Motorola Communications and Electronics, Inc. v. National Patient Aids, Inc., 81-1411

• Decision Date: 02 March 1983
• Docket Number: No. 81-1411,81-1411
• Citation: 427 So.2d 1042
• Parties: MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC., Appellant, v. NATIONAL PATIENT AIDS, INC., et al., Appellees.
• Court: Florida District Court of Appeals

Page 1042

427 So.2d 1042

MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC., Appellant, v. NATIONAL PATIENT AIDS, INC., et al., Appellees.

No. 81-1411.

District Court of Appeal of Florida Fourth District.

March 2, 1983.

Rehearing Denied March 31, 1983.

Robert L. Beals of DiGuilian, Spellacy & DiChiara, Fort Lauderdale, for appellant.

Stephen M. Goodman, Margate, for appellees.

GLICKSTEIN, Judge.

Motorola appeals a final judgment entered in favor of two signatories who guaranteed obligations incurred by Jefferson Emergency Medical Services, Inc. (JEMS), the purchaser of communications equipment from Motorola for use in Jefferson Parish, Louisiana. The final judgment against Motorola followed entry of summary judgment upon the issue of liability in its favor. This is indeed a most unusual circumstance.

We do not question the trial judge's right to vacate non-final orders prior to final judgment for legitimate reasons; ¹ but in light of the turnabout in result, the fact that the acting circuit judge who tried the case admittedly never reviewed the court file prior to trial appropriately had an initial chilling effect upon this court's consideration of the case. Further, we have tried to plumb the thinking of Motorola's attorney in the conduct of the trial to see why the issue of liability was tried after summary judgment was granted. The only professionally prudent explanation we perceive is that the attorney felt it was his obligation to inform the trial court that, although summary judgment had been awarded upon facts as they were represented by the pleadings, at the time of trial the facts, because of intervening events, were substantially different than how the pleadings had represented them.

At the time the original trial judge entered summary judgment in favor of Motorola and against two guarantors, ² the complaint was a simple action on the two executed guaranties. It alleged that the principal debtor, JEMS, which was not a party to the action, had paid nothing for the equipment it had purchased; and that there was $115,188.02 due and owing. The two guarantors' affirmative defenses included the allegation that Motorola had chosen its remedy by repossessing the equipment and had failed to mitigate its damages after repossession. There were no pleadings in the court file to indicate resale by Motorola of any of the repossessed equipment; or counterclaims asserting any form of set-off; ³ or claims for relief pursuant to section 679.507(1), Florida Statutes (1977); ⁴ or any allegation supporting or seeking a deficiency judgment; or anything of a defensive nature filed by the guarantors that would have been directed toward a claim for deficiency judgment. The guarantors did not appeal the non-final order which awarded summary judgment to Motorola on the issue of liability. ⁵

At the beginning of trial, Motorola's attorney informed the successor trial judge that, because summary judgment had been entered in his client's favor on the issue of liability, the proceedings were limited to a question of damages. ⁶ However, the attorney then informed the trial judge as follows:

The Plaintiff will submit evidence to show that reasonable notice of repossession and the intent to sell privately was given, and that a reasonable, commercially reasonable disposition has been made of that which was repossessed. We will, then, offer evidence as to the amount by which the repossessed collateral should be used as a set-off to the total indebtedness. The total indebtedness being a matter of stipulation.

THE COURT: You are talking about deficiency.

[ATTORNEY FOR MOTOROLA]: Yes, sir. Deficiency judgment against the guarantors.

We would submit, of course, that the Court may well anticipate that the Defendant will want to show that we did nothing reasonable, and that whatever we suggested as an approximate price for deficiency and set-off, is not a fair and commercially reasonable matter. That is what lawsuits are made out of.

Such opening statement disregarded not only the summary judgment ⁷ but also the original action on the debt; plainly this appeared to be an undertaking to establish, and to assume the burden of proving, liability for a deficiency judgment. See Bondurant v. Beard Equipment Co., 345 So.2d 806 (Fla. 1st DCA 1977).

In his opening statement, the attorney for the two guarantors acknowledged that summary judgment had been entered against his clients, but recited that he intended to establish the absence of commercial reasonableness in any resale of the subject equipment by Motorola, specifically, the failure of Motorola to give the guarantors notice of such resale. In short, the parties' opening statements were not supported by any of the pleadings; and a variety of complex issues suddenly had emerged at trial, involving secured transactions under the Uniform Commercial Code, as codified in Florida by chapter 679, Florida Statutes (1977), ⁸ which was in effect when the cause of action arose in this case.

"Debtor" in section 679.105(1)(d), Florida Statutes (1977), is defined as "the person who owes payment or other performance of the obligation secured"; therefore, a guarantor is a debtor subject to the code. See Hepworth v. Orlando Bank & Trust Co., 323 So.2d 41 (Fla. 4th DCA 1975). As the "secured party," Motorola had numerous, cumulative alternatives available to it, as is outlined in J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code § 26-4 (1972). Further, as a secured party, Motorola was not faced with the problem of election of remedies under the code. See § 679.501(1), Fla.Stat. (1977). ⁹

The foregoing principles, however, become difficult to apply in a fact pattern such as in the present case when, as the evidence revealed, some of the repossessed equipment has been sold and the remainder unsold; where the pleadings do not reflect the facts; and when the issues are not settled prior to trial. In attempting to determine if the trial judge properly applied these principles, certain matters have become evident.

First, the trial judge concluded that Motorola "did not attempt to effect a sale of the [subject equipment] ... in a commercially reasonable manner...." The foregoing is not consistent with the language of section 679.504(3), Florida Statutes (1977), which refers to disposition--not attempted disposition. Further, although the transcript expressly reflects that the trial judge was concerned with the issue of notification to the debtors, the final judgment mentions "timely notice" only in connection with the trial judge's second conclusion; namely, that Motorola "did not satisfactorily establish the market value of the remaining security items as of the date of repossession...." In summary, as to the items sold, it was incumbent upon the trial judge to determine what actually was sold and whether the secured party gave the debtors reasonable notification prior thereto; ^{10 10} or that the debtor had actual knowledge of the anticipated sale. ¹¹ This the judge failed to do.

Second, the trial judge made no distinction between what was sold and what was retained by Motorola; nor did he determine the effect of that retention without resale vis-a-vis the code; or whether Motorola was entitled, at least, to nominal damages, notwithstanding its failure to provide what the judge considered to be proper proof of actual damages. ¹² See Muroff v. Dill, 386 So.2d 1281 (Fla. 4th DCA 1980), petition for review denied, 392 So.2d 1377 (Fla.1981). The entire aura of this case is so unsettling that we feel compelled to conclude that the parties' respective rights ultimately have been determined in an inappropriate manner.

Accordingly, we reverse and remand with specific direction that the case not only be retried but that the trial court take such action with respect to the pleadings as may be necessary to define clearly all of the issues prior to retrial.

DOWNEY, J., concurs.

ANSTEAD, J., dissents without opinion.

1 See Tingle v. Dade County Board of County Comm'rs, 245 So.2d 76 (Fla.1971); Keathley v. Larson, 348 So.2d 382 (Fla. 2d DCA 1977), cert. denied, 358 So.2d 131 (Fla.1978).

2 There were actually three guarantors. The third guarantor, who was represented by counsel, had filed a notice of bankruptcy. The court file reflects notice of the trial being sent to such counsel. The record does not show whether the third guarantor's bankruptcy proceedings had terminated. His counsel was not served with a copy of the final judgment or notice of appeal.

3 As to the filing of a counterclaim with which to allege a set-off, see Ocean Ridge Development Corp. v. Quality Plastering, Inc., 247 So.2d 72 (Fla. 4th DCA 1971); and Southeastern Builders, Inc. v. Joe Brashears Steel, Inc., 336 So.2d 1228 (Fla. 1st DCA 1976).

4 Section 679.507(1), Florida Statutes (1977), provided:

If it is established that the secured party is not proceeding in accordance with the provisions of this part disposition may be ordered or restrained on appropriate terms and conditions. If the disposition has occurred the debtor or any person entitled to notification or whose security interest has been made known to the secured party prior to the disposition has a right to recover from the secured party any loss caused by a failure to comply with the provisions of this part. If the collateral is consumer goods the debtor has a right to recover in any event an amount not less than the credit service charge plus 10 percent of the principal amount of the debt or the time price differential plus 10 percent of the cash price.

5 Florida Rule of Appellate Procedure 9.130(g) expressly permits "initial review of a non-final order on appeal from the final order in the cause."

6 Ordinarily, even if Motorola had failed to come forward with any proof of loss or damage, with the summary judgment in hand it would have been entitled to nominal damages. See Muroff v. Dill, 386 So.2d 1281 (Fla. 4th DCA 1980), petition for review denied, ...