Okla. Stat. tit. 12A § 2A-529
Okla. Stat. tit. 12A, § 2A-529
Oklahoma Code Comment
The 1991 amendments make substantial changes to this section.
Under Article 2A, a lessor has little chance to obtain what amounts to specific performance of the lease; that is, to recover the present value as of the date of default of the rent for the remaining lease term (plus accrued and unpaid rent as of the date of default and any incidental damages allowed, but less expenses saved in consequence of the lessee's default). The lessor may recover this measure before the 1991 amendments only in three instances, the most important of which is where the goods have been accepted by the lessee. However, in that circumstance if the lessor then repossesses the goods, they must be held for the lessee under § 2A-529(2) and, if they are not, the lessor's recovery is reduced under § 2A-529(3). Under the 1991 amendments, in this case the rent can only be covered if redisposition is not possible.
Whether this represents a change in Oklahoma law is hard to determine. Symbolic of the difficulty of ascertaining what the Oklahoma law was in this respect prior to Article 2A are two cases. The first is Groendyke Transport, Inc. v. Merchant, 380 P.2d 682 (Okla.1963). There the lessor apparently retook and sold the leased equipment and then sued for loss of future profits. The court's main focus was on an interpretation of 23 Oklahoma Statutes § 96 and it held that it was error to fail to base an award of damages to a lessor for loss of future profits under a breached lease agreement on present value at the time judgment was rendered. Yet 24 years later in the second case, U.C. Leasing, Inc. v. State ex rel. State Board of Public Affairs, 737 P.2d 1191 (Okla.1987), the court did not disturb, perhaps as no issue was raised on appeal, a damage award to the lessor of a breached equipment lease in the full amount of the remaining unpaid rental installments due. As to determining present value, which must be used under Article 2A, see 12A Oklahoma Statutes § 1-201(37)(d)(iii), which allows the parties to determine the interest rate to be used in calculating the discount. It is not clear in the U.C. Leasing case, but it appears the lessee remained in possession of the leased goods. Such goods would be accepted, and thus an action would be allowed under this section. And while the lessor did not hold the goods for the lessee in Groendyke, the peculiar facts there, plus the fact the lessee received a credit for the value of the lessor's use of the leased goods, may equate the situation to that under § 2A-529.
If the lessor recovers a judgment under § 2A-529 and the lessee remains in possession of the accepted goods, nothing more is involved than enforcing any judgment obtained. If the lessor has retaken the goods, however, under subsection (2) the lessor cannot use the goods or otherwise deal with them as its own or it would seem subject to a suit by the lessee to recover the value of the use of the goods. See § 2A-529, Official Comment. Such use perhaps also might be viewed as a disposition resulting in the lessor's inability to recover upon the judgment beyond what is provided in subsection (3).
Subsection (3) does allow the lessor to dispose of the goods at any time before collection of the judgment. However, if the lessor disposes of the goods, its allowable recovery is reduced to that available under 12A Oklahoma Statutes § 2A-527 or § 2A-528, as applicable. Presumably in this event the judgment could be modified to reflect the adjustment and the 1991 amendments require all appropriate credit to be provided. Also the lessor should cease execution short of the full judgment and indicate satisfaction at that point. If the lessor does not cease execution but rather causes levy as if the judgment was outstanding for the original, higher amount, it would be a wrongful levy which would be the basis for an action for damages, including punitive and consequential damages. See Commonwealth ex rel. Harding v. Bartholomew, 98 S.W.2d 882 (Ky.App.1936) and Jackson v. Kirschman, 175 So. 105 (La.App.1937).
It has been asserted that the approach of § 2A-529 before amendment improperly ignores the principle of mitigation of damages and that a lessor should not have the unconditional right to recover future rent where the lessor has repossessed the goods. See Rapson, Deficiencies and Ambiguities in Lessor's Remedies Under Article 2A: Using Official Comments to Cure Problems in the Statute, 39 Ala.L.Rev. 875, at pp. 900-903, 908-909 (1988). It is submitted that Article 2A in many instances made the correct policy choice here. For example, a lessor should not be required to attempt to release the goods as a condition to recovery of the rent if to do so could deprive the lessor of another rental it could have made. See Benfield, Lessor's Damages Under Article 2A After Default by the Lessee As To Accepted Goods, 39 Ala.L.Rev. 915, 936-950 (1988). Moreover, any remaining issue in this regard may be more apparent than real. If a lessor is willing to hold the goods and not use them instead of mitigating its risk of non-recovery through selling or leasing them, it is likely that either there is no market for the goods or that the lessee is good for the judgment. In the former case, forcing the lessor to attempt the impossible is not useful, and in the latter case the lessee hardly will pay and allow the goods to remain unused with the lessor. The 1991 amendments, however, respond to the asserted criticisms.