In Cent. Tr. Bank v. Branch, No. SC99297, 2022 Mo. LEXIS 221, at *15-18 (Sep. 13, 2022), the Missouri Supreme Court reversed lower courts’ complaints about a Bank’s post-repossession notices and vehicle disposition, finding that the Bank had properly disclosed a “dealers-only” auction as a private sale.
The Bank asserts the circuit court erred in ruling the Bank did not strictly comply with sections 400.9-614(1)(A) and 400.9-613(1)(C), (E) in that the pre-sale notice stated the vehicle would be sold at a private sale but the dealers-only auction at which it was sold was a public sale. In consumer-goods transactions, section 400.9-614(1)(A) requires a notification of disposition to provide the “information specified in section 400.9-613(1)[.]” As relevant here, subdivision (C) of section 400.9-613(1) required the pre-sale notification of disposition to state “the method of intended disposition,” and subdivision (E) of the same section required it to state “the time and place of a public disposition or the time after which any other disposition is to be made[.]” The Bank’s pre-sale notice stated the vehicle would be “sold by private sale at some fifteen (15) or more days following the date of this letter.” Consequently, if the auction at which the vehicle was sold was not a public sale, the Bank complied with the statute because its pre-sale notice stated the method of intended disposition and “the time after which” the disposition would be made. Id. If, however, the auction was a public sale, the Bank failed to comply with the statute because its pre-sale notice failed to state the vehicle would be sold at a public sale and failed to state the “time and place” of the public sale. Id. The circuit court found the vehicle was sold “at an auction in which only certain dealers who qualified could participate.” There is no challenge to the circuit court’s factual findings in this regard. The only question is whether the circuit court correctly declared or applied the law in concluding that such an auction is a public sale. The UCC does not define “public sale” or “public disposition,” but comment 7 to section 400.9-610 provides guidance. Comment 7 states a public sale “is one at which the price is determined after the public has had a meaningful opportunity for competitive bidding.” The same comment states: “Meaningful opportunity is meant to imply that some form of advertisement or public notice must precede the sale (or other disposition) and that the public must have access to the sale (disposition).” Id. (internal quotation omitted). Because “only certain dealers who qualified” could participate in the auction, neither the public nor the Branches had a “meaningful opportunity” for competitive bidding. Id.; see also section 400.9-614 (including in the safe-harbor form for notification of disposition at a public sale the statement that the debtor “may attend the sale and bring bidders”). As a result, the auction was not a public sale, and the Bank’s pre-sale notice stating the vehicle would be “sold by private sale” and stating “the time after which” the vehicle would be sold complied with sections 400.9-613(1)(C), (E) and consequently, section 400.9-614(1)(A). Nonetheless, the Branches claim the auction was a public sale because it is conceivable a person who is not a dealer licensed in Missouri could have participated in the auction using a qualified dealer as an agent or intermediary. Even if that were true, the only members of the general public permitted to enter the auction and bid were dealers licensed in Missouri. The circuit court erroneously applied the law when it held the dealers-only auction at which the vehicle was sold was a public sale.