Florida First Nat. Bank at Pensacola v. Martin
| Decision Date | 27 March 1984 |
| Docket Number | No. AO-55,AO-55 |
| Citation | 449 So.2d 861 |
| Parties | 38 UCC Rep.Serv. 1073 The FLORIDA FIRST NATIONAL BANK AT PENSACOLA, Appellant, v. Phillip MARTIN and Janet K. Martin, husband and wife, et al., Appellees. |
| Court | Florida District Court of Appeals |
Paul Shimek, Jr., of Shimek & Southerland, Pensacola, for appellant.
H. Edward Moore, Jr., of Sherrill, Moore & Hill, Pensacola, for appellee Pinney.
Kenneth R. Ridlehoover, Pensacola, for appellee Martin.
Appellant, Florida First National Bank at Pensacola, appeals a final summary judgment in favor of appellees on the bank's complaint for "a judgment of deficiency after sale of a security and for foreclosure of additonal security for failure to pay said deficiency." The trial court ruled that the bank is not entitled to a deficiency judgment because the undisputed facts establish that the repossessed property was not disposed of by the bank in a commercially reasonable manner, as required by section 679.504(3), Florida Statutes (1981). We affirm.
The following facts appear to be undisputed in the record. On March 28, 1977, the bank extended a loan to appellee Martin and others pursuant to a security agreement and promissory note executed by Martin and secured by a thirty-one foot boat named "Mariposa." Appellee Pinney endorsed the note and security agreement. Martin made payments to the bank until late 1978, when he defaulted. On January 15, 1979, a representative of the bank, assisted by Pinney, took physical custody of the Mariposa and moved it to another dock specified by the bank. The balance due on the security agreement and note as of January 22, 1979, was $29,143. The bank ordered and paid for a survey of the boat in February 1979 which recommended that the Mariposa be advertised for $28,500 in its then-present condition or, if certain described repair work should be accomplished at minimal cost, for $35,000.
At the time the bank took custody of the boat, Pinney agreed to show it to prospective customers when requested to do so by the bank. Appellant bank ordered and paid for certain repairs. Appellee Pinney assisted in making some of them and, as agreed, showed the boat to a few prospective buyers for the bank until late May or June 1979, at which time the boat was removed, at the Bank's direction, to a new location. The bank continued to maintain custody and control of the Mariposa for the next eighteen months while the boat's physical condition depreciated substantially. Ultimately, in December 1980, the bank sold the Mariposa for $12,300.
The bank's officials testified that this transaction was not handled in accordance with the requirements of the Uniform Commercial Code or the bank's own policies and procedures applicable to repossession of secured property after default. The bank, having taken physical custody of the boat, obtained a survey and appraisal, and ordered and paid for repairs during the period January through May 1979, neglected to send the usual notice of repossession to appellees, as debtors, and neglected to otherwise follow normal procedures for the sale and disposition of the boat. Its entire efforts during the two-year period consisted of running a few advertisements in the Pensacola newspaper and showing the boat on a couple of occasions to potential customers, with no success.
Sometime in October 1979, the bank's senior officials learned of the situation and made inquiry of their loan officer in charge, Mr. Golson. Failing to receive an adequate explanation, the bank discharged Mr. Golson. Mr. Franklin was then put in charge of the loan. His investigation of the bank's records as of November 1979 indicated that "this was a repossession; that nothing had been done to comply with the Uniform Commercial Code" and "that nothing ... had been done to serve notice on any of the parties involved that it was a repossession." Mr. Franklin testified at deposition that his predecessor, Golson, had not managed this account properly and had not followed the bank's guidelines. Those guidelines permitted the bank to take custody of secured property and attempt to sell it with the debtor's assistance for thirty days without declaring it a repossession. Failing such sale, under the guidelines the bank was supposed to declare the property repossessed within 120 days, charge the loan to the profit and loss account, and process the repossession in accordance with applicable laws and banking regulations.
In this instance, the bank's officials, after receiving Franklin's report, deliberately elected not to treat its custody of the Mariposa as a repossession but, instead, to file suit against appellees to collect on the note and to foreclose the boat. Suit was filed in December 1979. Once this decision to sue was made, the bank did nothing of substance to sell the Mariposa during the ensuing months because, they explain, of the pendency of the litigation. Finally, notwithstanding the pending litigation, the bank formally notified the appellees by letter dated October 30, 1980, that it was declaring a repossession of the boat and would proceed to sell it at private sale. On December 3, 1980, the Mariposa was sold "as is" at private sale for $12,300, notwithstanding a second survey made in October 1980 which indicated that if $3,000 were spent on repairs, the sale price would exceed $20,000. That survey appraised the boat "as is" at approximately $12,500.
The following January, the bank supplemented its complaint in the pending litigation, acknowledged the sale and sought a deficiency judgment. All appellees defended on the ground that the bank had not disposed of the boat in a commercially reasonable manner and was not entitled to a deficiency judgment. Appellee Pinney also contended that the bank had released him from liability on his endorsement while Golson was in charge of the loan. Both the bank and appellees, conceiving there were no material facts in dispute, moved for summary judgment on their respective claims and defenses. The trial court denied the bank's motion and entered summary judgment for appellees on both grounds of their defenses. This appeal followed.
The bank contends that the granting of summary judgment on the ground that the security was not sold in a commercially reasonable manner was erroneous for several reasons.
The bank contends that it did not repossess the Mariposa until October 1980, when it sent its formal letter to that effect to appellees. Thus, the bank argues, the sales price less than two months later was well within the "as is" appraised value on that date. The bank reasons that in January 1979 it took joint possession with Pinney for the purpose of selling the boat for as much as possible and did not formalize "repossession" of the boat until it sent the appropriate notice to appellees in October 1980.
We find the bank's contention a distinction without substance that is contrary to the undisputed facts. The bank's own records, entitled "Record of Repossession," are dated May 16, 1979, and unambiguously state that the date of repossession of the boat is January 15, 1979. The bank took physical custody and stored the boat at a dock of its own choosing. The bank had the boat surveyed and ordered and paid for certain recommended repairs. The bank retained custody and control of the boat continuously until December 1980. And the bank alleged in its complaint, filed in December 1979, that it had possession of the boat. The fact that Pinney assisted the bank in picking up the boat, repairing it, and showing it to prospective buyers is not inconsistent with the bank's having repossessed the boat, especially since it is undisputed that Pinney had nothing more to do with the boat after May or early June 1979. We hold on the undisputed evidence that, upon taking custody of the boat on January 15, 1979, the bank repossessed the property within the meaning of section 679.503, Florida Statutes (1981), and at that time became obligated by section 679.504(3) to "sell, lease or otherwise dispose of" the collateral "in its then condition or following any commercially reasonable preparation or processing," provided that "disposition including the method, manner, time, place, and terms must be commercially reasonable." Although the bank could have retained the collateral in full satisfaction of the obligation by giving notice of such intention pursuant to section 679.505, it did not give such notice.
Even so, the bank contends that the evidence fails to show it acted unreasonably in this case because the mere passage of time before sale, or the fact that the bank could have received a better price by obtaining a sale at a different time or with a different method, is "not sufficient to establish that the sale was not made in a commercially reasonable manner," citing section 679.507(2). We agree that if the bank's conduct had otherwise been commercially reasonable, then the mere passage of time or failure to obtain a better price would not, standing alone, have meant that the sale violated section 679.504(3). But, as the undisputed facts described above show, the bank's conduct in handling and disposing of this collateral after repossession was not otherwise commercially reasonable. The bank's officials admit to not processing this repossession in accordance with the Uniform Commercial Code or the bank's own guidelines and procedures because the boat, valued at $28,500 or more when repossessed, was sold for $12,300. The bank permitted the physical condition and value of the boat to decline drastically while maintaining sole custody and control of it. The bank retained the property for many months after repossession without initiating its normal repossession procedures, and then consciously and deliberately elected to file litigation to foreclose on property already in its possession. After filing suit, the bank continued to hold the property without taking any...
To continue reading
Request your trial
-
TOPICAL JEWELERS, INC. v. NATIONSBANK, NA
...waived under section 679.501(3), Florida Statutes by either the principal debtor or the guarantor is Florida First National Bank at Pensacola v. Martin, 449 So.2d 861 (Fla. 1st DCA 1984),disapp'd on other grounds, Weiner v. American Petrofina Marketing, Inc., 482 So.2d 1362 (Fla. 1986).21 I......
-
Tropical Jewelers, Inc. v. NATIONSBANK, NA
...waived under section 679.501(3), Florida Statutes by either the principal debtor or the guarantor is Florida First National Bank at Pensacola v. Martin, 449 So.2d 861 (Fla. 1st DCA 1984), disapp'd on other grounds, Weiner v. American Petrofina Marketing, Inc., 482 So.2d 1362 (Fla. 1986).15 ......
-
Allen v. Coates
...protect and preserve the collateral and dispose of it in a manner likely to bring the full fair value." Florida First National Bank v. Martin, 449 So.2d 861, 865 (Fla. 1st DCA 1984), rev'd on other grounds, Weiner v. American Petrofina Marketing, Inc., 482 So.2d 1362 2. Possession and Dispo......
-
Gepetto's Tale O' The Whale of Fort Lauderdale, Inc. v. Landmark First Nat. Bank of Fort Lauderdale
...2d DCA 1973); see also American Petrofina Marketing, Inc. v. Weiner, 460 So.2d 527 (Fla. 4th DCA 1984); Florida First National Bank v. Martin, 449 So.2d 861 (Fla. 1st DCA 1984); but see Ayares-Eisenberg Perrine Datsun, Inc. v. Sun Bank of Miami, 455 So.2d 525 (Fla. 3d DCA 1984); Bank of Okl......