## Facts

- C.H. Betterton financed an over-the-road tractor (a 1979 Peterbilt) and trailer (a 1978 utility trailer) through First Interstate Bank of Arizona, N.A., executing separate promissory notes and security agreements that gave the Bank security interests in the vehicles.
- Betterton also received an additional unsecured loan from the Bank to cover operating expenses such as taxes and licensing.
- Betterton had recurring payment problems, missed required installments, and the Bank treated the loans as in default.
- After negotiations with Paula Stiles, the Bank officer assigned to Betterton’s account, the parties executed written revision agreements extending or revising the payment terms, but Betterton still did not perform under the revised terms.
- While the tractor was undergoing repairs, Stiles informed Betterton that, because he remained in default, the Bank intended to repossess the collateral.
- Betterton asserted that he and Stiles then reached an agreement: if the Bank would modify the repayment arrangement, Betterton would finish the repairs and arrange for payments through payroll deductions from his employer.
- The Bank repossessed the tractor and trailer and later sold them, applying the proceeds to Betterton’s debt and seeking the remaining balance as a deficiency.
- Betterton filed a diversity action in the Eastern District of Missouri asserting breach of contract and related tort theories (including fraud, conversion, and tortious breach of a duty of good faith), and also challenged the repossession and disposition as violating the security agreement and the U.C.C.’s commercial-reasonableness requirement.
- The district court granted summary judgment to the Bank and Stiles on several counts; the remaining U.C.C.-based sale issues and the Bank’s deficiency counterclaim were tried, resulting in judgment for the Bank.
- The district court denied the Bank and Stiles’ post-judgment request for attorneys’ fees on the ground that the fee motion was untimely.

## Issues

1. Whether the district court properly granted summary judgment against Betterton on his breach-of-contract claim based on an alleged agreement to modify repayment terms and/or forbear from repossession.
2. Whether the district court properly granted summary judgment against Betterton on his tort claims (fraud, conversion, and tortious breach of a duty of good faith) arising from the repossession.
3. Whether the trial judgment for the Bank on the commercial reasonableness of the disposition of collateral and on the Bank’s deficiency counterclaim should be affirmed.
4. Whether the district court erred by denying the Bank and Stiles’ motion for attorneys’ fees solely as untimely.

## Decision

- The Eighth Circuit affirmed the summary judgment for the Bank and Stiles on Betterton’s breach-of-contract and tort claims.
- The Eighth Circuit affirmed the trial judgment for the Bank on Betterton’s claim that the collateral was not disposed of in a commercially reasonable manner and on the Bank’s counterclaim for a deficiency judgment.
- The Eighth Circuit reversed the order denying attorneys’ fees to the Bank and Stiles as untimely and remanded for the district court to consider the fee request on the merits.

## Legal Principles

- Summary judgment is appropriate when the record shows no genuine dispute of material fact and the movant is entitled to judgment as a matter of law; a party opposing summary judgment must produce evidence sufficient for a reasonable factfinder to return a verdict in that party’s favor.
- In a default-and-repossession dispute, a borrower’s assertion that a lender promised to modify terms or delay repossession does not, by itself, create a triable contract claim when the governing documents authorize repossession upon default and the alleged modification/forbearance agreement is not supported by legally sufficient proof to make it enforceable.
- A fraud claim requires evidence of a misrepresentation of fact (and the other elements of fraud); allegations tied to collection decisions or to an asserted promise about future conduct, without proof supporting the elements, do not defeat summary judgment.
- A secured party’s repossession of collateral after default, when done pursuant to its contractual and statutory rights, does not become conversion merely because the debtor disputes the lender’s prior communications about possible workout arrangements.
- Under U.C.C. Article 9, a secured creditor must dispose of collateral in a commercially reasonable manner; whether a sale was commercially reasonable is evaluated based on the method, manner, time, place, and terms, and an appellate court will uphold a supported trial determination.
- A post-judgment request for attorneys’ fees based on a contractual fee provision should not be rejected solely on a timing rationale when it is filed within the period allowed by applicable procedural rules; the proper course is to decide entitlement and reasonableness.

## Conclusion

The Eighth Circuit upheld the Bank’s win on Betterton’s contract and tort theories, upheld the judgment that the repossession sale was commercially reasonable and that Betterton owed a deficiency, but sent the case back because the district court should not have denied the Bank and Stiles’ contractual attorneys’ fee request solely as untimely and instead needed to address the request on its merits.


Betterton v. First Interstate Bank of Arizona, 800 F.2d 732 (1986)