Present:   All the Justices

R.K. CHEVROLET, INC.

v.   Record No. 971907        OPINION BY JUSTICE ELIZABETH B. LACY
                                           June 5, 1998
BANK OF THE COMMONWEALTH

           FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON
                     Wilford Taylor, Jr., Judge

      In this appeal, we consider whether the trial court

properly awarded damages against an automobile dealership for

breaching its agreement with a lender by incorrectly titling a

motor vehicle.

      In July 1995, John H. Kauffman and Janice S. Carter

purchased a 1995 Chevrolet Camaro Z-28 from R.K. Chevrolet,

Inc. (RK).    To finance the purchase, Kauffman obtained a loan

in the amount of $24,398.87 from the Bank of the Commonwealth

(the Bank).   As a part of the loan transaction, the Bank

required that the Camaro be titled in Kauffman's name and that

a first lien in the Bank's favor be recorded on the

certificate of title.    The Bank issued a check for the

purchase price of the car, showing Kauffman and RK as payees.

The reverse side of the check contained a legend reciting the

obligation of the payees. 1    Kauffman and RK endorsed the check;



      1
       The legend read as follows: "The endorsement of this
check by the payee constitutes an obligation to the Bank of
the Commonwealth that the payee will record a first lien in
favor of the Bank of the Commonwealth, on one 1995 Chevrolet
Z-28 Camaro Identification No. 2G1FP22PXS2151739 Title in the
Name of John H. Kauffman In the amount of $23,828.00 Secured
by a Security Agreement Dated July 25, 1995."
however, the car was titled in the name of Janice Carter, not

Kauffman.

      Approximately one year later, the Bank discovered the

titling error and contacted RK and Carter.    Although both the

Bank and RK tried to convince Carter to re-execute the title

to the Camaro and add Kauffman's name, she refused.

      The Bank filed this action on September 24, 1996,

alleging that RK and Kauffman breached their contractual

obligations to the Bank by failing to properly title and

secure the Bank's lien on the Camaro. 2   The trial court entered

judgment in favor of the Bank, imposing joint and several

liability on RK and Kauffman in the amount of $19,131.75 plus

interest.

      RK appeals the trial court's judgment on three grounds.

First, RK asserts that even though it breached its contractual

duties to the Bank, the Bank sustained no damages as a result

of RK's breach.    Any damages suffered by the Bank, RK claims,

were caused by Kauffman's failure to make payments on his

loan. 3   We disagree.




      2
       Kauffman filed a cross-claim against RK, and RK filed an
amended third-party motion for judgment against Carter.
Neither of these claims is at issue in this appeal.
     3
       At the time the suit was filed, the Bank had notified
Kauffman that some payments were late, but had not declared
the loan in default. At trial in May 1997, the Bank's
evidence showed that the loan payments were paid through
February 1997.
                               2
     When a motor vehicle dealer breaches its contractual

warranty with a lender by not properly titling a vehicle, the

lender is damaged because it loses its security for the loan.

United Virginia Bank of Fairfax v. Dick Herriman Ford, Inc.,

215 Va. 373, 375, 210 S.E.2d 158, 161 (1974).   The amount of

the lender's recovery is limited to the lesser of the value of

the vehicle at the time of the breach and the amount of the

intended lien.   The lender's recovery is also diminished by

any loan payments actually received.   Id. at 375-76, 210

S.E.2d at 161.

     Here, like the dealer in Dick Herriman Ford, RK breached

its contract with the Bank.   While the record is not clear as

to the precise calculations made by the trial court in

reaching the damage amount, it does show that the amount of

the intended lien was $23,828.00 and that the value of the

collateral at the time of purchase was $24,289.45. 4   RK does

not dispute the Bank's representations that the trial court

decreased the award by the loan payments received by the Bank.

     RK seeks to distinguish Dick Herriman Ford by asserting

that in that case, the bank suffered "actual damages as a

direct proximate result" of the dealership's breach because

the borrower stopped making payments on the loan and took the

vehicle out of the state.   This factual distinction is not




                                3
material to the holding in Dick Herriman Ford.    In both cases,

the vehicle was mistitled and the lenders could not enforce

their liens, regardless of the location of the vehicles or the

status of the loan payments.    The injury suffered was the loss

of the collateral for the loan, not the failure to make

payments on the loan or the location of the vehicle.

     RK next asserts that, even if the Bank were entitled to

damages, the trial court erred in granting the Bank a "full

monetary judgment" because the Bank failed to mitigate its

damages.   In support of this claim, RK refers to evidence of

the Bank's contacts with Carter through its collection manager

and the Bank's release of its lien on a duplicate title issued

for the Camaro.   The Bank responds that the evidence showed

that its collection manager tried to convince Carter to re-

execute the title and add Kauffman's name, that Carter

testified she was not going to sign any documents changing the

title to the Camaro, that RK requested and handled the

paperwork on the duplicate title, and that even though the

original title reflected a lien in favor of the Bank, the Bank

had no legal interest in the Camaro.

     Mitigation of damages is an affirmative defense for which

RK bears the burden of proof.    Marefield Meadows, Inc. v.

Lorenz, 245 Va. 255, 266, 427 S.E.2d 363, 369 (1993); Foreman

     4
       The purchase price as shown on the title application is
conclusive evidence of the vehicle's value. Dick Herriman
                               4
v. E. Caligari & Co., Inc., 204 Va. 284, 289-90, 130 S.E.2d

447, 451 (1963).    Whether RK has satisfied its burden of

showing that the Bank failed to mitigate its damages is a

factual determination based on the evidence produced.

Considering this record, we cannot say that the trial court

erred in failing to find that the Bank did not mitigate its

damages.

     Finally, RK argues that the award against it includes

amounts attributable to late fees, interest, and collection

costs of $674.62 which should have been assessed against

Kauffman only. 5   Because, as we noted above, the record does

not show how the award was calculated, the record is

insufficient to address this claim.

     For the above reasons, we will affirm the judgment of the

trial court.

                                                        Affirmed.




Ford, 215 Va. at 376, 21 S.E.2d at 161.
     5
       RK apparently bases this amount on a past due notice
sent Kauffman which was introduced as an exhibit. That
notice, however, shows late charges of only $180.63 and the
loan amount past due as $493.99, for a total amount due of
$674.62.
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