## Facts

- Jason Coxall (titled owner) and Utho Coxall bought a used 1991 Lexus and signed a security agreement/retail installment contract with an $8,100 cash price, $3,798.25 down payment, and about $4,970 financed.
- The contract was assigned to Clover Commercial Corp., which became the secured creditor.
- Monthly payments of $333.68 were due starting November 21, 2002; no payments were made after purchase due to mechanical problems.
- On February 19, 2003, Clover repossessed the vehicle without breach of the peace.
- On February 20, 2003, Clover mailed (1) a redemption demand for $5,969.28 plus storage and a redemption fee, and (2) a notice stating the vehicle would be offered for private sale after 12:00 noon on March 3, 2003.
- On March 3, 2003, Clover sold the Lexus in a private sale to Jafas Auto Sales for $1,500.
- Clover later demanded an alleged remaining balance of $4,998.09 and sued for the claimed deficiency; Jason sued for damages alleging an illegal repossession. The actions were consolidated for a bench trial.
- At trial, Jason failed to prove a basis to rescind or avoid the purchase contract; Clover failed to present evidence establishing the commercial reasonableness of the disposition beyond the fact of the $1,500 sale.

## Issues

1. Whether Clover provided reasonable and legally sufficient notification of disposition under New York’s revised UCC Article 9.
2. Whether Clover proved the private sale back to the dealer for $1,500 was commercially reasonable under UCC Article 9.
3. What remedies follow from Article 9 noncompliance in a consumer-goods transaction, including entitlement to a deficiency and statutory damages.

## Decision

- The court applied New York’s revised UCC Article 9 to Clover’s enforcement of its security interest.
- The court found Clover failed to satisfy Article 9 requirements for both notice of disposition and proof of commercial reasonableness of the sale.
- Clover was precluded from obtaining a deficiency judgment based on the post-repossession disposition.
- Clover could recover unpaid installments and related charges that accrued up to the repossession because Jason defaulted and did not establish a contract-avoidance defense.
- Jason was awarded Article 9 statutory damages for Clover’s noncompliance.

## Legal Principles

- After default, a secured party disposing of collateral must proceed in a commercially reasonable manner as to method, manner, time, place, and terms (UCC § 9-610).
- A secured party must send reasonable notification of disposition to the debtor containing required information and sent within a reasonable time before the disposition (UCC § 9-611).
- The secured party bears the burden to prove commercial reasonableness when seeking a deficiency following disposition.
- Failure to comply with Article 9 notice and disposition requirements can bar or limit a deficiency unless the secured party proves what the deficiency would have been under a compliant disposition (UCC § 9-626).
- In a consumer-goods transaction, Article 9 provides statutory damages for noncompliance (UCC § 9-625), and noncompliance does not by itself void the underlying debt absent an independent contract defense.

## Conclusion

The court held that Clover’s repossession did not extinguish the buyers’ pre-repossession payment obligations, but Clover’s deficient notice and unproven commercial reasonableness of the private resale barred any deficiency recovery and entitled Jason to statutory damages under revised UCC Article 9.


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