A Texas Court of Appeals of Texas has reversed a judgment that awarded a debt buyer $8,323.75 on a deficiency claim and rendered judgment that it take nothing, ruling that no evidence supported a finding that the sale of the repossessed collateral was commercially reasonable.
The background: The case grew out of a routine auto deficiency suit in which the only contested issue was what happened to the vehicle after it was taken back.
- The defendant defaulted on an auto loan, leading the vehicle to be repossessed.
- It was sold for a price that did not cover the balance owed, leaving a deficiency the plaintiff was entitled to pursue.
- The plaintiff sued in a county court at law in Williamson County, asserting that all conditions had been met.
- The defendant specifically denied that the collateral had been disposed of in a commercially reasonable manner, which under Texas law shifted the burden to the plaintiff to prove reasonableness.
- At the bench trial, the court took judicial notice of its own file but admitted no exhibits and heard no testimony.
- The documents attached to the plaintiff’s business-records affidavit included a credit application, an account history, and notices of intent to accelerate the debt. A notice of plan to sell property said the vehicle would go “at a private sale sometime after 7/15/2021.” An explanation of calculation of surplus or deficiency said the vehicle was disposed of about six weeks later and listed selling costs of $430. An untitled and undated page listed “Auction fees” of $430.
- The trial court ruled for the plaintiff. The defendant appealed, and the plaintiff never filed a brief.
The ruling: Justice Darlene Byrne of the Court of Appeals of Texas, Third District, wrote that the record contained no evidence of any of the many factors that can show a sale was commercially reasonable.
- Because the trial court made no findings, Justice Byrne inferred that it had made every finding needed to support the judgment, including an implied finding of commercial reasonableness, then measured that finding against a no-evidence standard.
- Texas courts weigh a list of non-exclusive factors, including whether the seller tried to get the best price, whether the sale was public or private, whether the collateral was available for inspection, whether the sale was advertised, whether multiple bids came in, and where the sale took place. Justice Byrne found the record silent on where the sale occurred, whether it was advertised, whether the auction was public or private, whether the car sold at “a propitious time,” and whether the sale expenses were reasonable and necessary.
- The two references to $430 were the only glimpse of the sale itself, and they fixed the amount of the fees without saying anything about how the disposition was carried out.
- Evidence does not rise above a scintilla, the judge noted, when a factfinder “would have to guess whether a vital fact exists.”
- With no appellee’s brief on file, the court accepted as true the facts stated and supported by record references in the appellant’s brief, while still reviewing the record on its own.
