## Facts

- Ellen Foley financed a Chevrolet Silverado through a motor-vehicle retail installment sales contract with Capital One Bank, N.A.
- Foley defaulted on the loan; Capital One repossessed the truck and sold it.
- Capital One sued Foley for a deficiency balance in county civil court, alleging all conditions precedent to recovery were satisfied.
- Foley specifically denied that Capital One disposed of the collateral in a commercially reasonable manner and asserted Capital One was therefore not entitled to a deficiency.
- The case was tried to the bench with no live witnesses; Capital One relied on a business-records affidavit.
- The affidavit stated only that the vehicle was sold within a date range and listed account balances; it provided no details about method, manner, time, place, advertising, type of sale, or terms of the disposition.
- The trial court entered judgment for Capital One for $18,011.37 and later signed findings and conclusions that did not include a specific finding on commercial reasonableness.
- Foley appealed.

## Issues

1. In a deficiency suit following repossession and sale of collateral, who bears the burden to prove the disposition was commercially reasonable when the debtor specifically contests that condition?
2. Whether the evidence was legally sufficient to support a finding that the collateral was disposed of in a commercially reasonable manner.

## Decision

- The court of appeals held that, once Foley specifically denied commercial reasonableness as a condition precedent, Capital One bore the burden to prove the disposition was commercially reasonable.
- The court found the record contained legally insufficient evidence of commercial reasonableness because Capital One offered no evidence describing the circumstances of the sale beyond a bare business-records affidavit.
- The judgment for Capital One was reversed, and judgment was rendered that Capital One take nothing on its deficiency claim.

## Legal Principles

- Under the Texas UCC, every aspect of a secured party’s disposition of collateral after default—including method, manner, time, place, and other terms—must be commercially reasonable.
- In a deficiency action, compliance with statutory disposition duties (including commercial reasonableness) operates as a condition to the secured creditor’s right to recover a deficiency.
- When a creditor pleads that all conditions precedent are satisfied and the debtor specifically denies a particular condition, the creditor must prove the contested condition at trial.
- A business-records affidavit showing repossession, a sale date range, and a resulting deficiency—without evidence about how the sale was conducted—is insufficient to prove commercial reasonableness.
- When the party bearing the burden of proof fails to present legally sufficient evidence on an essential element, the proper remedy may be reversal and rendition of a take-nothing judgment.

## Conclusion

The appellate court eliminated the deficiency judgment because the debtor’s specific challenge required the creditor to prove the collateral was sold in a commercially reasonable manner, and the creditor’s proof did not address the sale’s circumstances.


Foley v. Capital One Bank, N.A., 383 S.W.3d 644 (Tex. App.—Houston [14th Dist.] 2012, no pet.)