Chrysler Dodge Country, U.S.A., Inc. v. Curley, 880424-CA

• Decision Date: 02 November 1989
• Docket Number: No. 880424-CA,880424-CA
• Citation: 11 UCC Rep.Serv. 381,782 P.2d 536
• Parties: 11 UCC Rep.Serv.2d 381 CHRYSLER DODGE COUNTRY, U.S.A., INC., a Utah corporation, Plaintiff and Respondent, v. Louise CURLEY, Defendant and Appellant.
• Court: Utah Court of Appeals

Page 536

782 P.2d 536

11 UCC Rep.Serv.2d 381

CHRYSLER DODGE COUNTRY, U.S.A., INC., a Utah corporation, Plaintiff and Respondent, v. Louise CURLEY, Defendant and Appellant.

No. 880424-CA.

Court of Appeals of Utah.

Nov. 2, 1989.

As Amended Nov. 20, 1989.

Richard A. Hummell, Ogden, for defendant and appellant.

N. George Daines, Logan, for plaintiff and respondent.

Before DAVIDSON, BILLINGS and JACKSON, JJ.

OPINION

BILLINGS, Judge:

Appellant Louise Curley ("Ms. Curley") appeals from a deficiency judgment entered against her after her repossessed truck was sold by Respondent Chrysler Dodge Country, U.S.A., Inc. ("Chrysler Dodge"). Ms. Curley claims Chrysler Dodge is barred from recovering any deficiency because it violated Navajo Tribal law and/or conducted the sale of the truck in a commercially unreasonable manner. We affirm.

Ms. Curley purchased a truck from Chrysler Dodge on April 4, 1985. The purchase price was financed by Chrysler Credit Corporation ("Chrysler Credit"). Under this retail installment contract, Chrysler Dodge was required to repurchase the truck in the event of default.

Ms. Curley, after making several monthly payments, gave the truck to her brother-in-law, Ernest Hawthorne, who agreed to make payments on the vehicle. Ultimately, Mr. Hawthorne ceased making payments on the loan. Chrysler Credit repossessed the truck and delivered the truck to Chrysler Dodge. As required by their contract, Chrysler Dodge paid Chrysler Credit the balance due on the contract.

The truck was delivered to Chrysler Dodge in rough condition. Chrysler Dodge repaired and cleaned the truck and placed it on its car lot for sale. The truck was advertised and shown on the lot with little interest from prospective purchasers. Chrysler Dodge then solicited bids for the truck from other dealers. Chrysler Dodge received three bids on the vehicle, all within a $200 price range.

On June 4, 1987, Chrysler Dodge sent a certified letter to Ms. Curley at her brother-in-law's home, the address from which payments had last been received. The notice stated the car was going to be sold on June 22, 1987, and that, following the sale, Ms. Curley may be responsible for any deficiency. The certified mail signature card was returned with a signature purporting to be Ms. Curley's. At trial, it was revealed that the signature was not hers.

The vehicle was sold to Davis Chrysler Dodge, a related dealership, for $2,350, a price higher than Chrysler Dodge or any other dealer had bid.

Based upon the foregoing facts, the trial court found Navajo Tribal law did not apply and that the sale of the truck was conducted in a commercially reasonable manner. Chrysler Dodge was awarded a deficiency judgment of $3,241.36.

Ms. Curley appeals the trial court's decision, claiming that the truck was repossessed from the Navajo reservation without her permission or a Tribal court order in violation of Navajo Tribal law and, thus, the deficiency judgment should be vacated. Alternatively, she claims the deficiency judgment is void because the truck was not sold in a commercially reasonable manner.

NAVAJO TRIBAL LAW

Ms. Curley claims Navajo Tribal law governs this case. Babbitt Ford, Inc. v. Navajo Indian Tribe, 710 F.2d 587 (9th Cir.1983), cert. denied, 466 U.S. 926, 104 S.Ct. 1707, 80 L.Ed.2d 180 (1984) (Tribal code will be enforced against a non-Indian auto dealer located off the reservation if it repossessed a vehicle from a member of the tribe on tribal lands). Ms. Curley contends Chrysler Credit ¹ violated Navajo Tribal law when it repossessed the truck from her brother-in-law's home, which she claims is on the Navajo reservation, without her permission or a Navajo Tribal Court order as required by section 607 of the Navajo Tribal Code. ²

The two-part test for application of section 607 of the Navajo Tribal Code requires that (1) the personal property belong to Navajo Indians, and (2) the property must be repossessed on the reservation without written consent of the purchaser or a Tribal court order.

There is no evidence in the record that Ms. Curley or her brother-in-law are members of the Navajo Indian tribe. ³ Her counsel asserts on appeal that her Tribal membership was never challenged at trial. However, Ms. Curley had the burden to demonstrate that Navajo Tribal law provided a defense to the deficiency judgment and thus had the burden to introduce evidence of her tribal membership. Alternatively, Ms. Curley argues that it was apparent to anyone at trial from her physical appearance that she is a Navajo Indian. However, the trial court made no such finding, but rather concluded that Tribal law did not apply. On the record before us, we cannot say this was error.

COMMERCIALLY REASONABLE SALE: SECTION 70A-9-504(3)

Ms. Curley further claims the disposition of the truck was not commercially reasonable because (1) Chrysler Dodge failed to give her notice of the sale; (2) the truck was sold to a related company in an improper private sale; (3) there was insufficient advertising and bid solicitation and thus Chrysler Dodge did not obtain the best price for the truck. As a result, Ms. Curley contends Chrysler Dodge may not collect its deficiency judgment.

The trial court's holding that the sale of Ms. Curley's truck was commercially reasonable is a conclusion of law, not a factual finding, and thus, our standard of review is correction of error. Scharf v. BMG Corp., 700 P.2d 1068, 1070 (Utah 1985).

Utah Code Ann. § 70A-9-504(3) (1980) governs commercial disposition of collateral:

Disposition of the collateral may be by public or private proceedings and may be made by way of one or more contracts. Sale or any other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable. Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor, if he has not signed after default a statement renouncing or modifying his right to notification of sale....

The secured party may buy at any public sale and if the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations he may buy at private sale.

Under this section of the Utah Uniform Commercial Code, the secured party has the burden of proof to establish that the disposition of collateral took place in a commercially reasonable manner including that reasonable notice was given to the debtor. FMA Fin. Corp. v. Pro-Printers, 590 P.2d 803, 806-07 (Utah 1979).

In Utah, a finding that a creditor failed to dispose of collateral in a commercially reasonable manner has generally been held to bar a deficiency judgment. Haggis Management, Inc. v. Turtle Management, Inc., 745 P.2d 442, 444 (Utah 1985) ("Generally a secured party who fails to dispose of collateral in a commercially reasonable manner is barred from recovering a deficiency judgment"); Pioneer Dodge Center, Inc. v. Glaubensklee, 649 P.2d 28, 31 (Utah 1982); Pro-Printers, 590 P.2d at 808. ⁴

The Utah Uniform Commercial Code does not provide a statutory definition of commercial reasonableness. However, the code does offer some assistance in determining commercial reasonableness. Utah Code Ann. § 70A-9-507(2) delineates several non-exclusive ⁵ circumstances which are deemed to be commercially reasonable:

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.

Thus, we consider the sale of the truck against the backdrop of reasonable commercial practices among car dealers who dispose of repossessed vehicles.

In dealing with the issue of commercial reasonableness, the Utah Supreme Court has concluded that the issue of commercial reasonableness is fact sensitive and is thus dependent on the totality of the commercial context.

[W]hether 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.

Scharf, 700 P.2d at 1070-71. See also IFG Leasing Co. v. Gordon, 776 P.2d 607, 610 (Utah 1989); Security State Bank v. Broadhead, 734 P.2d 469, 472 (Utah 1987); Haggis Management, 745 P.2d at 444; Glaubensklee, 649 P.2d at 29-31.

1. Self-Dealing

Ms. Curley claims the sale of her truck was commercially unreasonable because it was sold in a private sale to a related dealer. Thus, we begin by analyzing whether Chrysler Dodge conducted a private or a public sale. A public sale

"has traditionally meant 'a sale in which the public, upon proper notice, is invited to participate and given full opportunity to bid upon a competitive basis for the property placed on sale, which is sold to the highest bidder.' " ... The requirement of a public invitation is essential for a public sale under the Uniform Commercial Code.

Glaubensklee, 649 P.2d at 30 (quoting In re Webb, 17 U.C.C. Rep. 627, 630 (S.D. Ohio 1975)).

While Chrysler Dodge displayed the truck on its used car lot and advertised it in the newspaper, it sold the truck to a dealer after soliciting private bids. The "public" was not informed of the date of the sale and was not invited to attend and bid at the sale. Thus, we conclude the truck was sold at a private...