Monday, September 28, 2009

Trial Court's Conclusion That Bank Disposed Of Property In Commercially Unreasonable Fashion Affirmed

In Tropical Jewelers, Inc. v. Bank of America, N.A. (3D08-164), the Third District affirmed the trial court's conclusion that the bank "had disposed of the collateral in a commercially unreasonable fashion."  This is not the first time the case has been up on appeal. 
After summary judgment was entered in favor of the Bank in 1998 for a deficiency judgment, Tropical appealed in Tropical Jewelers, Inc. v. NationsBank, N.A., 781 So. 2d 381 (Fla. 3d DCA 2000) (“Tropical I”). The case was reheard, en banc, in Tropical Jewelers, Inc. v. NationsBank, N.A., 781 So. 2d 392 (Fla. 3d DCA 2000) (“Tropical II”). The summary judgment was reversed because there existed a genuine issue of material fact as to whether the collateral was disposed of in a commercially reasonable fashion and the case was remanded. The case eventually proceeded to a bench trial and the trial court found that the Bank had disposed of the collateral in a commercially unreasonable fashion and was not entitled to a deficiency judgment. The trial court also found that the appellants failed to prove any resulting damages.
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Pursuant to section 679.507 (2), Florida Statutes (1995)2, if a “secured party either sells the collateral in the usual manner in any recognized market at the time of his sale or if he has otherwise sold in conformity with reasonable commercial practices among dealers in the type of property sold, he has sold in a commercially reasonable manner.” Given that the Bank apparently did not sell all of the collateral at its disposal, including the unaccounted-for faceting machines, and the trial court’s findings regarding the limitations in both Stampler Auctions’ experience with liquidation of jewelry and its advertising of the auctions, we find no error in the trial court’s determination that Bank had disposed of the collateral in a commercially unreasonable fashion.
2 This statute has been renumbered and is now section 679.627, Florida Statutes (2009).

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