Mercedes-Benz Credit Corp. v. Johnson

Terry Johnson appeals from a judgment entered in favor of respondent Mercedes-Benz Credit Corporation (MBCC) after a nonjury trial on stipulated facts and exhibits. Johnson purchased a Mercedes-Benz automobile from Big Max Cars, a used car dealership owned by Hassan Marzban. At the time he purchased the car, Johnson was unaware that, two weeks earlier, Marzban had leased the car for five years for his personal use from Calabasas Motor Cars/MBCC and failed to make any payments under the lease. During the litigation, the parties agreed to sell the automobile. Johnson and MBCC each assert superior title and entitlement to the proceeds of sale.

The trial court ruled that MBCC had superior title under California Commercial Code section 10305. We agree with the trial court’s interpretation of that statute and affirm the judgment.

FACTS

Respondent MBCC, through its affiliate Calabasas Motor Cars, leased a new Mercedes-Benz automobile to Hassan Marzban with an option to purchase the vehicle at the end of the lease. In the lease, Marzban agreed to (1) pay $64,777.65 over the five-year term of the lease; (2) use the vehicle only for personal, family or household purposes; (3)…