Enviropower Renewable Inc. v. Ritger
After foreclosing on and buying two patents securing a settlement obligation for $2,100 at auction, the secured party obtained a $1.75 million deficiency judgment with no evidentiary hearing on the collateral's fair market value, based on a broad waiver clause in the Security Agreement. The Third DCA reversed, holding the clause waived valuation rights only as to the disposition of the collateral and did not clearly and unmistakably waive an evidentiary hearing on fair market value for purposes of a deficiency judgment.
Key facts
- Enviropower Renewable Inc. foreclosed on two patents securing a $2,100 settlement obligation and purchased them at auction, then obtained a $1.75 million deficiency judgment against Ritger without holding an evidentiary hearing on the collateral's fair market value.
- The secured party relied on a broad waiver clause in the Security Agreement that purported to waive rights to judicial hearings in connection with the disposition of collateral and appraisals.
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Why it matters
Useful for debtors' counsel resisting large deficiency judgments where the creditor credit-bids a nominal amount at a UCC Article 9 sale: boilerplate waiver-of-appraisal language in security agreements will be read… — full analysis with a trial
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