## Facts

- General Electric Capital Corp. (GE) loaned $400,000 to Stelmach Construction Co. (Stelmach) under a secured transaction, with Stelmach’s equipment pledged as collateral.
- Stelmach defaulted and voluntarily surrendered the collateral to GE.
- GE hired a separate company to assess, prepare, and clean the collateral for sale.
- That company appraised the collateral at $258,200.
- GE advertised the disposition in two national trade magazines and on two websites known in the trade, and also sent mailings to potential purchasers.
- GE’s advertisements described the collateral and made it available for inspection.
- GE’s advertisements did not state whether the equipment would be sold item-by-item or as a single lot.
- GE received six bids ranging from $225,000 to $311,000; each bid was for the entire lot.
- Stelmach retained a valuation witness who opined the collateral was worth $457,400.
- GE accepted the highest bid ($311,000), applied the proceeds to the debt, and sued Stelmach (and an individual guarantor, Christopher S. Stelmach) for the remaining deficiency.

## Issues

1. Whether GE’s disposition of the collateral was commercially reasonable under UCC Article 9 so that GE could recover a deficiency.
2. Whether a debtor’s higher valuation opinion (and related testimony) created a genuine dispute that defeated summary judgment on the deficiency amount.
3. Whether defendants’ valuation testimony should be excluded under Federal Rule of Evidence 702.

## Decision

- The court denied GE’s motion in limine to exclude defendants’ valuation testimony.
- The court granted GE’s motion for summary judgment on damages and entered a deficiency judgment against the defendants.
- The court held the sale was commercially reasonable as a matter of law based on the undisputed advertising, inspection opportunity, and competitive bidding, even though defendants presented a much higher valuation.

## Legal Principles

- Under UCC Article 9, a secured party seeking a deficiency must show that “every aspect” of the disposition—including method, manner, time, place, and terms—was commercially reasonable.
- Commercial reasonableness is evaluated by the sale process and market exposure, not by whether the secured party obtained the best imaginable price.
- Broad, trade-focused advertising, clear descriptions, and an opportunity to inspect support a finding of commercial reasonableness, particularly where multiple bids are received and the creditor accepts the highest bid.
- A competing valuation that exceeds the sale price does not, standing alone, establish that the disposition was commercially unreasonable or create a triable fact issue where the sale process is otherwise regular and well marketed.
- Under Federal Rule of Civil Procedure 56, summary judgment is proper when the record shows no genuine dispute of material fact and the movant is entitled to judgment as a matter of law.
- Under Federal Rule of Evidence 702, challenges to a valuation witness’s assumptions often go to weight rather than admissibility; admission of such testimony does not necessarily prevent summary judgment where the legal standard turns on the disposition’s reasonableness and the key process facts are undisputed.

## Conclusion

General Electric Capital Corp. was allowed to pursue a deficiency because its post-default sale of Stelmach’s surrendered equipment—supported by targeted trade advertising, inspection access, and multiple competitive bids—was commercially reasonable under Article 9, and the defendants’ higher valuation opinion did not create a genuine dispute sufficient to defeat summary judgment on damages.


General Electric Capital Corp. v. Stelmach Construction Co., 2001 WL 969052 (2001)