## Facts

- McCawith Energy, Inc. refinanced a 1998 Liebherr R984B excavator through CIT (later Wells Fargo Construction) for $557,918.28.
- Richard Moore, a corporate principal with a minority interest, executed a personal guaranty and related security documents securing McCawith’s indebtedness.
- The guaranty contained broad waiver language, including language purporting to waive objections concerning notice and the “commercial reasonableness” of any collateral disposition.
- McCawith defaulted in 2003; CIT repossessed the excavator. McCawith and other principals (except Moore) filed for bankruptcy.
- CIT sent Moore two notices of collateral disposition: (1) a 2003 notice stating a private sale would occur after a specified date and warning a deficiency claim would be pursued; and (2) a 2005 notice scheduling a public internet auction with the auction time and access information.
- The excavator did not sell at the internet auction and was later sold in a private sale for less than the debt, leaving a deficiency.
- Wells Fargo sued Moore on the guaranty for the deficiency; after a bench trial, the trial court entered a deficiency judgment for Wells Fargo.

## Issues

1. Whether a guarantor may contractually waive Article 9’s requirement that a secured party’s disposition of collateral be commercially reasonable.
2. Whether the secured party’s notices and disposition method satisfied Article 9 such that a deficiency judgment could be entered against the guarantor.

## Decision

- The Indiana Court of Appeals (on rehearing) held Moore could not waive, in advance, the statutory requirement of a commercially reasonable disposition under Article 9.
- Despite the ineffective waiver, the court determined the notices and disposition process satisfied Article 9.
- The court affirmed the trial court’s deficiency judgment for Wells Fargo.

## Legal Principles

- Under Article 9, an obligor cannot waive in advance the secured party’s duty to dispose of collateral in a commercially reasonable manner.
- Article 9 requires reasonable authenticated notification of disposition, including identification of the collateral and information adequate for the recipient to understand the disposition’s method and timing.
- Commercial reasonableness is assessed under the totality of the circumstances; recognized industry methods for the type of collateral may satisfy the standard even if the sale yields a low price and a deficiency remains.
- A secured party may pursue a deficiency after an Article 9-compliant disposition; the debtor or guarantor may challenge commercial reasonableness, but must show the disposition failed the statutory standard.

## Conclusion

The court rejected contractual waiver of Article 9’s commercial reasonableness requirement but affirmed the deficiency judgment because the secured party gave adequate notice and used commercially reasonable methods to sell the specialized heavy equipment.


Moore v. Wells Fargo Constr., 903 N.E.2d 525 (Ind. Ct. App. 2009)