Case Title: Gardner v. Ally Fin., Inc.

Citation: 

Docket Number: 10m/12

State: maryland

Court: Maryland Supreme Court

Date: 2013-03-01T00:00:00Z

Document:
Gladys Gardner, Individually and on behalf of all persons similarly situated v. Ally Financial
Incorporated f/k/a GMAC Incorporated & Randolph Scott, Individually and on behalf of all
persons similarly situated v. Nuvell National Auto Finance, LLC, d/b/a Nuvell National Auto
Finance; Nuvell Financial Services LLC, Misc. No. 10, September Term 2012. 
CERTIFIED QUESTION OF LAW – CREDITOR GRANTOR CLOSED END
CREDIT ACT – SECTION 12-1021(J) OF THE COMMERCIAL LAW ARTICLE –
PUBLIC AUCTION OR PRIVATE SALE OF REPOSSESSED PROPERTY
Under Section 12-1021(j) of the Creditor Grantor Closed End Credit Act (“CLEC”),
Commercial Law Article, Maryland Code (1975, 2005 Repl. Vol.), a sale of repossessed
tangible personal property, in which individuals were charged a refundable admission fee in
order to attend and observe the sale, was a “private sale.”
IN THE COURT OF APPEALS OF
MARYLAND
Misc. No. 10  
September Term, 2012
GLADYS GARDNER, INDIVIDUALLY
AND ON BEHALF OF ALL PERSONS
SIMILARLY SITUATED 
v.
ALLY FINANCIAL INCORPORATED,
f/k/a GMAC INCORPORATED
&
RANDOLPH SCOTT, INDIVIDUALLY
AND ON BEHALF OF ALL PERSONS
SIMILARLY SITUATED  
v.
NUVELL NATIONAL AUTO FINANCE,
LLC, d/b/a NUVELL NATIONAL AUTO
FINANCE;
 NUVELL FINANCIAL SERVICES LLC
Bell, C.J.
Harrell
Battaglia
Greene
Adkins
Barbera
McDonald,
JJ.
Opinion by Battaglia, J.
Filed: March 1, 2013
1  Section 12-603 of the Courts and Judicial Proceedings Article, Maryland Code
(1973, 2006 Repl. Vol.) provides: 
The Court of Appeals of this State may answer a question of law
certified to it by a court of the United States or by an appellate
court of another state or of a tribe, if the answer may be
determinative of an issue in pending litigation in the certifying
court and there is no controlling appellate decision,
constitutional provision, or statute of this State.
2  Rule 8-305 provides: 
(a) Certifying court. “Certifying court” as used in this Rule
means a court authorized by Code, Courts Article, §12-603 to
certify a question of law to the Court of Appeals of Maryland.
(b) Certification order. In disposing of an action pending
before it, a certifying court, on motion of any party or on its own
initiative, may submit to the Court of Appeals a question of law
of this State, in accordance with the Maryland Uniform
Certification of Questions of Law Act, by filing a certification
order. The certification order shall be signed by a judge of the
certifying court and state the question of law submitted, the
relevant facts from which the question arises, and the party who
shall be treated as the appellant in the certification procedure.
The original order and seven copies shall be forwarded to the
Court of Appeals by the clerk of the certifying court under its
official seal, together with the filing fee for docketing regular
appeals, payable to the Clerk of the Court of Appeals.
(c) Proceeding in the Court of Appeals. The filing of the
(continued...)
We have before us a question of law, certified by the United States Court of Appeals
for the Fourth Circuit, pursuant to the Maryland Uniform Certification of Questions of Law
Act, Sections 12-601 to 12-613 of the Courts and Judicial Proceedings Article, Maryland
Code (1973, 2006 Repl. Vol.)1 and Rule 8-305,2 regarding whether auctions of two
2(...continued)
certification order in the Court of Appeals shall be the
equivalent of the transmission of a record on appeal. The Court
of Appeals may request, in addition, all or any part of the record
before the certifying court. Upon request, the certifying court
shall file the original or a copy of the parts of the record
requested together with a certificate, under the official seal of
the certifying court and signed by a judge or clerk of that court,
stating that the materials submitted are all the parts of the record
requested by the Court of Appeals.
(d) Decision by the Court of Appeals. The written opinion of
the Court of Appeals stating the law governing the question
certified shall be sent by the Clerk of the Court of Appeals to the
certifying court. The Clerk of the Court of Appeals shall certify,
under seal of the Court, that the opinion is in response to the
question of law of this State submitted by the certifying court.
3  Section 12-1021(j) of the Commercial Article, pertaining to sales of repossessed
personal property under CLEC, provides: 
(j) Sale or auction – Authorized; notice; commercially
reasonable manner; accounting. – (1) (i) Subject to subsection
(l) of this section, the credit grantor shall sell the property that
was repossessed at:
  1. Subject to paragraph (2) of this subsection, a private
sale; or
  2. A public auction.
(ii) At least 10 days before the sale, the credit grantor
shall notify the consumer borrower in writing of the time and
place of the sale, by certified mail, return receipt requested, sent
(continued...)
2
repossessed automobiles, which were characterized by the creditors as “public auctions,”
were in actuality “private sales,” under the provisions of the Creditor Grantor Closed End
Credit Act, Section 12-1021(j) of the Commercial Law Article, Maryland Code (1975, 2005
Repl. Vol.) (“CLEC”),3 because attendance was limited to those who paid a refundable
3(...continued)
to the consumer borrower’s last known address.
(iii) Any sale of repossessed property must be
accomplished in a commercially reasonable manner.
(2) In all cases of a private sale of repossessed goods under this
section, a full accounting shall be made to the borrower in
writing and the seller shall retain a copy of this accounting for
at least 24 months. This accounting shall contain the following
information:
(i) The unpaid balance at the time the goods were
repossessed;
(ii) The refund credit of unearned finance charges and
insurance premiums, if any;
(iii) The remaining net balance;
(iv) The proceeds of the sale of the goods;
(v) The remaining deficiency balance, if any, or the
amount due the buyer;
(vi) All expenses incurred as a result of the sale;
(vii) The purchaser’s name, address, and business
address;
(viii) The number of bids sought and received; and
(ix) Any statement as to the condition of the goods at the
time of repossession which would cause their value to be
increased or decreased above or below the market value for
goods of like kind and quality.
(3) The Commissioner of Financial Regulation may make a
determination concerning any private sale that the sale was not
accomplished in a commercially reasonable manner.  Upon that
determination, the Commissioner may enter an order
disallowing any claim for a deficiency balance. 
Unless otherwise stated, all subsequent statutory references are to the Commercial Law
Article, Maryland Code (1975, 2005 Repl. Vol.).  
3
$1,000 cash deposit, even to observe:
Where tangible personal property financed pursuant to
Maryland’s Creditor Grantor Closed End Credit Act (“CLEC”),
Md. Code Ann., Com. Law §§ 12-1001 et seq., is subsequently
repossessed and sold by the credit grantor at an auction that is
4  Ally Financial Inc. was formerly known as GMAC, and Nuvell National Auto
Finance LLC and Nuvell Financial Services LLC are wholly owned subsidiaries of GMAC.
4
publicly advertised but requires a $1,000 refundable fee for a
person to enter and observe the auction, regardless of whether
the person intends to bid, is the sale a private sale under CLEC,
and thus subject to the post-sale disclosure requirements in Md.
Code Ann., Com. Law § 12-1021(j)(2), or is it a “public
auction” (or “public sale”),2 subject instead to the requirements
of § 12-1021(k)?
______________________
2  Section 12-1021 appears to use the terms “public auction” and
“public sale” interchangeably.  Compare Md. Code Ann., Com.
Law § 12-1021(j)(1)(i) (using “public auction”) with § 12-
1021(k)(1) (using “public sale”).  Neither term is defined in
CLEC, nor is the term “private sale.”
______________________
For the reasons that follow, we conclude that the auctions at issue were “private sales” under
CLEC, Section 12-1021(j). 
In its Certification Order, the Fourth Circuit summarized the circumstances giving rise
to the question, involving defaults by Gladys Gardner and Randolph Scott on their respective
automotive loan agreements and the subsequent repossessions of their cars by Ally Financial
Inc., Nuvell National Auto Finance LLC, and Nuvell Financial Services LLC (collectively
“GMAC”):4
The relevant and undisputed facts as recited by the
district court and set forth in the Appellants’ complaints are as
follows.3  See Scott v. Nuvell Fin. Servs., 789 F. Supp. 2d 637
(D. Md. 2011); Scott Am. Compl. (J.A. 20-41); Gardner Am.
Compl. (J.A. 81-103).4 
In 2007, Scott purchased a 2007 Mitsubishi Galant under
a retail installment sales contract governed by the provisions of
the CLEC.  His contract was assigned to GMAC.  Scott
5  Following oral argument in this Court, Manheim of Baltimore-Washington, which
is not a party to this action, submitted a pleading.  We have not considered it in determining
the answer to the Certified Question. 
5
subsequently defaulted on the loan, and GMAC repossessed the
vehicle on February 22, 2009.  On March 17, 2009, GMAC sent
a notice to Scott, informing him that the Galant would be sold
at 
a 
“public 
sale” 
conducted 
by 
Manheim 
of
Baltimore-Washington (“Manheim”)[5] on Tuesday, March 31,
2009.  GMAC then sent Scott a notice on a form indicating that
his car had been sold at that auction, and explaining that an
approximate balance of $16,541 remained.  See Scott, 789 F.
Supp. 2d at 638-39; Scott Am. Compl. ¶¶ 12-13, 15-18, 26.  
In July 2006, Gardner likewise purchased a Chevrolet
Impala under a retail installment sales contract governed by the
provisions of the CLEC.  Gardner failed to make scheduled
payments on the vehicle, and GMAC, who was assigned the
contract and a security interest in the vehicle, repossessed it.  On
December 8, 2009, GMAC sent a notice to Gardner, notifying
her that the Impala would be sold at a public sale on Tuesday,
January 5, 2010, as part of another Manheim auction.  The
notice stated, “[Y]ou may attend the sale and bring bidders if
you want.”  Scott, 789 F. Supp. 2d at 639; Gardner Compl. ¶¶
12-13, 15-17.  
Neither Scott’s nor Gardner’s notices mentioned that
members of the public needed to provide a refundable $1,000
cash deposit in order to attend the auction.5  Scott Am. Compl.
¶ 20; Gardner Am. Compl. ¶ 22.  In fact, Gardner tried to attend,
but she was denied admission because she could not pay the
deposit.  Gardner Am. Compl. ¶ 26.  She stated, “Since I did not
find out about the $1,000 entrance fee until I arrived at the
auction, I did not even have time to try to get the $1,000
entrance fee to attend the auction.”  Gardner Aff. ¶ 5 (J.A. 413).
After her vehicle was sold at the auction, GMAC informed her
of the sale and also that she had a deficiency balance of
approximately $12,196.  Scott, 789 F. Supp. 2d at 639; Gardner
Compl. ¶ 28. 
The Manheim “Tuesday Sales,” including the ones in
which Gardner’s and Scott’s vehicles were sold, were advertised
every Sunday in the Baltimore Sun’s classified “auction”
6
section.  The ads, printed in a similar font as other ads in that
section, provided the time and location of the sale, a contact
phone number, and the terms and conditions of the sale,
including the requirement of a refundable $1,000 cash deposit
to attend.  See Scott, 789 F. Supp. 2d at 643.  The ads did not,
however, mention the makes or model years of the cars to be
sold, nor did they include a specific description of the condition
of the cars.  Id.
______________________
3 Both of these complaints were styled as putative class actions;
however, the district court ruled on GMAC’s summary
judgment motion before a class was certified.
4  Citations to the “J.A.” refer to the Joint Appendix filed by the
parties in this appeal. 
5  If an attendee does not buy anything at the auction, he or she
is refunded the deposit amount via check two days later.  If a
purchase is made, the deposit is credited toward the purchase
price.  See Scott, 789 F. Supp. 2d at 638 n.1; Gardner Compl. ¶
19.  
______________________
Ms. Gardner and Mr. Scott filed separate complaints against GMAC in the United
States District Court for the District of Maryland, in which they alleged, in part, that GMAC
violated CLEC because the sales of their cars were in reality “private sales,” which required
GMAC to provide a detailed post-sale disclosure to the debtors under CLEC, Section
12-1021(j)(2) of the Commercial Law Article, which GMAC had not done: 
Scott and Gardner filed suit against GMAC, and they
both alleged the same five counts: (1) violation of the CLEC; (2)
breach of contract; (3) declaratory and injunctive relief; (4)
restitution and unjust enrichment; and (5) violation of the
Maryland Consumer Protection Act, Md. Code Ann., Com. Law
§§ 13-101 et seq.  Their suits were combined, as they were
“nearly identical in all material respects.”  Scott, 789 F. Supp.
2d at 639.  Notably, “both suits are [] predicated on the factual
premise that the Tuesday [Sales] were private sales subject to
more stringent notice and accounting requirements.” Id.6  
7
______________________
6  On August 24, 2010, GMAC filed a third-party complaint
against Manheim Marketing, Inc., a company with which
GMAC contracted to conduct auctions of its repossessed
automobiles.  See J.A. 115-121.  However, GMAC filed a
Notice of Dismissal Without Prejudice as to Manheim on
November 18, 2010, and the district court approved the
dismissal the same day.  As a result, Manheim did not
participate in this appeal.  
______________________
The District Court combined the two cases because they shared the same issue:
whether the sale of the debtor’s car was a “public auction” or a “private sale” under CLEC.
GMAC filed a motion for summary judgment, which the Court granted, concluding that the
sales were “public auctions” because they “were both widely advertised and open to the
public for competitive bidding.”  Scott v. Nuvell Financial Services LLC, 789 F. Supp. 2d
637, 644 (D. Md. 2011).  
Ms. Gardner and Mr. Scott appealed.  Before the Fourth Circuit, they filed a motion
to certify questions of law to this Court, as to whether the sales of their cars were “private
sales” because of the $1,000 admission fee required to attend and observe.  The Fourth
Circuit initially denied the motion, but thereafter, sua sponte, certified the issue: 
After discovery had begun, the district court sua sponte
raised the question of whether the Tuesday Sales were actually
“public sales” under Maryland law, and invited the parties to
move for judgment on the pleadings on this issue.  Thereafter,
the Appellees filed a motion for summary judgment, which the
court granted as to all five counts.  See Scott, 789 F. Supp. 2d at
645.  The court also rejected a request by Scott and Gardner to
pursue further discovery on the issue before ruling.  See id. at
640-42.  
Upon appeal to this court, the Appellants filed a Motion
6  As the Certified Question asks us to the consider the impact of an admission fee
under CLEC, we do not address the parties’ arguments regarding the sufficiency of the notice
sent by GMAC to the debtors. 
8
to Certify Questions of Law to the Court of Appeals of
Maryland on October 6, 2011.  This court denied the motion on
November 14, 2011.  Here, however, we address the
certification motion sua sponte. 
The issue before us is limited to the $1,000 admission fee and its impact on the
characterization of sales of repossessed cars as “public” versus “private.”6  The admission
fee in issue must be differentiated from other financial mechanisms employed by auctioneers
that are not addressed herein, such as a bidder’s fee, which is a deposit charged to an auction
attendee who intends to bid and is later refunded to an unsuccessful bidder, Pyles v. Goller,
109 Md. App. 71, 76, 674 A.2d 35, 37–38 (1996) (involving a $5,000 deposit in order to bid
during a public sale); an entry cost, which is “a nonrefundable fee required from bidders,”
Ronald N. Johnson, “Auction Markets, Bid Preparation Costs and Entrance Fees,” 55 Land
Economics 313, 313, 316 (1979); and a reserve price, which is defined as “[t]he minimum
price that a seller is willing to accept for a property to be sold at auction,” National
Auctioneers Association, Glossary of Terms, http://www.auctioneers.org/glossary (last
visited Feb. 27, 2013). 
It is axiomatic that “[w]hen a buyer finances the purchase of a car with funds
advanced by a creditor, the creditor often retains a security interest in the car as collateral.”
Ford Motor Credit Co. v. Roberson, 420 Md. 649, 656, 25 A.3d 110, 114 (2011).  Should the
debtor default on the loan, the security interest enables the creditor to repossess and retain
9
the car for full satisfaction of the debt or to sell it at a “public auction” or “private sale” and
use the sale’s proceeds to decrease the loan obligation of the debtor.  Section 12-1021(a),
(j)(1), (l)(4)(i).  The sale, whether a “public auction” or a “private sale,” “must be
accomplished in a commercially reasonable manner.”  Section 12-1021(j)(2)(iii). 
If the sale is a “public auction,” and the loan secured was more than $2,000, the
debtor, after the sale, must receive a written statement detailing how the proceeds were
allocated among the costs of the auction, costs of storing the collateral, and reducing the debt
obligation:
(k) Same – Disposition of certain proceeds. –(1) The provisions
of this subsection apply to a public sale of property which
secured a loan in excess of $ 2,000 at the time the loan was
made.
(2) The proceeds of a sale to which this subsection applies shall
be applied, in the following order, to:
(i) The actual and reasonable cost of the sale;
(ii) The actual and reasonable cost of retaking and storing
the property; and
(iii) The unpaid balance owing under the agreement at
the time the property was repossessed. 
(3) The credit grantor shall furnish to the consumer borrower a
written statement which shows the distribution of the proceeds.
Section 12-1021(k).  
If the sale is a “private sale,” by contrast, the debtor must receive more detailed
information, both quantitatively and qualitatively, in the form of a post-sale disclosure.  This
post-sale disclosure includes, in addition to a description of the distribution of the proceeds,
information about the purchaser, the number of bids received, and, if there is an impact on
its value, the condition of the collateral at the time it was repossessed:
10
(2) In all cases of a private sale of repossessed goods under this
section, a full accounting shall be made to the borrower in
writing and the seller shall retain a copy of this accounting for
at least 24 months.  This accounting shall contain the following
information: 
(i) The unpaid balance at the time the goods were
repossessed;
(ii) The refund credit of unearned finance charges and
insurance premiums, if any;
(iii) The remaining net balance;
(iv) The proceeds of the sale of the goods;
(v) The remaining deficiency balance, if any, or the
amount due the buyer;
(vi) All expenses incurred as a result of the sale;
(vii) The purchaser’s name, address, and business
address;
(viii) The number of bids sought and received; and
(ix) Any statement as to the condition of the goods at the
time of repossession which would cause their value to be
increased or decreased above or below the market value
for goods of like kind and quality.
Section 12-1021(j)(2).  
After the sale, the creditor may pursue a deficiency judgment against the debtor for
the remaining balance of the loan.  The debtor, obviously, only can challenge a creditor’s sale
as violative of CLEC after it is completed, typically in defense of a deficiency proceeding.
If the debtor can show that the creditor failed to abide by the requirements of CLEC in selling
the collateral, the creditor may be barred from a deficiency judgment and limited to the
proceeds of the sale as satisfaction of the debt.  Section 12-1021(j)(3), (k)(iv).
The debtors in this case contend that the sales of their cars were private, because the
$1,000 admission fee restricted access to the sales, and therefore GMAC should have
furnished to them the post-sale disclosures required for “private sales.”  They construe the
11
different post-sale disclosure requirements, which compel the production of more
information to the debtor if the sale is a “private sale,” as evidence that the distinction
between the two types of sales is the debtor’s ability to attend. 
GMAC counters that it was not required to provide detailed post-sale disclosures to
the debtors because the sales were “public auctions.”  It argues that a “private sale” is one
that expressly excludes “classes of individuals” and defines a “public auction” as “a method
of selling [property] in a public forum through open and competitive bidding,” quoting Pyles,
109 Md. App. at 75 n.2, 674 A.2d at 37 n.2.  It argues that a “public auction” does not
mandate the attendance of the debtor, but, instead, the distinction between sales in a public
or private context is the presence of competitive bidding.  The admission fee, GMAC further
maintains, improved competitive bidding because the fee ensured that potential bidders
would be able to pay at least $1,000 toward the price of the cars.  
CLEC does not define “public auction” or “private sale,” nor does the Uniform
7  The following provisions of the Maryland Uniform Commercial Code involving a
“public sale” and a “private sale,” for example, do not define the public-private distinction:
Section 2-706 of the Commercial Law Article (regarding the seller’s resale of goods as a
remedy to the buyer’s breach); Section 7-206 of the Commercial Law Article (providing that
a warehouse may sell goods “at public or private sale,” if the goods are a hazard to other
property, facilities, or other persons); Section 7-210 of the Commercial Law Article
(providing for the enforcement of a warehouse lien by public or private sale); Section 7-308
of the Commercial Law Article (providing for the enforcement of a carrier’s lien on goods
by public or private sale); Section 9-614 of the Commercial Law Article (providing Safe-
Harbor forms of pre-sale notification of public and private sales).
8  Other statutes providing for the sale of repossessed collateral by public or private
sale include: the Interest and Usury statute, Section 12-115(j), the Retail Installment Sales
Act (RISA), Section 12-626(e)(1)(ii), and the Credit Grantor Revolving Credit Provisions,
Section 12-921(j).
9  In Chapter 765 of the Laws of Maryland of 1983, in addition to CLEC, two other
statutes in the Commercial Law Article were amended as well: the Interest and Usury statute,
codified at Section 12-115(j), and the Credit Grantor Revolving Credit Provisions, codified
at Section 12-921(j).
12
Commercial Code7 or other provisions in which the terms are used.8  Legislative history,
then, becomes important: CLEC was enacted in 1984 as part of a body of legislation “to
entice creditors to do business in the State . . . .”  Roberson, 420 Md. 649, 662, 25 A.3d 110,
118 (2011).  CLEC was designed, in part, to counter “more favorable” regulations in
Delaware that had attracted lenders to that state away from Maryland, causing significant job
loss in the Baltimore area.  Biggus v. Ford Motor Credit Co., 328 Md. 188, 197, 613 A.2d
986, 991 (1992).  This 1983 Act, however, enabled a creditor only to sell repossessed goods
at a “public auction.”  1983 Maryland Laws, Chapter 143.
In 1987, Chapter 765 of the Laws of Maryland, which originated as Senate Bill 839,
amended CLEC, to add “private sale” as an alternative to a “public auction.”9  Senate Bill
10  The option of a “private sale,” according to Senator Della, was being proposed to
enable the creditor to sell to those who would purchase the property for personal use, as
opposed to a buyer who would purchase the property at a lower price, so to then resell it for
a profit, such as a wholesaler.  The bill file for Senate Bill 839 (1987) includes a handwritten
Hearing Summary of the House Committee on Economic Matters Hearing, noting that
Senator Della testified that the “Ave citizen cannot attend [struck word] auctions–often only
dlrs. bid on vehicles, thus forcing down the price . . . .”  The bill file also contains an untitled
explanation, which was characterized in Kline v. Central Motors Dodge, Inc., 328 Md. 448,
457, 614 A.2d 1313, 1317 (1992) as a “senate committee staff report,” which described the
purpose of the “private sale” option as to enable the creditor to “attract buyers who are
purchasing items for personal use and are therefore willing to pay a more reasonable price”:
Currently, public sales often do not offer a lender the best
advantage of obtaining the best resale price on repossessed
goods, as often buyers are unable to attend, or are buying goods
at wholesale for later retail resale.  By permitting private sale, a
lender will be better able to attract buyers who are purchasing
items for personal use and are therefore willing to pay a more
reasonable price.  
13
839, sponsored by Senator George Della, added the opportunity for a creditor to sell
collateral by “private sale,”10 in addition to “public auction,” and further provided that “any
sale of repossessed property must be accomplished in a commercially reasonable manner.”
Although the bill failed to identify what a “commercially reasonable manner” would
constitute, the bill file does contain a letter from Attorney General J. Joseph Curran, Jr. to
Governor William D. Schaefer regarding the constitutionality and legal sufficiency of the
bill, in which the Attorney General opined that the concept of commercial reasonableness
manifested itself in the common law, citing our decision in Obrecht v. Crawford, 175 Md.
385, 2 A.2d 1 (1938), which involved a seller’s resale of flour following the buyer’s breach
of contract.  There, we explained, and the Attorney General quoted in his letter, “where [the
14
seller] elects to resell, he must do [so] within a reasonable time and in such a manner as to
secure the best obtainable price and he is bound to exercise reasonable care and diligence to
that end.”  Obrecht, 175 Md. at 397–98, 2 A.2d at 8 (citation omitted).  Beyond referencing
this duty of reasonable care, the legislative history regarding commercial reasonableness is
wanting.
The bill file additionally contains a memorandum addressed to the House Economic
Matters Committee Counsel from Delegate Dana Dembrow, expressing concern that a
“private sale” could enable the creditor to engage in a sale of the debtor’s property, collusive
in nature, which would result in a rock-bottom resale price and a deficiency against the
debtor for the entire loan:
Because there is no notice provision and no right of public
participation in this bill which specifically permits private sales
of repossessed property, a dealer who repossesses could sell to
itself any vehicle for the sum of $1.00 and then proceed against
the purchaser for the entire deficiency of the loan (less
($1.00)[)].  The only possible protection is found in notification
of such a sale to the borrower and to the Commissioner of
Consumer Credit, but the disclosed activity would be perfectly
legal and the deficiency judgement enforceable.
Memorandum from Delegate Dana Dembrow to the House Economic Matters Committee
Counsel, Lars Kristiansen (April 9, 1987) (emphasis in original). 
Senate Bill 839 was amended in committee to add the post-sale disclosure
requirements for “private sales” as part of “consumer protection measures” to “prevent
private sales that are made to the detriment of the defaulting buyer/borrower”: 
The intent is to provide a lender the freedom to seek the best
11  The Legislature has modified the post-sale disclosure requirements for a “private
sale,” Section 12-1021(j), several times since 1987; none of these changes is pertinent to our
decision.  See 1988 Md. Laws, Chap. 632 (providing that the “purchaser’s name, address, and
business” must be filed with the Commissioner of Consumer Credit, who “may provide that
information to the borrower where it is necessary to ascertain” that the sale was
commercially reasonable and that “any alleged deficiency balance due the seller is, in fact,
due”); 1992 Md. Laws, Chap. 22 (Annual Corrective Bill); 1996 Md. Laws, Chap. 326
(continued...)
15
resale price on the repossessed goods, an option that could be of
benefit to the defaulting buyer/borrower.  Currently, many
public sales (auctions) cannot be attended by private buyers due
to limitations on how the purchase price must be paid, eligibility
to bid and other restructive [sic] factors.  Under certain
circumstances, such sales do not generate the best possible price
as the successful bidder is usually purchasing the goods at
wholesale for later retail resale.  Certain private purchasers may
be interested in buying the goods for their own use and not
concerned with the profit motive. 
These facts are recognized under the Retail Installment
Sales Act (CLA Title 12 subtitle 6); however, to prevent favored
buyer private sales that are not “bona fide” (commercially
reasonable), the Commissioner of Consumer Credit has a
regulation that allows a full review of all private sale
transactions under the subtitle.  These amendments, if accepted,
will codify the pertinent consumer protection measures of that
regulation and prevent private sales that are made to the
detriment of the defaulting buyer/borrower.
Explanation of Amendments, SB 839 (Senator Della) (1987).  The 1987 amendments to
CLEC, thus, were intended to balance giving the creditor the benefit of the “freedom to seek
the best resale price on the repossessed goods,” with protecting the debtor against collusive
and detrimental “favored buyer private sales that are not . . . commercially reasonable.”  Id.
The requirements of commercial reasonableness of all sales and post-sale disclosure
for a “private sale” have not been materially changed11 since 1987 nor defined.  Nevertheless,
(...continued)
(changing “Commissioner of Consumer Credit” to “Commissioner of Financial Regulation”);
1997 Md. Laws, Chap. 14 (Annual Corrective Bill); 1997 Md. Laws, Chap. 218 (providing
that “the purchaser’s name, address, and business” be included in the post-sale disclosure to
the debtor).
16
we can glean what the concept of “commercial reasonableness” represents by explaining its
meaning in the context of Maryland Uniform Commercial Code, pursuant to which the
approach is a multi-factor analysis.  The outcome of this multi-factor analysis does not
necessarily depend solely on a low sales price, as “[t]he fact that a greater amount could have
been obtained by a . . . disposition . . . at a different time or in a different method from  that
selected by the secured party is not of itself sufficient to preclude the secured party from
establishing that the . . . disposition . . . was made in a commercially reasonable manner.”
Section 9-627(a) of the Commercial Law Article.  
Rather, “‘the primary focus of commercial reasonableness is not the proceeds received
from the sale but rather the procedures employed for the sale.’”  National Housing
Partnership v. Municipal Capital Appreciation Partners I, L.P., 935 A.2d 300, 315 (D.C.
2007), quoting In re Zsa Zsa, Ltd., 352 F. Supp. 665, 671 (S.D.N.Y. 1972), aff’d without
opinion, 475 F.2d 1393 (2d Cir. 1973) (emphasis in original).  The procedures employed
were the focus in Harris v. Bower, 266 Md. 579, 590–91, 295 A.2d 870, 875–76 (1972), for
example, in which we determined that the creditor’s sale of a repossessed boat was not
commercially reasonable under the Uniform Commercial Code, because the creditor not only
failed to advertise the sale in “customary yachting publications,” but also the three bids he
received had a “curiously improbable air” about them, and the value of the boat depreciated
17
because the creditor failed to maintain its condition during the two-year delay between the
repossession and resale of the boat.  Notably, our conclusion was buttressed by the dubious
nature of the few prospective offers and the devalued condition of the boat.   
Commentators have opined that other procedural aspects that could influence a finding
of commercial unreasonableness of a sale are that the sale occurred “too quickly”; that there
was inadequate advertising; that it was held in an improper location; that prospective bidders
did not have the opportunity to inspect the property before the sale; that the creditor did not
perform minor maintenance to the collateral that might increase the selling price; or that the
sale did not occur as advertised.  James J. White & Robert S. Summers, Uniform Commercial
Code 906–08 (5th ed. 2000). 
The multi-factor analysis used to define commercial reasonableness in the UCC can
be applied to CLEC, as we have heretofore noted in Kline v. Central Motors Dodge, Inc., 328
Md. 448, 614 A.2d 1313 (1992), in which we addressed whether the Retail Installment Sales
Act (“RISA”), Sections 12-601 to 12-636 of the Commercial Law Article, Maryland Code
(1975, 2005 Repl. Vol.), another credit-extension statute, required a “bona fide public or
private sale,” Section 12-626(e)(1)(ii), to be conducted in a commercially reasonable manner.
In concluding that it did, we agreed with the debtors’ argument that the phrase “bona fide,”
in RISA’s requirement that a “private sale” must be “bona fide” in accordance with Section
12-626(e)(1)(ii), had “substantially the same meaning as the words, ‘commercially
reasonable,’” under what is now Section 9-610(b) of Maryland Uniform Commercial Code.
Kline, 328 Md. at 451, 459, 614 A.2d at 1314, 1318.  We held that “the bona fide sale
18
required by RISA § 12-626 is the same as the commercially reasonable sale required by”
CLEC.  Id. at 459, 614 A.2d at 1318.  The phrase “commercially reasonable manner,” under
CLEC, then, relates to evaluating the procedures utilized to sell collateral.
The post-sale disclosure requirements, similarly, were intended to address the
potential for collusion to the detriment of the buyer during a “private sale” and requires
greater qualitative and quantitative information be disclosed to the debtor, including: “The
purchaser’s name, address and business address;” “The number of bids sought and received;”
and “Any statement as to the condition of the goods at the time of repossession which would
cause their value to be increased or decreased above or below the market value for goods of
like kind and quality.”  Section 12-1021(j)(2)(vii, viii, ix).  
Although we have not had occasion to define “public auction,” our brethren on the
Court of Special Appeals have in Pyles v. Goller, 109 Md. App. 71, 75 n.2, 674 A.2d 35, 37
n.2 (1996), and Express Auction Services, Inc. v. Conley, 127 Md. App. 447, 453, 732 A.2d
1012, 1015 (1999), to be “a method of selling [property] in a public forum through open and
competitive bidding,” quoting the National Auctioneers Association’s Glossary of Real
Estate Auction Terms.  Although both of these cases involved the sale of real estate and
neither addressed the issue of whether the sale in question in those cases were “public
auctions,” it is the definition embraced by GMAC.  “Open” and “competitive bidding” are,
thus, the gravamen of a “public auction.”   
To be open, as a deterrent from collusion and abuse, is to be transparent, as we
acknowledged most recently in WSG Holdings, LLC v. Bowie, 429 Md. 598, 57 A.3d 463
12  Counsel for GMAC analogized the $1,000 admission fee to a fee charged to enter
a movie house or the Super Bowl, which may be characterized as “open to the public” in
(continued...)
19
(2012), in which we considered the open meeting provisions of the Charles County Code and
the Rules of Procedure of the Board of Appeals for Charles County.  In that case, the Board
of Appeals refused to allow all but one member of the public and his counsel to observe an
in-person inspection of a subject property in a zoning exception application proceeding.  In
concluding that this visit was a meeting that was not open, in violation of the Charles County
Code and the Board’s own Rules of Procedure, we acknowledged that the purpose of
openness is to be transparent, to allow the public to observe the Board of Appeals’ evidence-
gathering and decision-making process, so to prevent corruption, deceit, and “the
crystallization of secret decisions to a point just short of ceremonial acceptance.” 429 Md.
at 619, 57 A.3d at 476, quoting Town of Palm Beach v. Gradison, 296 So. 2d 473, 477 (Fla.
1974).  Openness and transparency, then, are dependent on the ability to observe the
proceeding to ensure opportunity to observe that rules are being followed and those in control
are not engaging in collusive or unfair practices.  
In auctions, openness, defined as “full transparency,” allows “[b]idders and other
interested parties [to] verify that the rules are followed.”  Peter Cramton & Jesse A.
Schwartz, “Collusive Bidding: Lessons from the FCC Spectrum Auctions,” 17 Journal of
Regulatory Economics 229, 230 (2000).  Transparency further assures the integrity of the
auction process, as all are involved in observing that the rules of the auction are followed and
thereby trust that the sellers are abiding by the rules, as opposed to favoring one bidder.12
(...continued)
spite of a mandatory admission fee.  That analogy is not apt in the situation in which
openness relates to the integrity of procedures. 
20
Aleksandar Peke… & Michael H. Rothkopf, “Combinatorial Auction Design,” 49
Management Science 1485, 1489 (2003) (“Transparency is important in auctions for two
reasons: (1) it simplifies bidders’ understanding of the situation, thus easing their decision
making, and (2) it increases their trust in the auction process by improving their ability to
verify that the auction rules have, in fact, been followed.” (emphasis in original)).  Openness
or transparency in a “public auction,” thus, elucidates the integrity, or lack thereof, of the
procedures employed. 
The “public auction” concept, as well as CLEC’s language, purpose, and design, thus,
define the answer to the Certified Question.  A “public auction” requires transparency in the
process for its own integrity.  The post-sale disclosure requirements for a “private sale” are
implicated when openness and transparency are not present, to enable a debtor to challenge
the procedures used to sell a vehicle that affect the amount of a deficiency judgment assessed
against the debtor. 
In the present case, the admission fee obscured transparency because bidders and
interested parties would have had to accumulate and part with money, at least temporarily,
in order to merely observe the auction.  The admission fee shielded the process used to sell
Ms. Gardner’s and Mr. Scott’s cars from observation and, thus, could not constitute a “public
auction” under CLEC.  Rather, the sales were, in actuality, “private sales” subject to the
post-sale disclosure requirements of Section 12-1021(j)(2). 
21
CERTIFIED QUESTION ANSWERED AS
SET FORTH ABOVE.  COSTS SHALL BE
EQUALLY DIVIDED BETWEEN THE
PARTIES.