Lenders And Borrowers Beware! Secured Creditors May Not Avoid Liability For Breaches Of The Peace By Using An Independent Contractor To Carry Out Repossession: MBank El Paso, N.A. v. Sanchez, 836 S.W.2d 151 (Tex. 1992)

In MBank El Paso, N.A. v. Sanchez, 836 S.W.2d 151 (Tex. 1992), the Texas Supreme Court, in an opinion written by Justice Mauzy, affirmed the decision of the court of appeals, thereby establishing a new exception to the general rule that an employer is not liable for the acts or omissions of an independent contractor. According to the court, section 9.503 of the Texas Business & Commerce Code imposes a nondelegable duty to prevent a breach of the peace on a secured party pursuing self-help repossession. The holding may result in a decrease in the availability, and an increase in the cost, of loans for "high risk" loan applicants. Secured creditors forced to pay for the damage claims resulting from the acts of their independent contractors might increase the costs of loans and/or decrease the number of loans they approve for these borrowers who rely most heavily on credit to purchase automobiles.