Did the bank exercise reasonable care of the shares?

Charles E. Johnson was the founder and CEO of PurchasePro.com, Inc., and Geoff Layne was its marketing director. When their Internet stock went public, both officers suddenly owned shares worth millions of dollars. To increase his liquidity, Johnson took out a loan for $2.8 million from Bank One, and Layne borrowed $3.25 million. Each secured the loan with shares of PurchasePro stock.
The loan agreement required a loan-to-value (LTV) ratio of 50 percent, meaning that the value of the shares had to be at least double the outstanding loan balance. If the value of the shares sank below the required level, the two men could either pay off some of the loan or offer additional security. If the two borrowers failed to remedy the problem, the bank was entitled (but not obligated) to sell the shares. Johnson secured his loan with $6.9 million worth of PurchasePro stock.
In February, Internet stocks suddenly plummeted, and both loans immediately exceeded their LTV ratio. Johnson and Layne spoke with the bank several times, stating that they would offer additional collateral. During March and April, more calls went back and forth, with the debtors occasionally suggesting that the collateral be sold, while at other times agreeing to provide more security. Finally, in July, over a four-day period, the bank sold Johnson’s PurchasePro shares for $524,757, less than 10 percent of its original worth. Johnson and Layne both filed suit against the bank, claiming that it failed to exercise reasonable care of the collateral. The trial court gave judgment for the bank, and the plaintiffs appealed.