In Bank of America, N.A. v. Sea-Ya Enterprises, LLC, 2013 WL 126268 (D.Del. 2013), Judge Andrews found that the purchase of an aircraft was not primarily for personal, family, or household purposes, thus allowing a Bank to pursue a post-repossession/post-sale deficiency balance notwithstanding purported irregularities in the liquidation sale notices.

This suit is a loan deficiency action brought by Plaintiff Bank of America, N.A. (D.I.1). The only unresolved claim is against Defendant Dani D. Wheeler. Both parties move for summary judgment. (D.I. 62; D.I. 65). The facts of this case are well-known to the parties. Dani Wheeler’s husband, Craig Wheeler, was the owner of a business known as Sea–Ya Enterprises. Sea–Ya Enterprises purchased and financed a Gulfstream Aircraft in June 2004. In doing so, Sea–Ya Enterprises executed a commercial promissory note in the amount of $6,148,666.01, along with an aircraft security agreement in favor of MBNA America, with Craig Wheeler and Dani Wheeler co-signing the note as secondary obligors. (D.I. 67, Appendix at 55–59, 60–67). The Bank of America later purchased MBNA and succeeded to MBNA’s interests in regard to the note and the security interest. Sea–Ya Enterprises stopped making payments on the promissory note as of October 2010. The Bank repossessed the Aircraft in February 2011 and resold it in June 2011. Due to the poor condition of the Aircraft (it was not “airworthy”) and a significant downturn in the relevant market, the Bank was only able to garner $400,000 at the private sale. This left an outstanding deficiency balance of $4,730,244.80. (D.I.59, p. 2).  .  .During the pendency of these motions, the Court became aware of Cal. Com.Code § 9626(a) and re-quested supplemental briefing on the statute’s applicability to the dispute. (D.I.80, 81). Prior to California’s adoption of the 2001 revisions to the Uniform Commercial Code (“UCC”), the failure of a secured party to follow the UCC’s requirements for disposing of collateral acted as a complete bar to recovery of a deficiency judgment. Bank of the Sierra v. Kallis, 2006 WL 3513568, *9 (E.D.Cal.2006). This was known as the “absolute bar rule.” In re MarMc Transp., Inc., 469 B.R. 84, 89 (Bankr.D.Wyo.2012). The 2001 revision to the UCC changed this rule in relation to commercial transactions, instead offering the secured party the opportunity to prove that com-pliance with enforcement requirements would not have netted an increased resale price.

The Court found that the airplane purchase was not a consumer transaction.

The Court first must determine whether the Air-craft transaction was a commercial transaction. Dani Wheeler argues that the transaction was a consumer transaction as to her because she personally did not use the Aircraft for business; her use was limited to family leisure activities. A transaction is only a consumer transaction when the obligation is primarily incurred and the collateral is primarily held for personal, family, or household purposes. Cal. Com.Code § 9102(a)(26). It is apparent that this is not the case here. The evidence shows that the primary purpose of the Aircraft was for it to be flown in service of Craig Wheeler’s business and not for the personal enjoyment of the Wheeler family. The Wheelers did not hold title to the Aircraft in their personal capacity; title was held by Sea–Ya Enterprises. (D.I. 67, Appendix at 55–66). The Aircraft was financed according to commercial loan agreements, i.e., the “Commercial Aircraft Note” and the “Aircraft Security Agreement (Commercial).” (Id ). Further, the Wheelers’ joint income tax return shows that they received more than $6 million for “jet charter services” between 2004 and 2010, and that they claimed depreciation and operational expenses of the Aircraft in their federal tax returns each year. (D.I. 68, Appendix at 125–43, 172–73). Although Mr. Wheeler did testify that the Aircraft was used for family vacations, he also admitted that it was used for business purposes “to call on doctors in certain parts of the country” and “[t]o go to trade shows [and] to work with salespeople.” (Id. at 171).  The sum total of these facts shows that the purchase and financing of the Aircraft was intended primarily to be a commercial transaction.  The “absolute bar” rule does not apply. Instead, the Bank has the opportunity to rebut the presumption that its failure to individually notify Dani Wheeler in accordance with the enforcement requirements of the UCC caused an actual reduction in the resale price of the Aircraft. Cal. Com.Code § 9626(a)(4).

The Court found that the Bank rebutted the presumption and granted summary judgment for the Bank.