## Facts

- In July 2007, PRA Aviation, LLC (PRA) financed the purchase of a 1987 Gates Learjet 55B with a $3 million loan from Center Capital Corp. (Center Capital), granting Center Capital a security interest in the aircraft; Joseph Pacitti executed a guaranty.
- The loan documents contained a choice-of-law clause selecting Connecticut law.
- PRA defaulted on April 1, 2009 and surrendered the aircraft in September 2009; Center Capital repossessed it and arranged for sale.
- Center Capital retained Business Air International to sell the aircraft; managing director J. Philip Jordan coordinated the transaction and testified he sold roughly 10–15 aircraft per year.
- To estimate value for the aging Learjet 55B, Jordan used available market information (including Learjet 60 data), considered the aircraft’s condition, and accounted for a feature affecting value (relocating the lavatory from front to back), arriving at an estimated value of about $1.45 million.
- The aircraft was marketed with an asking price of $1.595 million and received offers of $1.0 million, $1.2 million, and $1.35 million.
- Center Capital offered the highest bidder a $50,000 reduction if the buyer would accept the aircraft “as is” without a pre-purchase inspection; the buyer agreed, and the aircraft sold for $1.3 million on December 7, 2009.
- After sale costs, Center Capital realized net proceeds of $1,189,446.62, which were applied to the debt, leaving a large unpaid balance.
- Center Capital sued PRA for breach of the loan agreement and Pacitti for breach of guaranty to recover the deficiency. Defendants stipulated to liability but disputed whether the disposition of the collateral was commercially reasonable.
- Defendants presented Samuel Tabaei, a former PRA pilot and mechanic, who opined the aircraft could be worth $2.4–$2.9 million, but he did not rely on recent sales data and was not a professional aircraft broker; he also testified that avoiding the inspection likely increased the sale price.

## Issues

1. Under Connecticut’s UCC Article 9 (as selected by the parties’ contract), was Center Capital’s disposition of the repossessed Learjet commercially reasonable, permitting recovery of a deficiency against PRA and the guarantor?
2. After the court found the sale commercially reasonable, what deficiency amount (including principal, interest, and contractually allowed fees and costs) should be awarded based on the parties’ stipulated figures and loan terms?

## Decision

- The court applied Connecticut law pursuant to the parties’ choice-of-law clause.
- Following a bench trial on January 31, 2011, the court concluded Center Capital sold the Learjet in a commercially reasonable manner under Connecticut’s UCC.
- With commercial reasonableness established, the court proceeded to determine damages and relied on the parties’ Joint Pretrial Stipulation and the note’s terms.
- The court accepted that Center Capital sold the aircraft for $1.3 million, realized net proceeds of $1,189,446.62, and applied those proceeds to the debt.
- The court determined the remaining principal balance after applying the net proceeds was $1,964,324.49, with interest accruing at $945.58 per day from the sale date, and it awarded damages accordingly.
- The court also addressed Center Capital’s request for attorney’s fees and costs and awarded fees and costs to the extent authorized by the loan documents and supported as reasonable.

## Legal Principles

- A contractual choice-of-law clause may control, so long as it is enforceable; here, Connecticut law governed the deficiency dispute.
- Under UCC Article 9, “every aspect” of a post-default disposition of collateral—method, manner, time, place, and terms—must be commercially reasonable.
- Commercial reasonableness is evaluated by the sale process and market-based conduct, not solely by comparing the sale price to a later claimed value.
- Using an experienced broker, preparing a reasoned valuation tied to available market information, and marketing the collateral in a way intended to reach likely buyers support a finding that a disposition was commercially reasonable.
- Once the secured party establishes a commercially reasonable disposition, it may recover a deficiency equal to the debt minus the net proceeds of sale, plus contractually provided interest and allowable collection costs, including attorney’s fees when the contract so provides.

## Conclusion

Center Capital repossessed and sold PRA’s Learjet after default and, under Connecticut’s UCC as chosen in the loan documents, the court found the broker-run sale commercially reasonable. Because the sale was commercially reasonable, the court awarded Center Capital a deficiency judgment against PRA and the guarantor based on stipulated figures, including remaining principal, per-diem interest from the sale date, and contractually authorized fees and costs.


Center Capital Corp. v. PRA Aviation, LLC, 2011 U.S. Dist. LEXIS 11991 (2011)