Chrysler Financial Company v. Bergstrom

Summary

The Iowa Supreme Court considered whether Chrysler Financial could invoke the bona fide error defense under the Iowa Consumer Credit Code after filing a deficiency action in the wrong county. The court held that the filing was unintentional and resulted from a bona fide error despite a procedure reasonably adapted to avoid venue errors. It vacated the court of appeals' decision and affirmed the district court's denial of Bergstrom's counterclaim.

Holdings

1. A creditor avoids liability under the Iowa Consumer Credit Code's bona fide error defense by proving by a preponderance of the evidence that the violation was unintentional, resulted from a bona fide error, and occurred notwithstanding the maintenance of procedures reasonably adapted to avoid the error.
2. For purposes of the bona fide error defense, the relevant intent is whether the violator intended to perform the act that constituted the violation, not whether the violator intended to violate the law.
3. The procedure must be reasonably adapted to avoid the statutory violation at issue generally—filing a consumer action in the wrong county—not to avoid only the particular factual variation that produced the violation.
4. Whether a creditor's procedures are reasonably adapted to avoid the statutory error is ordinarily a fact-intensive question for the fact finder, and a procedure need not be perfect or foolproof.
5. The word 'maintenance' in Iowa Code section 537.5201(7) means having a procedure in place; it does not require proof that the procedure was followed 'time in and time out.'

Questions Presented

1. Whether filing a consumer credit action in the wrong county violated the Iowa Consumer Credit Code and could support statutory damages through the code's unfair-debt-collection provisions.
2. Whether Chrysler established the bona fide error defense under Iowa Code section 537.5201(7).
3. Whether Chrysler's procedure of consulting the USPS city-county directory was a procedure reasonably adapted to avoid filing consumer actions in the wrong county.
4. Whether the district court's findings supporting the bona fide error defense were supported by substantial evidence.

Disposition

vacated