Independent Bank v. Kimberly Susan Davis and William W. Rylee

Rel: November 7, 2025

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter.
Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue,
Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections
may be made before the opinion is published in Southern Reporter.

ALABAMA COURT OF CIVIL APPEALS
OCTOBER TERM, 2025-2026
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CL-2025-0052
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Independent Bank

v.

Kimberly Susan Davis and William W. Rylee

Appeal from Mobile Circuit Court
(CV-24-900035)

FRIDY, Judge.

Independent Bank ("the Bank") appeals from a judgment the

Mobile Circuit Court ("the trial court") entered in favor of William W.

Rylee in its action against him and Kimberly Susan Davis. We reverse

the judgment and remand the case to the trial court.
CL-2025-0052

Background

This case stems from Davis's purchase of a 2016 Jeep Cherokee

sport-utility vehicle ("the Jeep"). On July 12, 2016, while Davis was living

with Rylee at 9823 Hollowbrook Avenue in Fairhope, Davis, as the

primary obligor, and Rylee, as the secondary obligor, signed a retail-

installment sale contract ("the contract") with Chris Myers Automall.

The contract financed $38,654.69 of the purchase price of the Jeep and

vested Chris Myers Automall with a security interest in the Jeep. The

contract listed 9823 Hollowbrook Avenue as the address of both Davis

and Rylee. After Davis and Rylee signed the contract, Chris Myers

Automall assigned its rights and obligations under the contract to the

Bank. The contract required Davis to make monthly installment

payments on the amount financed pursuant to the contract.

Within approximately a year after Davis and Rylee signed the

contract, Davis moved out of the residence located at 9823 Hollowbrook

Avenue. Rylee continued to live at that address, which, he testified, was

the address where he had continuously lived during the seventeen years

before the trial of this case on November 25, 2024.

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Davis made the payments required by the contract until sometime

in 2018. After she stopped making payments, the Bank sent her a series

of letters attempting to collect the unpaid portion of the debt. The Bank

listed both Davis's and Rylee's names on the letters, but none of the

letters were addressed to 9823 Hollowbrook Avenue. Instead, the Bank

sent the letter to three addresses other than 9823 Hollowbrook Avenue,

addresses where the Bank had learned that Davis was living during

different periods. Rylee testified that he did not receive any of those

letters. One of those letters, which was dated December 3, 2019, offered

to settle the debt for $11,612, with a deadline of acceptance of January 3,

2020.

When Davis did not respond to any of the collection letters that the

Bank had sent her, the Bank, on April 18, 2019, repossessed the Jeep.

When the bank repossessed it, the Jeep was located at 9139 Lake View

Drive in Fairhope, one of the three addresses where the Bank had sent

the collection letters and where Davis was then living. Also on April 18,

2019, the Bank sent a letter listing Davis and Rylee as the addressees

and addressed it to 9139 Lake View Drive. That letter notified the

recipient of the letter that the Bank had possession of the Jeep and that

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it planned to sell the Jeep at a private sale unless the recipient of the

letter paid the Bank the following amounts: the principal balance on the

contract in the amount of $27,047.51, interest in the amount of $39.57,

late fees in the amount of $227.07, miscellaneous fees in the amount of

$84.36, and the estimated cost of repossessing, repairing, and storing the

Jeep in the amount of $800. The Bank did not send a copy of that letter

to 9823 Hollowbrook Avenue.

When the Bank did not receive a response to its April 18, 2019,

letter, it sold the Jeep for $15,000. On May 24, 2019, the Bank sent a

letter listing Davis and Rylee as the addressees and addressed it to 9139

Lake View Drive. The May 24, 2019, letter stated that, after the sale of

the Jeep, the recipient owed a deficiency in the amount of $14,047. The

Bank did not send a copy of that letter to 9823 Hollowbrook Avenue.

On January 5, 2024, the Bank sued Davis and Rylee, alleging that

they had breached the contract by failing to make all the payments due

under the contract and seeking to recover the unpaid principal of the debt

plus interest, which totaled $18,992.27; attorney's fees in the amount of

$2,477.25; interest accruing after the action was filed; and the costs of

the action. On January 18, 2024, Rylee was served personally at 9823

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Hollowbrook Avenue with the first summons issued by the trial court.

Rylee filed some dispositive motions that were denied and then answered

the complaint. Davis was served with process but did not file an answer

to the complaint or otherwise defend the action. The trial court held a

bench trial regarding the merits of the action on November 25, 2024.

Upon the conclusion of the trial, the trial court took the action

under submission, and the Bank and Rylee filed posttrial briefs. On

December 28, 2024, the trial court entered a judgment in favor of Rylee

as to the Bank's claim against him and a default judgment against Davis

as to the Bank's claim against her. The trial court did not make any

specific findings of fact or explain the rationale for its decision as to Rylee.

The Bank timely filed a notice of appeal from the judgment in favor of

Rylee without filing a postjudgment motion challenging that judgment.

Standard of Review

Although there are some conflicts in the evidence regarding some

facts that are not material to our decision in this case, the evidence

regarding the facts that are material to our decision in this case is not in

dispute. Therefore, the ore tenus rule does not apply to our review in this

case. See Beavers v. Walker Cnty., 645 So. 2d 1365, 1372-73 (Ala. 1994)

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(holding that "where the facts are not disputed the ore tenus standard

does not apply). The present appeal involves issues regarding whether

the trial court correctly ascertained the law and whether it correctly

applied the law to the facts; therefore, our standard of review is de novo.

Id.

Analysis

Logically, the first issue we must address is whether the Bank gave

Rylee, as the secondary obligor, the notice he was entitled to under the

Alabama Code. The Bank argues that he was given notice in compliance

with the Alabama Code because, it says, the Bank put both Davis's and

Rylee's names on the letters it mailed to Davis's address. Rylee argues

that he was not given the notice required by the Alabama Code because,

he says, putting his name on a letter sent to Davis's address but not sent

to his address was not reasonably calculated to provide him with that

notice.

Subsections (b) and (c) of § 7-9A-611, Ala. Code 1975, require a

secured party that repossesses collateral to send notice of its intent to

dispose of the collateral to both the debtor, i.e., the primary obligor, and

any secondary obligor. Subsections (b) and (c) of § 7-9A-616, Ala. Code

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1975, require a secured party that has disposed of collateral to provide

obligors of the debt secured by the collateral with an explanation of any

deficiency they owe after the disposition of the collateral.

In pertinent part, § 7-9A-610(b), Ala. Code 1975, provides: "Every

aspect of a disposition of collateral, including the method, manner, time,

place, and other terms, must be commercially reasonable." (Emphasis

added.) Subsections (b) and (c) of § 7-9A-611 provide that, in consumer

transactions, a secured party that disposes of collateral must give notice

to the debtor and any secondary obligor of the secured party's intent to

dispose of the collateral before disposing of it. The Official Comment to §

7-9A-611 states:

"2. Reasonable Notification. This section requires a
secured party who wishes to dispose of collateral under
Section [7-9A-610] to send 'a reasonable signed notification of
disposition' to specified interested persons, subject to certain
exceptions. The notification must be reasonable as to the
manner in which it is sent …."

(Emphasis added.)

As noted above, the Bank argues that mailing a letter that named

both Davis and Rylee as recipients but was addressed to only Davis's

address was sufficient to comply with the §§ 7-9A-611(b) and (c) and 7-

9A-616(b) because, the Bank says, Davis's address was the last known

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address of the obligors. In the Bank's action, Rylee was served with

process at 9823 Hollowbrook Avenue, the address listed for him on the

contract, and the Bank perfected service on Rylee at that address without

having to obtain an alias summons. Thus, the trial court reasonably could

have inferred that the Bank had the ability to verify that Rylee still lived

at 9823 Hollowbrook Avenue before it sent the notices required by §§ 7-

9A-611(b) and (c) and 7-9A-616(b) and, for whatever reason, elected not

to do so. We agree with Rylee that mailing a letter with his name on it to

Davis's address, without also sending one to his address of 9823

Hollowbrook Avenue, was not a commercially reasonable way to send the

notices required by those Code sections. See § 7-9A-610(b).

Having determined that the way the Bank sent Rylee the notices

required by §§ 7-9A-611(b) and (c) and 7-9A-616(b) was not commercially

reasonable, we now consider what legal effect that had on the Bank's

claim against Rylee seeking to recover the deficiency. The trial court de

facto barred the Bank from recovering the deficiency from Rylee without

citing any legal authority indicating why Rylee was entitled to a complete

bar against the Bank's ability to recover the deficiency from him.

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Citing Folks v. Tuscaloosa County Credit Union, 989 So. 2d 531

(Ala. Civ. App. 2007), a plurality opinion, the Bank argues that Rylee's

remedy was a setoff against the amount of the deficiency and that the

trial court erred because it completely barred the Bank from recovering

its deficiency instead of granting Rylee a setoff. Although Folks is only a

plurality opinion, we find its reasoning regarding the effect of a creditor's

conducting a commercially unreasonable sale of collateral on its ability

to recover a deficiency sound, and we adopt its reasoning regarding that

issue. The Folks court held that the proper remedy was a setoff.

Explaining its reasoning for reaching that conclusion, the Folks court

stated:

"Before the enactment of revised Article 9A, Title 7, Ala.
Code 1975, which became effective in Alabama in 2002,
Alabama decisions applied a setoff approach to deficiency
judgments in both consumer and nonconsumer transactions.
See Stone v. Cloverleaf Lincoln-Mercury, Inc., 546 So. 2d 388
(Ala. 1989) (applying the setoff approach to the disposition of
a consumer-use automobile); Underwood v. Coffee County
Bank, 668 So. 2d 10 (Ala. Civ. App. 1994) (same); and First
Nat'l Bank of Dothan v. Rikki Tikki Tavi, Inc., 445 So. 2d 889,
890 (Ala. 1984) (applying the setoff approach to the
disposition of commercial-use restaurant equipment). Under
the setoff approach, a secured party's failure to have
conducted a sale or disposition of collateral in a commercially
reasonable manner does not absolutely bar the secured party
from recovering the deficiency between the amount due on the
secured debt and the proceeds of the sale or disposition of the

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collateral. Rather, the debtor is entitled to set off any loss
proven at trial against the deficiency owed to a secured party.
See Stone, 546 So. 2d at 390.

"Under revised Article 9A, the Alabama legislature
adopted a rebuttable-presumption approach to deficiency
judgments only in nonconsumer transactions. See § 7-9A-
626(a)(4), Ala. Code 1975. According to the rebuttable-
presumption approach, if a secured party does not conduct a
sale or disposition of collateral in a commercially reasonable
manner, the value of the collateral is presumed to be
equivalent to the debtor's deficiency unless the secured party
proves otherwise. § 7-9A-626(a)(4), Ala. Code 1975.

"Section 7-9A-626, Ala. Code 1975, provides, in
pertinent part:

" '(a) Applicable rules if amount of deficiency
or surplus in issue. In an action arising from a
transaction, other than a consumer transaction, in
which the amount of a deficiency or surplus is in
issue, the following rules apply:

" '....

" '(3) Except as otherwise
provided in [Ala. Code 1975, §] 7-9A-
628, if a secured party fails to prove
that the collection, enforcement,
disposition, or acceptance was
conducted in accordance with the
provisions of this part relating to
collection, enforcement, disposition, or
acceptance, the liability of a debtor or a
secondary obligor for a deficiency is
limited to an amount by which the sum
of the secured obligation, expenses, and
attorney's fees exceeds the greater of:

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" '(A) the proceeds of
the collection, enforcement,
disposition, or acceptance;
or

" '(B) the amount of
proceeds that would have
been realized had the
noncomplying secured
party proceeded in
accordance with the
provisions of this part
relating to collection,
enforcement, disposition, or
acceptance.

" '(4) For purposes of paragraph
(3)(B), the amount of proceeds that
would have been realized is equal to the
sum of the secured obligation,
expenses, and attorney's fees unless
the secured party proves that the
amount is less than that sum.

" '....

" '(b) Non-consumer transactions; no
inference. The limitation of the rules in subsection
(a) to transactions other than consumer
transactions is intended to leave to the court the
determination of the proper rules in consumer
transactions. The court may not infer from that
limitation the nature of the proper rule in
consumer transactions and may continue to apply
established approaches.'

"(Emphasis added.) The Official Comment to § 7-9A-626 explains:

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" 'Courts construing former [UCC] Section 9-
507 [former § 7-9-507 in Alabama's version of the
UCC] disagreed about the consequences of a
secured party's failure to comply with the
requirements of former Part 5. Three general
approaches emerged. Some courts have held that
a noncomplying secured party may not recover a
deficiency (the "absolute bar" rule). A few courts
held that the debtor can offset against a claim to a
deficiency all damages recoverable under former
Section 9-507 resulting from the secured party's
noncompliance (the "offset" rule). A plurality of
courts considering the issue held that the
noncomplying secured party is barred from
recovering a deficiency unless it overcomes a
rebuttable presumption that compliance with
former Part 5 would have yielded an amount
sufficient to satisfy the secured debt. In addition to
the nonuniformity resulting from court decisions,
some States enacted special rules governing the
availability of deficiencies.'

"The Folkses recognize that Alabama courts have
previously applied the setoff approach to deficiency
judgments, and they acknowledge that § 7-9A-626(a)(4)
adopts the rebuttable-presumption approach only in
nonconsumer cases. Nevertheless, the Folkses assert that § 7-
9A-626(a)(4) supplants Alabama decisions applying the setoff
approach to deficiency judgments. The Folkses contend that
pursuant to § 7-9A-626(a)(4), either the rebuttable-
presumption approach or the absolute-bar rule applies to
deficiency judgments in consumer transactions.

"Although there are a number of policy considerations
and rationales that might be advanced either for adopting the
rebuttable-presumption approach to deficiency judgments or
for maintaining Alabama's current setoff approach, we do not
find it necessary to outline any of those considerations here.

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When the Alabama legislature revised the Alabama Code
provisions regarding secured transactions, the legislature had
the opportunity to adopt the rebuttable-presumption
approach to deficiency judgments in consumer transactions.
Instead, our legislature chose to enact § 7-9A-626, which
provides in subsection (b) that the adoption of the rebuttable-
presumption approach to deficiency judgments in
nonconsumer transactions is 'intended to leave to the court
the determination of the proper rules in consumer
transactions.' Subsection (b) further provides that an
Alabama court 'may not infer from [the application of the
rebuttable-presumption approach in nonconsumer
transactions] the nature of the proper rule in consumer
transactions and may continue to apply established
approaches.' (Emphasis added.) Because our legislature
declined the opportunity to modify the approach to deficiency
judgments in consumer transactions established by Alabama
caselaw, we hold that it implicitly accepted the use of the
setoff approach that had been followed under the former Code
provisions. We, therefore, decline to overrule the cases that
have applied the setoff approach or to mandate the
application of the rebuttable-presumption approach in
consumer transactions."

989 So. 2d at 535-37.

Rylee argues that we should not adhere to the reasoning and

conclusion of Folks because, he says, Folks is distinguishable from the

present case because it involved a sale of collateral that was commercially

unreasonable because the secured party sold the collateral for less than

it was worth. However, a failure to give the obligors the notice required

before and after the sale of repossessed collateral is just as commercially

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unreasonable as selling the collateral for less than it is worth. See § 7-

9A-610(b) ("Every aspect of a disposition of collateral, including the

method, manner, time, place, and other terms, must be commercially

reasonable." (emphasis added)); Stone v. Cloverleaf Lincoln-Mercury,

Inc., 546 So. 2d 388, 390 (Ala. 1989) (recognizing that, under the

statutory predecessor of § 7-9A-610(b), "[f]ailure to transmit notice, or

transmission of insufficient notice, is in and of itself commercially

unreasonable behavior).

Accordingly, we reverse the trial court's judgment and remand the

case to the trial court for it to determine the amount of setoff, if any, to

which Rylee is entitled. The Bank argues that we should rule on the issue

of how much setoff Rylee is entitled to in this appeal; however, that issue

is not ripe for appellate review because the trial court has not had the

opportunity to rule on it.

REVERSED AND REMANDED WITH INSTRUCTIONS.

Moore, P.J., and Hanson and Bowden, JJ., concur.

Edwards, J., concurs in the result, without opinion.

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