Myles M. Mattenson
ATTORNEY AT LAW
5550 Topanga Canyon Blvd.
Suite 200
Woodland Hills, California 91367
Telephone (818) 313-9060
Facsimile (818) 313-9260
Email: MMM@MattensonLaw.com
Web: http://www.MattensonLaw.com
My Equipment Has Been Repossessed!
What Happens Next?

      Myles M. Mattenson engages in a general civil and trial practice including litigation and transactional services relating to the coin laundry and dry cleaning industries, franchising, business, purchase and sale of real estate, easements, landlord-tenant, partnership, corporate, insurance bad faith, personal injury, and probate legal matters.

      In providing services to the coin laundry and dry cleaning industries, Mr. Mattenson has represented equipment distributors, coin laundry and dry cleaning business owners confronted with landlord-tenant issues, lease negotiations, sale documentation including agreements, escrow instructions, and security instruments, as well as fraud or misrepresentation controversies between buyers and sellers of such businesses.

      Mr. Mattenson serves as an Arbitrator for the Los Angeles County Superior Court. He is also past chair of the Law Office Management Section of the Los Angeles County Bar Association. Mr. Mattenson received his Bachelor of Science degree (Accounting) in 1964 and his Juris Doctorate degree from Loyola University School of Law in 1967.

      Bi-monthly articles by Mr. Mattenson on legal matters of interest to the business community appear in alternate months in The Journal, a leading coin laundry industry publication of the Coin Laundry Association, and Fabricare, a leading dry cleaning industry publication of the International Fabricare Institute. During the period of May 1995 through September 2002, Mr. Mattenson contributed similar articles to New Era Magazine, a coin laundry and dry cleaning industry publication which ceased publication with the September 2002 issue.

      This website contains copies of Mr. Mattenson's New Era Magazine articles which can be retrieved through a subject or chronological index. The website also contains copies of Mr. Mattenson's Journal and Fabricare articles, which can be retrieved through a chronological index.

      In addition to Mr. Mattenson's trial practice, he has successfully prosecuted and defended appeals on behalf of his clients in various areas of the law. Some of these appellate decisions are contained within his website.


My Equipment Has Been Repossessed!
What Happens Next?

      Unhappiness, most likely!  The failure of a business is  an
emotionally  and economically challenging matter.   Knowing  what
lies ahead and some of the possible defenses to be considered may
ease the pain.

      The  seller or finance company (secured party) holding  the
security interest in the repossessed equipment (collateral)  will
proceed  to sell the collateral at a public or private sale.   In
the  event  any  portion  of  the debt remains  unsatisfied,  the
secured party will request that you pay the deficiency.   If  you
refuse  to  do  so,  the  secured party will  seek  a  deficiency
judgment against you in Court.

      Sale of the collateral, according to the Uniform Commercial
Code, "may be as a unit or in parcels".  For example, if 32  coin
operated washers were repossessed, all of the washers may be sold
as  a unit or 8 parcels of 4 washers may be sold separately.  The
collateral may be sold "at wholesale or retail".

      More  importantly, the sale may be held "at  any  time  and
place  and on any terms, provided the secured party acts in  good
faith and in a commercially reasonable manner."

      The  Appellate  Courts  are  occasionally  called  upon  to
determine  whether  a secured party has acted in  a  commercially
reasonable  manner.   In  one case which reached  the  California
Supreme  Court,  a  creditor lent money to a  debtor  to  buy  an
airplane and acquired a purchase money security interest  in  the
plane.   After  the  debtor defaulted on the loan,  the  creditor
advertised  the  sale in a newspaper, omitted  information  about
whom  to  contact  to  qualify as bidder, published  a  corrected
advertisement the day before the auction, and as the sole  bidder
at the auction, bought the airplane.  The secured party purchased
the  plane  for $1,000,000 and thereafter resold the plane  to  a
third  party  for  $1,525,000, receiving, eventually,  $1,487,000
from the third party purchaser.  A deficiency was nonetheless due
in  the approximate amount of $996,000.  The fair market value of
the airplane, however, was determined by the Court on the date of
sale to be $3,800,000.

      The  secured party argued that the publication of  the  one
notice  in  the  newspaper  constituted  adequate  publicity  and
compliance with the requirement that the secured party act  in  a
commercially reasonable manner.

      The  California Supreme Court, however, held the  publicity
inadequate and stated:

                "A  dealer  in  the  type  of  property
          repossessed  here -- a valuable  airplane  --
          surely  would  advertise its auction  in  the
          relevant  market  by, for example,  informing
          brokers,    placing   reasonably    prominent
          announcements  in recognized trade  journals,
          or  contacting individuals or entities  known
          to  be  seeking an airplane of the  type  for
          sale."

     It is essential that the secured party provide notice of any
sale to the debtor.  The Uniform Commercial Code requires that  a
notice  in  writing be provided "of the time  and  place  of  any
public sale or of the time on or after which any private sale . .
.  is  to be made."  The failure to provide such notice will  bar
the secured party from obtaining a deficiency judgment.

      The purpose of such notice has been expressed by the Courts
as  follows:   "to  give  the  debtor an  opportunity  either  to
discharge the debt and redeem the collateral, to produce  another
purchaser, or to see that the sale is conducted in a commercially
reasonable manner."

     The notice required under the Uniform Commercial Code

                 "must   be  delivered  personally   or
          deposited in the United States mail,  postage
          prepaid,  addressed to the debtor at  his  or
          her   address  set  forth  in  the  financing
          statement  or  as set forth in  the  security
          agreement  or  at such other address  as  may
          have  been furnished to the secured party  in
          writing  for this purpose, or, if no  address
          has been so set forth or furnished, at his or
          her  last  known address . . . at least  five
          days  before  the date fixed for  any  public
          sale or before the day on or after which  any
          private sale . . . is to be made."

      In order to monitor the activities of the secured party, it
is essential that you provide the secured party with your current
address.   If you have relocated, the secured party  will  be  in
compliance merely by sending the notice to the addresses provided
by  the financing documentation; the secured party does not  have
to hunt the bushes for you!

      In  the  event  a  sale is intended as a public  sale,  the
secured  party  must also give at least five days notice  of  the
time  and  place  of any public sale "by publication  once  in  a
newspaper of general circulation published in the county in which
the sale is to be held . . . ."

      After the sale has been held, debtors have frequently  been
known to complain that the secured party should have recovered  a
better  price  by selling at a different time or  by  some  other
method  than  that  selected by the secured party.   The  Uniform
Commercial Code specifically provides, however, that

               "The fact that a better price could have
          been  obtained by a sale at a different  time
          or  in  a different method from that selected
          by   the  secured  party  is  not  of  itself
          sufficient to establish that the sale was not
          made in a commercially reasonable manner.  If
          the secured party either sells the collateral
          in  the usual manner in any recognized market
          therefor or if he sells at the price  current
          in  such market at the time of the sale or if
          he  has  otherwise  sold in  conformity  with
          reasonable commercial practices among dealers
          in the type of property sold he has sold in a
          commercially reasonable manner."

       The   moral  of  the  story?   When  faced  with  economic
difficulty,  consider  your economic alternatives  early  because
with  the  passage  of  time,  fewer  and  fewer  options  become
available to you.


[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from New Era Magazine
Myles M. Mattenson  1998-2002