Ban

The appeal by PWS, Inc., raises a question of first impression. Where a creditor purchases the collateral after the debtor's default does the creditor’s failure to comply with the notice requirement of California Uniform Commercial Code section 9504 preclude its recovery of a deficiency judgment if the creditor, upon realizing its mistake, conducts a new sale after giving proper notice? We conclude in the absence of a showing of prejudice to the debtor the creditor may obtain a deficiency judgment based on the second sale. Therefore, we reverse the judgment against PWS, Inc.

The cross-appeal by the Bans argues the judgment in favor of PWS, Inc., on the Bans’ cross-complaint for rescission of the conditional sales contract is not supported by substantial evidence. We affirm this judgment.

Facts and Proceedings Below

This matter was tried to the court and the parties agree on the following basic facts.

The Bans purchased a laundromat business from PWS, Inc. (PWS) for approximately $300,000. The parties entered into a conditional sale contract under which the laundry equipment, fixtures and certain improvements were security for the balance due on the contract. After…