TROPICAL JEWELERS v. NATIONSBANK

COPE, J.

The main question before us is whether a guarantor is a "debtor" for purposes of Article 9 of the Uniform Commercial Code ("UCC"). We adhere to the overwhelming majority rule that a guarantor is a "debtor" for Article 9 purposes. Under Article 9, a debtor is entitled to insist that the disposition of collateral after a default be made in a commercially reasonable manner, and this UCC protection cannot be waived by a debtor. It follows that the purported waivers of commercial reasonableness in the personal guarantees in this case are a nullity, and this case must be remanded for further proceedings.

Tropical Jewelers, Inc. obtained business loans from Intercontinental Bank, N.A., which has since merged into Nationsbank, N.A. The loans were secured by Tropical's inventory, furniture, fixtures, equipment and accounts receivable. The individual appellants executed personal guarantees of the business loans.

In the guarantees, the guarantors waived any rights they might have under the UCC, including the commercial reasonableness of any sale or disposition of collateral by the bank in the event of a default by Tropical. There was no such waiver in the promissory notes executed by Tropical.

After default by Tropical, the Bank sued Tropical and the guarantors. The Bank obtained Tropical's collateral and liquidated it. By affirmative defense and counterclaim, Tropical and the guarantors asserted that the Bank had failed to dispose of the collateral in a commercially reasonable way.

The Bank moved for summary judgment. Tropical and the guarantors supported their defense of commercial unreasonableness by affidavit. The Bank contended that the affidavit was insufficient and that, in any event, by signing the personal guarantees the guarantors had waived any defense regarding the commercial reasonableness of disposition of collateral.

The trial court entered summary judgment against Tropical and the individual guarantors jointly and severally for $314,718.89, and this appeal follows.

We first consider whether the summary judgment should have been entered with respect to the borrower, Tropical Jewelers.

Under Article 9 of the UCC, upon a debtor's default, a secured creditor is obligated to dispose of the collateral securing the debt in a commercially reasonable manner. See § 679.504 (3), Fla.Stat. (1995); see also Sorrels v. Rebecca's Ice Cream, Inc., 696 So.2d 1313, 1314 (Fla. 2d DCA 1997). Indeed, the right to commercially reasonable disposition of repossessed property cannot be waived by the debtor. See § 679.501 (3)(b), Fla.Stat. (1995); Barnett Bank of Tallahassee v. Campbell, 402 So.2d 12, 13 (Fla. 1st DCA 1981).

The Bank acknowledges these principles, and agrees that the borrower, Tropical, qualifies as a "debtor" for Article 9 purposes. The Bank made no argument that Tropical had waived the right to a commercially reasonable disposition of collateral.

With respect to Tropical, therefore, the only question is whether there was a disputed issue of material fact regarding the commercial reasonableness of the disposition of Tropical's collateral. The panel which originally heard this appeal unanimously concluded that Tropical's affidavit showed the existence of disputed factual questions, and reversed the judgment as to Tropical for that reason. We adhere to the panel's position on that point.

We turn now to the individual guarantors. They present a different legal issue because the guarantees in this case contain language waiving the guarantors' "right to object to the commercial reasonableness of any sale or disposition of collateral." The guarantors argue that this waiver is invalid under the anti-waiver provision of the UCC, § 679.504 (3), Fla.Stat., and we agree.

As already stated, a secured creditor must dispose of collateral in a commercially reasonable manner, and this requirement of the UCC cannot be waived by the debtor. See §§ 679.501 (3)(b), 679.504 (3), Fla. Stat. (1995). The question is whether a guarantor is a "debtor" for Article 9 purposes. The answer is yes.

Article 9 defines "debtor" in part as "the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral . . . ." § 679.105 (1)(d), Fla. Stat. (1995) (emphasis added). Certainly a guarantor is a person who owes "payment or other performance," id., and this court has already said that the UCC definition of debtor includes guarantors. See Adler v. Key Fin. Servs., Inc., 553 So.2d 284, 285 (Fla. 3d DCA 1989). The First and Fourth Districts have likewise held that a guarantor is a debtor for purposes of this part of the UCC. See Motorola Communications and Elecs., Inc. v. Nat'l Patient Aids, 427 So.2d 1042, 1044 (Fla. 4th DCA 1983); Barnett Bank v. Campbell, 402 So.2d 12, 14 (Fla. 1st DCA 1981); Barnett v. Barnett Bank, 345 So.2d 804, 805-06 (Fla. 1st DCA 1977); Hepworth v. Orlando Bank Trust Co., 323 So.2d 41, 42 (Fla. 4th DCA 1975). And on the exact issue before us, the First District has concluded, as we do, that the anti-waiver provision of subsection 679.501 (3), Florida Statutes, protects guarantors. See Barnett v. Barnett Bank, 345 So.2d at 805-06; Barnett Bank v. Campbell, 402 So.2d at 14.

It is suggested, however, that this interpretation of Article 9 is defeated by the second sentence of the definition of "debtor," which states:

Where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision of the chapter dealing with the collateral, the obligor in any provision dealing wilt the obligation, and may include both where the context so requires[.]

§ 679.105 (1)(d), Fla.Stat. (1995) (emphasis added).

It is argued that under this second sentence of the definition, one can only be a "debtor" if he or she is the owner of the collateral. That is not so. The first sentence of the definition states that a "debtor" is "the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral. . . ." Id. (emphasis added). By the plain words of the first sentence of the definition, a person can be a "debtor" even though he or she does not own the collateral. The second sentence of the definition is aimed at a problem not now before us: where a borrower takes out a loan and a third person puts up the collateral. See § 679.105 comment 2, reprinted in 19C Fla.Stat.Ann. 179 (1990) (UCC § 9-105 comment 2); Gambo v. Bank of Maryland, 102 Md. App. 166, 648 A.2d 1105, 1109 (1994).

In any event, the second sentence of the "debtor" definition provides that a "debtor" includes "the obligor in any provision dealing with the obligation . . . ." § 679.105 (1)(d), Fla. Stat. (1995). For these purposes, a guarantor is properly viewed as a secondary obligor, and qualifies as a debtor under the definition. See American Seaway Foods, Inc. v. Belden S. Assocs. Ltd. Partnership, 72 Ohio St.3d 514, 651 N.E.2d 941, 944 (1995); Gambo v. Bank of Maryland, 648 A.2d at 1109 (Md. App. 1994); Shawmut Worcester County Bank, N.A. v. Miller, 398 Mass. 273, 496 N.E.2d 625, 628 (1986); Zions First Nat'l Bank v. Hurst, 570 P.2d 1031, 1033 n. 5 (Utah 1977); see also Black's Law Dictionary 1103 (7th ed. 1999) (defining "secondary obligation").

The Bank argues that this court upheld a guarantor's waiver of commercial reasonableness in Von Dunser v. Southeast First Nat'l Bank of Miami, 367 So.2d 1094 (Fla. 3d DCA 1979). The court there said that "under an absolute and unconditional contract of guaranty . . . it is no defense that the creditor has lost security or has been negligent in regard to protection of the collateral. Fegley v. Jennings, 44 Fla. 203, 32 So. 873 (1902) and A T Motors, Inc. v. Roemelmeyer, 158 So.2d 567 (Fla. 3d DCA 1963)." 367 So.2d at 1096. The Von Dunser case has no application here. It nowhere mentions the UCC and the cases it cites are pre-UCC cases. As there is no indication that any UCC issue was raised, the Von Dunser decision is properly viewed as a common-law, non-UCC case.

Practical considerations likewise lead to the conclusion that a guarantor is a debtor. When a bank refuses to make a loan unless there is a personal guarantee, the bank in reality is looking to the guarantor for repayment, and the guarantor is in a real sense the "debtor."

Nor is it persuasive to say, as the Bank does, that there should be one measure of damages for the borrower and a different measure for the guarantors. Consider the following hypothetical example:

Parent guarantees car loan for child. The guarantee contains a waiver of the requirement of commercial reasonableness of disposition of collateral.

Child defaults and bank repossesses the car. If disposed of in a commercially reasonable manner, the car is worth $10,000. For simplicity, assume the loan balance is also $10,000.

Bank president decides to sell car to bank president's relative for $1,000.

In the hypothetical example, sale of a $10,000 car for $1,000 is not commercially reasonable. Under the UCC, the bank would not be allowed to sue the borrower child for the $9,000 deficiency. Since a commercially reasonable disposition of the collateral would have yielded $10,000, and the loan balance was $10,000, it follows that the borrower child owes the bank nothing. See § 679.507, Fla. Stat.; Weiner v. American Petrofina Mktg., Inc., 482 So.2d 1362, 1364 (Fla. 1986).

Logically the same analysis should apply to the guarantor parent in the hypothetical example. It would make no sense to say that the bank may recover the $9,000 deficiency from the guarantor parent, even though the bank cannot recover the $9,000 deficiency from the borrower child.

Indeed, the present case offers an even more extreme example. Tropical and the guarantors contend that the Bank threw away valuable collateral. The Bank denies that this happened, but explained to the trial court that even if it had, under the waiver in the personal guarantees, the guarantors would be entitled to no relief. The Bank stated, "We throw out the gold and platinum. We dispose of the collateral totally improperly. I'm not saying we did. I am saying [so] just for the sake of argument. . . . You know what, we left the window open. Thieves came in and stole the collateral. You waived it."

We reject that argument. The Bank itself acknowledges that it must act in a commercially reasonable manner with regard to the borrower, Tropical, and that as a matter of law, Tropical cannot waive the requirement that collateral be disposed of in a commercially reasonable manner. It makes no sense to say that if the Bank breaches its statutory duty, Tropical can complain but the guarantors cannot. Both must be treated equally.

"[I]t would be odd indeed if the Code allowed a creditor to avoid the protections established for debtors merely by taking the readily available step of forcing the debtor's principals to sign personal guarantees." Bank of China v. Chan, 937 F.2d 780, 786 (2d Cir. 1991).

Another court has said:

[T]he unconditional guarantor is in a very real sense the debtor. When the probability of deficiency looms after default, the guarantor is the real target of the secured party. It is simply inequitable, therefore, to permit the secured party, who fixes the amount of the guarantor's liability in the first step of the collection effort by repossession and sale, to deny in the face of this economic reality that the guarantor is in fact its debtor. At that point, the guarantor is the only debtor. Furthermore, where the debtor and guarantor are in essence the same entity . . . it is equally unjust to allow a creditor to evade the Code duties by merely insisting on a guaranty.

The policy of the UCC is well put in one of the UCC comments:

In the area of rights after default our legal system has traditionally looked with suspicion on agreements designed to cut down the debtor's rights and free the secured party of his duties: no mortgage clause has ever been allowed to clog the equity of redemption. The default situation offers great scope for overreaching; the suspicious attitude of the courts has been grounded in common sense.

Finally, we rule as we do in order to maintain uniformity with the other states.

One of the purposes of the UCC is "[t]o make uniform the law among the various jurisdictions." § 671.102 (2)(c), Fla. Stat. (1995); see Mason v. Avdoyan, 299 So.2d 603, 606-07 (Fla. 4th DCA 1974).

Writing about a predecessor to the UCC, the Florida Supreme Court said, "An act like the Uniform Negotiable Instruments Law . . . should receive a uniform interpretation and construction in all of the states where it prevails if the beneficial purpose of having a uniform law on the subject is to be subserved." Valentine v. Hayes, 102 Fla. 157, 160, 135 So. 538, 540 (1931).

In the overwhelming majority of states that have considered the issue, the courts have ruled that a guarantor is a "debtor" for Article 9 purposes. Our count of jurisdictions is:

Guarantor is debtor 36 States ____

Guarantor is not debtor 3 States ____

Unclear States (North Carolina, 2 Rhode Island) ____

No reported decision 9 States ____

See Appendix 1; see also Gambo, 648 A.2d at 1108, 1110-13; Thompson Machine, 649 A.2d at 22; May, 807 P.2d at 1148.

It has been argued in this proceeding that the majority of federal courts go the other way. While there was a spate of federal decisions that initially so held, most of those decisions are no longer good law. See Appendix 2.

Interpretation of the UCC is a matter of state law, not federal law. In a number of jurisdictions, the UCC issue arose for the first time in federal court. In the absence of state precedent on the point, a federal court is required to determine how it believes the courts of that state would rule when presented with the issue. See 19 Charles Alan Wright, Arthur R. Miller Edward H. Cooper, Federal Practice and Procedure: Civil § 4507, at 200 (1996).

Later, when the state courts of those same states finally reached the issue, the state courts held that a guarantor is a debtor. See Appendix 2. Since the UCC issue is a matter of state law, the later state decisions are authoritative — not the earlier federal decisions.

Since the guarantors' waivers of the requirement of commercial reasonableness were invalid, the summary judgment must be reversed with respect to the individual guarantors.

Tropical and the guarantors argue that the trial court abused its discretion in refusing to grant a continuance of the summary judgment hearing. Since we are reversing the summary judgment on the merits, we need not address the continuance issue.

Tropical and the guarantors argue that the Bank's affidavit setting forth the calculation of the outstanding indebtedness was not stated to be on personal knowledge and did not demonstrate how the calculations were arrived at. We need not reach these claims because the effect of our ruling is to reverse the summary judgment and remand for a trial on damages.

For the reasons stated, the summary judgment is reversed and the cause remanded for a trial on damages.

Reversed and remanded for further proceedings consistent herewith.

JORGENSON, LEVY, GODERICH, FLETCHER, SHEVIN, SORONDO, and RAMIREZ, JJ., concur.

State Guarantor is a Debtor and/or Guarantor is NOT a Debtor and/ Pre-Default Waiver is Invalid. or Waiver is Valid. Alabama Prescott v. Thompson Tractor Co., Inc., 495 So.2d 513 (Ala. 1986). Arkansas Hallmark Cards, Inc. v. Peevy, 293 Ark. 594, 739 S.W.2d 691 (Ark. 1987). California American Nat'l Bank v. Perma-Tile Rutan v. Summit Sports, Inc., 173 Roof Co., 200 Cal.App.3d 889, Cal.App.3d 965, 219 Cal.Rptr. 381, 246 Cal.Rptr. 381 (Cal.5th Dist. 385-6 (Cal.3d Dist. 1985). 1988). C.I.T. Corp. v. Anwright Corp., 191 Cal.App.3d 1420, 237 Cal.Rptr. 108 (Cal.2d Dist. 1987) Connolly v. Bank of Sonoma City, 184 Cal.App.3d 1119, 229 Cal.Rptr. 396 (Cal. 1st Dist. 1986) Canadian Commercial Bank v. Ascher Findley Co., 229 Cal.App.3d 1139, 280 Cal.Rptr. 521, (Ca.App. 2 Dist. 1991). Colorado May v. Women's Bank, 807 P.2d 1145 (Colo. 1991). Connecticut Connecticut Nat. Bank v. Douglas, 221 Conn. 530, 606 A.2d 684 (Conn. 1992) (Waiver upheld, but did not discuss whether guarantor is debtor). Florida Barnett Bank of Tallahassee v. Campbell, 402 So.2d 12 (Fla. 1st DCA 1981). Adler v. Key Fin. Servs., Inc., 553 So.2d 284 (Fla. 3rd DCA 1989). Hepworth v. Orlando Bank Trust Co., 323 So.2d 41 (Fla. 4th DCA 1975). City Federal Savings Bank v. Florida Eastern Dev. Management Corp., 536 So.2d 1057 (Fla. 4th DCA 1988). Barnett v. Barnett Bank of Jacksonville, N.A., 345 So.2d 804 (Fla. 1st DCA 1977). Georgia Branan v. Equico Lessors, Inc., 255 Ga. 718, 342 S.E.2d 671 (Ga. 1986). Hawaii Liberty Bank v. Honolulu Providoring Inc., 65 Haw. 273, 650 P.2d 576 (Haw. 1982). Idaho CIT Fin. Servs. v. Herb's Indoor RV Center Inc., 108 Idaho 820, 702 P.2d 858 (Idaho Ct.App. 1985) (Guarantor is entitled to raise defense that sale was commercially unreasonable; does not address whether guarantor is debtor). Illinois Watseka First Nat'l. Bank, 135 Ill.2d 140, 142 Ill. Dec. 184, 552 N.E.2d 775 (Ill. 1990). Indiana McEntire v. Indiana Nat'l Bank, 471 N.E.2d 1216 (Ind.Ct.App. 1984). Iowa United States v. Jensen, 418 N.W.2d 65 (Iowa 1988). Maine Ford Motor Credit Co. v. Thompson Mach., Inc., 649 A.2d 19 (Me. 1994). Maryland Gambo v. Bank of Maryland, 102 Md. App. 166, 648 A.2d 1105 (Md. Ct.Spec.App. 1994). Massachusetts Shawmut Worcester County Bank, N.A. v. Miller, 398 Mass. 273, 496 N.E.2d 625 (Mass. 1986). Michigan Estate of Blueston v. Gen. Elect. Credit Corp., 121 Mich. App. 659, 329 N.W.2d 446 (Mich.Ct.App. 1982). Minnesota Chemlease Worldwide Inc. v. Brace Inc., 338 N.W.2d 428 (Minn. 1983). Missouri Cherry Manor, Inc. v. American Health Care, Inc., 797 S.W.2d 817 (Mo.Ct.App. 1990). Montana Westmont Tractor Co. v. Continental I, Inc., 224 Mont. 516, 731 P.2d 327 (Mont. 1986) (Pre-default waiver is invalid; did not address whether debtor is guarantor). Nebraska Transmerica Commercial Fin. Corp. v. Rochford, 244 Neb. 802, 509 N.W.2d 214 (Neb. 1993). New Jersey Caterpillar Fin. Servs. Corp. v. Wells, 278 N.J. Super. 481, 651 A.2d 507 (N.J. Super. Ct. Law Div. 1995). T W Ice Cream, Inc. v. Carriage Barn, Inc., 107 N.J. Super. 328, 258 A.2d 162 (N.J Super Ct. Law Div. 1969). See also Tri-Continental Leasing Corp. v. Cicerchia, 664 F. Supp. 635 (D.Mass. 1987) (Predicting that New Jersey Supreme Court will adopt majority view that guarantor is a debtor). New Mexico American Bank of Commerce v. Covolo, 88 N.M. 405, 540 P.2d 1294 (N.M. 1975). New York Marine Midland Bank N.A. v. First City Div. of Chase Lincoln Kristin Int'l Ltd., 141 A.D.2d 259, First Bank, N.A. v. Vitale, 123 534 N.Y.S.2d 612 (N.Y.Sup.Ct. A.D.2d 207, 510 N.Y.S.2d 766 App. Div. 4th Dept. 1988). (N.Y.Sup.Ct.App. Div. 3rd Dept. 1987). Marine Midland Bank v. CMR Indus., Inc., 159 A.D.2d 94, 559 N.Y.S.2d 892 (N.Y.Sup.Ct.App. Div.2d Dept. 1990). North Carolina Gregory Poole Equip. Co. v. Murray, But see Borg-Warner Acceptance 105 N.C. App. 642, 414 S.E.2d Corp. v. Johnston, 97 N.C. App. 563 (N.C. App. 1992). 575, 389 S.E.2d 429 (N.C. App. 1990) (Guarantor may waive commercial reasonableness; does not discuss whether guarantor is debtor). North Dakota Dakota Bank Trust Co., Fargo v. Grinde, 422 N.W.2d 813 (N.D. 1988). Ohio American Seaway Foods, Inc. v. Belden S. Assocs. Ltd. Partnership, 72 Ohio St.3d 514, 651 N.E.2d 941 (Ohio 1995). Oregon Ferrous Financial Servs. Co. v. Wagon, 70 Or. App. 285, 689 P.2d 974 (Or.Ct.App. 1984) ("Plaintiffs concede that guarantors are `debtors' under the statutory definition but argue that [the guarantors] are not entitled to damages because they have suffered no `loss.' We agree."). Pennsylvania Reuter v. Citizens Northern Bank, 410 Pa. Super. 199, 599 A.2d 673 (Pa.Super.Ct. 1991). Rhode Island Rhode Island Hosp. Trust Nat'l But see id. at 303 n. 4 (Suggesting Bank v. National Health Found, that waiver in guarantee might be 119 R.I. 823, 384 A.2d 301 (R.I. given effect). 1978) (Guarantor's defense that sale of collateral was commercially unreasonable was barred by judicial approval of sale. Doesn't address whether guarantor is debtor). South Carolina Crane v. Citicorp Nat'l Servs., Inc., 313 S.C. 70, 437 S.E.2d 50 (S.C. 1993). South Dakota Wang v. Wang, 440 N.W.2d 740 (S.D. 1989). Texas Hernandez v. Bexar County Nat'l Bank, 710 S.W.2d 684 (Tex.Ct. App.), aff'd, 716 S.W.2d 938, (Tex. 1986). Utah Zions First Nat'l Bank v. Hurst, 570 P.2d 1031 (Utah 1977). (Guarantor is an obligor under UCC definition of debtor). Vermont Vermont Indus. Dev. Authority v. Setze, 157 Vt. 427, 600 A.2d 302 (Vt. 1991). Virginia Woodward v. Resource Bank, 246 Va. 481, 436 S.E.2d 613 (Va. 1993). Washington McChord Credit Union v. Parrish, 61 Wn. App. 8, 809 P.2d 759 (Wash.Ct.App. 1991). B. Controlling Federal Court Decisions (Because No State Court Decision On Point.) State Guarantor is a Debtor Guarantor is NOT a Debtor Delaware Rushton v. Shea, 423 F. Supp. 468 (D.Del. 1976). Kansas United States v. Kelly, 890 F.2d 220 (10th Cir. 1989). Louisiana United States v. Southern Cycle Accessories, Inc., 567 F.2d 296 (5th Cir. 1978). New Van Dorn Retail Management, Inc. Hampshire v. Jim's Oxford Shop, Inc., 874 F. Supp. 476 (D.N.H. 1994). Tennessee First Heritage Nat'l Bank v. Keith, 902 F.2d 33 (6th Cir. 1990) (unpublished). C. No precedent on the issue . Alaska Arizona Kentucky Mississippi Nevada Oklahoma West Virginia Wisconsin Wyoming TOTALS States Guarantor is debtor 36 (and/or predefault waiver is invalid) By state court decision 30 By federal court decision 4 (where there is no state court decision) By majority of courts of appeals 2 (but there is contrary authority) (Cal. N.Y.) Guarantor is not debtor 3 (and/or waiver is valid) By state court decision 2 By federal court decision 1 Unclear 2 (N.C. and Rhode Island) Have not spoken 9

A. Federal Decisions That Are No Longer Valid After Later State Supreme Court Decisions. Earlier Cited Case No longer Valid after Later Decision. United States v. H S Realty Co., 837 F.2d Ford Motor Credit Co. v. Thompson Mach., 1 (1st Cir. 1987) (Under Maine law, loan Inc., 649 A.2d 19 (Me. 1994) (Loan guarantors guarantor was able to waive any right it were debtors, cannot waive) ( Maine). might have had to assert defense of commercial unreasonableness in action against it to collect deficiency judgment). First Nat'l Park Bank v. Johnson, 553 F.2d Westmont Tractor Co., 224 Mont. 516, 731 599 (9th Cir. 1977) (Guarantor is not debtor; P.2d 327 (Mont. 1986) (A guarantor's predefault waiver is enforced) ( Montana). waiver is invalid) ( Montana). United States v. Kukowski, 735 F.2d 1057 Dakota Bank Trust Co., Fargo v. Grinde, (8th Cir. 1984) (Guarantor is not debtor) 422 N.W.2d 813 (N.D. 1988) (Guarantor is ( North Dakota). debtor ( North Dakota). Chrysler Credit Corp. v. Curley, 753 F. Supp. Woodward v. Resource Bank, 246 Va. 481, 611 (E.D.Va. 1990) (Guarantor is debtor but 436 S.E.2d 613 (Va. 1993) (Guarantors of may waive) ( Virginia). note were "debtors"; waiver invalid) ( Virginia). B. Federal Decisions That Are Invalid After Later State Court of Appeal Decision. Earlier Cited Cases No Longer Valid After Later Decision. United States v. Meadors, 753 F.2d 590 (7th McEntire v. Indiana Nat'l Bank, 471 N.E.2d Cir. 1985) (Guarantor has same rights as 1216 (Ind. App. 4th Dist. 1985) (Guarantor is debtor but may waive) ( Indiana). debtor and could not waive) ( Indiana). National Bank of Wash. v. Pearson, 863 Gambo v. Bank of Maryland, 102 Md. App. F.2d 322 (4th Cir. 1988) (Assuming Guarantor 166, 648 A.2d 1105 (Md. App. 1994) (Guarantor is debtor, waiver is valid) ( Maryland). falls within the definition of "debtor" and may not waive) ( Maryland). C. Federal Decision No Longer Valid After Later Federal Decision Earlier Cited Case No Longer Valid After Later Decision. United States v. Kurtz, 525 F. Supp. 734 Security Pacific Nat'l Bank v. Kirkland, 915 (E.D.Pa. 1981) (Guarantor may be treated F.2d 1236 (9th Cir. 1990) (Guarantor is as debtor under 9-504(3), but protections Debtor within the meaning of California may be waived. Relies on tendency of the Commercial Code Provision requiring secured courts to permit SBA loan guarantors to creditor to notify debtor in default of waive the protections and California precedent manner in which creditor will dispose of which allows guarantors to waive collateral unless, after default, debtor Civil Code protection to their security interest). waives that right). United States v. Frey, 708 F. Supp. 310 Kelley v. United States, 890 F.2d 220 (10th (D.Kan. 1988) (Guarantors waived defense Cir. 1989) (Assuming federal law does not of commercial unreasonableness of sale of apply, Kansas law would be interpreted to SBA loan collateral securing note when make UCC defense of commercially unreasonable guarantors executed unconditional guarantee) sale of collateral available to guarantors, ( Kansas). as well as debtors and would not permit waiver). United States v. Lowy, 703 F. Supp. 1040 Bank of China v. C.W. Chan, 937 F.2d 780 (E.D.N.Y. 1989) (Guarantor waived right to (2nd Cir. 1991) (Under New York UCC, commercial reasonableness of sale of debtor's Guarantor is debtor and may not waive inventory and to object to lack of bank's obligation to act in commercially notice of sale) ( New York). reasonable manner.) D. Other Earlier Cited Case No Longer Valid After Later Decision. Mutual Fin. Co. v. Politzer, 21 Ohio St.2d American Seaway Foods, Inc. v. Belden 177, 256 N.E.2d 606 (Ohio 1970) (Guarantor South Assocs. Ltd. Partnership, 72 Ohio is not a debtor and can waive) ( Ohio). St.3d 514, 651 N.E.2d 941 (Ohio 1995) (Guarantor is debtor and cannot waive) ( Ohio). Continental Leasing Corp. v. Lebo, 217 Reuter v. Citizens Northern Bank, 410 Pa. Super. 356, 272 A.2d 193 (Pa.Super.Ct. Pa.Super. 199, 599 A.2d 673 (Pa.Super.Ct. 1970) (Enforced unconditional guarantee 1991) (Guarantor is debtor; may but did not address whether guarantor challenge commercial reasonableness is debtor) ( Pennsylvania). ( Pennsylvania).