Both wholesale valuation and techniques that average wholesale and retail values, see, e.g., In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993), undercompensate the secured creditor and provide an invalid windfall to the debtor.Rash, 31 F.3d at 331.
1993); In re Green, 151 B.R. 501, 506 (Bankr. D.Minn. 1993); In re Reynolds, 17 B.R. 489, 493 (Bankr.N.D.Ga. 1981).In re Rowland, 166 B.R. 172, 176 (Bankr. N.D.Fla. 1994); In re Carlan, 157 B.R. 324, 326 (Bankr.S.D.Tex. 1993); In re Stauffer, 141 B.R. 612, 614 (Bankr.N.D.Ohio 1992); In re Chapman, 135 B.R. 11, 14 (Bankr.M.D.Pa. 1990); In re Thayer, 98 B.R. 748, 750 (Bankr.W.D.Va. 1989); In re Johnson, 8 B.R. 503, 505 fn. 1 (Bankr.S.D.Tex. 1981); In re McLeod, 5 B.R. 520, 521 (Bankr.N.D.Ga. 1980); In re Miller, 4 B.R. 392, 394 (Bankr.S.D.Cal. 1980).In re Mitchell, 954 F.2d 557, 560 (9th Cir. 1992); In re Malody, 102 B.R. 745, 749 (9th Cir. BAP 1989); In re King, 165 B.R. 296, 300 (Bankr.M.D.Fla. 1994); In re Angel, 147 B.R. 48, 49 (Bankr.D.Idaho 1992); In re Rossow, 147 B.R. 1, 2 (Bankr.W.D.N.Y. 1992); In re Phillips, 142 B.R. 15, 17 (Bankr.D.N.H. 1992); In re Owens, 120 B.R. 487, 490 (Bankr.E.D.Ark. 1990); In re Johnson, 115 B.R. 515, 516 (Bankr.D.S.C. 1988); In re Cook, 38 B.R. 870, 875 (Bankr. D.Utah 1984); In re Klein, 10 B.R. 657, 660 (Bankr.E.D.N.Y. 1981); In re Van Nort, 9 B.R. 218, 221 (Bankr.E.D.Mich.
A growing number of cases have held that valuation of collateral at an average between wholesale and retail prices is the best alternative because it is the most consistent with the statutory language and legislative intent. See In re Jones, 5 B.R. 736 (Bankr.E.D.Va. 1980) (valuation is neither amount realized at a distress sale nor on-the-lot, in-the-store retail figure); In re Miller, 4 B.R. 392 (Bankr.S.D.Cal. 1980) (median value between wholesale and retail); In re Thayer, 98 B.R. 748 (Bankr.W.D.Va. 1989) (fair and equitable to value collateral at median value between average retail and average trade-in); In re Stauffer, 141 B.R. 612 (Bankr.N.D.Ohio 1992) (most equitable approach would be to average N.A.D.A. retail and wholesale values); and In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993) (proper value between wholesale and retail). I agree with these courts and hold that the proper and most equitable approach is to value the collateral usually at an average between the wholesale and retail amounts.
Both wholesale valuation and techniques that average wholesale and retail values, see, e.g., In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993), undercompensate the secured creditor and provide an invalid windfall to the debtor. Finally, it is argued that profit should be eliminated from calculations of the value of the creditor's lien.
The difference between retail and wholesale values of used vehicles is substantial. In In re Carlan, 157 B.R. 324, 325 (Bankr.S.D.Tex. 1993), the court considered evidence of an automobile with a wholesale value of $6,050 and a retail value of $7,675, a difference of $1,625, or almost 27% of the wholesale value. And in Metrobank v. Trimble (In re Trimble), 50 F.3d 530, 530 (8th Cir. 1995), the parties stipulated that the wholesale value of the debtor's pickup truck was $4,000, but that the retail value was $6,500, an increase of 38% over wholesale.
See In re Mitchell, 191 B.R. 957 (Bankr.M.D.Ga. 1995); In re Madison, 186 B.R. 182 (Bankr.E.D.Pa. 1995); In re Hoskins, 183 B.R. 166 (Bankr.S.D.Ind. 1995); In re Myers, 178 B.R. 518 (Bankr.W.D.Okla. 1995); In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993). 11.
See In re Myers, 178 B.R. 518, (Bankr.W.D.Okla. 1995) (average of wholesale and retail book values with adjustments based on facts of particular case); In re Rowland, 166 B.R. 172 (Bankr.N.D.Fla. 1994) (starting point is average between retail and wholesale values with adjustments due to special circumstances); In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993) (somewhere between wholesale and retail value); In re Stauffer, 141 B.R. 612 (Bankr.N.D.Ohio 1992) (average NADA wholesale and NADA retail values; party can request a hearing if factors necessitate higher or lower valuation); General Motors Acceptance Corp. v. Chapman (In re Chapman), 135 B.R. 11 (Bankr.M.D.Pa. 1990) (average between wholesale and retail value found in official used car guide); Dominion Bank v. Thayer (In re Thayer), 98 B.R. 748 (Bankr.W.D.Va. 1989) (average between NADA adjusted retail and trade-in values; must show that vehicle so deteriorated or so mint that formula should not apply). The bases for the different interpretations of ยง 506(a) stem from emphasizing either the first or second sentence of the statute. Courts favoring the wholesale method focus on the provision that an allowed claim "is a secured claim to the extent of the value of such creditor's interest."
Id. See, e.g., General Motors Acceptance Corp. v. Valenti, 191 B.R. 521 (N.D.N.Y. 1995) (use of the average of the wholesale and retail values is dictated by local rule); In re Mitchell, 191 B.R. 957 (Bankr.M.D.Ga. 1995) (begins with average of wholesale and retail which gives court the flexibility to give meaning to both sentences in 506(a)); In re Madison, 186 B.R. 182 (Bankr.E.D.Pa. 1995) (cases advocating retail valuation overemphasize the second sentence of 506(a)); In re Hoskins, 183 B.R. 166 (Bankr.S.D.Ind. 1995) (average value was appropriate under particular facts of the case); In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993) (the starting point is the average between the book wholesale and retail values); In re Thayer, 98 B.R. 748 (Bankr.W.D.Va. 1989). II
, In re Myers, 178 B.R. 518 (Bankr.W.D.Okla. 1995); In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993); In re Stauffer, 141 B.R. 612 (Bankr.N.D.Ohio 1992); In re Chapman, 135 B.R. 11 (Bankr.M.D.Pa. 1990); In re Thayer, 98 B.R. 748 (Bankr.W.D.Va. 1989). A party may request an evidentiary hearing if it believes certain factors necessitate a higher or lower value.
In re Myers, 178 B.R. 518 (Bankr.W.D.Okla. 1995); In re Carlan, 157 B.R. 324 (Bankr.S.D.Tex. 1993); In re Stauffer, 141 B.R. 612 (Bankr.N.D.Ohio 1992); In re Thayer, 98 B.R. 748 (Bankr.W.D.Va. 1989). The "purpose of the valuation" in this case is to value the collateral in order to confirm a Chapter 13 plan. If that phrase is given meaning then a court must make distinctions dependant upon, in part, the reason for the valuation.