Moore v. Wells Fargo Construction
2009 Ind. App. LEXIS 732, 903 N.E.2d 525, 68 U.C.C. Rep. Serv. 2d (West) 436 (2009)
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Rule of Law:
For a notice of a public sale of repossessed collateral conducted online, providing the auction's web address and the auction company's physical address satisfies the Uniform Commercial Code's requirement to state the 'place' of the disposition.
Facts:
- Richard Moore was a principal in McCawith Energy, Inc., a mining corporation.
- On June 14, 2000, McCawith refinanced a Liebherr Excavator through CIT (now Wells Fargo), and Moore executed a personal guaranty for the indebtedness of $557,918.28.
- The guaranty Moore signed included a clause waiving any defense based on the 'commercial reasonableness' of the disposition of the collateral and waiving the right to be notified of such disposition.
- In 2003, McCawith defaulted on the loan, and CIT repossessed the Excavator, which was found in an inoperable state.
- On October 5, 2005, CIT sent Moore a notice stating its intent to sell the Excavator in a public auction via an internet website, providing the date, the web address, and the auction company's physical address.
- The internet auction was unsuccessful, and CIT did not sell the Excavator at that time.
- In January 2006, CIT sold the Excavator in a private sale to Bramer & Son for $54,000, leaving a deficiency of over $251,000 on the loan.
Procedural Posture:
- CIT (later Wells Fargo) filed a deficiency action against Richard Moore in the trial court.
- Following a bench trial, the trial court entered judgment in favor of Wells Fargo, finding Moore liable for the deficiency of $354,930.40.
- Moore, as the appellant, appealed the trial court's judgment to the Court of Appeals of Indiana.
- Wells Fargo is the appellee in this appeal.
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Issue:
Does a secured creditor's notice of a public sale of collateral conducted via the internet satisfy the statutory requirement to state the 'place' of the disposition when the notice provides the auction website address and the physical address of the auction company?
Opinions:
Majority - Najam, J.
Yes, a notice of an online public sale of collateral satisfies the UCC's requirement to state the 'place' of disposition by providing the auction website and the auction company's physical address. First, regarding Moore's challenge to the commercial reasonableness of the sale, the court found he contractually waived this defense in the personal guaranty he signed. The guaranty's plain language explicitly waived any and all defenses based on the commercial reasonableness of the disposition of the collateral. Therefore, he is barred from raising this claim. Second, regarding the adequacy of the notice, the court found that the pre-default waiver of notice in the guaranty was ineffective under Indiana Code § 26-1-9.1-624, which only permits such waivers in a post-default agreement. However, the court concluded that the second notice CIT sent to Moore was sufficient. An internet auction does not have a traditional physical 'situs,' and providing the web address and the auction company's address adequately informed Moore where the auction would occur, allowing him to monitor or participate. This modern interpretation fulfills the purpose of the notice requirement under Indiana Code § 26-1-9.1-613.
Analysis:
This decision is significant for adapting traditional Uniform Commercial Code (UCC) rules to modern e-commerce practices. By holding that a web address constitutes a 'place' for the purpose of a public sale notice, the court provided crucial legal clarity for secured creditors utilizing internet auctions to dispose of collateral. This precedent allows creditors to leverage online platforms with confidence that their notices will be deemed legally sufficient, so long as they provide the necessary details for the debtor to observe the sale. The case also reinforces the critical distinction between waivable rights, such as challenging commercial reasonableness under the terms of a guaranty, and non-waivable rights, such as the right to notice of disposition, which can only be waived after a default has occurred.
