Chapter 13

Commercially Unreasonable Sale of Repossessed Car

Dale Irwin is in private practice in Kansas City, Mo., with the firm of Slough, Connealy, Irwin & Madden, LLC, devoting his practice to consumer law. He began his career as a legal services lawyer in 1973 and has been in private practice since 1983. He is a founding member of the National Association of Consumer Advocates. He co-taught consumer advocacy at the University of Missouri-Kansas City School of Law with Bernard Brown. He is a past recipient of the Missouri Bar Associations Pro Bono Award. He served a year as a guest columnist with the Kansas City Star, writing articles on consumer law topics, including auto repossession law. He and Mr. Brown successfully fought against the non-uniform amendments to Revised Article 9 that were pushed by the bankers association in the Missouri legislature. He has been involved in and is currently handling numerous individual and class actions attacking automobile repossession practices. Section 13.1 are interrogatories and 13.2 is a request to produce documents regarding the commercial reasonableness of the sale of a repossessed car. Section 13.3 is a brief arguing that the repossession of the consumers car was not commercially reasonable as the creditor failed in to provide proper notice of sale and did not introduce sufficient evidence that sale was conducted in a commercially reasonable manner.1 The appellate court held that the consumer for lack of proof a sale in a commercially reasonable manner.2

1 2

See NCLCs Repossessions and Foreclosures Ch. 10 (5th ed. 2002 and Supp.). Consumer Finance Corp. v. Reams, 158 S.W.3d 792 (Mo. App. 2005).

13.1 Interrogatories
IN THE CIRCUIT COURT OF LAFAYETTE COUNTY, MISSOURI ASSOCIATE CIRCUIT DIVISION FORD MOTOR CREDIT COMPANY, Division 3 Plaintiff, vs. [Consumer 1] and [Consumer 2], ) ) ) ) ) ) ) ) ) ) )

Case No. [redacted]

Defendants.

DEFENDANTS FIRST INTERROGATORIES TO PLAINTIFF COME NOW defendants and propound the following interrogatories to plaintiff, to be answered in writing and under oath on or before 30 days following service hereof: Definitions 1. The word "identify" or any form of that word as used herein with reference to a document

means to state: (a) The date appearing on the document or if the document is undated, the date, if

known, the document was prepared; (b) the identity of the individual who prepared the document and all addresses of each

and every individual who has received a copy of the document; (c) The identity of the custodian of the document and any other persons currently

having possession of the document or a copy thereof. 2. The word "identify" or any form of that word as used herein with reference to an

individual means to state the name, address, employer, business address and telephone number of

said individual. If any of the requested information is unknown to you, please state the most current information available to you. 3. The word "document", or any form of that word, as used herein means any written,

recorded, graphic or other matter, whether produced, reproduced or stored on paper, cards, tapes, discs, belts, charts, film, computer storage device or any other medium. Interrogatories 1. With respect to the 2002 Ford Taurus, vehicle identification number [VIN], referred to in

the Retail Installment Contract attached to plaintiffs Petition, please: (a) Identify the individual or entity to whom the vehicle was sold after plaintiff repossessed it from defendants; (b) State the date, time and place of the sale and identify any and all persons of whom plaintiff has knowledge that were present at the sale, including any agents, representatives or employees of plaintiff; (b) (c) State the amount for which the vehicle was sold; Identify any and all individuals or entities from whom bids were solicited for the vehicle or who tendered bids on the vehicle; (d) State the deficiency balance resulting from the sale, if any, itemizing with specificity all debits and credits figuring into such calculation and stating the specific nature and purpose of each debit and credit; and (e) Identify all documents pertaining to the sale.

ANSWER:

2.

With respect to the allegation in paragraph 7 of plaintiffs Petition for Breach of Contract

that the vehicle was sold in a commercially reasonable manner, please state each and every fact and identify each and every document upon which plaintiff relies to establish that the collateral was sold in a commercially reasonably manner and identify all persons with knowledge pertaining to the method, manner, time, place or any other term of the sale. ANSWER:

3.

Please identify any and all memoranda, policy and procedure manuals, guidebooks,

written directives, or any other similar documents utilized by plaintiff in the process of repossession and sale of collateral. ANSWER:

4.

Please identify each person you expect to call as an expert witness at trial and please provide such expert's: (a) (b) (c) (d) (e) (f) name; address; occupation; place of employment; qualifications to give an opinion; the general nature of the subject matter on which the expert is expected to testify; and (g) the expert's hourly deposition fee.

ANSWER:

5.

Please state the date, nature and substance of any and all oral or written communications between plaintiff and either or both of the defendants regarding any aspect of the defendants purchase and/or financing of the 2004 Ford Taurus and identify the individuals between whom the respective communications took place and identify any documents memorializing in any manner any such communications.

ANSWER:

6.

Please state the date, nature and substance of any and all oral or written communications between plaintiff and Gary Crossley Ford, Inc., regarding any aspect of the defendants purchase and/or financing of the 2004 Ford Taurus and identify the individuals between whom the respective communications took place and identify any documents memorializing in any manner any such communications.

ANSWER:

7.

Please identify the individual signing the answers to these interrogatories on plaintiffs behalf.

ANSWER:

Date: August 30, 2004 [Attorneys for Defendants]

By: ________________________________

[Attorney for Defendants] Attorneys for Defendants PLAINTIFF'S SWORN SIGNATURE STATE OF _________________ COUNTY OF _______________ ) ) ss )

The below named person, being duly sworn on oath, states that he or she has read the foregoing interrogatories and the answers given are true to the best of affiant's knowledge and belief. The foregoing answers to interrogatories were subscribed and sworn to before me this ______ day of ___________________, 2004.

____________________________________ Notary Public My Commission Expires:

CERTIFICATE OF SERVICE I hereby certify that a copy of the above and foregoing was mailed, first-class, postage prepaid, this 30th day of August, 2004, to: [Attorneys for Plaintiff] Attorneys for Plaintiff _________________________ Attorney for Defendants

13.2 Document Requests

IN THE CIRCUIT COURT OF LAFAYETTE COUNTY, MISSOURI ASSOCIATE CIRCUIT DIVISION FORD MOTOR CREDIT COMPANY, Division 3 Plaintiff, vs. [Consumer 1] and [Consumer 2], Defendants. ) ) ) ) ) ) ) ) ) )

Case No. [redacted]

DEFENDANTS FIRST REQUEST TO PLAINTIFF FOR PRODUCTION OF DOCUMENTS COME NOW defendants and request plaintiff to produce the following documents on or before 30 days following service hereof: REQUEST NO. 1 The document(s) referred to in paragraph 6 of plaintiffs Petition for Deficiency as all statutorily required notices. Response:

REQUEST NO. 2 Any and all documents identified in plaintiffs responses to Defendants First Interrogatories to Plaintiff. Response:

REQUEST NO. 3 Any and all documents memorializing any written or verbal communications between plaintiff and either defendant pertaining to any aspect of the defendants purchase and/or financing of the 2004 Ford Taurus. Response:

REQUEST NO. 4 Any and all documents memorializing any written or verbal communications between plaintiff and Gary Crossley Ford, Inc., pertaining to any aspect of the defendants purchase and/or financing of the 2004 Ford Taurus. Response:

REQUEST NO. 5 Any and all records memorializing the defendants payment history under the contract at issue, including, but not limited to, any and all debits and credits to the defendants account. Response:

REQUEST NO. 6 Any and all documents relied upon to support the claim for attorneys fees made in paragraph 10 of the Petition for Deficiency. Response:

Date: August 30, 2004 [Attorneys for Defendants]

By: ________________________________ [Attorney for Defendants] Attorneys for Defendants CERTIFICATE OF SERVICE I hereby certify that a copy of the above and foregoing was mailed, first-class, postage prepaid, this 30th day of August, 2004, to: [Attorneys for Plaintiff] Attorneys for Plaintiff

________________________ Attorney for Defendants

13.3 Brief re Failure to Provide Proper Notice of Sale

No. [redacted] __________ In The MISSOURI COURT OF APPEALS WESTERN DISTRICT __________ [Consumer], Appellant, v. CONSUMER FINANCE CORPORATION, Respondent. __________ APPEAL FROM THE CIRCUIT COURT OF MISSOURI SIXTEENTH JUDICIAL CIRCUIT Honorable Gregory B. Gillis __________ JURISDICTIONAL STATEMENT This is an appeal from a final order and judgment of the Circuit Court of Jackson County, Missouri, Sixteenth Judicial Circuit, finding in favor of the respondent Consumer Finance Corporation on its claim for a deficiency, following repossession and sale of collateral, against appellant [Consumer] and entering judgment for respondent accordingly. Pursuant to 512.020 RSMo 2000, appellant has the right to appeal said judgment and the Missouri Court of Appeals, Western District has jurisdiction. This appeal does not involve any claim that would come within the class of cases enumerated in Article V, 3 of the Missouri Constitution of 1945. STATEMENT OF FACTS

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The record in this appeal has been prepared pursuant to the provisions of Rule 81.12 and 81.14. Citations will be denoted as follows: to the legal file (LF p. ____); to the transcript (Tr. ____); and to the Appendix (Apx. ). The parties will be referred to as follows:

[Consumer] for appellant [Consumer] and CFC for respondent Consumer Finance Corporation. [Consumer] purchased a 2000 Dodge Stratus for $17,529.95 from Approved Auto, Inc., on June 30, 2000, paying $2,000.00 down. (Tr. 5:11-25; 6:1-9; LF 1, 3; LF 47; LF 8, 3) The balance of the purchase price was financed under a Retail Installment Contract and Security Agreement at 17.49% with payments of $390.46 per month. Id. Approved Auto assigned the installment contract to CFC. (LF 1, 4; LF 8, 4)

[Consumer] fell behind on her payments and the car was repossessed on July 3, 2001. (Tr. 27:1113; LF 2, 7; LF 8, 7) She later received a letter dated July 5, 2001, advising her that unless she redeemed the car by July 16, 2001, it would be sold on July 18, 2001, at 9:30 a.m. at the Kansas City Auto Auction. (TR 27:17-22; 28:3-10; Apx. 2) The car was sold on October 3, 2001, for $5,100. (Tr. 27:23-25; 28:1-2; Apx. 3) According to an auction invoice, Remarketing Services of America (RSA) sold [Consumer]s car after it was repossessed. (Tr. 17:12-22; Apx. 4) RSA is a third party company, a separate corporation unrelated to CFC. (Tr. 18:12-24) CFC sued [Consumer] on June 17, 2003, alleging that it sold the car pursuant to notice for $5,100.00 and requesting a deficiency judgment of $11,786.37 with 17.49% interest from and after October 3, 2001, plus $1,767.96 in attorneys fees. (LF 1-7) In response, [Consumer] filed her Answer on June 19, 2002, requesting dismissal of CFCs lawsuit and recovery of her attorneys fees pursuant to 408.092 RSMo. (LF 8-9)

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A bench trial was held on September 22, 2003. (Tr. i) [Collections Supervisor], a collections supervisor with Chevy Chase Bank Consumer Finance Corporation, testified for CFC. (Tr. 4:5-18) CFC introduced the July 5, 2001, notice of sale letter referred to above (Apx. 2) and the auction invoice from RSA referred to above (Apx. 4). [Collections Supervisor] testified that RSA is not in any way related to CFC, that RSA is a separate corporation and that he did not work for RSA. (Tr. 18:12-25; 19:1-6) He also testified that he was not at the sale. (Tr. 25:3-4) When asked if he knew anybody that was, he mentioned only RSA. (Tr. 25:5-9) No one from RSA appeared at trial to testify about what occurred at the sale. (Tr. 25:1-12) [Collections Supervisor] did not know how many people attended the sale or if it was a private or a public sale. (Tr. 25:13-17) On October 8, 2003, the trial court entered judgment for CFC and against [Consumer] for $11,786.37 plus costs. (LF 10; Apx. 1) [Consumer] filed her Notice of Appeal to this Court November 12, 2003. (LF 11-14)

POINTS AND AUTHORITIES I. THE CIRCUIT COURT ERRED IN GRANTING JUDGMENT TO CFC ON ITS CLAIM FOR A DEFICIENCY BECAUSE THE TRIAL COURT ERRONEOUSLY APPLIED THE LAW, IN THAT CFCS PRE-SALE NOTICE WAS INSUFFICIENT, AS A MATTER OF LAW, TO COMPLY WITH THE REQUIREMENTS OF 400.9-611 RSMO IN ONE OR ALL OF THE RESPECTS SET FORTH BELOW AND CFCS CLAIM FOR A DEFICIENCY WAS ACCORDINGLY BARRED.

Standard of Review. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)

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Rule 84.13(d). UCC Pre-sale Notice Requirements. Thong v. My River Home Harbour, Inc., 3 S.W.3d 373, 377 (Mo.App.E.D. 1999) Dean Machinery Co. v. Union Bank, 106 S.W.3d 510 (Mo.App.W.D. 2003) Boatmens Bank of Nevada v. Dahmer, 716 S.W.2d 876, 879 (Mo.App.W.D. 1986) Cherry Manor, Inc., v. American Health Care, Inc., 797 S.W.2d 817, 821-2 (Mo.App.S.D. 1990). Victory Hills Ltd. v. NationsBank, N.A. (Midwest), 28 S.W.3d 322, 330 (Mo.App.W.D. 2000) 400.9-503(4) RSMo 400.9-611 RSMo 400.9-613 RSMo 400.9-614 RSMo 400.9-628(a) and (b) RSMo CFCs Pre-sale Notice Does Not Comply with UCC Requirements. 1. The Notice Does Not Describe the Secured Party. 400.9-613(1)(A) RSMo 2. The Notice Does Not State the Method of the Intended Disposition. Ford Motor Credit Co. v. Henson, 34 S.W.3d 448, 450 (Mo.App.S.D. 2001) In Re Downing, 286 B.R. 900, 904 (Bkrtcy.W.D.Mo. 2002) 400.9-613(1)(C) RSMo 400.9-614(1)(A) RSMo 400.9-614(3) RSMo 3. The Notice Fails The Requirements Of 400.9-613(1)(E) RSMo Pertaining To Public Sales. Boatmens Bank of Nevada v. Dahmer, 716 S.W.2d 876, 879 (Mo.App.W.D. 1986)

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 400.9-611(b) and (c) RSMo 400.9-613(1)(E) RSMo 4. The Notice Fails The Requirements Of 400.9-613(1)(E) RSMo Pertaining To Private Sales. 400.9-613(1)(C) RSMo 400.9-613(1)(E) RSMo 5. The Notice Misrepresents Redemption Rights. Credithrift of America, Inc. v. Smith, 308 S.E.2d 53 (Ga.App. 1983) First Natl. Bank of Md. v. DiDomenico, 487 A.2d 646, 648-9 (Md.App. 1985) Moore v. Fidelity Financial, 1997 WL 323822, at *3 (N.D.Ill. 1997) Owens v. Automobile Recovery Bureau, Inc., 544 S.W.2d 26 (Mo.App. 1976) Roosevelt Federal Savings and Loan Association v. Crider, 722 S.W.2d 325, 330 (Mo.App.1986) 400.9-623 RSMo 6. The Notice Provides No Phone Number at Which The Redemption Amount Is Available. 400.9-614(1)(C) 7. The Notice Does Not Advise Of The Right To An Accounting. 400.9-613(1)(D) RSMo 400.9-614(3) RSMo II. THE CIRCUIT COURT ERRED IN GRANTING JUDGMENT TO CFC ON ITS CLAIM FOR A DEFICIENCY BECAUSE THERE WAS NO SUBSTANTIAL EVIDENCE TO SUPPORT THE JUDGMENT, IN THAT CFC FAILED TO MEET ITS

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BURDEN TO PROVE A COMMERCIALLY REASONABLE SALE OF THE COLLATERAL. Boatmens Bank of Nevada v. Dahmer, 716 S.W.2d 876, 879 (Mo.App.W.D. 1986) Ford Motor Credit Co. v. Henson, 34 S.W.3d 448, 450-51 (Mo.App.S.D. 2001)

ARGUMENT I. THE CIRCUIT COURT ERRED IN GRANTING JUDGMENT TO CFC ON ITS CLAIM FOR A DEFICIENCY BECAUSE THE TRIAL COURT ERRONEOUSLY APPLIED THE LAW, IN THAT CFCS PRE-SALE NOTICE WAS INSUFFICIENT, AS A MATTER OF LAW, TO COMPLY WITH THE REQUIREMENTS OF 400.9-611 RSMO IN ONE OR ALL OF THE RESPECTS SET FORTH BELOW AND CFCS CLAIM FOR A DEFICIENCY WAS ACCORDINGLY BARRED.

A. Standard of Review Review of this court-tried case is governed by Rule 84.13(d). The judgment of the trial court will be reversed if there is no substantial evidence to support it, if it is against the weight of the evidence, if it erroneously declares the law or if it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). There was no substantial evidence to support the trial courts judgment for CFC and its judgment was against the weight of the evidence, because CFCs pre-sale notice did not comply with the requirements of UCC Article 9 and because CFC failed to introduce any evidence of the commercial reasonableness of its disposition of the collateral.

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B. UCC Pre-sale Notice Requirements UCC Article Nine (Chapter 400.9 RSMo) contains the requirements by which to measure the adequacy of CFCs pre-sale notice.3 Section 400.9-611 RSMo requires a secured creditor to send the debtor notice of its intended disposition of repossessed collateral. The content of the notice is dictated by 400.9-613 and 400.9-614 RSMo, the latter specifically being geared to consumer transactions. To guide creditors, that section contains a safe-harbor form for such transactions. (Apx. 12, 13) CFC, for whatever reason, chose not to use it. The importance of a proper pre-sale notice is widely recognized. The purpose behind the statutory requirement of notice is to apprise the debtor of the details of the disposition so that the debtor may take appropriate action to protect his or her interest. Thong v. My River Home Harbour, Inc., 3 S.W.3d 373, 377 (Mo.App.E.D. 1999). It is the creditor's burden in a suit for deficiency to prove strict and literal compliance with the statute. Boatmens Bank of Nevada v. Dahmer, 716 S.W.2d 876, 879 (Mo.App.W.D. 1986). If the creditor fails to send a legally sufficient notice prior to disposition of the collateral, the creditor is barred from recovering a

UCC Article Nine was extensively amended in 2001. Most of the case law cited in this brief

was decided under the pre-2001 version, but the pertinent provisions requiring notice and dictating the consequences of violating notice requirements remain substantially the same. Compare, for example, the notice requirement found in former 400.9-503(4) with current notice provisions in 400.9-611, 400.9-613 and 400.9-614. And although the rules for

determining deficiencies in commercial transactions were changed so that the absolute deficiency bar no longer applies in commercial transactions, the legislature expressly left the prior law intact with respect to consumer transactions. See 400.9-628(a) and (b).

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deficiency judgment. Id., at 877. Any doubt regarding compliance is resolved in the debtors favor. Id. There is good reason for holding creditors to strict compliance with statutory requirements. Prior to the UCC creditors had only the collateral for satisfaction of the debt. Victory Hills Ltd. Partnership I v. NationsBank, N.A. (Midwest), 28 S.W.3d 322, 330 (Mo.App.W.D.2000) (deficiency judgments after repossession of collateral are in derogation of the common law). Because the UCC gave creditors something the common law did not, they are held to strict compliance. Id. In considering whether a UCC violation has occurred, court decisions of other jurisdictions on similar facts are persuasive. Dean Machinery Co. v. Union Bank, 106 S.W.3d 510 (Mo.App.W.D. 2003); Cherry Manor, Inc., v. American Health Care, Inc., 797 S.W.2d 817, 821-2 (Mo.App.S.D. 1990) (relying, in part, for example, on a decision from the federal bankruptcy court for the Western District of Missouri). With the above principles in mind, we turn to an examination of CFCs pre-sale notice (Apx. 2) and compare it with the statutory requirements. C. CFCs Pre-sale Notice Does Not Comply with UCC Requirements The Notice Does Not Describe The Secured Party. Section 400.9-613(1)(A) RSMo mandates that the notice describe the secured party. CFC, the assignee and holder of the contract, was the secured party (LF 1, 3, 4; 8, 3, 4) The notice makes no mention of CFC. It advises [Consumer] that to redeem the vehicle payment must be sent to Chevy Chase Bank. Although CFCs witness testified Chevy Chase Bank owned CFC, he acknowledged they are separate companies. (Tr. 23:22-5; 24:1-14) CFC was the

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secured creditor. (LF 1, 3, 4; 8, 3, 4) The failure to identify CFC in the notice as the secured creditor constitutes a clear violation of the foregoing UCC section. The Notice Does Not State Method Of The Intended Disposition. Section 400.9-613(1)(C) RSMo requires the creditor to state the method of intended disposition of the collateral. (Apx. 9) Section 400.9-614(1)(A) makes this requirement

applicable to consumer transactions. The form notice set forth in 400.9-614(3) RSMo sets forth differing language concerning private versus public dispositions. (Apx. 12, 13) The presale notice at issue does not state whether the car was to be sold at a private sale or a public sale. (Apx. 2) And, although it said the vehicle would be sold at the auction listed below, referring to the Kansas City Auto Auction, it failed to indicate whether that auction is limited to dealers or open to the public.4 Thus it gives no indication whether the sale is to be public or private and fails for this reason to comply with the statute. This is another clear violation. In Re Downing, 286 B.R. 900, 904 (Bkrtcy.W.D.Mo. 2002). See also Ford Motor Credit Co. v. Henson, 34 S.W.3d 448, 450 (Mo.App.S.D. 2001) (creditor denied deficiency for failing to prove method of disposition). The Notice Fails The Requirements 400.9-613(1)(E) RSMo Pertaining To Public Sales. If the contemplated sale was open to the public, and thus a public sale, CFC was required by 400.9-613(1)(E) RSMo to state the time and place of a public disposition. (Apx. 8) While the notice set the time of sale as July 18, 2001, at 9:30," CFCs post-sale notice indicates the vehicle was not sold until two and one-half months later, on October 3, 2001. (Apx. 3)
4

See In Re Downing, supra, at 904 for a discussion of whether dealer auctions are private or

public sales.

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And though CFC, or whoever sent the July 5, 2001 notice, attempted to hedge by saying, This date is subject to change and giving a number to call to verify the sale date, such a hedge, contemplating notice by phone, simply gives rise to another violation of the law. The UCC requires authenticated notice, which rules out oral (e.g., telephone) notice. See 400.9611(b) and (c) RSMo and Official Comment 5 to that section (Apx. 5, 7).5 4. The Notice Fails The Requirements Of 400.9-613(1)(E) RSMo Pertaining To Private Sales . If a sale is not open to the public, 400.9-613(1)(E) RSMo requires that the notice state the time after which any other disposition was to be made. (Apx. 9) CFC might argue the notice did so by telling [Consumer] she had until July 16, 2001 to redeem the vehicle and that if she did not it would be sold on July 18, 2001. However, the notice did not simply state the time after which the car would be sold. It stated a specific time and place, thus adding confusing and misleading language that muddied the content of the notice, making it unclear what method or manner of sale was contemplated. This language compounded the violation of 400.9-

613(1)(C) RSMos requirement to state the method of intended disposition, referenced above. And, here again, stating the date was subject to change and listing a phone number to call amounted to an anticipatory violation of the written notice requirement. 5. The Notice Misrepresents Redemption Rights. A gross violation flows from the fact that the notice cut off the right of redemption at July 16, 2001, even though the vehicle was not to be sold - at the earliest, according to the notice -

Even prior to this statutory condemnation of oral notice, Missouri courts held that the notice

had to be written. Dahmer, supra, at 878.

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until two days later, and was not actually sold until some two and one-half months later.6 Because 400.9-623 RSMo allows for redemption at any time before the actual disposition, a pre-sale notice that limits the debtors right of redemption short of the actual sale violates the UCC. Credithrift of America, Inc. v. Smith, 308 S.E.2d 53, 37 (Ga.App. 1983); First Natl. Bank of Md. v. DiDomenico, 487 A.2d 646, 648-9 (Md.App. 1985); Moore v. Fidelity Financial, 1997 WL 323822, at *3 (N.D.Ill. 1997). And though no Missouri court has passed directly on this question, in Owens v. Automobile Recovery Bureau, Inc., 544 S.W.2d 26 (Mo.App. 1976), the court considered the effect of a creditors $130 overcharge on a debtors redemption rights. The debtor successfully sued the creditor for conversion after the creditor conditioned return of his car on payment of the overcharge. On appeal the creditor argued its possession was rightful because the debtor had failed to tender the balance due to redeem the car. Rejecting this argument and refusing the bank's urging that it construe the UCC in its favor, the court held that by demanding an illegitimate balance, the bank had waived the debtor's obligation to tender the amount legitimately owed. Owens, at 31-2. Owens thus illustrates that a creditor will be held

responsible for misrepresenting the debtors redemption rights in the context of a UCC Article Nine case. Similarly, see Roosevelt Federal Savings and Loan Association v. Crider, 722 S.W.2d 325, 330 (Mo.App.1986), holding in favor of a debtor against a holder of a note concerning the debtor's UCC rights, commenting, "We think the more enlightened approach is exemplified by

The October 23, 2001, post-sale notice (Apx. 3) indicates the vehicle was not sold until October

3, 2001.

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those states that have been liberal in their construction of consumer transactions for purposes of their consumer protection statutes." Given the strong leanings of Missouri courts, and given their inclination to look to other states rulings for guidance in this area of the law, it is clear that CFC must suffer the consequences of this gross misstatement of [Consumer]s redemption rights and be denied a deficiency. 6. The Notice Provides No Phone Number At Which The Redemption Amount

Is Available. Still another violation is found in the absence of any phone number to call for verification of the redemption amount, as required by 400.9-614(1)(C). (Apx. 2) The only phone number mentioned in the notice is the one to call to verify the sale date. No number is given from which to verify the amount that must be paid to the secured party to redeem the collateral, as required by the foregoing section.7 7. The Notice Does Not Advise Of The Right To An Accounting.

Even if the notice had identified the secured party, had properly advised of the method of intended disposition, had contained proper private or public sale language, had not misstated redemption rights and had contained the required phone number for the redemption amount, it would still violate the UCC, because it failed to advise [Consumer] she was entitled to an

In this regard, it is interesting to note that, although the July 5, 2002 pre-sale notice pegs this

amount at $2,359.72, which consists of all principal and interest currently due (Apx. 2), the October 23, 2001 post-sale notice purports an Unpaid balance at the time of repossession of $14,640.52. (Apx. 3)

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accounting of the unpaid indebtedness, as required by 400.9-613(1)(D) RSMo. (Apx. 9) The safe-harbor form provided in 400.9-614(3) RSMo for consumer transactions contains this language: If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at (telephone number) (or write us at (secured partys address)) and request a written explanation. (Apx. 13) The notice, however, provided only for a post-sale accounting. (Apx. 2, 2) This is not the same as telling a debtor she is entitled to know how the secured party figured the amount claimed owing prior to the sale. That the law clearly provides the right to an accounting prior to the sale is obvious from the form notices for both commercial and consumer transactions set out in 400.9-613 and 400.9-614 RSMo.8 (Apx. 10, 11 and 12-14) The lack of this required information in the pre-sale notice constitutes yet another UCC Article Nine violation. By reason of any or all of the above defects in CFCs notice, CFCs claim for a deficiency was barred as a matter of law and the court below erred in ruling otherwise. II. THE CIRCUIT COURT ERRED IN GRANTING JUDGMENT TO CFC ON ITS CLAIM FOR A DEFICIENCY BECAUSE THERE WAS NO SUBSTANTIAL EVIDENCE TO SUPPORT THE JUDGMENT, IN THAT CFC FAILED TO MEET ITS

The form in 400.9-613 RSMo, applicable to secured transactions in general, contains this

language: You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $ ). You may request an accounting by calling us at (telephone number).

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BURDEN TO PROVE A COMMERCIALLY REASONABLE SALE OF THE COLLATERAL. CFC had the burden to prove not only that it complied with pre-sale notice requirements, but also that the sale of [Consumer]s car was commercially reasonable. Dahmer, 716 S.W.2d at 877-8. A creditors failure to prove commercial reasonableness, just like its failure to prove satisfaction of the notice requirement, bars it from recovering a deficiency. Ford Motor Credit Co. v. Henson, supra, at 450-51. Here, just as CFC failed to meet the UCCs pre-sale notice requirements, it likewise failed to prove that a commercially reasonable sale of the collateral took place. All it proved was a sale. The only evidence it presented concerning the sale was an invoice showing that RSA, an unrelated company, sold the car at an auction. (Tr. 17:12-22; 18:10-25; 19:1-2; Apx. 4) The only thing the invoice proved was that the car was sold. It was, as characterized by CFC, simply a bill of sale. (Tr. 19:20-25; 20:1) CFCs witness, [Collections Supervisor], admitted that he was not present when the car was sold. (Tr. 25:3-4) He conceded having no knowledge as to how many people were at the sale or what kind of sale it was, whether public or private. (Tr. 25:13-17) While he testified RSA was at the sale, no one from RSA came to court to testify about the sale. (Tr. 25:5-12) A strikingly similar dearth of evidence in Henson, supra, compelled the court to conclude the creditor had failed to meet its burden, resulting in reversal of the deficiency judgment against the debtors there. The judgment here should likewise be reversed. Conclusion That CFC in multiple ways failed to prove compliance with UCC requirements concerning the pre-sale notice is clear from the above comparison of the notice with statutory requirements and

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is reinforced by comparison of the notice with 400.9-614(3) RSMos safe-harbor form. (Apx. 12-14) That CFC failed to prove a commercially reasonable sale of the collateral is equally clear. The trial court therefore erred, as a matter of law, in granting a deficiency judgment to CFC.

Respectfully submitted, [Attorneys for Appellant]

By: ________________________________ [Attorneys for Appellant] ATTORNEYS FOR APPELLANT

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