## Facts

- Charlene Hutzenbiler entered into an installment sale contract and security agreement with Cherry Creek Development, Inc. to buy a mobile home, agreeing to monthly payments and late fees for payments more than five days late.
- Cherry Creek retained a security interest in the mobile home to secure Hutzenbiler’s payment obligations and later assigned the contract to its parent company, RJC Investment, Inc. (RJC).
- Hutzenbiler made payments but the parties later disputed whether she was in default; no court determined default before the later surrender and resale.
- In December 2015, Hutzenbiler vacated the mobile home, allowed RJC to take possession, and signed a written “Full Release of Contract” stating she relinquished all rights to the home.
- At the time she signed the release, Hutzenbiler still owed more than $30,000 under the contract.
- RJC later resold the mobile home without giving Hutzenbiler notice of the disposition.
- Hutzenbiler, through counsel, requested an accounting of the resale proceeds; RJC did not provide an accounting and did not pay any alleged surplus, asserting none was owed.
- Hutzenbiler sued RJC in Montana state court under UCC Article 9, seeking (among other relief) an accounting and payment of any surplus from the collateral’s disposition.
- The district court granted summary judgment to RJC, ruling that the release severed the security interests so the UCC did not apply and, alternatively, that the release amounted to acceptance of the collateral in full satisfaction (strict foreclosure) under Mont. Code Ann. § 30-9A-620.
- Hutzenbiler appealed to the Montana Supreme Court.

## Issues

1. Did the release between Hutzenbiler and RJC terminate application of the UCC’s requirement for an accounting and surplus after RJC sold the collateral?
2. Did the district court err in determining that the release constituted an acceptance of the collateral in full satisfaction of Hutzenbiler’s secured obligation under Mont. Code Ann. § 30-9A-620?
3. Was RJC entitled to summary judgment on other statutory or equitable grounds?

## Decision

- The Montana Supreme Court reversed the district court’s grant of summary judgment and remanded for further proceedings.
- The Court held the release did not terminate Article 9’s application to RJC’s post-surrender disposition of the mobile home, including duties tied to proceeds, accounting, and surplus.
- The Court held the release did not meet the statutory requirements for acceptance of collateral in full satisfaction under Mont. Code Ann. § 30-9A-620.
- The Court declined to affirm on alternative grounds because disputes of material fact remained, including facts relevant to the secured obligation and the disposition.

## Legal Principles

- When a secured party disposes of collateral, UCC Article 9 governs the disposition and the handling of proceeds, including the debtor’s right to an accounting and to any surplus after application of proceeds in the statutory order.
- A debtor’s private “release” of rights in collateral does not, by itself, eliminate Article 9 obligations that apply once the secured party repossesses and sells the collateral.
- A secured party may accept collateral in full satisfaction of a secured obligation (strict foreclosure) only by meeting the conditions in Mont. Code Ann. § 30-9A-620, including the statute’s consent and procedure requirements; a general release is not enough.
- Core Article 9 protections concerning disposition proceeds—such as the right to an accounting and the right to surplus—are statutory and generally cannot be waived in advance by contract language that purports to forfeit those rights.
- Summary judgment is improper when material facts remain disputed about the status of the secured obligation and the consequences of the collateral’s disposition.
- A person can remain a “debtor” for Article 9 purposes even after surrendering possession, where the secured obligation is still asserted and the secured party proceeds with a collateral sale.

## Conclusion

Hutzenbiler v. RJC Investment holds that a debtor’s signed release surrendering a mobile home did not remove the transaction from UCC Article 9 once the secured party resold the collateral, and it did not establish strict foreclosure under § 30-9A-620; the Montana Supreme Court reversed summary judgment for the secured party and remanded for further proceedings on the accounting and surplus claims and related factual disputes.


Hutzenbiler v. RJC Investment, 439 P.3d 378 (2019)