In Volvo Financial Services, Inc. v. Williamson, 2017 WL 4708136, at *3 (S.D.Miss., 2017), Judge Guirola held that the statute of limitations on a promissory note secured by a number of tractors did not accrue until all of the repossessed collateral was sold, due to a cross-collateralization clause in the note.
The most reasonable interpretation of the statute when applied to the facts of this case is that the sale or foreclosure must be complete to trigger the limitation period. It can be expected that sales of multiple items pledged as security for a single note will occur over some period of time, and it would serve no purpose to require the foreclosing party to file more than one lawsuit if sales spanned the limitation period. This interpretation has no effect on the purpose of the statute – to discourage the foreclosure of mortgages during the depression period. As noted above, the usual mortgage foreclosure situation involves one piece of property secured by a single note, generating no uncertainty about when the limitation period has commenced and no potential for multiple lawsuits. Those hazards exist only where, as in this case, multiple items of property are pledged as security for one promise to pay. Allowing the foreclosure/sales process to be completed before starting the one-year clock for an action on the note avoids these hazards. The Court therefore concludes that the statute of limitations in Miss. Code Ann. § 15-1-23 does not bar Volvo’s claim to a deficiency judgment that includes the disposition of the first four trucks. The plaintiff’s Motion for Partial Summary Judgment will be denied.
The District Court also held that the collateral was disposed of in a commercially reasonable fashion, two for salvage and one without first reconditioning the truck.
The North Carolina courts have suggested three factors for consideration in deciding if a resale price was adequate: 1) price handbooks, 2) expert testimony about fair market value, and 3) price received on a second resale. Fritts v. Selvais, 404 S.E.2d 505, 507 (N.C. Ct. App. 1991) (citing Catlette, 297 S.E.2d at 411). There is no evidence concerning where the “ACV” listed on the Insurance Auto Auction remittance forms originated, or even what this term means or encompasses. The Court therefore cannot consider the “ACV” values as competent evidence concerning an adequate resale price. As for the NADA values, Volvo argues that an adjustment is necessary to the listed wholesale value. According to Volvo, the mileage could not be determined for either truck because of electrical problems, and in those circumstances, the NADA allows a twenty-five percent reduction for “True Miles Unknown.” (Pl. Mot. Ex. 2, at 7, 8, ECF No. 12-2). As adjusted, the NADA wholesale value of the 2005 Peterbilt was $15,712 and the 2006 Peterbilt wholesale value was $21,413. (Id.). The 2005 Peterbilt was estimated by the independent appraisal company to require $36,000 in reconditioning costs, which exceeded its estimated value of $15,712. (Id. at 8). The 2006 Peterbilt was estimated to require $36,425 in reconditioning costs, which exceeded its estimated value of $21,413. (Id. at 7). The estimated reconditioning costs for both of these trucks exceeded the NADA wholesale values even when the NADA values are not adjusted for “True Miles Unknown.” According to Volvo’s remarketing manager, it is customary in the industry to sell these units as salvage, and the price Volvo obtained for the units was “more than the fair market value” and therefore the price represented a commercially reasonable fair market value. (Pl. Mot. Ex. 2, at 8, 9, ECF No. 12-2). Williamson provides his testimony that “had Plaintiff took some steps to recondition or clean the 2005 and 2006 Peterbilt trucks as [the second reseller] apparently did, then the subject trucks would have sold for a higher price.” (Def. Resp. Ex. 3, at 4, ECF No. 16-3). However, Volvo has submitted specific evidence of the value of the trucks versus the cost of reconditioning. Williamson offers neither a competing estimate of reconditioning costs nor shows that Volvo would have recouped more than it paid for the reconditioning. Therefore, as to the second factor the Court is to consider, the evidence concerning the NADA values for the trucks does not create a question of material fact regarding whether the price obtained by Volvo for resale of the 2005 and 2006 Peterbilt trucks was inadequate. Williamson has provided current internet advertisements for the two trucks, presumably to show evidence of the third factor – the price received on a second resale. However, the prices now being asked for the two trucks does not constitute evidence of the price received on a second resale. Furthermore, the advertisements do not include any information about the current condition of the trucks. (See Def. Resp. Ex. 1, 2, ECF Nos. 16-1, 16-2). If the trucks have been repaired to some extent, then they are not the same items and the prices cannot be compared. The Court therefore does not find any competent evidence of the price received on a second resale. Considering all of the circumstances of the sales of the salvage trucks and in particular, the factors singled out as relevant by North Carolina courts, this Court finds no evidence creating a question of material fact regarding whether the sales prices of the two trucks sold as salvage were inadequate. 3. Sale Preparation for 2015 Volvo Truck In regard to the 2015 Volvo truck, Williamson argues that Volvo could have obtained a higher price if it had reconditioned the truck rather than selling it in “as is” condition. Williamson asserts in an affidavit that “[s]ince I have bought and sold large trucks for many years, had Plaintiff reconditioned the 2015 Volvo, they would have been able to secure higher price at the online sale of the truck.” (Williamson Aff. 4, ECF No. 16-3). The NADA wholesale value for the truck was $89,400, and the truck was estimated to require $8550 for reconditioning, resulting in a “target wholesale value” of $80,850. (Pl. Mot. Ex. 2, at 7, ECF No. 12-2). Volvo sold it for $69,010, which was the highest bid out of eight, but almost eleven thousand dollars less than the target wholesale value. (Id.). There is no explanation for the difference between the estimated book value and the sales price, but that does not mean the sale was commercially unreasonable. See In re Marshall, 219 B.R. 687, 690 (Bankr. M.D.N.C. 1997) (fact that the price obtained was less than what expert had estimated to be the fair market value does not make the sale commercially unreasonable). Volvo states that eight bids were received on this truck, indicating that it was the subject of some interest from buyers. (Pl. Mot. Ex. 2, at 6-7, ECF No. 12-2). Although Williamson argues that Volvo should have reconditioned it first, its un-reconditioned condition was accounted for in the “target wholesale value.” Volvo was not required by the terms of the Note or North Carolina law to recondition the truck before selling it. N. C. Gen. Stat. § 25-9-610(a) & cmt. 4. Furthermore, North Carolina courts “recognize the fact that a greater amount could have been obtained by a disposition occurring at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the disposition was made in a commercially reasonable manner.” Commercial Credit Grp., Inc., 682 S.E.2d at 767 (quoting N.C. Gen. Stat. Ann. § 25-9-627(a)) (other citations and quotation marks omitted). There is no evidence in this record that the lower sales price resulted from some commercially unreasonable sales method. See N.C. Gen. Stat. Ann. § 25-9-627, cmt. 2. Accordingly, the Court finds that no question of material fact is raised by Williamson’s assertion that a higher price could have been obtained for the 2015 Volvo truck with better sales preparation.