Lister v. Lee-Swofford Investments, L.L.P.

195 S.W.3d 746 (2006)

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Lister v. Lee-Swofford Investments, L.L.P.

Texas Court of Appeals
195 S.W.3d 746 (2006)

Facts

Garry and Nancy Lister (plaintiffs) owned a used-tractor-parts dealership. The Listers borrowed money from First State Bank of Miami, Texas and gave the bank a security interest in the dealership’s equipment and inventory. Garry’s mother, Doretta Moore (plaintiff), guaranteed repayment of the loans. Lee-Swofford Investments, L.L.P. (LSI) (defendant) acquired the loans and the security interest from the bank. After the Listers defaulted on their payment obligations, LSI took possession of the collateral and sold the collateral at a public auction. The sale netted only $6,304.19. LSI sued the Listers and Moore to recover the substantial debt remaining. The Listers and Moore defended the lawsuit on the ground that the public sale had been commercially unreasonable. At trial, the parties introduced conflicting evidence. Although LSI’s principals had no experience with this type of collateral, they had hired a reputable auctioneer. The auctioneer had advertised the auction publicly in newspapers and trade publications and solicited over 80 registrants. Conversely, Garry testified that the inventory would have sold at retail price for over $1 million. The bank had also appraised the inventory at $125,000. Auction attendees in the Listers’ line of business testified that they had found bargains at the auction. However, the attendees acknowledged that they might not have purchased the items at a higher price and that many of their competitors had already stocked up on parts elsewhere. Additionally, the price of scrap metal was very low at the time. Ultimately, the trial court entered a judgment against the Listers and Moore in the amount of $181,629.79, plus interest. On appeal, the Listers and Moore contended that the proceeds would have been greater if the auction had targeted more people in the Listers’ line of business rather than the public.

Rule of Law

Issue

Holding and Reasoning (Campbell, J.)

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