TitleMax of Alabama Inc v. Hambright et al

Filing 35

MEMORANDUM OPINION: The Court REVERSES the bankruptcy court's finding and REMANDS each of the consolidated cases. The Court will enter a separate order consistent with this memorandum opinion. Signed by Judge Corey L Maze on 3/29/2024. Associated Cases: 7:21-cv-01602-CLM, 7:21-cv-01659-CLM, 7:21-cv-01660-CLM, 7:21-cv-01708-CLM, 7:21-cv-01714-CLM, 7:21-cv-01715-CLM, 7:21-cv-01716-CLM, 7:22-cv-00089-CLM, 7:22-cv-00091-CLM, 7:22-cv-00139-CLM(LCB)

FILED
2024 Mar-29 PM 01:11
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
TITLEMAX OF ALABAMA, INC.,
Plaintiff,
v.
NAUQUITA L. HAMBRIGHT, and
C. DAVID COTTINGHAM
Defendants.

Case No. 7:21-cv-1602-CLM
and consolidated cases no.:
7:21-cv-1659-CLM; 7:21-cv1660-CLM; 7:21-cv-1708CLM; 7:21-cv-1714-CLM;
7:21-cv-1715-CLM; 7:21-cv1716-CLM; 7:22-cv-89-CLM;
7:22-cv-91-CLM; 7:22-cv-139CLM.

MEMORANDUM OPINION
This case is about title pawns. The question is straightforward: If
someone pawns her car’s title to get a loan, then doesn’t repay the loan,
what does the borrower forfeit to the pawnbroker: just the paper title that
she left at the pawnshop or the car and its title?
Alabama law controls the answer. Below, the bankruptcy court said
the borrower forfeited the certificate of title but not the car because, based
on the court’s reading of Alabama’s pawn statute, the borrower forfeits
only those tangible items she leaves at the pawnshop—and she only left
the paper title. This court agrees that’s a plausible reading of the statute.
But Alabama courts have interpreted the statute differently; they
have said the pawnbroker owns the car the moment the borrower defaults.
This is also a plausible reading of the statute.
Federal courts must apply state law the way the state courts
interpret it. So this court REVERSES the bankruptcy court’s finding that
the borrower still owned the vehicle after default and REMANDS each of
the consolidated cases listed in the caption for further proceedings
consistent with this court’s findings.

BACKGROUND
This case includes 10 consolidated appeals, all involving the
pawning of a vehicle’s title and all arising from the Bankruptcy Court’s
opinion in TitleMax of Ala., Inc. v. Hambright (In re Hambright), No. 2070608-JHH13, AP No. 20-70016-JHH, 2021 WL 5441074 (Bankr. N.D.
Ala. Nov. 19, 2021), amended by 635 B.R. 614 (Bankr. N.D. Ala. 2022).
This opinion focuses on Hambright’s case. But before we recount
Hambright’s story, we look at the statute that has caused so much trouble.
A. The Alabama Pawnshop Act
Generally, the Alabama Pawnshop Act (APA) allows someone
(“pledgor”) to obtain money by either selling a good to a pawnbroker or
giving a secured interest in a good to a pawnbroker, then either (a)
repaying the money to redeem the good or (b) not repaying the money and
forfeiting the good. Three provisions set out this general scheme:
• A pawn transaction is “[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).
• Automatic Forfeiture: “Pledged goods not redeemed
within 30 days following the originally 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.
• “Pledged goods” are defined as “[t]angible personal
property other than choses in action, securities, or printed
evidences of indebtedness, which property is purchased
by, deposited with, or otherwise actually delivered into the
possession of, a pawnbroker in connection with a pawn
transaction.” Ala. Code § 5-19A-2(6).

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These provisions are easy to apply to items like jewelry and
appliances. For example, the pawnbroker gives the pledgor $1,000 and a
pawn ticket, and the pledgor leaves a necklace at the pawnshop. If the
borrower pays back the $1,000 plus interest or pawn fee, the pawnbroker
gives back the necklace. If the pledgor fails to pay back the $1,000, the
pawnbroker keeps the necklace.
Title pawns are harder. Rather than leave his car with the
pawnbroker, the pledgor signs a lien on the certificate of title and gives
the certificate of title to the pawnbroker; he then leaves with $1,000 and
the car. If the pledgor repays the pawn, the pawnbroker returns the
certificate of title. That’s easy.
The trouble comes if the pledgor doesn’t redeem in time; what
“pledged good” does he forfeit? Let’s look again at the three key provisions,
this time focusing on possession of the “pledged good” during the
repayment period:
• A pawn transaction is “[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) (highlight added).
• “Pledged goods” are defined as “[t]angible personal
property other than choses in action, securities, or printed
evidences of indebtedness, which property is purchased
by, deposited with, or otherwise actually delivered into the
possession of, a pawnbroker in connection with a pawn
transaction.” Ala. Code § 5-19A-2(6) (highlight added).
• Automatic Forfeiture: “Pledged goods not redeemed
within 30 days following the originally 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.

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Do these provisions require that, to be a “pledged good” that can be
forfeited, the pledgor’s property be “left with the pawnbroker,” Ala. Code
§ 5-19A-2(3), or “actually delivered into the possession of the
pawnbroker?” Ala. Code § 5-19A-2(6). If the answer is ‘yes, the pledged
good must be left at the pawnshop,’ then what pledged good does the
pledgor forfeit if he fails to redeem a vehicle title pawn: (a) the car plus its
title or (b) just the paper title, because the paper is the only tangible item
actually possessed by the pawnbroker?
That’s the dispute between borrower Nauquita Hambright and
pawnbroker TitleMax of Alabama, Inc. (“TitleMax”). When Hambright
failed to redeem her pawn, she says she forfeited the paper title; TitleMax
says she forfeited the car and its title.
B. Hambright’s title pawn
Hambright gave a “security interest in,” and “the Title” to, her 2013
Dodge Challenger to TitleMax in exchange for $6,739.14:

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Hambright agreed that TitleMax would hold her car’s title, and that
she had the right to redeem it by paying TitleMax $7,547.16. If she did,
TitleMax would “release the security interest in the Vehicle and return
the Title to [Hambright]”:

Hambright also agreed that, if she did not redeem the pawn within
30 days of the maturity date (April 25, 2020), “the Vehicle shall be
forfeited to and absolute right, title, and interest in and to the Vehicle
shall vest in [TitleMax]” and that TitleMax or its recovery vendor could
“take possession of the Vehicle upon [her] default,” without a court order
or any other judicial process:

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(Doc. 32-1, pp. 28-34). Hambright didn’t redeem the pawn by the maturity
date (April 25, 2020), or the 30-day grace period (May 26, 2020).
C. Hambright’s Chapter 13 petition
Hambright filed a Chapter 13 Bankruptcy petition between the
pawn’s maturity date and the end of the 30-day grace period:
• April 25, 2020:
• April 30, 2020:
• May 26, 2020:

Maturity date
Hambright files petition
30-day grace period expired.

Hambright physically possessed the Dodge Challenger when she filed her
petition, and she proposed to treat TitleMax as a secured creditor.
TitleMax objected and filed an adversary proceeding, arguing that
it owned the vehicle. According to TitleMax, Hambright (and her estate)
forfeited all rights and interests in the vehicle when she failed to redeem
“her title and Vehicle within 60 days of the filing of her petition.” (Doc. 411, p. 9). TitleMax disclaimed constructive possession.
Hambright and the trustee said that the vehicle was not a pledged
good subject to the automatic-forfeiture provision. They argued that “this
pawn transaction is a title pawn, not a vehicle pawn,” (doc. 4-12, pp. 4-5),
effectively conceding that the certificate of title was a pledged good.
TitleMax responded that even if the certificate of title alone—not the
vehicle—was the pledged good, TitleMax held absolute title to the vehicle
because “all rights in the vehicle’s title transferred to TitleMax” upon
automatic forfeiture and “ownership follows title.” (Doc. 4-13, p. 3).
D. The Bankruptcy Court’s decision
The Bankruptcy Court held that Hambright owned the Dodge
Challenger and that TitleMax merely held a security interest in it. In re
Hambright, 635 B.R. at 671-73. The court rested its conclusion on three
findings.

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First, Hambright’s vehicle was not a “pledged good” under the APA
because TitleMax never possessed the vehicle. The court adhered, in its
view, to “the plain language of the Alabama Pawnshop Act,” id. at 623,
and emphasized that TitleMax disclaimed any constructive-possession
argument. Id. at 671.
Second, Hambright and TitleMax could not “effect a pre-agreed
forfeiture of Hambright’s UCC rights, or common law equitable title, by
contract.” Id. As a result, TitleMax did not take ownership through the
contract term providing that Hambright’s failure to repay the loan
triggered automatic forfeiture of the vehicle.
Third, automatic forfeiture of the unassigned certificate of title did
not transfer absolute title to the vehicle to TitleMax under Ala. Code § 328-44(a). So Hambright owned the vehicle even though she forfeited the
certificate of title to TitleMax.
In sum, because Hambright still possessed the Challenger, the court
held that the APA did not cause it to fall out of the bankruptcy estate
when the 30-day grace period ended. So, the court explained, Hambright
and the estate could “treat TitleMax as the holder of a claim secured by a
lien on the Vehicle in Hambright’s bankruptcy case.” Id. at 675. The court
entered final judgment against TitleMax in its adversary proceeding and
overruled its plan-confirmation objection.
E. TitleMax’s appeal
TitleMax appealed to this court. This court then consolidated two
Hambright cases with eight similar appeals.1 (Doc. 10). In each case,
TitleMax took possession of a debtor’s certificate of title, recorded a lien
on the title, and the debtor retained possession of their vehicle. The
bankruptcy court’s decision in Hambright supported the decision in each
TitleMax of Alabama, Inc. v. Hambright, 7:21-cv-1708-CLM; TitleMax of Alabama, Inc. v.
Gurtler, 7:21-cv-1659-CLM; TitleMax of Alabama, Inc. v. Coleman, 7:21-cv-1660-CLM; TitleMax
of Alabama, Inc. v. Crispin, 7:21-cv-1714-CLM; TitleMax of Alabama, Inc. v. Hargrove, 7:21-cv1715-CLM; TitleMax of Alabama, Inc. v. Burrell, 7:21-cv-1716-CLM; TitleMax of Alabama, Inc.
v. Myrick, 7:22-cv-89-CLM; TitleMax of Alabama, Inc. v. Gurtler, 7:22-cv-91-CLM; TitleMax of
Alabama, Inc. v. Harrington, 7:22-cv-139-CLM.
1

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of these actions.
TitleMax asked the court to certify the 10 consolidated appeals to
the Eleventh Circuit under 28 U.S.C. § 158(d)(2)(A). (Doc. 3). The court
granted TitleMax’s motion and certified the appeal. (Doc. 19). The Circuit
Court denied TitleMax’s petition for permission to appeal.
Next, TitleMax moved to reopen the cases and certify the main issue
to the Alabama Supreme Court. (Doc. 20). The court granted TitleMax’s
motion and certified this question to the Alabama Supreme Court:
In a pawn transaction involving a motor vehicle, if the pledgor
leaves the certificate of title with the pawn broker but keeps
possession of the vehicle, then fails to repay the pawn, who
owns the vehicle at the moment of automatic forfeiture under
Ala. Code § 5-19A-6?
(Doc. 27). In a 5-4 decision, the Alabama Supreme Court declined to
answer the state-law question. (Doc. 29). Having unsuccessfully asked
everyone else to end the debate, this court must now re-engage.
STANDARD OF REVIEW
A district court assumes the role of an appellate court when
reviewing the decision of a bankruptcy court. See 28 U.S.C. § 158(a). In
resolving a bankruptcy appeal, the district court reviews the factual
findings of the bankruptcy court for clear error and its legal conclusions
de novo. In re Coady, 588 F.3d 1312, 1315 (11th Cir. 2009).
DISCUSSION
The court starts with the most important—and ultimately
determinative—point: Even though bankruptcy is federal law, “property
interests are created and defined by state law.” In re Northington, 876
F.3d 1302, 1310 (11th Cir. 2017). That means “the nature and existence
of the debtor’s right to property is determined by looking to state law.” Id.
So no matter what this federal court thinks Alabama’s pawn statute says,
whatever Alabama courts have said, goes.
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With that caveat, the court tackles the question it asked the
Supreme Court of Alabama:
In a pawn transaction involving a motor vehicle, if the pledgor
leaves the certificate of title with the pawn broker but keeps
possession of the vehicle, then fails to repay the pawn, who
owns the vehicle at the moment of automatic forfeiture under
Ala. Code § 5-19A-6?
(Doc. 27). The answer is the pawnbroker, but not because the APA plainly
says so. As explained in Part 1, this court agrees with the bankruptcy
court that one plausible reading of the APA says that the pledgor only
forfeits tangible items she leaves with the pawnbroker. If she only leaves
the paper title, then she only forfeits the paper title.
But, as detailed in Part 2, the Alabama appellate courts have read
the APA otherwise; they’ve said the car is automatically forfeited. This
reading is also plausible. Because this federal court must apply state law
as interpreted by the state’s appellate courts, it finds that TitleMax owned
the Dodge Challenger as soon as the 30-day grace period expired. In doing
so, the court vindicates TitleMax’s rights under the pawn agreement,
which unambiguously says that Hambright would forfeit the “Vehicle”
and “absolute right, title, and interest” in the vehicle if she failed to make
full payment by the end of the grace period, and that TitleMax could take
possession at any time after that, without judicial proceedings.
1. Plain reading of the APA
You can plausibly read the statute to go either way. The court starts
with the provisions that suggest TitleMax had to physically possess the
vehicle to own the vehicle when Hambright failed to redeem.
A. Physical possession is required
The APA’s definition of a pawn transaction imposes a condition that
the “pledged good” be left with the pawnbroker:

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(3) Pawn Transaction. Any 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) (highlight added). TitleMax rightly argues this
definition creates two distinct types of pawn transactions: (a) a loan on
the security of pledged goods and (b) the purchase of pledged goods. But
TitleMax wrongly argues the condition “that the pledged goods are left
with the pawnbroker” only applies to purchases, not loans on security.
Security loans and purchases are parallel options, both involving “pledged
goods.” So the Series-Qualifier Canon suggests that the postpositive
condition “applies to the entire series.” Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts § 19, at 147 (2012).
The definition of pledged goods supports this reading:
(6) Pledged goods. Tangible personal property other than
choses in action, securities, or printed evidences of
indebtedness, which property is purchased by, deposited
with, or otherwise actually delivered into the possession
of, a pawnbroker in connection with a pawn transaction.
Ala. Code § 5-19A-2(6) (highlight added). The highlighted phrase is
disjunctive, so the catch-all phrase at the end—“or otherwise actually
delivered into the possession of a pawnbroker”—applies to the “same
general kind or class specifically mentioned” before it. Scalia & Garner,
Reading Law § 32, at 199 (ejusdem generis canon). That means all three
parts of the series require a pledged good be “actually delivered into the
possession” of the pawnbroker.
Other provisions of the APA assume that the pawnbroker physically
possesses the “pledged good.” For example, the APA gives the pawnbroker
a lien on the pledged goods, then says “[t]he pawnbroker shall retain
possession of the pledged goods except as otherwise herein provided until
the lien is satisfied.” Ala. Code § 5-19A-10(a). The next provision requires

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that “pledged goods” that are not redeemed by the maturity date “shall be
held by the pawnbroker for 30 days following that date”—i.e., the 30-day
grace period. These provisions seemingly confirm the definition section’s
requirement that the pawnbroker take physical possession of the pledged
good when purchasing the good or gaining a security on a loan.
The APA also requires that the pawnbroker maintain a record of all
pledged goods “on the premises.” Ala. Code § 5-19A-5(b). The next
provision calls “automobiles, trucks, and similar vehicles” “goods
purchased” and requires a vehicle to be maintained “on the premises” for
21 days before it can be resold. Ala. Code § 5-19A-5(c). An automobile
would be on the pawnbroker’s premises only if he physically possessed it.
B. Physical possession not required
That said, the automatic forfeiture provision suggests that in a title
pawn, the “pledged good” is something other than the title:
A pledgor shall have no obligation to redeem pledged goods
or make any payment on a pawn transaction. Pledged goods
not redeemed within 30 days following the originally 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 (highlight added). This provision separates the “right,
title, and interest” to a pledged good from the pledged good itself. It seems
odd to read this provision to say that a pledgor forfeits “title to his Title,”
rather than he forfeits “title to his Vehicle.”
—
If this court had nothing but the statute to consider, it would find
that (a) the pawnbroker is required to physically possess the tangible item
for it to be a “pledged good” under the APA and (b) the Alabama
Legislature wasn’t thinking about how the possession rule applies to
vehicle title pawns when it wrote the statute. The best solution would be
for the Alabama Legislature to specifically address title pawns, as Georgia
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has. See Ga. Code § 44-12-130 (defining “pledged goods” to include “any
motor vehicle certificate of title” and saying that possession of the title
“shall be conclusively deemed to be possession of the motor vehicle”).
But the Alabama Legislature has not acted, so parties have pressed
the Alabama appellate courts. We turn there now.
2. Alabama caselaw
A. Floyd: Vehicle title pawns allowed under the APA
Alabama passed the APA in 1992. Soon after, the State Banking
Department told Title Exchange, a pawnbroker, that its vehicle title pawn
practice was unlawful. See Floyd v. Title Exch. & Pawn of Anniston, Inc.,
620 So. 2d 576, 576-77 (Ala. 1993). Title Exchange sued, asking for an
injunction that would prevent the State from ending its title pawn
practice. The trial court issued the injunction, finding that because the
pawnbroker possessed the vehicle’s title and a key, it constructively
possessed the vehicle under the APA.
The Supreme Court affirmed, although with very little analysis.
Looking at the definition of pledged good, it agreed with the trial court
that a certificate of title was not a “chose in action” but wasn’t sure
whether it was “tangible physical property” distinct from the vehicle it
registered. Id. at 579. The court then suggested that if the Alabama
Legislature intended to shut down vehicle title pawns, it could amend the
APA. Id. It hasn’t.
A few months later, the Alabama Supreme Court clarified its
holding in Floyd:
In [Floyd v. Title Exchange], we held that an automobile
certificate of title is ‘tangible personal property’ within the
meaning of the Alabama Pawnshop Act. The effect of that
decision was to hold that money-lending transactions
involving the transfer of automobile certificates of title for the
purposes of giving security are ‘pawn’ transactions . . . .

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Blackmon v. Downey, 624 So. 2d 1374, 1376 (Ala. 1993) (highlight added).
So federal courts must read the APA’s definition of a “pawn transaction”
in a way that allows vehicle title pawns to fit within it.
B. Coleman: No constructive possession
Ten years later, the same court decided Ex parte Coleman, 861 So.
2d 1080 (Ala. 2003). In Coleman, debtors sued a pawnbroker for
wrongfully taking their vehicle, then selling it, during an orally-extended
30-day grace period. The pawnbroker argued there was no oral agreement
to extend the grace period, and under Floyd, he “constructively possessed”
the vehicle because he held the title. So the pawnbroker was free to take
and sell the vehicle. Id. at 1082.
The supreme court remanded for trial, finding that whether the
grace period had been extended was a genuinely disputed material fact.
Relevant here, the court also clarified two things about its Floyd decision:
(a) Floyd does not say that possession of the certificate of title and a key
creates constructive possession of the car and (b) Floyd does not say that
pawnbrokers that hold a title can legally repossess the vehicle before the
maturity date or during the 30-day grace period. Id. at 1086.
—
Applied here, the Supreme Court of Alabama has definitively said
that (a) vehicle title pawns are pawn transactions under the APA, and (b)
certificates of title are tangible personal property. It’s unclear what the
court thinks about constructive possession, other than clarifying that it
has not adopted the concept. But the court uses the terms ‘vehicle’ and
‘title’ somewhat interchangeably. See, e.g., Blackmon, 624 So. 2d at 1375
(“Downey transferred the title to his automobile to Blackmon . . . . At the
end of 10 weeks, Blackmon was to return the car to Downey.”) (emphasis
added); Coleman, 861 So. 2d at 1081-82 (“The Colemans alleged that The
Money Tree wrongfully took possession of their 1995 Cadillac automobile,
which the Colemans had pawned to The Money Tree . . . . The Colemans
initially borrowed $500 and pawned the title to their 1995 Cadillac . . . .
Thereafter, the Colemans together and then Vera singly repawned their
car each month . . . .”).
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C. Pattans Ventures: The vehicle is forfeited
The Alabama Court of Civil Appeals has been clearer. In State ex
rel. Morgan v. Thompson, 791 So. 2d 977 (Ala. Civ. App. 2001), Thompson
pawned his car title to Mayhall Title Pawn for $300. Thompson did not
redeem by the maturity date (April 26) or the end of the 30-day grace
period (June 26). Unfortunately for Mayhall, the State seized the vehicle
on June 18—eight days before the grace period expired. The State argued,
and the Court of Civil Appeals held, that Mayhall did not own the vehicle
on June 18 because the 30-day grace period had yet to run. So Mayhall
was entitled only to the amount of its interest as a “bona fide lienholder.”
Id. at 978. In dicta, the court cited the APA’s automatic forfeiture
provision, Ala. Code § 5-19A-6, to say that Mayhall would have owned the
vehicle on June 26, when the 30-day grace period expired. Id.
The court said the same thing, but more clearly, in Pattans
Ventures, Inc. v. Williams, 959 So. 2d 115 (Ala. Civ. App. 2006). Williams
pawned his SUV’s title to Pattans Ventures for $700 and kept the SUV.
Williams did not redeem the pawn. Pattans Ventures took the SUV eight
months after the pawn ticket matured and sold it less than 30 days later.
The court said that, when Pattans Ventures took the SUV months after
the 30-day grace period ended, it “merely took possession of a vehicle that
legally belonged to it.” Id. at 121 (emphasis added). In doing so, the court
cited the state supreme court’s decision in Coleman: “our supreme court
[in Coleman] implicitly held that the pawnshop was not required first to
take possession of the vehicle” once the maturity date had passed, and
then give Williams 30 days. Id. at 122. The court remanded to determine
whether Williams had tried to timely redeem the pawn.
In Complete Cash Holdings, LLC v. Fryer, 297 So. 3d 1223 (Ala. Civ.
App. 2019), the court briefly described the state of the law:
Initially, we note that, under Alabama law, title loans are
considered pawn transactions governed by the Alabama
Pawnshop Act, § 5-19A-1 et seq., Ala. Code 1975 (“the act”).
Floyd v. Title Exch. & Pawn of Anniston, Inc., 620 So. 2d 576,

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579 (Ala. 1993). As pawn transactions, title loans are
generally considered to be nonrecourse loans that do not
create personal debt on the part of a pawnor. For example, §
5-19A-6, Ala. Code 1975, provides that “[a] pledgor shall
have no obligation to redeem pledged goods or make any
payment on a pawn transaction.” Section 5-19A-8(7), Ala.
Code 1975, likewise provides that “[a] pawnbroker ... shall
not ... [m]ake any agreement requiring the personal liability
of a pledgor or seller ....” Instead, should a borrower default
on the loan or otherwise fail to redeem a pledged vehicle, a
pawnbroker’s remedy under the act is to take possession of
that vehicle.
Id. at 1225.
—
To sum up, the best reading of Alabama appellate precedent is that
(1) vehicle title pawns are pawn transactions covered by the APA; (2)
pawnbrokers are required to give pledgors 30 days to redeem the pledge
after the maturity date; and (3) if 30 days passes without redemption, the
pawnbroker has absolute right, title, and interest in and to the vehicle—
not just its paper title.
3. Application of State law to Hambright’s pawn
Applying the state courts’ holdings and statements about the APA
to these facts, the court finds that, under the APA’s automatic forfeiture
provision, TitleMax took “absolute right, title, and interest in and to”
Hambright’s Dodge Challenger when the 30-day grace period expired on
May 26, 2020. Ala. Code § 5-19A-6. While the court appreciates the
bankruptcy court’s plain reading of the defined term “pledged goods,” the
bankruptcy court’s conclusion that TitleMax owned a piece of paper and a
lien, but not the Dodge Challenger, once Hambright’s grace period
expired, contradicts the Alabama state courts’ reading of the APA. Their
reading is plausible, and we federal courts must defer to the state courts’

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definition of Hambright and TitleMax’s respective property rights. In re
Northington, 876 F.3d at 1310.
This outcome not only best reflects the state courts’ precedent, it
vindicates the express written agreement of the parties:

Hambright knew that she would forfeit her car and its title to
TitleMax if she failed to redeem by the end of the 30-day grace period. And
under Section 8 above, she also knew TitleMax had the right to take her
vehicle, without any judicial process, from then on.

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CONCLUSION
For these reasons, the court REVERSES the Bankruptcy Court’s
decision in In re Hambright, 635 B.R. 614 (Bankr. N.D. Ala. 2022) and
REMANDS each of the consolidated cases for further proceedings
consistent with this opinion, as applied to the particular facts of the case.
The court will enter a separate order consistent with this memorandum
opinion.
DONE and ORDERED on March 29, 2024.

_________________________________
COREY L. MAZE
UNITED STATES DISTRICT JUDGE

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