In Re Larry Dean Kirkland and Billie Kirkland, Debtors. Security Pacific National Bank v. Larry Dean Kirkland and Billie Kirkland

Appellant, Security Pacific National Bank (Security Pacific), brought this action against appellees, the Kirklands, to collect a deficiency claim on loans made and secured by Security Pacific and guaranteed by the Kirklands. In bankruptcy proceedings initiated by the Kirklands, the bankruptcy court granted summary judgment in favor of the Kirklands disallowing Security Pacific’s deficiency claim against the Kirk-lands because Security Pacific failed to notify the Kirklands of the sale of collateral prior to its disposition in contravention of California Commercial Code § 9504(3). The bankruptcy appellate panel affirmed and this appeal timely followed. We affirm and deny Security Pacific’s request for summary judgment.

BACKGROUND

On September 16, 1980, Security Pacific entered into a credit agreement with Cascade Oil Company (Cascade) of which Mr. Kirkland was president and majority stockholder. This revolving note and credit agreement established a $1,250,000 unsecured line of credit from Security Pacific and an additional $200,000 line of credit. The Kirklands also gave Security Pacific an unsecured general continuing guaranty of Cascade’s credit line. The guaranty expressly…