Appeal from the District Court of Hot Springs County The Honorable Robert E. Skar, Judge
The opinion of the court was delivered by: Golden, Justice.
Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be made before final publication in the permanent volume.
[¶1] Earl D. Wallace and Nawana V. Wallace (the Senior Wallaces) borrowed $15,789 from Pinnacle Bank - Wyoming (Pinnacle) to finance a vehicle the Senior Wallaces purchased for their son and his wife (the Junior Wallaces). Although the Senior Wallaces borrowed the money in their own names and agreed to make the payments on the loan, the collateral for the loan was the vehicle they bought for and titled in the Junior Wallaces' names. To that end, the Junior Wallaces signed a Third Party Security Agreement pledging the vehicle as collateral.
[¶2] The day following the loan transaction, the Junior Wallaces filed a bankruptcy petition. During the course of the bankruptcy, the bankruptcy trustee seized and eventually sold the vehicle to benefit the bankruptcy estate. The Senior Wallaces thereafter stopped making payments on the loan.
[¶3] After making demand for payment, Pinnacle filed a complaint in district court seeking damages in the amount of the principal due on the note together with accrued interest, late fees, and attorney fees. The Senior Wallaces contended that because Pinnacle had not taken sufficient steps to protect the vehicle from seizure by the bankruptcy court, the Senior Wallaces no longer had any obligation to repay the loan. The district court rejected the defenses asserted by the Senior Wallaces and granted Pinnacle's motion for summary judgment. We affirm.
[¶4] The Senior Wallaces present the following issues on appeal:
1. Whether Appellee is barred from collecting from Appellants due to the application of the doctrine of avoidable consequences?
2. Whether Appellants' loan obligation was discharged by a supervening frustration?
3. Whether Appellee's impairment of the collateral securing the loan precludes it from collecting on the loan?
4. When Appellee transferred its lien to the Bankruptcy Trustee, was Appellee no longer the proper party in interest to collect on the loan obligation?
5. Whether the failure to provide Appellants with notice of the sale of the collateral should have barred Appellee's suit?
[¶5] On Saturday, August 22, 2009, the Senior Wallaces purchased a 2009 Nissan Versa from a Riverton, Wyoming, automobile dealership. They paid for it in full with a check in the amount of $15,779, and then on Monday, August 24, 2009, they borrowed $15,789 from Pinnacle, a Thermopolis, Wyoming, bank, to cover the cost of the vehicle. In furtherance of the loan, the Senior Wallaces signed a document entitled "Note, Disclosure, and Security Agreement" (Loan Agreement).
[¶6] The Loan Agreement specified that the purpose of the loan was to provide a vehicle for the Senior Wallaces' son. To this end, during the meeting with the Pinnacle loan officer that handled the transaction, the auto dealership was contacted and asked to re-issue the Nissan's ownership documents in the Junior Wallaces' names. The dealership complied and issued a "Dealer Reassignment and Odometer Statement," dated August 22, 2009, in the Junior Wallaces' names and signed by the Junior Wallaces.
[¶7] Through the Loan Agreement, the Senior Wallaces agreed to repay the amount borrowed with monthly payments over the course of approximately five years. The Loan Agreement also contained a "Third Party Agreement" (Security Agreement), which was signed by the Junior Wallaces. Through the Security Agreement, the Junior Wallaces pledged the 2009 Nissan as collateral for the loan, but the Junior Wallaces assumed no obligation for the debt itself.
[¶8] On August 25, 2009, the day after execution of the Loan Agreement and the Security Agreement, the Junior Wallaces, who were residents of Idaho, filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Idaho. As part of that filing, the Junior ...