Whirlybirds Leasing Co. v. Aerospatiale Helicopter Corp.

749 S.W.2d 915, 6 U.C.C. Rep. Serv. 2d (West) 1019, 1988 Tex. App. LEXIS 1293, 1988 WL 55362
CourtCourt of Appeals of Texas
DecidedApril 13, 1988
Docket05-87-00362-CV
StatusPublished
Cited by20 cases

This text of 749 S.W.2d 915 (Whirlybirds Leasing Co. v. Aerospatiale Helicopter Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Whirlybirds Leasing Co. v. Aerospatiale Helicopter Corp., 749 S.W.2d 915, 6 U.C.C. Rep. Serv. 2d (West) 1019, 1988 Tex. App. LEXIS 1293, 1988 WL 55362 (Tex. Ct. App. 1988).

Opinions

BAKER, Justice.

Whirlybirds Leasing Company et al. appeal from an adverse summary judgment. Whirlybirds asserts eight points of error contending that the trial court erred in failing to recognize several disputed issues of fact. We agree with Whirlybirds’ third point asserting that appellee Aerospatiale Helicopter Corporation elected its remedy and therefore reverse and remand.

Whirlybirds Leasing Company-Ill is a partnership consisting of the individuals named as defendants by A.H.C. In November 1979, A.H.C. sold a helicopter to Whirlybirds. Whirlybirds executed a promissory note for the sale price and gave a security agreement to A.H.C. for payment of the note. A.H.C. alleged that Whirlybirds defaulted on the note in February 1982. At the time of default the principal balance due was $123,597.97. On March 1, 1983, A.H.C. repossessed the helicopter. In September 1985, A.H.C. instituted suit against Whirlybirds and its partners to recover the unpaid principal and accrued interest on the note together with attorney’s fees. Whirlybirds’ answer asserted a number of affirmative defenses including the allegation that A.H.C. had elected its remedy by its conduct in this transaction.

Subsequently, A.H.C. filed its motion for summary judgment supported by exhibits and affidavits which tracked the factual allegations of its original petition as did the affidavits that A.H.C. filed in support of its motion. In its response and motion for [917]*917summary judgment, Whirlybirds alleged that A.H.C. elected its remedy by repossession under the security agreement; therefore, it and not A.H.C. was entitled to summary judgment. The trial court granted A.H.C.’s motion, denied Whirlybirds’, and rendered judgment for the entire balance of the note, interest, and attorney’s fees.

A movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. In deciding whether there is a disputed material fact issue precluding summary judgment, all evidence favorable to the non-movant will be taken as true. Every reasonable inference must be indulged in favor of the non-movant, and any doubts resolved in its favor. Nixon v. Mr. Property Management Co., Inc., 690 S.W.2d 546, 548-49 (Tex.1985). The function of the summary judgment is not to deprive a litigant of his right to trial by jury, but to eliminate patently unmeritorious claims and untenable defenses. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 931 (Tex.1952). Its purpose is to eliminate the need for formal trials when only questions of law exist. Schroeder v. Texas & Pac. Ry. Co., 243 S.W.2d 261, 263 (Tex.Civ.App. — Dallas 1951, no writ).

In this appeal, Whirlybirds asserts that A.H.C. is barred from pursuing this suit for deficiency because it repossessed the collateral and has not complied with sections 9.504 and 9.505 of the Uniform Commercial Code.1 Whirlybirds argues that in order to prevail on a suit for deficiency, A.H.C., after it repossessed the helicopter, was required to give Whirlybirds notice of any intended disposition of the collateral and was also required to dispose of the collateral in a commercially reasonable manner. Whirlybirds asserts there is no pleading or evidence of any notice of A.H. C.’s intended disposition of the collateral or of the disposition of the collateral in a commercially reasonable manner. Whirlybirds asserts it had not renounced or modified its right to such notification. Whirlybirds relies on Tanenbaum v. Economics Laboratory, Inc., 628 S.W.2d 769 (Tex.1982), as authority barring A.H.C. from recovery in this case. A.H.C. counters by asserting that the Texas Uniform Commercial Code abolished the doctrine of election of remedies and relies on Pruske v. National Bank of Commerce, 533 S.W.2d 931, 934 (Tex.Civ.App. — San Antonio 1976, no writ). In its brief A.H.C. contends that Tanenbaum can be factually distinguished, and therefore, is not applicable. A.H.C. also asserts that Whirlybirds had the burden to raise the issue of failure to notify in its responsive pleadings or its motion for summary judgment and did not do so.

The record in this case reveals that A.H. C.’s suit against Whirlybirds and the partners was a “cause of action for default on note and breach of security agreement.” The original petition alleged the facts of the sale and the execution of the note and the security agreement. A.H.C. also alleged that it repossessed the helicopter pursuant to the terms of the security agreement and in accordance with applicable state and federal law. Its petition asserted that the helicopter, at the time it was repossessed, was merely a hull and had no market value. At the time of repossession the principal balance due and owing on the note was $123,597.97. The suit that was filed two years after the repossession was for the same principal balance with additional accrued interest. A.H.C.’s motion for summary judgment tracked the allegations of its original petition almost verbatim. The note sued upon was submitted as part of its summary judgment evidence; however, no copy of the security agreement was submitted. The supporting affidavit included a statement that the helicopter was repossessed by A.H.C. pursuant to the terms of the security agreement and at [918]*918the time the helicopter was repossessed, it was a shell and had no value. A.H.C. responded to Whirlybirds’ summary judgment with an affidavit that repeated the same allegations contained in its motion but concluded with the statement that “because the helicopter had no fair market value, A.H.C. subsequently donated the helicopter to [a third party].”

There are no allegations in A.H.C.’s petition, motion for summary judgment, or summary judgment affidavits that any notice of the proposed disposition of the collateral was given to Whirlybirds or notice of what disposition, if any, was made of the collateral. There is no pleading or summary judgment evidence that Whirlybirds waived such notice after default. The basic issue for this Court is whether A.H.C.’s actions preclude it from suing for a deficiency judgment on the debt.

A creditor has two alternatives when seeking to recover from a defaulting debt- or. Section 9.504 allows for sale of the collateral by “any advantageous means,” so long as the disposition is commercially reasonable and prior notice is given to the debtor. Under section 9.504(c) notice to the debtor is required unless the collateral is perishable, would decline quickly in value, is customarily sold on a recognized market, or the debtor waives his right to notice in writing after default. Only when appropriate notice is given, may a creditor subsequently sue for deficiency under section 9.504(c).

Alternatively, section 9.505 allows the creditor to retain the collateral in complete satisfaction of the indebtedness once it notifies the debtor of its intent. In cases other than consumer goods, it must also notify other interested secured parties.

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Whirlybirds Leasing Co. v. Aerospatiale Helicopter Corp.
749 S.W.2d 915 (Court of Appeals of Texas, 1988)

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749 S.W.2d 915, 6 U.C.C. Rep. Serv. 2d (West) 1019, 1988 Tex. App. LEXIS 1293, 1988 WL 55362, Counsel Stack Legal Research, https://law.counselstack.com/opinion/whirlybirds-leasing-co-v-aerospatiale-helicopter-corp-texapp-1988.