## Facts

- A secured lender repossessed an aircraft and two engines and arranged a public auction.
- At the auction, the auctioneer stated the sale would be to the “highest bidder” and that “no minimum bid would be required.”
- Miami Aviation bid $1 million.
- The lender bid $3.3 million and became the highest bidder, retaining the aircraft and engines.
- Miami Aviation claimed the auction was “without reserve” and that the lender’s bidding was the equivalent of withdrawing the goods after bids began.
- Miami Aviation also relied on alleged pre-auction statements by a lender representative that the auction would be “without reserve.”

## Issues

1. Whether the auction was “without reserve” under UCC § 2-328(3) based on the auctioneer’s “no minimum bid” and “highest bidder” statements and alleged pre-auction assurances.
2. If the auction was “without reserve,” whether the lender’s bid on its own collateral was an impermissible withdrawal after bidding commenced.

## Decision

- The Eleventh Circuit affirmed judgment for the lender.
- The court held the auction was not “without reserve” because the goods were not put up “in explicit terms” without reserve as required by UCC § 2-328(3).
- The statements “no minimum bid” and “sale to the highest bidder” were insufficient to override the statutory default that auctions are “with reserve.”
- Because the auction was “with reserve,” the lender’s bidding and retention of the goods did not violate UCC § 2-328(3).

## Legal Principles

- Under UCC § 2-328(3), an auction is “with reserve” unless the goods are put up “in explicit terms” “without reserve.”
- In a “with reserve” auction, the seller may withdraw the goods any time before completion of the sale.
- In a “without reserve” auction, once the auctioneer calls for bids, the goods generally cannot be withdrawn after a bid is made (absent no bid within a reasonable time).
- Generic auction phrases such as “highest bidder,” and statements indicating the absence of an opening or minimum bid, do not constitute an explicit “without reserve” designation.
- Seller bidding may be treated as similar to withdrawal only if the auction is properly characterized as “without reserve”; otherwise, it is permitted in a “with reserve” sale.

## Conclusion

The court treated the auction as “with reserve” because there was no explicit “without reserve” announcement, so the secured lender’s bidding to protect its interest was permissible and the bidder’s challenge failed.


Miami Aviation Serv. v. Greyhound Leasing & Fin. Corp., 856 F.2d 166 (11th Cir. 1988)