Commercial Credit Group, Inc. v. Barber

In July 2007, Leland Barber, Jr. (defendant) used a $225,000 loan from Commercial Credit Group, Inc. (Commercial) (plaintiff) to purchase a specialized machine that produced wood chips by grinding logs. The machine was purchased from Pioneer Machinery, LLC (Pioneer) and came with a warranty covering 6,000 hours of service and a limited warranty on the engine covering the first five years. Unfortunately, the machine worked for only six hours before breaking down. Although Pioneer promised Commercial and Barber that Pioneer would fix the machine within 30 days, the machine remained at Pioneer’s dealership unassembled and broken until December. Because Barber could not generate income from the sale of wood chips without the machine, Barber defaulted on the loan. Commercial repossessed the machine on November 28. Commercial notified Barber the machine would be sold at public auction. Commercial chose to hold the auction on December 27, two days after Christmas, and only advertised in two general-circulation newspapers, on December 23 and 26. Further, despite the existence of the two warranties, Commercial advertised the inoperable machine as being sold as is with no warranties. Only one person showed up for the auction. Commercial’s own officer placed the only bid, which was for $100,000. When this amount was deducted from Barber’s debt, Barber still owed Commercial $128,168.09. Commercial immediately sued Barber for the deficiency in January 2008. However, weeks later in March, Commercial sold the machine at a private sale for $190,000. Therefore, the trial court ruled both that a public auction was not a commercially reasonable method for selling the machine and that Commercial’s recovery was limited to the $100,000 bid at the auction. The court denied Commercial a deficiency judgment. Commercial appealed. On appeal, Commercial’s employee responsible for the advertisement testified that he knew about the warranties when he placed the ad indicating that no warranties existed.