Federal Express Credit Union v. Lanier, No. W2005-00194-COA-R3-CV (TN 10/27/2005)
| Decision Date | 27 October 2005 |
| Docket Number | No. W2005-00194-COA-R3-CV.,W2005-00194-COA-R3-CV. |
| Parties | FEDERAL EXPRESS CREDIT UNION v. BARRY LANIER. |
| Court | Tennessee Supreme Court |
William G. Hatton, Bolivar, TN, for Appellant
David A. Kirkscey, Memphis, TN, for Appellee
OPINION
In this appeal, we are called upon to evaluate the propriety of the trial court's decision to award a creditor a deficiency judgment against the debtor following the sale of the collateral after the debtor defaulted on the loan. The debtor filed an appeal to this Court arguing that the creditor failed to provide him with reasonable notice of the sale of the collateral and that the creditor did not conduct the sale in a commercially reasonable manner. We hold that the creditor did not provide the debtor with reasonable notice. Accordingly, we reverse the decision of the trial court and remand this case to the trial court for further proceedings.
For purposes of this appeal, the facts have been set forth in a "Joint Statement of the Evidence" entered into between the parties pursuant to Rule 24(c) of the Tennessee Rules of Appellate Procedure. On August 23, 1995, Barry Lanier ("Mr. Lanier" or "Appellant") signed a promissory note and security agreement in favor of Federal Express Credit Union (the "Credit Union" or "Appellee") to secure funds to purchase a 1995 Lexus automobile. The promissory note called for Mr. Lanier to make payments in the amount of $199.01 for fifty-nine (59) consecutive months followed by a balloon payment in the amount of $26,327.55 on July 31, 2000. Mr. Lanier made the required fifty-nine (59) consecutive monthly payments. However, when it came time to pay the final balloon payment, he was unable to tender the amount owed. The parties subsequently entered into negotiations in an effort to refinance the balloon payment, but the negotiations proved unsuccessful.
At the time of the events giving rise to the instant litigation, Mr. Lanier was employed by Federal Express Corporation ("Federal Express"). On the promissory note, Mr. Lanier listed his address as 1214 Central Avenue, Memphis, Tennessee, which remained his home address at the time the loan matured. After Mr. Lanier defaulted on the loan, the Credit Union repossessed the 1995 Lexus automobile from Mr. Lanier's home address. On November 29, 2000, the Credit Union sent a letter by certified mail to Mr. Lanier at his home address advising him that it intended to sell the vehicle at a private sale on December 15, 2000. The certified mail return receipt was never signed for or returned. At trial, Mr. Lanier testified that, at the time the Credit Union sent the notice, it knew he had been in Saudi Arabia for the past several years conducting business for his employer. In support of this assertion, Mr. Lanier testified to the following: the Credit Union had access to the computer files of Federal Express which enabled it to learn of Mr. Lanier's location (i.e., Saudi Arabia) at the time the notice was sent; the Credit Union and Mr. Lanier spoke several times by phone and e-mail while he was in Saudi Arabia to negotiate the re-financing of the outstanding balance; and the Credit Union even contacted him in Saudi Arabia to discuss the indebtedness. Conversely, Larry Stevenson, the collection manager for the Credit Union, testified that the Credit Union is a separate and distinct entity from Federal Express, and it did not have direct access to any of the computer records maintained by Federal Express.
As promised in the letter sent to Mr. Lanier, the Credit Union conducted a private sale of the 1995 Lexus automobile on December 15, 2000. A deficiency remained after the Credit Union applied the proceeds of the sale to the outstanding loan amount. On May 31, 2001, the Credit Union filed a "Civil Warrant" in the General Sessions Court of Shelby County against Mr. Lanier to recoup $10,645.04 remaining on the promissory note and $3,547.99 in attorney's fees, for a total requested judgment in the amount of $14,193.03.
Ultimately, the case came to be heard by the Circuit Court of Shelby County.1 The circuit court entered an order on January 3, 2005 finding "that [the Credit Union] should be awarded judgment against [Mr. Lanier] for the sum of $14,193.03." No additional findings of fact or conclusions of law are contained in the order. Mr. Lanier filed a timely notice of appeal to this Court presenting the following issues for our review:
1. Whether the trial court erred in finding that the Credit Union's notice of the sale of the collateral was reasonable; and
2. Whether the trial court erred in finding that the sale of the 1995 Lexus automobile was commercially reasonable.
For the reasons set forth herein, we reverse the decision of the circuit court and remand this case for further proceedings not inconsistent with this Opinion.
Our review of this case is complicated somewhat by the terseness of the trial court's order and the lack of a complete record of the proceedings below. Ordinarily, "review of findings of fact by the trial court in civil actions shall be de novo upon the record of the trial court, accompanied by a presumption of the correctness of the finding, unless the preponderance of the evidence is otherwise." Tenn. R. App. P. 13(d) (2005); see also Decatur County Bank v. Smith, No. 02A01-9903-CV-00074, 1999 Tenn. App. LEXIS 864, at *4 (Tenn. Ct. App. Dec. 27, 1999) (). We review the lower court's conclusions of law de novo without any presumption of correctness. Dennis Joslin Co. v. Johnson, 138 S.W.3d 197, 200 (Tenn. Ct. App. 2003) (citing Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993)).
In the instant case, there are no findings of fact which we may presume to be correct. Ordinarily, the absence of findings of fact by the trial court would require this Court to conduct an independent review of the record to determine where the preponderance of the evidence lies. See Kendrick v. Shoemake, 90 S.W.3d 566, 570 (Tenn. 2002) (citing Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997)); Crabtree v. Crabtree, 16 S.W.3d 356, 360 (Tenn. 2000). However, we cannot perform this task without a complete record. Thus, we are forced to determine whether the facts, as set forth in the "Joint Statement of the Evidence," support the trial court's judgment as a matter of law.
We begin with an examination of whether the notice of the private sale provided to Mr. Lanier by the Credit Union was reasonable. Tennessee's version of Article 9 of the Uniform Commercial Code, codified at 47-9-101 et seq. of the Tennessee Code, provides, in relevant part, as follows:
(a) DISPOSITION AFTER DEFAULT. After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.
(b) COMMERCIALLY REASONABLE DISPOSITION. Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one (1) or more contracts, as a unit or in parcels, and at any time and place and on any terms.
Tenn. Code Ann. § 47-9-610 (2003). Tennessee's version of Article 9 further provides as follows:
(b) NOTIFICATION OF DISPOSITION REQUIRED. Except as otherwise provided in subsection (d), a secured party that disposes of collateral under § 47-9-610 shall send to the persons specified in subsection (c) a reasonable authenticated notification of disposition.
Tenn. Code Ann. § 47-9-611(b) (2003).2 Implicit in the trial court's ruling in this case is a finding that, as a matter of law, the notice provided by the Credit Union was sufficient.
The official comment to section 47-9-611(b) provides as follows: "The notification must be reasonable as to the manner in which it is sent, its timeliness (i.e., a reasonable time before the disposition is to take place), and its content." Tenn. Code Ann. § 47-9-611 cmt. 2 (2003) (emphasis added). This Court has previously addressed the policy justification for requiring the creditor to send the debtor reasonable notice of the sale of the collateral:
We think the provision for notice in connection with a sale is intended to afford the debtor a reasonable opportunity (1) to avoid a sale altogether by discharging the debt and redeeming the collateral or (2) in case of sale, to see that the collateral brings a fair price.
Int'l Harvester Credit Corp. v. Ingram, 619 S.W.2d 134, 137 (Tenn. Ct. App. 1981) (citing Mallicoat v. Volunteer Fin. Loan Corp., 415 S.W.2d 347, 350 (Tenn. Ct. App. 1966)).
On appeal, Mr. Lanier argues that the trial court erred in finding that the notice of the sale of the collateral provided by the Credit Union was reasonable and adequate under the circumstances present in this case. Mr. Lanier does not contest the timeliness or content of the notice. Instead, he contests the reasonableness of the manner in which it was sent. "[T]he reasonableness of the notice also encompasses a consideration of where the notice was sent." R & J of Tenn., Inc. v. Blankenship-Melton Real Estate, Inc., 166 S.W.3d 195, 203 (Tenn. Ct. App. 2004) (citing Commercial Credit Corp. v. Cutshall, 28 U.C.C. Rep. Serv. (Callaghan) 277 (Tenn. Ct. App. 1979)). He urges this Court to find that the notice sent by the Credit Union does not amount to reasonable notice where (1) the record establishes that the Credit Union knew he was not at his...
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