Bank of Guam v. Del Priore (2001)
Citation: 2001 Guam 10 (Supreme Court Case No. CVA99-043; Superior Court No. CV1022-98) · Court: Supreme Court of Guam (Cruz, C.J.; Siguenza, J.; Benson, Designated J.; opinion by Cruz, C.J.) · Decided: filed May 17, 2001
Facts
The Del Priores bought the vessel Sunflower in 1990 and gave a First Preferred Mortgage to the Bank of the Orient to secure a USD 228,750 note; Bank of Guam later acquired the loan documents. After the borrowers fell behind on insurance and on payments, Bank of Guam sued in the Superior Court in April 1998 to “Foreclose Security Interest and for Damages.” While that suit was pending it took physical possession of the vessel at Agat Marina, moved and guarded it, and on September 21, 1998 sold it at a public sale for USD 75,000 (appraised at USD 35,000–38,000). The trial court awarded a deficiency of USD 61,170.54 plus attorney fees (opinion ¶¶ 3–5).
Holding
A secured creditor that disposes of collateral after default must plead and prove that it gave the debtor the reasonable notification required by 13 GCA § 9504(3). Notice is a condition precedent to a deficiency judgment, not an affirmative defense; failure to plead and prove it bars any deficiency (the “absolute bar” rule). The deficiency judgment and the fee award were vacated and the matter remanded (opinion ¶¶ 19, 25–26, 28–30). This was not an order of final dismissal for an incurable pleading omission: the later 2007 opinion describes the bank’s amended complaint and the subsequent dispute over compliance.
Reasoning
The court surveyed the three national lines of authority on lack of notice under UCC 9-504(3) (rebuttable presumption, set-off, absolute bar) and adopted the absolute bar rule. It reasoned that deficiency judgments are a creature of statute requiring strict compliance; that a commercially reasonable sale does not cure a notice failure, because notice protects the debtor’s pre-sale right to redeem under 13 GCA § 9506 and to monitor the sale; and that, unlike real-property foreclosure, a secured-transaction debtor has no post-sale redemption, so lack of notice is especially harmful (¶¶ 11–24). The court expressly left open the effect of a commercially unreasonable sale (¶ 10 n.3). Because the collateral was a used vessel, none of the § 9504(3) exceptions (perishable, rapidly declining, recognized market) applied (¶ 28).
Practical impact
- Buyer / operator: the holding concerns the creditor’s deficiency claim, not the buyer’s title. Under 13 GCA § 9504(4) a good-faith purchaser at a public sale takes the debtor’s rights free of the security interest even if the secured party failed to comply with the chapter, provided the buyer had no knowledge of defects and did not collude. A buyer at a Guam secured party’s sale should still ask for proof of the § 9504(3) notice, since a notice failure is the most common ground of post-sale litigation.
- Owner / debtor: a debtor who received no notice of the time and place of a public sale (or of the date after which a private sale would occur) has a complete defense to a deficiency claim on Guam, whether or not the price was fair.
- Secured creditor: the complaint must allege, and the evidence must show, compliance with § 9504(3) notice; Guam still applies the pre-2001 version of Article 9 (13 GCA Div. 9).
Good-law status
needs_verification for current later-treatment status. The independently retrieved
2007 opinion actually applies the 2001 condition-precedent holding (¶¶ 1, 23), but
that historical positive treatment does not establish a complete current citator result.
Applies in →
guam · ucc-article-9-dispositions · vessels · maritime-liens-and-preferred-ship-mortgages
Legal information, not legal advice. Summarized from the opinion PDF published by the Judiciary of Guam, independently retrieved in full 2026-10-17 and re-retrieved and re-read 2026-10-18 (retained in
schema/verification/guam-evidence-2026-10-18/cases/).