Riyad Bank v. Gailani

Argued on March 7, 2001

This case involves the legality of a bank’s actions in foreclosing on accounts receivable a debtor pledged as collateral. The trial court concluded that the bank neither used commercially unreasonable collection methods under section 9.502 of the Uniform Commercial Code nor conducted an improper foreclosure sale under section 9.504. See Tex. Bus. & Com. Code �� 9.502, 9.504. *fn1 The court of appeals, concluding that the debtors raised fact questions about the collection attempt under section 9.502, reversed the trial court’s judgment. 22 S.W.3d 560. The court did not reach the debtors’ claims about the impropriety of the foreclosure sale under section 9.504. Contrary to the court of appeals, we conclude that section 9.502 does not apply in this case. But because we conclude that section 9.504 does apply, we remand to the court of appeals to decide if the debtors raised fact questions on whether the creditor complied with that section. We therefore reverse the judgment of the court of appeals and remand to that court for further proceedings.