Repossessing? What Happens When the Cops Show Up? - Greater Cincinnati Automobile Dealers Association

Repossessing? What Happens When the Cops Show Up?

By Thomas B. Hudson

With everything that car finance companies and buy-here, pay-here dealers must worry about, you’d think that they wouldn’t pay much attention to the Civil Rights Act of 1871. You’d be wrong.

The law in question is a federal statute, 42 U.S.C. § 1983, that allows people to sue for civil rights violations. It applies when someone acting “under color of” state-level or local law has deprived a person of rights created by the U.S. Constitution or federal statutes

So how does this law create liability risks for those that finance and repossess cars? A recent Indiana case provides an example.

Brian O’Day bought a used car, financing it on terms set forth in a retail installment contract assigned by the dealer to Ally Financial Inc. After O’Day defaulted, Ally contracted with UAR Direct LLC to repossess the car.

UAR then contracted with Tri-Force Inc. to repossess the car. Four individuals working for Tri-Force went to O’Day’s apartment to repossess the car from his attached garage. An altercation ensued between O’Day and the Tri-Force employees, and O’Day’s girlfriend called the police.

When the police officers arrived, they had O’Day pull the car out of the garage and hand the keys to the Tri-Force employees. O’Day sued Ally, UAR, Tri-Force, and the four Tri-Force employees for, among other claims, violating his Fourth Amendment rights under Section 1983 by unlawfully taking his vehicle with the assistance of law enforcement officers. The defendants moved to dismiss for failure to state a claim.

To establish a Section 1983 claim, the plaintiff must show that the defendant deprived him of a right secured by the U.S. Constitution and that the defendant deprived him of this constitutional right “under color of law.” The question is what the phrase “under color of law” means.

The federal trial court noted that a private person acting under the color of state law may be subject to liability under Section 1983. Therefore, the court reasoned, O’Day could state a Section 1983 claim against the private defendants if he sufficiently alleged that the police officers provided a level of assistance sufficient to bring the defendants’ conduct under the rubric of “state action.”

The court found that O’Day’s complaint alleged that the police officers did more than maintain the peace at the scene of the repossession. O’Day alleged that the officers “forced” him to relinquish his vehicle, which, he claimed, he would not have done absent the officers’ affirmative intervention.

The court concluded that the level of participation by the officers, though minimal, raised a question of fact sufficient to allow the Section 1983 claim against the defendants to go forward. Accordingly, the court denied the defendants’ motion to dismiss.

Creditors and repossession agencies need to be aware that police presence at the scene of a repossession is a red flag for potential risk of a Section 1983 claim. Unless those on the scene are well trained and capable of accurately assessing the role of any authorities present, calling off the repossession and rescheduling it for another day might be a good idea.

O’Day v. Ally Financial Inc., 2018 U.S. Dist. LEXIS 103015 (N.D. Ind. June 20, 2018).

Thomas B. Hudson was a founding partner of Hudson Cook, LLP, and is now of counsel in the firm’s Maryland office. He is the CEO of, LLC, and is a frequent speaker and writer on a variety of consumer credit topics. Tom can be reached at 410.865.5411 or by email at