GA Code § 11-9-625 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 9 - Secured Transactions|Part 6 - Default|§ 11-9-625. Remedies for Secured Party's Failure to Comply With Article

  Judicial orders concerning noncompliance. If it is established that a secured party is not proceeding in accordance with this article, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.   Damages for noncompliance. Subject to subsections (c), (d), and (f) of this Code section, a person is liable for damages in the amount of any loss caused by a failure to comply with this article. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.   Persons entitled to recover damages; statutory damages if collateral is consumer goods. Except as otherwise provided in Code Section 11-9-628:   A person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subsection (b) of this Code section for its loss; and   If the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this part may recover for that failure in any event an amount not less than the credit service charge plus 10 percent of the principal amount of the obligation or the time price differential plus 10 percent of the cash price.     Recovery when deficiency eliminated or reduced. A debtor whose deficiency is eliminated under Code Section 11-9-626 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under Code Section 11-9-626 may not otherwise recover under subsection (b) of this Code section for noncompliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.   Statutory damages; noncompliance with specified provisions. In addition to any damages recoverable under subsection (b) of this Code section, the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover $250.00 in each case from a person that:   Fails to comply with Code Section 11-9-208;   Fails to comply with Code Section 11-9-209;   Files a record that the person is not entitled to file under subsection (a) of Code Section 11-9-509;   Fails to cause the secured party of record to file or send a termination statement as required by subsection (a) or (c) of Code Section 11-9-513;   Fails to comply with paragraph (1) of subsection (b) of Code Section 11-9-616 and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or   Fails to comply with paragraph (2) of subsection (b) of Code Section 11-9-616.     Statutory damages; noncompliance with Code Section 11-9-210. A debtor or consumer obligor may recover damages under subsection (b) of this Code section and, in addition, $250.00 in each case from a person that, without reasonable cause, fails to comply with a request under Code Section 11-9-210. A recipient of a request under Code Section 11-9-210 which never claimed an interest in the collateral or obligations that are the subject of a request under that Code section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.   Limitation of security interest; noncompliance with Code Section 11-9-210. If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Code Section 11-9-210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.     (Code 1981, §11-9-625, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 18/SB 185.)    The 2013 amendment,  effective July 1, 2013, substituted "if collateral is consumer goods" for "in consumer goods transaction" in the heading of subsection (c).   Law reviews.   - For article, "Nonjudicial Foreclosures in Georgia Revisited," see 24 Ga. St. B.J. 43 (1987). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991). For survey article on commercial law, see 44 Mercer L. Rev. 99 (1992). For comment on a secured party's burden of proof in seeking a deficiency judgment after resale of collateral, see 33 Mercer L. Rev. 397 (1981).   JUDICIAL DECISIONS   Editor's notes.   - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.   Liability for loss caused by failure to comply with law.    - The debtor or any person entitled to notification has a right to recover from secured party any loss caused by failure to comply with provisions of law. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980) (decided under former Code Section11-9-507).    Recovery of "any loss" by the debtor under former paragraph (1) for the creditor's noncompliance with the Codal provisions must necessarily be limited to actual damages caused by a sale at less than an adequate price. Willis v. Healthdyne, Inc., 191 Ga. App. 671, 382 S.E.2d 651 (1989) (decided under former Code Section11-9-507).   Disposition approved in judicial proceeding.    - A judicial order which merely authorized plaintiff to conduct a commercially reasonable sale but did not declare the manner in which plaintiff ultimately conducted the sale to be commercially reasonable did not constitute judicial approval of the sale which would conclusively deem the sale to be commercially reasonable. Carlton Mfg., Inc. v. Bauer, 207 Ga. App. 850, 429 S.E.2d 329 (1993) (decided under former Code Section11-9-507).   Effect of failure to prove commercial reasonableness of disposition.    - A creditor who fails to prove that notice of sale was given debtor (where required) or fails to prove that disposition, including its method, manner, time, place and terms, was commercially reasonable, is barred from obtaining a deficiency judgment. Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section11-9-507).    When the reasonableness of the sale is challenged, the seller of the collateral has the burden of proving that the sale was reasonable. A secured creditor who fails to meet this burden is barred from recovering any deficiency between the sale price and the debt. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558 (1989) (decided under former Code Section11-9-507).   Creditor's failure to notify of dispository intent immaterial.    - Where collateral securing debt was never repossessed by subsequent creditor but was instead sold at auction by guarantor's bankruptcy trustee and the proceeds thereof were retained by the trustee as an asset of the bankruptcy estate and not distributed to creditor, pursuant to former paragraph (2), this disposition by creditor's representative was conclusively deemed to be commercially reasonable, rendering immaterial creditor's failure to notify guarantor of its intent not to repossess and dispose of that collateral. Davis v. Concord Com. Corp., 209 Ga. App. 595, 434 S.E.2d 571 (1993) (decided under former Code Section11-9-507).    Creditor's failure to comply with notice requirement of former § 11-9-505. - Even though a debtor gave possession of a note and security deed and executed a transfer and assignment of the instruments to the creditor as collateral for a loan, the instruments never vested in the creditor and the transaction was not the creation or transfer of an interest in real estate under former § 11-9-104(h); thus, where the creditor did not comply with the notice requirement of former § 11-9-503(2), the debtor was entitled to recover either damages for conversion of the collateral after default or damages prescribed by this former section. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995).   Reasonable terms of sale.    - For secured party to meet burden of proving every aspect of sale to be commercially reasonable, it must establish affirmatively that the "terms" of sale were commercially reasonable; this includes burden to show that resale price was fair and reasonable value of collateral. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section11-9-507).    Where commercial reasonableness of sale is challenged by debtor, party holding security interest has burden of proving that terms of sale were commercially reasonable and that resale price was fair and reasonable value of collateral. Richard v. Fulton Nat'l Bank, 158 Ga. App. 595, 281 S.E.2d 338 (1981) (decided under former Code Section11-9-507).    Denial of the creditor's motion for a directed verdict was proper since, based on the evidence presented, the jury could have determined that a sale was commercially unreasonable and that the debtor was entitled to money damages as a result. Atlantic Coast Fed. Credit Union v. Delk, 241 Ga. App. 589, 526 S.E.2d 425 (1999).   Overcoming presumption that value of collateral equals debt.    - Presumption that value of collateral equals debt on it is overcome by proving fair and reasonable value of collateral, whereupon creditor is entitled to deficiency judgment in amount of debt (plus or minus any payments or charges properly applicable to disposition) less fair and reasonable value of collateral proved by creditor (if resale price is less than fair and reasonable value proved). Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section11-9-507).    Burden is on secured party to prove value of collateral at time of repossession and that such value does not equal debt; failure to so prove results in a presumption that value was at least amount of debt. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section11-9-507).    Where adequacy of price is challenged, creditor must overcome presumption as to value to recover deficiency. Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section11-9-507).    Debtor's contention that the debtor could have obtained higher price  for aircraft sold at private sale had the debtor sold them personally was insufficient to infer that creditor, who sold planes, acted in commercially unreasonable manner. Cessna Fin. Corp. v. Wall, 876 F. Supp. 273 (M.D. Ga. 1994).    Wide discrepancy between sale price and value of collateral signals need for close scrutiny, even though a seemingly low return is usually not dispositive on question of commercial reasonableness. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section11-9-507).    Sale of repossessed collateral is not commercially reasonable when there is wide discrepancy between sale price and value of such collateral (presumed to equal amount of debt in absence of proof otherwise) coupled with secured party's failure to prove value at time of repossession, and that such value does not equal debt. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section11-9-507).   Ultimate question of commercial reasonableness is one of law.    - When reasonableness of sale of repossessed collateral is challenged, secured party has burden of proving that it was reasonable; and ultimate question of commercial reasonableness is one of law. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section11-9-507).   Notice to secured party holding interest senior to that of selling secured party.    - Secured party who holds interest senior to one held by secured party selling property at public sale and who meets other requirements of Code, must be sent notification of sale, and failure to do so gives rise to cause of action under the former provisions of this section. Bank of Camilla v. Stephens, 234 Ga. 293, 216 S.E.2d 71 (1975) (decided under former Code Section11-9-507).   Acts of secured party which deny debtor opportunity to redeem collateral.    - Act of secured party, in selling collateral without strict compliance with notice of sale provisions of former § 11-9-504 precluded purchaser or owner from exercising right of redemption under former § 11-506, and for that reason secured party cannot recover for deficiency owed by purchaser. Braswell v. American Nat'l Bank, 117 Ga. App. 699, 161 S.E.2d 420 (1968) (decided under former Code Section11-9-507).   Sale of property by secured party without notice.    - In action for conversion of mortgaged property, instruction that secured party had no right to sell property if no notice was given was erroneous, as the U.C.C. does not prohibit sale without notice, but rather provides that a debtor is entitled to recover any loss caused by such a sale, that is, a loss caused by a sale at a less than adequate price, and is also protected from any action by secured party to recover any deficiency between sale price and balance owing. Trust Co. v. Kite, 164 Ga. App. 119, 294 S.E.2d 606 (1982) (decided under former Code Section11-9-507).    The UCC does not prohibit a post-re-possession sale without notice. A debtor's remedies for a sale without notice are recovery of loss caused by an inadequate sale price. Clark v. GMAC, 185 Ga. App. 130, 363 S.E.2d 813 (1987) (decided under former Code Section11-9-507).   Repossessed collateral need not be disposed of where only fraction of value recoverable.    - A secured creditor did not act in a commercially unreasonable manner when it repossessed the collateral and, without ever disposing of it, filed suit against the debtor, there being evidence that the collateral was the type of equipment which in the past the creditor had been able to dispose of at only a fraction of its original sale value. However, if it was later established that the creditor did not act in a commercially reasonable manner, the balance of the indebtedness owed on the contracts would be reduced by the value of the equipment at the time it was repossessed, plus the amount of any damage sustained as a result of the creditor's inaction in returning or disposing of the goods. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784 (1984) (decided under former Code Section11-9-507).    When the resale price is less than the fair and reasonable value, the creditor is entitled to a deficiency judgment in the amount of the debt (plus or minus any payments or changes properly applicable to the disposition) less the fair and reasonable value of the collateral proved by the creditor, not the debt less the resale price. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61 (1988) (decided under former Code Section11-9-507).   Private auction sale of automobile.    - The method and manner of sale of a repossessed automobile were commercially reasonable, where the collateral was disposed of at a private auction by a recognized automobile auction company according to standard practice and procedure for sales of this kind. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61 (1988) (decided under former Code Section11-9-507).   Failure to prove fair and reasonable value of minibuses.    - Secured creditor failed to prove the fair and reasonable value of minibuses at the time of sale, where the only evidence of value of the vehicles was the offers received after the default by the creditor's corporate president, upon the solicitation of some 15 individuals nationwide, and the actual price paid at the sale of the vehicles. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558 (1989) (decided under former Code Section11-9-507).   State remedy precludes federal due process claim.    - Because Georgia provided a remedy for improper repossession pursuant to O.C.G.A. § 11-9-625, a former arrestee, who claimed that police officers interfered with the arrestee's possessory interests in a vehicle at the time of the arrest, had no federal due process claim with respect to the repossession of the vehicle. Carroll v. Henry County, 336 Bankr. 578 (N.D. Ga. 2006).   Judicial estoppel barred debtor's claim for damages.    - Debtor was judicially estopped from pursuing the debtor's claim for damages under O.C.G.A. § 11-9-625 arising from a company's sale of the debtor's car following the car's repossession because any recovery would not inure to the benefit of the debtor's creditors, who were not fully compensated when a bankruptcy court discharged the debtor's debts; the debtor's claim that the company sold the debtor's car for an unreasonably low price arose at least two years before the debtor filed for bankruptcy protection, and because the cause of action accrued prior to the debtor's commencement of the debtor's bankruptcy action, the debtor was required to disclose the car in the debtor's schedule of assets to be included as property of the bankruptcy estate under 11 U.S.C. § 541. Sevostiyanova v. Tempest Recovery Servs., 307 Ga. App. 868, 705 S.E.2d 878 (2011).    Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).   RESEARCH REFERENCES   Am. Jur. 2d.   - 68A Am. Jur. 2d, Secured Transactions, § 709, 737-779.   C.J.S.   - 72 C.J.S., Pledges, § 30.   U.L.A.   - Uniform Commercial Code (U.L.A.) § 9-625.   ALR.   - Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.   Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.   UCC: value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 A.L.R.4th 1128.   Remedies available under revised U.C.C. § 9-625 for secured party's failure to comply with Article 9, 47 A.L.R.7th Art. 3.