Prestige Ltd. Partnership-Concord v. East Bay Car Wash Partners

Prestige Limited Partnership (“Prestige”) appeals the district court’s order affirming an order of the bankruptcy court. We conclude that the unsecured claim held by East Bay Car Wash Partners (“East Bay”) agaitfst Prestige’s bankruptcy estate is not barred by Cal. Civ. Proc.Code § 580b nor by East Bay’s violation of Cal.Civ.Proc.Code § 726. We therefore affirm the district court order.

Background

In 1990, Prestige purchased a car wash business from East Bay, financed in part by a seller carry-back loan of $1,573,000. Prestige gave East Bay a promissory note (“first note”) that was secured by a deed of trust and a security interest in Prestige’s personal property and equipment. The first note was signed by Prestige’s three general partners, including Jerry Brass-field, and included a guaranty provision stating, “This Promissory Note, including all of Trustor’s obligations to pay principal and interest are hereby personally guaranteed by Jerry G. Brassfield dba J.G. Brassfield Enterprises.”

In September 1991, the first note was split into two notes, one for $800,000 (“second note”), and one for $773,000 (“third note”), both of which were secured by deeds of trust and both of…