Johany Serrano Martinez

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
JOHANY SERRANO MARTINEZ AKA
JOHAN SERRANO,
Debtor.
Chapter 7
Case No. 16-10699 (MEW)
OPINION WITH RESPECT TO MOTION FOR RELIEF FROM THE
AUTOMATIC STAY AND USURY ISSUES RELEVANT THERETO
Before the Court is the motion for relief from the automatic stay filed by Santander
Consumer USA Inc., seeking permission to enforce rights against a 2009 Chevrolet Equinox motor
vehicle pursuant to the terms of a Retail Installment Contract. The motion was unopposed, but in
reviewing the papers the Court noted that the Retail Installment Contract calls for the payment of
interest at a rate of 24.99% per year. When the matter came on for hearing the Court asked counsel
to Santander to submit an explanation as to why the 24.99% rate did not violate New York’s usury
statutes, which (if applicable) might have limited Santander’s rights to enforce the claimed debt.
Counsel filed the requested explanation on July 1, 2016 [ECF No. 9]. Santander takes the
position that the relevant loan is an “indirect loan” governed by Section 303(1) of the New York
Personal Property Law, as the original retail installment contract was entered into between the
debtor and a car dealer. Counsel also took the position that usury limits do not apply to such an
agreement, based on the language of the relevant statute and also based on the “time-price
differential” doctrine described in Zachery v. Macy & Co., 293 N.E.2d 80 (N.Y. 1972).
The Court notes that similar arrangements, and similar arguments, have been and currently
are being contested in other cases. 	A New York Supreme Court Justice issued an unreported
decision in 2010 holding that the “time-price differential” doctrine is not applicable to motor
vehicle retail installment contracts and that usury limits still apply to contracts governed by Section
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303(1) of the Personal Property Law. See Ford Motor Credit Co., LLC v. Black, 910 N.Y.S.2d
404 (N.Y. Civ. Ct. 2010). 	In addition, a class action is currently pending in the United States
District Court for the Southern District of New York, in which plaintiffs contend that so-called
indirect loans should not be entitled to the claimed exemptions from the usury laws. See Franklyn
Cabrera Garcia v. Chrysler Capital LLC, et al., No. 15-CV-05949 (S.D.N.Y.). Motions to dismiss
have been filed and briefed in that case, and the validity of the prior decision in Ford Motor Credit
Co. has been challenged, but no ruling has yet been issued by the District Court.
After receiving Santander’s letter submission, the Court issued an order on July 12, 2016
[ECF No. 10], noting that the submission had been filed and notifying the debtor, the chapter 7
trustee and the Office of the United States Trustee that any further briefing on this issue, and any
additional authorities the parties wished the Court to consider, should be filed on or before July
22, 2016. No party made any filing, and the motion for relief from the stay remains unopposed.
In light of the lack of opposition, and the apparent consent to the relief requested, the Court
will grant the motion for relief from the automatic stay, which is the only relief that has been
sought at this time.
Dated: July 28, 2016
New York, NY
/s/ Michael E. Wiles
UNITED STATES BANKRUPTCY JUDGE
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