Filed: Sep. 10, 2021
Latest Update: Sep. 11, 2021
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 21-11457
Non-Argument Calendar
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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.
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Appeal from the United States District Court
for the Southern District of Alabama
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(September 10, 2021)
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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
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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).
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CONCLUSION
We AFFIRM the district court.
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