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Coxall v. Clover Commer. Corp. - 4 Misc. 3d 654, 781 N.Y.S.2d 567 (Civ. Ct. 2004)


Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable.N.Y. U.C.C. Law § 9-610(b) (2001). Private dispositions, as compared to public auction, are encouraged on the assumption that they frequently will result in higher realization on collateral for the benefit of all concerned. A disposition of collateral is made in a commercially reasonable manner if the disposition is made in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.


On October 21, 2002, Jason Coxall and Utho Coxall purchased a 1991 model Lexus automobile, executing a Security Agreement/Retail Installment Contract. Simultaneously with the sale, the contract was assigned to Clover Commercial Corp., whose name was printed on the top and at other places.  The cash price on the contract was $ 8,100, against which the Coxalls made a cash down payment of $ 3,798 and financed the balance of $ 4,970. The Coxalls were required by the contract to make monthly payments of $ 333 each, beginning November 21, 2002. No payments were made, however, because Jason Coxall experienced mechanical difficulties with the vehicle soon after purchase. On February 19, 2003, Clover Commercial took possession of the vehicle, and on the next day mailed two letters to Jason Coxall. In one, Clover told Mr. Coxall that he could redeem the vehicle with a payment of $ 5,969.28, exclusive of storage charges and a redemption fee. In the other, Clover gave Mr. Coxall notice that the vehicle would be offered for private sale after 12:00 noon on March 3, 2003. On March 3, 2003, the Lexus was sold back to Jafas Auto Sales for $ 1,500. On April 22, 2003, Clover Commercial wrote to Jason Coxall demanding that he pay the remaining balance of $ 4,998. Coxall commenced an action against Clover Commercial Corp. seeking damages for the alleged illegal repossession of the Lexus automobile.


Was the Lexus automobile illegally repossessed by Clover Commercial Corp.?




The Court held that Clover Commercial Corp. failed to provide reasonable notice and did not provide any evidence as to the commercial reasonableness of the sale by failing to show that any prospective buyer was contacted and by providing no evidence of the fair market value of the car on the date of the sale to justify the low sale price. New York courts have determined commercial reasonableness by whether the secured party acted in good faith and to the parties' mutual best advantage. Whether a sale was commercially reasonable is, like other questions about "reasonableness," a fact-intensive inquiry; no magic set of procedures will immunize a sale from scrutiny. New York courts have, indeed, scrutinized "low price" sales.  Clover Commercial provided no evidence as to the commercial reasonableness of the sale; it provided no evidence that any prospective buyer was contacted, other than the original seller; and provided no evidence of the fair market value of the Lexus on the date of sale, or any other evidence that would justify a sale price of $ 1,500. In short, Clover Commercial failed to sustain its burden of showing that the sale of Coxall's Lexus was commercially reasonable.

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