehicle thus has a very

limited role in the statute.    When the deficiency or the fair

market value is disputed, there is a rebuttable presumption that

the estimated retail value is fair market value.     This

presumption places the burden on the creditor to prove the fair
                                                                    12


market value of the vehicle.   The fair market value of the

vehicle, however, is just that:   the highest price that a

willing buyer would pay Honda in a fair market for the vehicle.

See Epstein, 317 Mass. at 299.    And fair market value, not fair

market retail value, is what the statute provides that the court

must determine.   The statute does not dictate use of a

particular market.   If contested, a court must determine the

fair market value based on all the facts and circumstances,

including the goods to be sold, the relevant markets, the

particular creditors and debtors, and the rebuttable

presumption.   See generally Rapson, Deficient Treatment of

Deficiency Claims:   Gilmore Would Have Repented, 75 Wash. U.

L.Q. 491, 522-523 (1997) (discussing different factors that go

into consideration of fair market value).   See also In re

Roberts, 210 B.R. 325, 330-331 (N.D. Iowa 1997) (exclusive

reliance on industry guides alone is disfavored and may

contradict court's duty to value specific collateral at issue).

    Indeed, if the Legislature had intended fair market value

to be fair market retail value, it would have simply said so, as

other provisions in the General Laws demonstrate that the

Legislature is capable of specifying retail or wholesale markets

and values in statutes when it intends to do so.    See, e.g.,
                                                                    13


G. L. c. 127, § 67 ("wholesale market price"); G. L. c. 159C,

§ 5A (a) ("retail market value of the goods or services").4

     Our interpretation of the statutory language leads to the

conclusion that fair market value, not fair market retail value,

is to be used when calculating a deficiency under G. L. c. 255B,

§ 20B.

     ii.   Legislative history.   The limited legislative history

available supports the plain language interpretation of fair

market value and does not even mention fair market retail value.5


     4 Other examples include G. L. c. 6, § 197 ("wholesale
market price of such device prevailing at the time of sale");
G. L. c. 127, § 58 ("shall conform as nearly as may be to the
wholesale market rates for similar goods"); and G. L. c. 64H,
§ 1 (referencing "retail sales market in the commonwealth" and
"every person engaged in the making of retail sales at
auction").

     5 The dissent accuses the court of largely ignoring the
relevant legislative history in this case. Post at      . Quite
the contrary, it is the dissent that only selectively references
portions of the legislative history. The dissent relies on the
recommendation from the Consumers' Council (council), an
executive agency that would propose multiple bills each
legislative session, and this reliance is misplaced for several
reasons. First, the dissent's position that the council "first
recommended for legislative action" the bill that the
Legislature eventually enacted, see post at    -   , is simply
wrong. The council's recommendation recycled proposals from
earlier legislative sessions, and the bill that eventually
passed the House, see 1973 House Doc. No. 6884, was the product
of at least three separate proposed bills that were being
considered by the committee. Id. The dissent wholly ignores
the three years of proposed legislation that preceded the
council's recommendation, some of which contained provisions
                                                                     14


        The Legislature enacted the current provisions in G. L.

c. 255B, §§ 20A and 20B, in 1973.    St. 1973, c. 629.   The

Legislature began considering proposals to amend these

provisions as early as 1970.     See 1970 House Doc. No. 3814 ("An

Act restricting deficiency judgments in motor vehicle

installment sales").     From 1970 to 1973, the Legislature

considered at least eight different bills to amend §§ 20A and

20B.6

        There were at least five different proposals for how to

calculate or limit deficiencies.7    Most significantly, none of



that were eventually enacted. See note 6, infra (list of
proposed legislation predating council's recommendation).
Additionally, the council's proposal does not mention fair
market value, fair market retail value, or even the rebuttable
presumption of estimated retail value, the key language that the
court is interpreting in this case. See 1973 House Doc. No. 66.
Instead, the council's proposal contained a completely different
mechanism for calculating deficiencies that does not involve
fair market value or the estimated retail value. Therefore, the
dissent's treatment of the council's recommendation as
conclusive as to legislative intent, see post at    , is
erroneous and misleading.

       See 1973 House Doc. No. 6884; 1973 House Doc. No. 66; 1972
        6

House Doc. No. 6111; 1971 House Doc. No. 5470; 1971 House Doc.
No. 2767; 1970 House Doc. No. 5533; 1970 House Doc. No. 4574;
1970 House Doc. No. 3814. Several additional bills filed during
this period appear to be refilings of earlier proposals. See
1973 House Doc. No. 2833 (refiling of 1972 House Doc. No. 6111);
1972 House Doc. No. 2775 (refiling of 1971 House Doc. No. 5470).

       One bill proposed abolishing deficiencies altogether,
        7

limiting the creditor's recovery to the proceeds of the sale of
                                                                    15


these prior proposals considered using the estimated retail

value of the collateral.     At least one proposed bill, however,

used the fair market value of the collateral without any

reference to retail value.     See 1970 House Doc. No. 5533 ("buyer

shall not be liable for any deficiency or part of a deficiency

which results from a difference between the proceeds of the sale

and the fair market value of the motor vehicle at the time of

repossession or surrender").

    The current method for calculating deficiencies in § 20B

was not proposed in the Legislature until 1973.    See 1973 House

Doc. No. 6884.   It appears that the Legislature took this

approach from the National Consumer Act (NCA), a draft model act

proposed by the National Consumer Law Center in 1970 that uses

almost the same language as G. L. c. 255B, § 20B.     As the

comments to the NCA suggest, this approach to calculating

deficiencies is "the more equitable approach" that properly

balances the concerns of creditors left with large unpaid



the collateral. See 1971 House Doc. No. 2767. Two separate
bills proposed prohibiting a creditor from collecting a
deficiency where the cash price of the collateral was below a
certain amount. See 1971 House Doc. No. 5470 (debtor not liable
where cash price was equal to or less than $4,000); 1970 House
Doc. No. 4574 (debtor not liable where cash price was equal to
or less than $2,000). Another proposal provided that the debtor
would not be liable "for any deficiency or part of a deficiency
which results from a difference between the proceeds of the sale
and the fair market value of the collateral at the time of
repossession or surrender." 1970 House Doc. No. 5533.
                                                                     16


balances when a consumer defaults after purchase and the

interest in shielding consumers from unnecessary or

unnecessarily inflated deficiency claims.      See NCA § 5.211

comment (1970).    See also Rubin, Deficiency Judgments:    A

Louisiana Overview, 69 La. L. Rev. 783, 786 (2009) (rules

regulating deficiencies balance interests of debtors, creditors,

and public policy).    The approach to calculating fair market

value discussed supra preserves and protects that balance.

Regardless, nothing in the legislative history imposes a fair

market retail value standard.

     iii.    Automobile repossession market.   Our interpretation

of the statutory language and legislative history is also

consistent with the practical realities of the automobile

repossession market.    As evidenced by an extensive study of the

automobile repossession market by the Federal Trade Commission

in the 1970s, creditors have an incentive to obtain the highest

possible price for collateral that they repossess.     Federal

Trade Commission, Trade Regulation; Credit Practices; Final

Rule, 49 Fed. Reg. 7740, 7783 (Mar. 1, 1984).8     This study also

concluded that using fair market retail value to calculate

deficiencies "has several defects that make it completely

impractical."    See Federal Trade Commission, Report of the

     8   As discussed supra, G. L. c. 255B, § 20B, was enacted in
1973.    See St. 1973, c. 629.
                                                                     17


Presiding Officer on Proposed Trade Regulation Rule:     Credit

Practices, at 238 (1978) (FTC Report).    The commercial realities

of today's market, as described in the record, confirm both of

these propositions.

    Creditors generally do not sue to collect the deficiency.

See FTC Report, supra at 220 ("Testimony and evidence presented

by many witnesses at the hearings showed that deficiency

judgments were not often sought and that recoveries of

deficiencies did not provide creditors with a significant amount

of revenue").   See also id. at 221-222 ("Creditor-repossessors

on an average filed no more than one suit for every five cars

repossessed . . ."); J.J. White & R.S. Summers, Uniform

Commercial Code § 25-10, at 919 (4th ed. 1995) ("In many cases

in which cars are repossessed and resold -- perhaps in the large

majority -- no claim for deficiency is filed").    Indeed, Honda

has filed lawsuits to collect the deficiencies fewer than five

times over the past few years even though it sells tens of

thousands of motor vehicles each year, of which approximately

twenty to thirty per cent are repossessed vehicles.     It is also

unlikely that the creditor will recover much, if any, of the

resulting deficiency.   See National Consumer Law Center,

Repossessions § 12.1.1 (9th ed. 2017) ("Creditors know they are

able to collect only a small percentage of deficiency

judgments").    The FTC found that creditors only collected
                                                                      18


between five and fifteen per cent of these deficiencies.       See 49

Fed. Reg. at 7783.    In this case, the evidence suggests that

Honda has collected less than ten per cent of the deficiency

judgments that it does obtain.9    These realities all incentivize

a creditor to maximize the sale price.     Thus, for the creditor,

the repossession and disposition of the collateral is almost

always the last opportunity to minimize the loss caused by a

consumer defaulting.     See Matter of Excello Press, Inc., 890

F.2d at 901 ("[W]hy would [a secured party] forgo a dollar today

for the chance to enforce a deficiency judgment tomorrow?").

     There are also practical problems with imposing a retail

market price.    In the motor vehicle industry, retail sales

require capital, facilities, and personnel, which creditors

often lack.     FTC Report, supra at 229-231.   Moreover, selling a


     9 The dissent's concern about, and heavy reliance upon, the
"cooperative, perhaps unwitting, consumer," post at note 1, who
would default on instalment payments but then pay the entire
outstanding balance after repossession and sale but before the
creditor sues to collect the debt, has absolutely no support in
either this record or the extensive record considered by the
Federal Trade Commission when it rejected a fair market retail
value standard on policy grounds. See Federal Trade Commission,
Trade Regulation; Credit Practices; Final Rule, 49 Fed. Reg.
7740, 7783 (Mar. 1, 1984). The record supports the exact
opposite conclusion, that defaulting debtors who have had their
automobiles repossessed do not "simply pay" the deficiency.
See, e.g., id. (creditors on average collect five to fifteen per
cent of deficiencies); National Consumer Law Center,
Repossessions § 12.1.1 (9th ed. 2017) ("Creditors know they are
able to collect only a small percentage of deficiency
judgments").
                                                                   19


repossessed motor vehicle at retail entails further costs, such

as storage, overhead, and most importantly, reconditioning of

the vehicle for sale at retail.   Id. at 247 (noting "convincing

evidence that many repossessed automobiles, and probably the

overwhelming majority, require extensive reconditioning or

repair to make them suitable for sale at retail").   As the FTC

noted, when the creditors who repossess vehicles are retailers,

they will usually sell the vehicle at retail.   See 49 Fed. Reg.

at 7784.   When they are not retailers, however, the retail

market may be neither practical nor fair.10   Indeed, Honda is not


     10The dissent's fair market retail value standard has been
described, after exhaustive study, as "manifestly and patently
unfair to creditors." Federal Trade Commission, Report of the
Presiding Officer on Proposed Trade Regulation Rule: Credit
Practices, at 239 (1978). The dissent nonetheless contends that
the Legislature intended to impose this commercially
unreasonable standard, a standard that has "no generally
accepted meaning," id. at 237, and that is not mentioned
anywhere in the General Laws or our case law. In an attempt to
support this highly unusual standard, the dissent argues that
the Legislature would not have gone from a commercially
reasonable standard to a fair market value standard as described
by the court, as the two standards are too similar in the
dissent's view. Post at     -   . The dissent then goes further
and misreads the court's decision as stating that the court has
concluded that these two standards are the same. Id. at     .
This is incorrect. We recognize that there is great overlap
between "fair market value" and "commercially reasonable," but
emphasize that there are meaningful differences between a
commercially reasonable standard and a fair market value
standard. For example, under the Uniform Commercial Code, the
fact that a creditor could have obtained a higher price does not
necessarily mean that a disposition was commercially
unreasonable. See G. L. c. 106, § 9-627 (a). Under a fair
market value standard, however, the creditor must obtain "the
                                                                   20


licensed to sell on the retail market and may interfere with the

legal rights of independent Honda dealers.

    Finally, the fact that industry guides, such as the Black

Book used by Honda, provide different estimated prices simply

reflects the reality that consumers, wholesalers, and retailers

each add varying amounts of value to the vehicle that are built

into the different sale prices that each can obtain from

consumers.   See Lawless & Ferris, Economics and the Rhetoric of

Valuation, 5 J. Bankr. L. & Prac. 3, 5 (1995) ("The reasons for

the price difference result from the manner in which the retail

and wholesale automobile markets operate, not because the same

automobile can have two different values").   For example, the

difference between the estimated retail value of an automobile

and the estimated wholesale value of an automobile is often a

result of the costs of retailing.   See id. at 18 ("inflated

retail price includes value-adding activities by the retailer").

See also FTC Report, supra at 230-231.

    Imposing a fair market retail value on sales by all

creditors would also appear to have unintended consequences.     It



highest price which a hypothetical willing buyer would pay to a
hypothetical willing seller in an assumed free and open market"
or credit the debtor with that amount. Epstein v. Boston Hous.
Auth., 317 Mass. 297, 299 (1944). Regardless, reframing and
refining a commercially reasonable standard to be a fair market
value standard is quite different from imposing a commercially
unreasonable standard, the approach recommended by the dissent.
                                                                    21


would likely increase the cost of borrowing because many

creditors lack the means, and some, like Honda, the legal right,

to sell repossessed vehicles at retail.     See 49 Fed. Reg. at

7784.   In the end, these costs would invariably be passed on to

all consumers.   The result would likely be more expensive

financing even for the vast majority of borrowers who pay off

their vehicle loans.

    In sum, the Legislature did not dictate a particular market

and left the determination of fair market value to the courts in

contested cases.   The plain language of the statute, the

legislative history, and the realities of the automobile

repossession market all support this approach to the

determination of fair market value.

    b.   Questions two and three.     Questions two and three are

closely related, as each asks whether the notice required by the

Uniform Commercial Code can be sufficient even if it does not

describe the debtor's deficiency as the difference between the

outstanding balance and the fair market value of the collateral.

Specifically, these questions ask:

    "2. Whether, and in what circumstances, a pre-sale notice
    is 'sufficient' under [the Uniform Commercial Code, G. L.
    c. 106, § 9-614 (4) and (5)], and 'reasonable' under [the
    Uniform Commercial Code, G. L. c. 106, § 9-611 (b)], where
    the notice does not describe the consumer's deficiency
    liability as the difference between what the consumer owes
    and the 'fair market value' of the collateral, and the
    transaction is governed by [G. L. c. 255B]?
                                                                  22


    "3. Whether, and in what circumstances, a post-sale
    deficiency explanation is 'sufficient' under [the Uniform
    Commercial Code, G. L. c. 106, § 9-616,] where the
    deficiency is not calculated based on the 'fair market
    value' of the collateral, and the transaction is governed
    by [G. L. c. 255B]?"

We conclude that the notice that is required by the Uniform

Commercial Code is never sufficient where the deficiency is not

calculated based on the fair market value of the collateral and

the notice fails to accurately describe how the deficiency is

calculated.

    The Uniform Commercial Code provisions in G. L. c. 106,

§§ 9-600, generally govern defaults in secured transactions.

General Laws c. 106, § 9-614, requires that notice be given to a

debtor prior to the disposition of repossessed collateral, and

G. L. c. 106, § 9-616, requires that notice be provided after

the collateral is sold.   Under each section, the notices must

include certain information to be sufficient, including a

description of any deficiency that the debtor will owe.     See

G. L. c. 106, § 9-614 (1) (B); G. L. c. 106, § 9-616 (b) (1).

The Uniform Commercial Code also provides standard form

language, including the following statement for presale notices:

"The money that we get from the sale (after paying our costs)

will reduce the amount you owe.   If we get less money than you

owe, you (will or will not, as applicable) still owe us the

difference.   If we get more money than you owe, you will get the
                                                                    23


extra money, unless we must pay it to someone else."    G. L.

c. 106, § 9-614 (3).    A notification following the above form

"is sufficient, even if additional information appears at the

end of the form."   G. L. c. 106, § 9-614 (4).

    General Laws c. 255B, § 20B (d), provides that the Uniform

Commercial Code applies "unless displaced by the provisions of

[§ 20B] and [§ 20A]."    General Laws c. 255B, § 20B, calculates

the deficiency using the fair market value of the vehicle,

whereas the Uniform Commercial Code calculates deficiencies

using the proceeds of a "commercially reasonable" sale.      See

G. L. c. 106, § 9-615.    Because the Uniform Commercial Code and

G. L. c. 255B, § 20B, calculate deficiencies differently, the

use of the Uniform Commercial Code safe harbor language is

inconsistent with Massachusetts law.    The notice that is

required by G. L. c. 106, § 9-614, and G. L. c. 106, § 9-616,

must describe the deficiency as the difference between the fair

market value of the collateral and the debtor's outstanding

balance because this is what is required by § 20B.

    Therefore, when creditors are providing notice prior to

disposing of the collateral under § 9-614 (3), the notice should

include language similar to the following statement:

    "The fair market value of your vehicle will be used to
    reduce the amount you owe, which is your outstanding
    balance plus the reasonable costs of repossessing and
    selling the vehicle. If the fair market value of your
    vehicle is less than you owe, you (will or will not, as
                                                                   24


    applicable) still owe us the difference. If the fair
    market value of your vehicle is more than you owe, you will
    get the extra money, unless we must pay it to someone
    else." (Emphasis added.)

Additionally, when providing notice of the deficiency after the

sale under § 9-616, the notice should clearly identify the fair

market value of the vehicle in the calculation of the

deficiency.   This statement replaces the description of "the

amount of proceeds of the disposition" that is currently

required by § 9-616 (c) (2).   Ultimately, the notice required by

the Uniform Commercial Code will only be considered sufficient

if it accurately describes the deficiency under G. L. c. 255B,

§ 20B.

    3.   Conclusion.   In transactions governed by G. L. c. 255B,

a debtor's deficiency liability must be calculated as the

difference between the debtor's unpaid balance and the fair

market value of the repossessed collateral.   In determining fair

market value, the Legislature did not dictate the creditor's

market choice in the first instance and left the ultimate

determination of fair market value to the courts in contested

cases, taking into account both creditor and debtor interests,

the means, methods, and markets used to sell the vehicle, and a

rebuttable presumption of estimated retail value as provided in

periodically published trade journals to put the market choice

and valuation of the creditor to the test.    In presale notices
                                                                25


and postsale deficiency explanations, creditors must describe

and calculate the debtor's deficiency as based on "the fair

market value" of the vehicle.

    The Reporter of Decisions is directed to furnish attested

copies of this opinion to the clerk of this court.   The clerk in

turn will transmit one copy, under the seal of the court, to the

clerk of the United States Court of Appeals for the First

Circuit, as the answers to the questions certified, and will

also transmit a copy to each party.
    GANTS, C.J. (dissenting).     I respectfully dissent.

    Most American consumers purchase their motor vehicles on

credit, in many cases by entering into a retail instalment

contract.     See Federal Reserve, Report on the Economic Well-

Being of U.S. Households in 2015, at 42 (2016).     Under a typical

retail instalment contract, the consumer makes an initial down

payment and promises to pay the remainder of the purchase price,

plus interest and fees, in regular instalments.     The consumer

can keep the vehicle as long as he or she continues to make

these payments or otherwise repays the loan in full; if the

consumer falls behind on payments or stops making them, the

creditor can repossess the vehicle and sell it to satisfy the

unpaid debt.     If, after the vehicle is sold, some part of the

debt remains unpaid, the consumer may be liable for that

deficiency.

    In Massachusetts, this process of repossession and sale is

governed by the Retail Instalment Sales of Motor Vehicles Act

(act), G. L. c. 255B, §§ 20A and 20B, and the Uniform Commercial

Code (UCC), G. L. c. 106, §§ 9-601 to 9-628.     Under § 20B of the

act, a creditor who repossesses and sells a vehicle may be

entitled to recover from the consumer the deficiency, if any,

that remains after deducting the "fair market value" of the

vehicle from the consumer's unpaid balance.     G. L. c. 255B,

§ 20B (e) (1).    Section 20B also establishes a presumption, in
                                                                        2


deficiency proceedings, that trade estimates of retail value --

such as those found in the Black Book -- reflect the vehicle's

"fair market value."    G. L. c. 255B, § 20B (e) (2).

    Based on this presumption, and on the commercial realities

that underlie this statute, as well as its purpose and

legislative history, I would hold that the "fair market value"

of a vehicle under § 20B is the fair market retail value of that

vehicle.   The court, however, concludes that the term "fair

market value" in § 20B does not necessarily mean retail value,

and that it is only presumed to have that meaning when a

creditor sues a consumer for a deficiency.    See ante at      .    I

do not agree with this interpretation for three reasons.

    First, the court's interpretation of § 20B disregards the

commercial realities of the motor vehicle market.    The United

States Court of Appeals for the First Circuit has asked us

"[w]hether the 'fair market value' of collateral under [G. L.

c. 255B, § 20B,] is the fair market retail value of that

collateral," recognizing that, in the motor vehicle market,

prices hinge on whether the vehicle is sold at wholesale or at

retail.    Here, for example, at the time that the plaintiff's

vehicle was sold, the Black Book listed the wholesale value for

a comparable vehicle as $7,750, and its retail value as $9,800.

In response, the court answers that "fair market value" means

fair market value.     Ante at   .   This is not a helpful answer
                                                                     3


to the First Circuit's reported question.    Nor will it aid a

judge or jury asked to determine the amount of a deficiency at

trial.   It is hardly helpful to recite the classic definition of

"fair market value," stating that it is the "highest price that

a willing buyer would pay . . . in a fair market for the

vehicle," when that price will depend on whether that willing

buyer is a wholesale dealer or a retail consumer.    Ante at     .

And the court's additional guidance -- that "[i]f contested, a

court must determine the fair market value based on all the

facts and circumstances, including the goods to be sold, the

relevant markets, the particular creditors and debtors, and the

rebuttable presumption" -- will not be any more illuminating to

a judge or jury.     Id.

    The Legislature recognized the commercial realities of the

motor vehicle market when it established a presumption in

§ 20B (e) (2), providing that in deficiency proceedings,

"[p]eriodically published trade estimates of the retail value of

goods shall . . . be presumed to be the fair market value of the

collateral" (emphasis added).    Consequently, where the creditor

sues the consumer because he or she has failed to pay a

deficiency, the presumptive fair market value of the vehicle is

the retail value listed in trade estimates, such as those found

in the Black Book.    And in the absence of other evidence

rebutting that presumptive value, the deficiency judgment must
                                                                      4


deduct this retail value from the unpaid balance.     See Epstein

v. Boston Hous. Auth., 317 Mass. 297, 302-303 (1944) (where

presumption is unrebutted, it "retain[s] its force as a rule of

law requiring the judge" to apply presumption).     See also 9 J.H.

Wigmore, Evidence § 2487(c), at 295 (Chadbourn rev. ed. 1981)

("[A] presumption creates for the opponent a duty of producing

evidence, in default of which he loses as a matter of legal

ruling").

    Where the Legislature has established trade estimates of

retail value as the presumed fair market value of the collateral

in a deficiency proceeding, I believe it must have intended that

"fair market value" be the retail value.   Indeed, if the

Legislature had intended the term "fair market value" to mean

something other than retail value, it would make no sense --

given that trade estimates typically include retail, wholesale,

and trade-in values -- to choose trade estimates of retail value

as a presumptive starting point.   National Consumer Law Center,

Repossessions § 10.9.5.1, at 341-342 (9th ed. 2017).     To be

sure, the presumption in § 20B (e) (2) is rebuttable, but only

with evidence that the trade estimates do not reflect the

collateral's actual fair market retail value, for example,

because the condition of the vehicle is especially poor.     The

creditor can provide an alternative measure of retail value, but
                                                                     5


the ultimate value to be determined must still be the fair

market retail value.

     The court takes the position that § 20B "does not dictate

use of a particular market" and that the term "fair market

value" need not categorically refer to either wholesale or

retail value.   Ante at    .   I agree with the court that the

determination of actual fair market value in any given

deficiency proceeding will depend on the specific facts.     Ante

at   .    But the meaning of the term itself is a legal question,

which the First Circuit has asked us to resolve.    See Wright vs.

United States, U.S. Ct. App., Nos. 90-5089 & 90-5096 (Fed. Cir.

Feb. 12, 1991) ("How fair market value is defined is a legal

question; what constitutes fair market value in a particular

case is a factual matter").    "[F]air market value is . . . to be

determined [not] in a rarefied realm of abstract calculation,

but from the perspective of a hypothetical buyer in the real

world," Portland Natural Gas Transmission Sys. v. 19.2 Acres of

Land, 195 F. Supp. 2d 314, 321 (D. Mass. 2002), and in the real

world, the value of a vehicle typically depends -- as we can see

from the Black Book and other trade manuals -- on whether it is

sold in a wholesale market or in a retail market.

     Second, the court's interpretation of § 20B would have

practical results that I am confident the Legislature did not

intend.   Under the court's reading, a consumer's deficiency is
                                                                        6


presumed to be based on retail value only at a deficiency

proceeding, but not where the consumer decides to voluntarily

pay the deficiency.      Not only does this interpretation create a

significant difference between the amount the creditor could

demand from the consumer and the amount it would likely be

awarded at a deficiency proceeding in a court of law, but it

would also provide an incentive for a consumer to refuse to pay

a deficiency, knowing that the creditor would likely be entitled

to receive less at a deficiency proceeding.1      I do not believe

that in enacting this presumption the Legislature intended to

penalize consumers who pay their debts and reward those who do

not.       See Attorney Gen. v. School Comm. of Essex, 387 Mass. 326,

336 (1982) ("We assume the Legislature intended to act

reasonably").




       To illustrate the practical results of the court's
       1

interpretation, consider this example: if a consumer's vehicle
is repossessed because of an unpaid balance of $20,000, and is
sold at an auction for $8,000 when its estimated Black Book
retail value is $10,000, under this reading the creditor could
demand a deficiency of $12,000. The cooperative, perhaps
unwitting, consumer would simply pay the $12,000. The
uncooperative, perhaps more savvy, consumer who refuses to pay
may be sued by the creditor for the deficiency, but in such a
lawsuit he or she would benefit from the statutory presumption
of the estimated Black Book retail value and, unless that
presumption was rebutted by the creditor, would be ordered to
pay only $10,000 in a deficiency judgment. Thus, a consumer who
just pays the deficiency when asked will likely pay more than a
consumer who waits to be sued.
                                                                    7


    Third, the court's interpretation is at odds with the

purpose and history of the act.   In order to ascertain the

meaning of § 20B (e), it is crucial to understand the statutory

scheme that it replaced and the reasons behind this change.

Because the court has largely ignored this history, I summarize

it here.

    The predecessor to the current § 20B of the act was first

enacted in 1966, together with an amended § 20A.   St. 1966,

c. 284, § 3.   As originally enacted, these twin provisions gave

creditors wide latitude in the repossession and sale of vehicles

purchased under retail instalment contracts.   Notice of the

intent to repossess was not required:   a creditor could either

notify the consumer fourteen days before repossessing, in which

case the creditor was entitled to the reasonable costs of

repossession, storage, and sale, or it could simply repossess

without prior notice, in which case it would forgo recovery of

those costs.   See former G. L. c. 255B, § 20A (A), (C) (1)-(2),

inserted by St. 1966, c. 284, § 3.   Following repossession, the

consumer could redeem the collateral only by paying the full

amount due under the contract.    See former G. L. c. 255B, § 20B

(B)-(C), inserted by St. 1966, c. 284, § 3.    If the consumer

failed to redeem, and the collateral was sold, the act

contemplated that the consumer would be liable for any

deficiency, see former G. L. c. 255B, § 20A (D), inserted by
                                                                     8


St. 1966, c. 284, § 3, but was silent as to how that deficiency

would be calculated.    As a result, the background rules of the

Uniform Commercial Code (UCC) applied, and the creditor could

claim a deficiency equal to the difference between the

outstanding loan balance and the sale proceeds as long as the

sale was "commercially reasonable."     See former G. L. c. 106, §

9-504 (1)-(3), inserted by St. 1957, c. 765, § 1.     See generally

Queenan, The New Consumer Repossession Law, 58 Mass. L. Q. 412,

416-417 (1973) (Queenan).

    Sections 20A and 20B were substantially amended in 1973,

see St. 1973, c. 629, § 2, at a time when public concern over

abusive consumer credit practices was mounting.     Consumer

instalment credit had swelled nationwide, more than doubling

from $42 billion outstanding in 1960 to $102 billion in 1970.

Federal Reserve, Financial and Business Statistics, 59 Fed. Res.

Bull. A56 (1973).    Consumers in 1970 shouldered more than $35

billion of debt in order to finance the purchase of motor

vehicles -- more than one-half of the vehicles purchased in the

United States were purchased on credit -- and another $31

billion for other consumer goods.     See id.; United States Bureau

of the Census, Statistical Abstract of the United States 549

(94th ed. 1973).    When consumers defaulted on these loans,

creditors had a broad range of remedies to choose from,

including repossession of the collateral and lawsuits for
                                                                        9


deficiency, which typically resulted in default judgments

against consumers because of their failure to appear.       See

National Commission on Consumer Finance, Consumer Credit in the

United States 23-42 (1972).    Some creditors engaged in

especially aggressive repossession tactics, seizing collateral

in the middle of the night or under false pretenses.       See, e.g.,

Whaley v. United States, 324 F.2d 356, 356-357 (9th Cir. 1963),

cert. denied, 376 U.S. 911 (1964) (private repossessor

impersonated Federal law enforcement agent); Boland v. Essex

County Bank & Trust Co., 361 F. Supp. 917, 921 (D. Mass. 1973)

(repossessions involved "stealthful reclamation of motor

vehicles during the nighttime").     See also Firmin & Simpson,

Business As Usual:     An Empirical Study of Automobile Deficiency

Judgment Suits in the District of Columbia, 3 Conn. L. Rev. 511,

512 & n.5 (1971) (Firmin & Simpson) (in study of 106 motor

vehicle deficiency suits in District of Columbia courts, ninety-

five per cent of repossessions were carried out between midnight

and 6 A.M.).

    With the rapid growth of consumer credit, various efforts

were undertaken to protect consumers from overreaching

creditors.     In a pair of landmark decisions, the United States

Supreme Court took substantial steps to limit creditors'

remedies, holding that creditors could not, absent notice or a

hearing, enforce debts by garnishing debtors' wages, Sniadach v.
                                                                     10


Family Fin. Corp. of Bay View, 395 U.S. 337, 342 (1969), or by

seizing collateral under a writ of replevin, Fuentes v. Shevin,

407 U.S. 67, 96 (1972).    See Clark & Landers, Sniadach, Fuentes

and Beyond:   The Creditor Meets the Constitution, 59 Va. L. Rev.

355, 355-362 (1973).   Meanwhile, the Federal Trade Commission

(FTC) in 1973 launched a two-year investigation into the

consumer credit industry, during which it identified several

patterns of abusive practices.     See Federal Trade Commission,

Annual Report 29 (1974).     In particular, the FTC found that

"many creditors abuse the deficiency judgment mechanism by

selling repossessed goods at prices substantially below their

fair market retail value."     40 Fed. Reg. 16,347, 16,348 (1975).

The FTC's findings were consistent with several empirical

studies from the time, which indicated that repossessed motor

vehicles were sold for little more than one-half of their retail

value.2   Although creditors attributed these low resale values to




     2 Researchers in three separate studies concluded that
repossessed motor vehicles were sold, on average, for only fifty
to sixty-five per cent of their retail value, as listed in trade
manuals. See Note, I Can Get It for You Wholesale: The
Lingering Problem of Automobile Deficiency Judgments, 27 Stan.
L. Rev. 1081, 1084-1085 (1975) (study of 216 motor vehicle
deficiency suits filed in Alameda County, California); Firmin &
Simpson, Business As Usual: An Empirical Study of Automobile
Deficiency Judgment Suits in the District of Columbia, 3 Conn.
L. Rev. 511, 512, 518 (1971) (study of 106 motor vehicle
deficiency suits filed in the District of Columbia); Schuman,
Profit on Default: An Archival Study of Automobile Repossession
                                                                   11


the poor condition of repossessed vehicles -- as well as to the

fact that many creditors lacked the facilities or resources to

sell directly to the retail market -- consumer advocates claimed

that creditors profited from the practice.   See Federal Trade

Commission, Report of the Presiding Officer on Proposed Trade

Regulation Rule:    Credit Practices 224-237 (1978).   Some dealers

and finance companies were believed to engage in the practice of

"churning" vehicles, whereby the same vehicle would be

repossessed, sold at a low price to the original dealer, sold

again at a higher price to another consumer, then repossessed

again upon default, and so on, repeating the process of

repossession and sale several times, with hefty deficiency

judgments obtained against each new defaulting consumer.3    See

id. at 233-234.    See also Firmin & Simpson, supra at 517-518



and Resale, 22 Stan. L. Rev. 20, 31 (1969) (study of eighty-
three motor vehicle deficiency suits filed in Connecticut).
     3 To give an example of how the "churning" process works,

suppose a consumer purchases a motor vehicle from a dealer for
$30,000, financing the full amount through a retail instalment
contract. The dealer then assigns that contract to an
affiliated finance company. When the consumer defaults, her
unpaid balance is $20,000. The finance company repossesses the
vehicle and sells it back to the dealer for $15,000, then sues
the consumer, recovering a deficiency of $5,000. Meanwhile, the
dealer sells that same vehicle to another consumer for $25,000.
As a result, the finance company is made whole, having received
the $15,000 in sale proceeds and a $5,000 deficiency judgment,
in full satisfaction of the debt, while its affiliated dealer
makes a $10,000 profit, having purchased the vehicle at
wholesale for $15,000 and sold it at retail for $25,000. This
process can be repeated several times with the same vehicle.
                                                                     12


(creditors who engaged in "churning" were found to sell and

finance same vehicle at least three times).

    Against this background, the Massachusetts Legislature in

1973 undertook to strengthen the rights of consumers in consumer

credit transactions.    "An Act relative to taking possession of

collateral and deficiency judgments," St. 1973, c. 629, was

first recommended for legislative action by the Massachusetts

Consumers' Council (council), an independent agency charged with

acting as a public advocate for consumer interests.     See St.

1963, c. 773.   As the council explained in its recommendation,

"[the] proposed legislation" was intended to "clarify and secure

a debtor's rights."    1973 House Doc. No. 59.   Specifically, the

council stated that "[the] proposed bill," by limiting

creditors' rights to repossess collateral and recover

deficiencies from consumers, "will stop the practice of constant

sale, repossession, deficiency judgment, resale, etc., now

engaged in by some unscrupulous merchants, and will greatly

enhance the protection afforded the unsuspecting consumer."       Id.4


    4  The original version of the 1973 legislation proposed by
the Massachusetts Consumers' Council (council) would have
required a judicial determination before a creditor could
repossess collateral and would have also eliminated the
consumer's deficiency liability where the "cash price" of the
repossessed collateral was $4,000 or less. See 1973 House Doc.
No. 59; 1973 House Doc. No. 66, § 4. It was an amended version
of the council's proposed bill, based also on two other bills on
the same topic, which was subsequently enacted without
                                                                    13


As eventually enacted, the 1973 legislation "impose[d]

substantially greater restrictions on the rights of secured

creditors in consumer credit transactions," amending not only

the laws governing motor vehicle retail instalment sales, G. L.

c. 255B, §§ 20A and 20B, but also the laws governing loans

secured by consumer goods, G. L. c. 255, §§ 13I and 13J, and

other retail instalment sales and services, G. L. c. 255D, §§ 21

and 22.    Queenan, supra at 412.

       The 1973 legislation amended §§ 20A and 20B of the act to

benefit consumers in five significant ways.   First, it

strengthened notice requirements.    Section 20A, as amended, no

longer gives creditors a choice whether to notify consumers

before repossession; rather, it provides that a creditor cannot

take possession of a vehicle unless the creditor gives the

consumer notice, in writing, conspicuously stating the

consumer's rights upon default, including the right to redeem

the collateral after repossession.   G. L. c. 255B, § 20A (b)-

(c).    Second, the 1973 legislation limited the remedies

available to creditors in the event of default.   Section 20A now

provides that, after giving notice of the intent to repossess, a

creditor must wait at least twenty-one days before repossessing

the vehicle or bringing an action against the consumer.     G. L.


substantial change.   See 1973 House Doc. No. 6884; St. 1973,
c. 629.
                                                                     14


c. 255B, § 20A (d).   During that period, a creditor also may not

accelerate the debt; thus, whereas previously a consumer could

cure the default only by paying the full debt, under the amended

§ 20A, a consumer need only make the overdue payments to cure

the default and avoid repossession.    G. L. c. 255B, § 20A (d)-

(e).    Third, § 20B now limits creditors' right to repossess,

allowing repossessions without a prior hearing only where they

can be carried out "without use of force [or] breach of peace,"

and, if repossession requires entry onto the consumer's

property, only with the consumer's consent.    G. L. c. 255B,

§ 20B (a).   Fourth, the amended § 20B extends from fifteen to

twenty days the period during which the consumer may redeem the

collateral after repossession.   Compare G. L. c. 255B,

§ 20B (c), with former G. L. c. 255B, § 20B (A), inserted by

St. 1966, c. 284, § 3.

       Fifth, and of most relevance here, the 1973 legislation

significantly narrowed the scope of consumers' deficiency

liability.    Although under the UCC a consumer would have been

liable for any deficiency following a "commercially reasonable"

sale of the collateral, see former G. L. c. 106, § 9-504 (2)-

(3), inserted by St. 1957, c. 765, § 1, § 20B was amended to

provide that a consumer whose unpaid balance is $2,000 or less

cannot be held liable for any deficiency.     G. L. c. 255B, § 20B

(d).    Section 20B was also amended to change the rules for
                                                                  15


calculating a consumer's deficiency.    Whereas under the UCC, the

consumer's deficiency would have been the difference between the

unpaid balance and the proceeds from a "commercially reasonable"

sale, see former G. L. c. 106, § 9-504 (1)-(2), inserted by St.

1957, c. 765, § 1, § 20B now specifically states that the

deficiency is the difference between the unpaid balance and "the

fair market value of the collateral."    G. L. c. 255B, § 20B (e)

(1).

       It is evident from the statutory evolution of § 20B, as

well as its legislative history and historical context, that it

was intended broadly to protect the rights of consumers and,

more specifically, to protect consumers from potential abuse by

creditors who would repossess their vehicles, sell them at

distressed prices, and then claim large deficiencies.

Consistent with this legislative purpose, the term "fair market

value" in § 20B (e) (1) must be read to mean the fair market

retail value of the vehicle.   Calculating a consumer's

deficiency based on retail value, rather than auction proceeds,

diminishes the risk of abuse and specifically the risk of

"churning," not only because it incentivizes creditors to sell

the repossessed vehicle for the highest possible price, but also

because -- in cases where the creditor fails to do so -- it
                                                                   16


places the cost of that failure on the creditor, shielding

consumers from excessive deficiency claims.5

     It is also evident that, in making these amendments, the

Legislature intended to displace the UCC provisions governing

deficiency liability.   Any doubt on this issue was resolved in

2001, when the Legislature made explicit that it intended to

displace the UCC in this respect, adding to § 20B the language,

"[n]otwithstanding the provisions of [UCC, G. L. c. 106, §§ 9-

601 to 9-628]."   St. 2001, c. 26, § 48.    The court appears to

adopt Honda's view that § 20B (e) (1) must be read together with

the UCC, and that the term "fair market value" refers to the

proceeds of a "commercially reasonable" sale, citing Matter of

Excello Press, Inc., 890 F.2d 896, 904-905 (7th Cir. 1989), for

the proposition that "[t]he product of a commercially reasonable

sale is the fair market value."   Ante at      .6   But if the


     5 The court takes issue with my reading of the legislative
history of § 20B, claiming that it "selectively references
portions of the legislative history," that is, the proposal from
the council and its accompanying recommendation. Ante at note
5. See 1973 House Doc. No. 59; 1973 House Doc. No. 66. The
court is correct that by 1973 the Legislature had considered
several different proposals on the issue of consumer
deficiencies, and that none of the proposed bills -- including
the council's proposal -- referenced retail value. Ante at note
5. And I do not claim otherwise. See note 4, supra. I rely on
the council's proposal only to the extent that, in its
accompanying recommendation, it sheds light on the consumer
protection concerns that motivated the amendments.
     6 In addition, the court declares that "[t]he fair market

value of the vehicle . . . is just that: the highest price that
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Legislature had intended a consumer's deficiency to be

calculated based on the proceeds of a "commercially reasonable"

sale, as was already the case under the UCC, why would it have

bothered to enact § 20B (e) (1) at all?   The court offers no

explanation for why the Legislature would have enacted this

provision if it intended only to preserve the status quo, or why

it chose to use the term "fair market value," rather than keep

the "commercially reasonable" language already found in the UCC,

G. L. c. 106, § 9-610, if, in practice, it meant the same thing.

The court's failure to do so is especially perplexing given that

it later acknowledges, in its answer to the First Circuit's

second and third questions, that the two standards are not the

same.   Ante at    ("the Uniform Commercial Code and G. L. c.

255B, § 20B, calculate deficiencies differently").

    Unsurprisingly, the court's interpretation of § 20B (e) (1)

is also at odds with contemporary understandings of the statute

when it was amended in 1973.   James F. Queenan, Jr., a

commercial law practitioner and later a United States Bankruptcy



a willing buyer would pay Honda in a fair market for the
vehicle" (emphasis added). Ante at     . But, as the court has
emphasized, Honda sells all its repossessed vehicles at auction
and does not have access to the retail market. Ante at     . In
declaring that the fair market value of the vehicle is the
highest price paid to Honda, then, the court implicitly declares
that the fair market value is the wholesale value that Honda
obtains at auction, as long as the auction is commercially
reasonable.
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Court judge, summarized the 1973 amendments to §§ 20A and 20B

immediately after their approval, writing:

     "Under the Uniform Commercial Code a secured party may
     claim a deficiency based upon the proceeds of the resale
     less expenses so long as the resale is 'commercially
     reasonable.' Now as to consumer goods the amount of the
     deficiency is computed solely with reference to the 'fair
     market value of the collateral' less 'reasonable
     repossession and storage costs.' . . . No longer will a
     secured party be entitled to rely on the wholesale price in
     computing his deficiency." (Emphasis added; footnote
     omitted.)

Queenan, supra at 417.

     In support of its interpretation, the court contends that,

because creditors do not generally sue for deficiencies, and are

unlikely to recover them even if they do, Honda and other

creditors already have every incentive to obtain the highest

possible price for repossessed vehicles.     Ante at    -     .   The

court also contends that many creditors lack access to the

retail market and therefore, as a practical matter, cannot

obtain a price approximating retail value.    Id. at     .    As an

empirical matter, this may very well be true.     But legally, it

is irrelevant.    To interpret the meaning of § 20B (e) (1), this

court need not evaluate the auction methods of Honda or any

other creditor.   We need not inquire into the creditors'

incentives, or seek to ascertain the incidence of deficiency

suits or the subsequent likelihood of recovery.     Ante at       -

.   All that we have been asked to determine is what the
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Legislature intended in 1973, and in 1973 the Legislature

enacted § 20B to protect "unsuspecting consumer[s]" from

"unscrupulous merchants" engaged in "the practice of constant

sale, repossession, deficiency judgment, [and] resale," 1973

House Doc. No. 59, in the belief that crediting the consumer

with the fair market retail value of the vehicle was the fair

way to accomplish that goal.

    Finally, the court also warns that, if deficiencies are

calculated based on fair market retail value, the costs of

borrowing would rise and "[i]n the end, these costs would

invariably be passed on to all consumers."   Ante at    .     Even

if it were this court's task to determine whether this is the

case -- and it is not -- I am skeptical that this would be the

"invariable" consequence.   If, as the court states, "the

repossession and disposition of the collateral is almost always

the last opportunity" for a creditor to recover a debt after

default, and creditors therefore have no real expectation of

recovering the deficiency, ante at     , then it should not

matter much to creditors, when setting their interest rates, how

deficiencies are calculated.   If deficiencies are rarely paid,

then reducing the amount of those deficiencies by the fair

market retail value of the vehicle would have little or no

impact on the interest rates that a creditor would charge for a

motor vehicle loan.
                                                                  20


    Consistent with the commercial realities underlying § 20B,

and with its purpose and history, I would hold that a consumer's

deficiency liability must be calculated as the difference

between the consumer's unpaid balance and the fair market retail

value of the vehicle.   Accordingly, I would also hold that in

their presale and postsale deficiency explanations, creditors

must describe and calculate the consumer's deficiency liability

as such.   I would therefore answer "Yes" in response to the

first certified question, and "Never" to the second and third

certified questions.
