Court Opinion

ID: 9570247
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:21:27.761547+00
Date Added: 2024-06-11T12:05:12.547961
License: Public Domain

STEWART, Justice
(dissenting):
I dissent. The majority sustains the trial court’s determination made in a summary judgment that the sale of assets in this case was commercially unreasonable. Therefore, the seller forfeits all right to a deficiency judgment. Whether the sale was commercially reasonable depends upon the inferences and conclusions drawn from the facts in this case. Where different inferences and conclusions can be drawn, summary judgment is inappropriate, even if the underlying facts are not disputed. Ultimate questions of mixed fact and law— such as the instant case — are not to be decided by a judge in derogation of a party’s right to trial by jury. Butler v. Sports Haven International, Utah, 563 P.2d 1245, 1246 (1977).
This rule is in accord with what numerous other courts have held. Even though the basic evidence is not in conflict, summary judgment is not appropriate if a jury could draw differing but reasonable conclusions from that evidence. See, e.g., ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga.App. 710, 320 S.E.2d 784, 787 (1984); Lundy v. Hazen, 90 Idaho 323, 411 P.2d 768, 770 (1966). In this case, a jury trial had been demanded, and the case should have been submitted to a jury.
In Scharf v. BMG Corp., 700 P.2d 1068 (1985), we recently stated:
Since the statutory standard of commercial reasonableness cannot be measured with a bright-line test, whether any particular sale is commercially reasonable is to be determined on a case-by-case basis. That determination depends on whether the circumstances of the sale and the manner and business context in which it occurred support a conclusion that the sale was conducted in a commercially reasonable manner.
Id. at 1070.
The majority asserts that the sale to Chianti was commercially unreasonable because (1) there was “no advertisement or public notice of sale,” (2) only a few potential buyers were contacted, (3) no firm bids were received before the sale to Chianti, and (4) the guarantors were not given formal notice of the private sale. The majority opinion, I submit, ignores the most crucial proposition, that summary judgment is inappropriate where a factual inquiry is necessary to decide the dispute, or where reasonable persons could draw a different conclusion from the facts and law governing this case.
The majority states that the sale was without advertisement. That is true, but of no legal significance. Section 70A-9-504(3) specifically provides that “[disposition of the collateral may be by public or private proceeding_” (Emphasis added.) If plaintiff was required to dispose of the collateral by public sale, “[i]t is fundamental that a public sale presupposes posting public notices or advertising.” Pioneer Dodge Center v. Glaubensklee, Utah, 649 P.2d 28, 30 (1982). But public notice is not required for private sales. Hall v. Owen County State Bank, 175 Ind.App. 150, 370 N.E.2d 918 (1977). In fact, public notice or advertising may, as a general proposition, be commercially unreasonable, and may well have been so on the facts of this particular case. Commercially reasonable selling procedures for disposing of collateral are outlined in § 70A-9-507(2), which provides: “If the secured party either sells the collateral in the usual manner in any recognized market therefor or if he sells at the price current in such market at the time of his sale or if he has otherwise sold in conformity with reasonable commercial practices among dealers in the type of property sold he has sold in a commercially reasonable manner.” (Emphasis added.)
What the “reasonable commercial practices” of sellers of private clubs are was not established by the moving party in this case, but it is clear beyond peradventure that a private club is a unique article for which there is only a limited market. Most assuredly it is not like a commonly traded and essentially fungible item such as an automobile. Compare Pioneer Dodge Center v. Glaubensklee, supra. A qualified purchaser would initially have to have substantial funds to acquire a club and the necessary operating capital to create the *446requisite cash flow. Financing such a purchase is often done on terms unique to the deal. If profits from the operation of the club are to be used to help finance the purchase, the personal background and experience of the purchaser may be critical if the purchaser is to succeed in owning and managing the club.
Where unique collateral or special qualifications of a purchaser are involved, public notice of sale has been held to be commercially unreasonable. In United States v. Terrey, 554 F.2d 685 (5th Cir.1977), the court held that personal solicitation of bids for a private sale would be the commercially reasonable method of disposing of the unique collateral. Id. at 695. The appropriateness of personal solicitations and the inappropriateness of widely publicized notice of sale of unique collateral has also been recognized by other courts. For example, in Dynalectron Corp. v. Jack Richards Aircraft Co., 337 F.Supp. 659 (W.D. Okla.1972), the court refused to find a sale commercially reasonable because the seller did not make normal and reasonable contacts within the industry likely to purchase the aircraft he was selling. Id. at 663.
This case is factually highly similar to First National Bank & Trust Co. v. Halston, 20 U.C.C.Rep.Serv. 1124 (Okla.1976). In that case, the court held that a secured creditor conducted a sale of the fixtures and inventory of a grocery store in a commercially reasonable manner, even though it was sold at a private sale. In an attempt to find prospective buyers, the secured creditor contacted the sales manager for Affiliated Foods and several other grocery store owners in the area but no one made an offer to purchase. No advertising was placed in newspapers, handbills or trade journals. Only one offer was received, which was eventually accepted. The court ruled that the disposition was made in keeping with prevailing trade practices among “reputable and responsible business and commercial enterprises engaged in the same or a similar business[,]” id. at 1128, and sustained the lawfulness of the sale. The court noted that the policy of the Uniform Commercial Code is “to provide flexibility in the disposition of collateral, and to encourage disposition by private sale through regular commercial channels.” Id. (Footnotes omitted.) In light of these considerations, it was not, as a matter of law, commercially unreasonable for Haggis to personally solicit bids and refrain from public advertising.
The majority also relies on the fact that only a few potential buyers were contacted by Haggis. Although only a handful were contacted, that is no basis for concluding that as a matter of law the number was insufficient. The number of potential buyers was certainly highly limited. However, I doubt that the majority would find the sale commercially unreasonable if only one buyer were contacted but the proceeds of the sale exceeded the amount of the debt. It is not simply the number of buyers contacted, but how the sale as a whole was conducted which governs whether it was conducted in a commercially reasonable manner. The record shows that Haggis contacted people in Park City, Salt Lake City and Ogden. Some of the people contacted were current or previous owners of other private clubs and restaurants. Haggis also notified the representative of the Utah Private Club Association that the Haggis club was for sale and asked him to refer potential purchasers to Haggis. An attorney contacted Haggis on behalf of undisclosed clients.
From these inquiries and solicitations, Haggis received two offers to purchase, one from Chianti for $110,000, and another from a buyer in Park City for $50,000, subject to available financing. On the face of it, at least, it was not commercially unreasonable for Haggis to accept the offer from Chianti.
Another fault that the majority finds with Haggis’ sale was that no firm bids were received before the sale to Chianti. But as noted above, the law is not that more than one bid must be received to make a sale commercially reasonable. However, when only one bid is received, it is, of course, critical to examine the terms of sale with great care to determine that it was fair and reasonable. This examination, being of the particular facts and circumstances of the case, is singularly inappropriate for disposition by summary judgment.
The majority also, after conceding that notice is only one factor to be considered in determining whether a sale was commercially reasonable, holds that Haggis was required to give formal notice of the impending sale to the guarantors. The purpose of notice to the debtor is to enable the debtor to protect his or her interests. Where the debtor is actually aware of the impending sale, as the guarantors here were, the debtor has had an adequate op*447portunity to protect his or her interests and formal notice is not necessary. For all practical purposes, formal notice to the guarantors would have been of minimal, if any, value. Haggis had repossessed the collateral. Turtle was in bankruptcy, and its trustee had abandoned the property to Haggis. Lack of formal notice did not prejudice the guarantors’ rights.
Because I believe that the commercial reasonableness of the disposition of the collateral to Chianti should be tried by a jury, I note the following in respect to the transfer or transfers of the collateral to Eeslew or Weslee after repossession of the collateral, but before the sale to Chianti: whether they were commercially reasonable dispositions of the collateral may depend upon whether they were dispositions within the meaning of § 9-504. However, as the majority acknowledges, “not every transfer of collateral by a secured party is a disposition for purposes of § 9-504.” On the record before us, it is impossible to determine how these transfers should be classified. The record is so unclear that we cannot ascertain whether one or two transfers occurred and what the conditions of, or reasons for, those transfers were. Because the party moving for summary judgment has the burden of establishing his right to judgment on the basis of the applicable law applied to undisputed facts, and the moving party has failed to show here that the transfers were dispositions within the meaning of § 9-504, I would reverse and remand for trial.
DURHAM, J., concurs in the dissenting opinion of STEWART, J.,
ZIMMERMAN, J., having disqualified himself, does not participate herein.
HYDE, District Judge, sat.