Prince v. R & T Motors, Inc.

Claudia Kay PRINCE v. R & T MOTORS, INC.

CA 97-76                                           ___ S.W.2d ___

                  Court of Appeals of Arkansas
                           Division IV
                Opinion delivered October 1, 1997


1.   Judgment -- summary judgment -- when granted. -- Summary judgment
     should be granted only when a review of the pleadings,
     depositions, and other filings reveals that there is no
     genuine issue as to any material fact and the moving party is
     entitled to judgment as a matter of law. 

2.   Judgment -- summary judgment -- burden of proof. -- On a motion for
     summary judgment, all proof submitted must be considered in
     the light most favorable to the nonmoving party, and any
     doubts or inferences must be resolved against the moving
     party; once the moving party makes a prima facie showing of
     entitlement, the opposing party must meet proof with proof by
     showing a genuine issue of material fact; when a prima facie
     showing is made, the adverse party may not rest upon mere
     allegations or denials but must set forth specific facts
     showing that there is a genuine issue for trial.

3.   Judgment -- summary judgment -- means of avoiding expense and time of
     trial. -- Where the facts are not disputed and the law can be
     applied, a summary judgment is an appropriate means of
     avoiding the expense and time of a formal trial.


4.   Debtors & creditors -- sale of collateral -- when debtor should challenge
     aspect of disposition. -- Where the debtor is concerned about the
     price received for a trade-in or the collateral, he should
     challenge the aspect of the sale that he feels has made the
     disposition commercially unreasonable so as to result in an
     insufficient price.

5.   Secured transactions -- burden on secured party to establish deficiency and
     commercially reasonable disposition. -- The burden is on the secured
     party as the plaintiff to establish a deficiency, and if the
     secured partyþs handling of the disposition of the collateral
     is attacked, it has the burden of proving that every aspect of
     that disposition was commercially reasonable.

6.   Secured transactions -- sale of collateral -- whether commercially
     reasonable is factual question. -- Whether a sale of collateral was
     conducted in a commercially reasonable manner is essentially
     a factual question.

7.   Secured transactions -- sale of collateral -- price alone not dispositive
     of commercial reasonableness. -- In Arkansas, sale price alone is
     not dispositive of whether a sale is commercially reasonable.

8.   Secured transactions -- sale of collateral -- better price available
     elsewhere does not make sale commercially unreasonable. -- The fact that
     a better price could have been obtained by a sale at a
     different time or in a different method from that selected by
     the secured party is not of itself sufficient to establish
     that the sale was not made in a commercially reasonable
     manner.

9.   Secured transactions -- sale of collateral -- wholesale rather than retail
     can be commercially reasonable. -- Whether collateral is sold
     wholesale instead of retail is not necessarily determinative
     of commercial unreasonableness.

10.  Secured transactions -- sale of collateral -- determining commercial
     reasonableness. -- Any difference between the fair market value
     and the price actually received for collateral is ordinarily
     a material consideration in determining commercial
     reasonableness, but this fact must be examined in light of all
     aspects of the sale to determine commercial reasonableness.

11.  Judgment -- appellant failed to meet proof with proof -- summary judgment
     upheld. -- Even when the defendant-debtor raises the defense
     that a sale of collateral was conducted in a commercially
     unreasonable manner, summary judgment may be awarded if the
     debtor fails to meet proof with proof in response to a motion
     for summary judgment; where appellee established a prima facie
     case that the sale of a repossessed automobile was conducted
     in a commercially reasonable manner, and where appellant
     failed to meet proof with proof in response but merely
     asserted that a better price might have been realized and made
     no challenge to any other aspect of the repossession and sale,
     the appellate court held that she failed to demonstrate that
     a material question of fact remained for trial.


     Appeal from White Circuit Court; Bill Mills, Judge; affirmed.
     Lightle, Beebe, Raney & Bell, by:  James A. Simpson, Jr., for
appellant.
     John Patterson, P.A., for appellee.

     Andree Layton Roaf, Judge.
     Claudia Prince has appealed from a deficiency judgment awarded
to the appellee, R&T Motors, Inc., by the White County Circuit
Court, following the resale of a repossessed automobile.  We find
no error in the courtþs entry of summary judgment for appellee and
affirm.
     Prince purchased a 1991 Chevrolet Blazer from R & T Motors and
defaulted on the loan that financed the purchase.  After R & T
Motors repossessed the Blazer, it sent notice, dated August 16,
1993, by certified mail, with restricted delivery, to Prince in
Plano, Texas, that it would sell the Blazer at a public sale at
3004 Hawkins Drive, Searcy, Arkansas, at 10:00 a.m. on September 8,
1993.  The notice also provided that Prince would be liable for any
deficiency remaining after the proceeds of the sale were applied to
R & T Motorsþ costs of retaking and attorneyþs fees and the
outstanding debt.  It also informed her that she could redeem the
vehicle at any time before sale by paying R & T Motors $16,992.98
plus the expenses of repossession, repair, and preparation for
sale.  Prince received the notice and signed the return card.  The
Blazer was sold on September 8, 1993, to Carder Buick for $8,500. 
R & T Motors filed this action against Prince for the deficiency of
$8,704.17.
     On July 16, 1996, R & T Motors filed a motion for summary
judgment supported by the affidavit of George Carder, III, R & T
Motorsþ vice president, in which he stated in pertinent part:
     . . .

     8.   R&T Motors, Inc. notified Ms. Prince of the
          proposed public sale of the vehicle by certified
          mail, which was received by Ms. Prince on
          August 19, 1993.  See Exhibits 2 and 3.

     9.   R&T Motors, Inc. caused a notice of public sale to
          be published in the Searcy Daily Citizen, a
          newspaper having county-wide circulation, on August
          18, 1993, and August 19, 1993.  See exhibit 4.

     10.  Pursuant to the notice, the sale was conducted on
          September 8, 1993, at the time and place designated
          in the notice.

     11.  At the commencement of the sale, a representative
          for R&T Motors, Inc. publicly announced the sale to
          all persons on the premises.

     12.  At the sale, Ron Peyton, representing Carder Buick,
          submitted a bid of $8,500.00, which was accepted.

     13.  R&T Motors, Inc. notified Ms. Prince of the amount
          of the deficiency in the sum of $8,704.17 and made
          demand for payment.

R & T Motors also filed copies of the installment sales contract,
the notice of sale that it sent to Prince, the certified mail
return card signed by Prince, and proof of publication of the
notice of sale.
     In response to the motion for summary judgment, Prince argued
that genuine issues of fact remained to be tried regarding the
commercial reasonableness of the sale and whether R & T Motors had
sustained any damages.  Prince attached a copy of a September 1,
1993, used truck and van guide showing the value of the Blazer at
the time of its sale following repossession to be over $12,000. 
Prince later amended her response to the motion for summary
judgment and filed the affidavit of her husband, Rick Prince, in
which he stated that the value of the Blazer was in excess of
$16,000.

     On August 20, 1996, the circuit judge filed an opinion letter
in which he stated that insufficient price alone does not make the
sale commercially unreasonable.  He stated that, because Prince
relied only upon the inadequacy of the sale price, no fact was in
dispute.  He found the sale to be commercially reasonable and
granted summary judgment to R & T Motors.  
     A hearing was held on the total amount of the judgment on
September 25, 1996.  At this hearing, Prince again argued that
summary judgment was inappropriate because the sale was not
commercially reasonable.  The circuit judge replied:  
     [Y]ou were given every opportunity by affidavit to say
     what was wrong with the sale, and all you said was that
     the amount received for the car was made at a
     commercially unreasonable sale, and I ruled that that
     alone was not good enough.  Now if you have got anything
     else, say so.
The circuit judge entered judgment for R & T Motors for the
deficiency of $8,704.17, prejudgment interest in the amount of
$2,394.21, interest from the date of judgment at 10%, and
attorneyþs fees in the amount of $3,500.
     On appeal, Prince argues that, after she raised the defense
that the sale was not commercially reasonable, the circuit judge
should have required R & T Motors to prove that it conducted the
sale in a commercially reasonable manner.  As before, however,
Prince points to no fact, other than the sale price of the Blazer,
as evidence that the sale was not conducted in a commercially
reasonable manner. 
     Summary judgment should be granted only when a review of the
pleadings, depositions, and other filings reveals that there is no
genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law.  Wirth v. Reynolds Metals
Co., 58 Ark. App. 161, 947 S.W.2d 401 (1997).  All proof submitted
must be considered in the light most favorable to the nonmoving
party, and any doubts or inferences must be resolved against the
moving party.  Id.  Once the moving party makes a prima facie
showing of entitlement, the opposing party must meet proof with
proof by showing a genuine issue of material fact.  Id.  When a
prima facie showing is made, the adverse party may not rest upon
mere allegations or denials, but must set forth specific facts
showing that there is a genuine issue for trial.  Id.; Ark. R. Civ.
P. 56(e).  Where the facts are not disputed and the law can be
applied, a summary judgment is an appropriate means of avoiding the
expense and time of a formal trial.  Neel v. Citizens First State
Bank, 28 Ark. App. 116, 771 S.W.2d 303 (1989).
     It is true that a party that has sold collateral in violation
of the Uniform Commercial Code is not entitled to a deficiency
judgment.  Bank of Bearden v. Simpson, 305 Ark. 326, 808 S.W.2d 341
(1991); First State Bank of Morrilton v. Hallett, 291 Ark. 37, 722 S.W.2d 555 (1987).  Arkansas Code Annotated  4-9-504(3) (Repl.
1991) provides:
     Disposition of the collateral may be by public or private
     proceedings and may be made by way of one or more
     contracts.  Sale or other disposition may be as a unit or
     in parcels and at any time and place and on any terms,
     but every aspect of the disposition including the method,
     manner, time, place, and terms must be commercially
     reasonable.
(Emphasis added.)  
     As this code section requires, the primary concern of both
debtor and creditor is that every aspect of the disposition of the
collateral be conducted in a commercially reasonable fashion. 
Holiman v. Haganþs Motors, Inc., 32 Ark. App. 62, 796 S.W.2d 356
(1990).  However, the court stated in Holiman that þ[w]here the
debtor is concerned over the price received for the trade-in or the
collateral, he should challenge the aspect of the sale which he
feels has made the disposition commercially unreasonable so as to
result in an insufficient price.þ  Id. at 64, 796 S.W.2d  at 357-58. 
The burden is on the secured party as the plaintiff to establish
the deficiency, and if the secured partyþs handling of the
disposition of the collateral is attacked, it has the burden of
proving that every aspect of that disposition was commercially
reasonable.  Id.  at 64, 796 S.W.2d  at 358.  Accord Henry v.
Trickey, 9 Ark. App. 47, 653 S.W.2d 138 (1983).  Whether a sale of
collateral was conducted in a commercially reasonable manner is
essentially a factual question.  Beard v. Ford Motor Credit Co., 41
Ark. App. 174, 850 S.W.2d 23 (1993); Cheshire v. Walt Bennett Ford,
Inc., 31 Ark. App. 90, 788 S.W.2d 490 (1990); Jones v. Union Motor
Co., 29 Ark. App. 166, 779 S.W.2d 537 (1989).
     However, in Arkansas, sale price alone is not dispositive of
whether a sale is commercially reasonable.  Arkansas Code Annotated
 4-9-507(2) (Repl. 1991) provides:  þThe fact that a better price
could have been obtained by a sale at a different time or in a
different method from that selected by the secured party is not of
itself sufficient to establish that the sale was not made in a
commercially reasonable manner.þ  Moreover, in Thrower v. Union
Lincoln-Mercury, Inc., 282 Ark. 585, 590, 670 S.W.2d 430, 433
(1984), the Arkansas Supreme Court discussed the relevance of the
price received upon resale of the collateral or of a trade-in
accepted as a part of the transaction:
     [T]here are many elements in any such sale which must be
     considered to see if the disposition was commercially
     reasonable and some degree of flexibility must be allowed
     to assure that unfair practices do not go undetected, or
     that the creditor is not held to any particularly hard
     and fast rules.   85-9-507(2) states in part:  þThe fact
     that a better price could have been obtained by a sale at
     a different time or in a different method from that
     selected by the secured party is not of itself sufficient
     to establish that the sale was not made in a commercially
     reasonable manner.þ  Also, whether the collateral is sold
     wholesale instead of retail is not necessarily
     determinative of commercial unreasonableness.... Any
     difference between the fair market value and the price
     actually received, however, is ordinarily a material
     consideration, but this fact must be examined in light of
     all aspects of the sale to determine commercial
     reasonableness.  (Citations omitted.)  
Further, in Goodin v. Farmers Tractor & Equip. Co., 249 Ark. 30,
33, 458 S.W.2d 419, 421 (1970), the supreme court stated:  
     The fact that a better price could have been obtained by
     a sale at a different time or in a different method from
     that selected by the secured party is not of itself ...
     sufficient to establish that the sale was not made in a
     commercially reasonable manner. Ark. Stat. Ann.
     85-9-507(2). Yet that precise proof -- that a better
     price could have been obtained by a sale at a different
     time and in a different method -- comprised the only
     substantial evidence adduced by Goodin upon the point at
     issue. What little case authority there is upon this
     provision of the Code indicates that decidedly stronger
     proof is needed to establish commercial unreasonableness. 
     In view of the precise language of the Code we are unable
     to say that the appellant's meager proof made the
     necessary prima facie showing that Farmers's public sale
     was not commercially reasonable.  (Citations omitted.)
     Accordingly, we hold that R & T Motors established a prima
facie case that the sale was conducted in a commercially reasonable
manner and that Prince failed to þmeet proof with proofþ in
response.  In support of its motion for summary judgment, R & T
Motors submitted evidence, by affidavit and otherwise, as to every
relevant detail of the disposition of the collateral.  In response,
however, Prince produced no evidence, other than the bare assertion
that a better price might have been realized, to show that the sale
was conducted in a commercially unreasonable fashion.  Moreover,
she has provided no convincing argument or authority to persuade us
that the rules governing summary judgments in general do not apply
in cases such as this.  Even when the defendant-debtor raises the
defense that the sale was conducted in a commercially unreasonable
manner, summary judgment may be awarded if the debtor fails to
þmeet proof with proofþ in response to the motion for summary
judgment.  Because Prince made no challenge to any other aspect of
the repossession and sale, we hold that she failed to demonstrate
that a material question of fact remained for trial.  
     Affirmed.
     Bird and Rogers, JJ., agree.