## Facts

- Garry and Nancy Lister operated a used-tractor-parts dealership and borrowed money from a bank, granting a security interest in equipment and inventory; Doretta Moore guaranteed the loans.
- Lee-Swofford Investments, L.L.P. (LSI) acquired the notes and security interests from the bank.
- After default, LSI repossessed the collateral and chose to dispose of it by public auction.
- LSI hired a reputable professional auctioneer who advertised in newspapers and trade publications and attracted more than 80 registrants.
- The sale netted $6,304.19, leaving a large deficiency; the debtors asserted the collateral’s value was far higher (including testimony of over $1 million in retail value and a prior bank appraisal of $125,000).
- Industry witnesses described the auction prices as “bargains,” while also indicating demand was limited and scrap prices were low.

## Issues

1. Whether the secured party’s public auction disposition was “commercially reasonable” as to method, manner, time, place, and terms under Texas UCC Article 9.
2. Whether the evidence was legally and factually sufficient to support the trial court’s finding of commercial reasonableness.
3. Whether a finding of commercial reasonableness permitted recovery of a deficiency judgment on the notes.

## Decision

- The court of appeals affirmed the judgment for LSI.
- The court held the public auction was conducted in a commercially reasonable manner.
- The court found the evidence sufficient to support the trial court’s determination despite the low sale proceeds.
- The court upheld the deficiency judgment of $181,629.79 plus interest against the Listers and Moore.

## Legal Principles

- After default, a secured party’s disposition of collateral must be commercially reasonable as to method, manner, time, place, and terms.
- Commercial reasonableness is fact-dependent and focuses primarily on the sale process; a secured party is not required to obtain the highest possible price.
- A low sale price is relevant evidence but does not, by itself, establish commercial unreasonableness absent proof of procedural defects, bad faith, or bidder suppression.
- Use of competent professionals and reasonable advertising and outreach to potential buyers may support a finding of commercial reasonableness.
- When the record contains probative evidence supporting the trial court’s findings, an appellate court will not reweigh credibility or substitute its judgment under legal and factual sufficiency review.
- If the secured party proves a commercially reasonable disposition, it may recover a deficiency equal to the unpaid debt after crediting net sale proceeds, plus allowable interest and costs.

## Conclusion

The court affirmed a deficiency judgment because the secured creditor’s repossession sale met Article 9’s commercial-reasonableness standard: the collateral was sold through a professionally run, publicly advertised auction with no shown irregularities, and the low price alone did not defeat the deficiency claim.


Lister v. Lee-Swofford Invs., L.L.P., 195 S.W.3d 746 (Tex. App.—Amarillo 2006, no pet.)