Opinion
Index No. EF005251-2018
05-08-2020
CREDIT ACCEPTANCE CORPORATION, Plaintiff, v. Mackenzie PULIS, Defendant.
The following papers numbered 1 - 8 were read on Plaintiff's motion for summary judgment:
Notice of Motion(denied)/Affirmation of Rafeena Khairullah, Esq./
Exhibits A - F ... –––– 1 - 8
This motion is the second attempt to obtain a deficiency judgment. Plaintiff's first attempt was denied on June 25, 2019 for failing to provide proof that the sale of the vehicle was done in a "commercially reasonable" manner. Upon denial of Plaintiff's motion, this matter was placed on the calendar for a conference to set a date for an inquest or produce further documentation regarding the sale. On September 29, 2019, Plaintiff appeared but Defendant failed to appear. The Court directed Plaintiff to submit a motion for a judgment. Plaintiff submits the instant motion pursuant to that directive. However, Plaintiff's papers still do not contain proof of the commercial reasonableness of the sale.
As was stated in the Court's first decision and Order dated June 25, 2019,
"In this case, summary judgment can not be granted on the papers submitted. Although Plaintiff has provided sufficient proof of their breach of contract claim, Plaintiff fails to submit any evidence in support of the requirement to sell the repossessed vehicle in a 'commercially reasonable' manner. After plaintiff took possession of the vehicle, it was obligated to deal with the vehicle in accordance with the requirements of Article 9 of the Uniform Commercial Code. Article 9 imposes two significant requirements upon a secured party who chooses to sell the collateral: (1) the secured party must send "a reasonable authenticated notification of disposition" to the debtor UCC § 9—611 (b) ; and, (2) the sale must be "commercially reasonable". UCC § 9—610(b). In her answer to the complaint, the defendant alleges as an affirmative defense that the plaintiff failed to sell the vehicle in a commercially reasonable manner. This places the burden on the plaintiff to demonstrate that all aspects of the sale were commercially reasonable. M & T v. Sailor , 131 AD3d 1017 (2nd Dept 2015). Plaintiff fails to give any information concerning how the vehicle was sold except to state that it was at a private auction.
When a secured party is seeking a deficiency, the secured party bears the burden of proving the sale was commercially reasonable. GMAC v. Jones , 89 AD3d 985 (2nd Dept 2011), Associates Commercial Corp. v. Liberty Truck Sales & Leasing, Inc. , 286 AD2d 311 (2nd Dept 2001). Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. ( UCC § 9—610[b] ). Under the UCC, private sales are encouraged on the assumption that they frequently will result in a higher realization on collateral for the benefit of all concerned. ( UCC § 9—610 Official Comment 2). Under UCC § 9-627[b], the disposition of collateral is made in a commercially reasonable manner if it is made:
"(1) in the usual manner on any recognized market; (2) at the price current in any recognized market at the time of the disposition; or (3) otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition."
In order to demonstrate that the liquidation of collateral meets these requirements, the factual circumstances surrounding the sale must be fully disclosed. See, Chrysler Credit Corp. v. Kosal , 132 AD2d 686 (2nd Dept 1987), Mack Financial Corp. v. Knoud , 98 AD2d 713 (2nd Dept 1983). The amount realized from the disposition of the collateral is one of these factual circumstances to be considered. According to Official Comment 2 of UCC 9-627, a low sales price "suggests that a court should scrutinize carefully all aspects of a disposition to ensure that each aspect was commercially reasonable." A marked difference between the disposal price and the sale price signal a need for such scrutiny. Federal Deposit Insurance Corp v. Forte , 94 AD2d 59 (2nd Dept 1083), Central Budget Corp. v. Garrett , 48 AD2d 825 (2nd Dept 1975).
Without affirmative proof that the disposition was commercially reasonable, there can be no deficiency recovery. Central Budget Corp. v. Garrett , 48 AD2d 825 (2nd Dept 1975)."
The law does not change because Defendant failed to appear, and a deficiency can not be granted without proof that the "private sale" of this vehicle was commercially reasonable.
Accordingly, it is hereby
ORDERED that Plaintiff's motion for summary judgment is again denied, and it is further
ORDERED that this matter shall be marked off calendar as disposed. Should Plaintiff obtain the proof necessary to satisfy the statutory requirements, a motion for judgment will be entertained.
The foregoing constitutes the Decision and Order of the Court.
The clerk is directed to mark this matter disposed.