Sovereign Bank v. Alverado, 2003 WL 21771751 (Conn. Super. Ct. July 2003)
(Not reported in A.2d)
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This case is a collection action arising out of a retail installment sales contract for a 1993 Toyota Paseo. The defendants Daniel and Edith Alvarado entered into a retail installment sales contract with Shawmut Bank on November 11, 1995, and, that contract was sold and assigned by Shawmut to the plaintiff Sovereign Bank. The Alvarados were late with their monthly loan payments and in April of 1998, they stopped making monthly payments on their obligation.
On June 4, 1998, Sovereign repossessed the Alvarados' Paseo and on the same date sent notice advising them, among other things, that "the vehicle will be resold at Southern Auto Auction by private or public sale at anytime after 4:00 p.m. on June 24, 1998." The car was not redeemed by the Alvarados, and on July 1, 1998, the vehicle was sold at Southern Auto Auction for $3,250.
Southern Auto Auction is a "dealer-only" auction, so only those with a valid dealer's license may participate. On July 6, 1998, Sovereign notified the Alvarados that their vehicle had been sold, and informed them of the deficiency balance due after resale. Sovereign calculated the Alvarados' deficiency by adding the total outstanding balance on their loan ($9,871.56) to the cost of retaking and liquidating the vehicle ($425), and then deducting the vehicle's fair market value ($5,513). [FN1]
FN1. Sovereign relied on the National Automobile Dealers Association (NADA) guidelines to determine the vehicle's fair market value. The amount collected on the resale was less than the vehicle's fair market value, and this fact is significant inasmuch as the defendants, pursuant to statute, were entitled to a credit for the actual sale price or the fair market value of the vehicle.
Sovereign then filed suit against the Alvarados, on May 7, 1999, to collect the deficiency, interest on the deficiency since the last payment made in April, 1998, attorneys fees, and costs. The operative amended answer and special defenses were filed on March 20, 2002, and the case then was transferred to the complex litigation docket pursuant to application by the defendants.
Sovereign now moves for summary judgment.
[Discussion of standard omitted.]
In opposition to the motion for summary judgment, the Alvarados rely on the factual issues raised in their special defenses to the complaint, including Sovereign's alleged violation of the Retail & Installment Sales Financing Act (RISFA), General Statutes § 36a-770 et seq. (first special defense), and Sovereign's alleged failure to act in a commercially reasonable manner pursuant to article 9, part 5, of the Uniform Commercial Code (UCC), General Statutes § 42a-9-501 et seq. (second special defense). Specifically, the Alvarados claim that Sovereign violated the notice requirement and failed to specify whether the resale would be private or public, failed to itemize the disposition of the proceeds, violated RISFA by including the costs associated with the resale in the deficiency and including a mileage deduction, erred in reporting the mileage deduction, and failed to conduct a commercially reasonable resale of their car. Each of these special defenses is addressed in this memorandum in order to determine whether a genuine issue of material fact remains in the case.
[Discussion of Connecticut Retail & Installment Sales Financing Act omitted.]
The Resale Was Not Commercially Reasonable
The Alvarados contend that the resale of their car at auction was not "commercially reasonable" as required by RISFA and the UCC. General Statutes § 42a-9-610(b) provides that "[e]very aspect of a disposition of collateral, including the method, manner, time, place and other items, must be commercially reasonable."
The reasonableness of a commercial resale is ordinarily a question of fact. Gaynor v. Union Trust Company, supra, 216 Conn. at 478. The Alvarados argue that the $3,250 resale price was less than half of their car's retail value, and more than 40 percent less than its wholesale value. They also rely on Connecticut Bank & Trust Company v. Incendy, supra, 207 Conn. at 28, which held that proof of the commercial reasonableness of a resale requires, in general, "evidence of such things as the amount of advertising done, the number of people contacted, normal commercial practices in disposing of the particular collateral, the length of time between the repossession and sale, whether any deterioration in the collateral has occurred, the number of bids received, and the price obtained." Id., at 28. The Connecticut Supreme Court subsequently held in Gaynor v. Union Trust Company, supra, 216 Conn. at 476, that "[i]n Incendy, we do not intend to establish strict evidentiary standards that must invariably be met in each and every case." In Gaynor, the matter went to trial and there was testimony from a used car dealer.
In the instant case, the affidavits in support of Sovereign's motion for summary judgment do not include any evidence to specifically demonstrate the commercial reasonableness of the sale at Southern Auto Auction. In the absence of any evidence that the sale was "commercially reasonable," summary judgment is inappropriate. The statutes at issue were designed to protect the consumer. The law has long held that presumptions in favor of the consumer are necessary because of the unequal distribution of power between the parties to these transactions. Mack Financial Corp. v.. Crossley, 209 Conn. 163, 166, 550 A.2d 303 (1988).
Sovereign argues that because the Alvarodos were credited the fair market value rather than the actual resale value, the bank is not required to show that the resale was commercially reasonable. Crediting a consumer with the fair market value sufficiently legitimizes the sale, according to Sovereign, and only those dealers with valid licenses may attend and bid at Southern Auto Auction. There is no other reference in the bank's moving papers regarding the commercial reasonableness of the resale, such as whether any of the Incendy criteria were met.
The commercial reasonableness of the resale is a genuine issue of material fact in this case. Awarding credit for the fair market value of the vehicle does not render the issue moot. In any private sale, the compensation received could exceed the fair market value and, thus, result in a lower deficiency for the debtor. The motion for summary judgment on the commercial reasonableness issue is denied. [Footnote omitted.]
CONCLUSION
Consistent with the foregoing, the motion for summary judgment (# 112) is granted in part and denied in part.