Harley-Davidson Credit Corp. v. Mark B. Galvin

United States Court of Appeals
For the First Circuit
No. 15-1157
HARLEY-DAVIDSON CREDIT CORP.,
Plaintiff, Appellee,
v.
MARK B. GALVIN,
Defendant, Appellant,
RASAIR, LLC,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Landya B. McCafferty, U.S. District Judge]
Before
Howard, Chief Judge,
Lynch and Kayatta, Circuit Judges.
Timothy Chevalier, with whom McCandless & Nicholson, PLLC,
was on brief, for appellant.
Mark W. Thompson, with whom Wong Fleming was on brief, for
appellee.
December 8, 2015

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LYNCH, Circuit Judge. Under the terms of a security
agreement assigned to it, Harley-Davidson Credit Corp. ("Harley-
Davidson") seeks to collect $108,681.50 from Mark B. Galvin.
Galvin is the guarantor of a defaulted promissory note on a loan
secured by an interest in a Cessna 421C aircraft ("the Aircraft").
The suit is for the deficiency balance that remained due after
Harley-Davidson repossessed and sold the Aircraft through a third-
party dealer for $155,000.00.
Galvin disputes the extent of his liability on the
grounds that Harley-Davidson's disposition of the Aircraft was not
"commercially reasonable," a requirement set forth in the security
agreement and Nevada commercial law, which the parties had selected
to govern their contract.
On a motion for summary judgment, the district court
held that there was no dispute of material fact that the sale was
"commercially reasonable" and entered partial summary judgment in
favor of Harley-Davidson, denying only its request for attorney's
fees. Galvin filed a motion for reconsideration, which was denied.
The court later granted a separate motion by Harley-Davidson for
attorney's fees. Galvin appeals from the entry of summary judgment
and the denial of his motion to reconsider. We agree with Galvin
that a genuine dispute of material fact exists as to whether the
sale was "commercially reasonable." We reverse and remand.

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I.
On review of summary judgment, we recite the facts in
the light most favorable to the non-moving party and "draw all
reasonable inferences in his favor." Ray v. Ropes & Gray LLP, 799
F.3d 99, 104 (1st Cir. 2015). In April 2008, Eaglemark Savings
Bank ("Eaglemark") loaned RASair, a New Hampshire LLC that managed
and operated private aircrafts, $250,000 for the purchase of a
Cessna 421C Aircraft, in exchange for an "Aircraft Secured
Promissory Note" ("the Note") for the full amount of the loan and
an "Aircraft Security Agreement" ("the Agreement") giving
Eaglemark a first priority interest in the Aircraft. Mark Galvin,
a pilot and the owner of RASair, personally guaranteed payment of
the loan. Eaglemark assigned the Note and the Agreement (together
"the Loan Documents") to Harley-Davidson.
More than two years later, in August 2010, RASair
defaulted on the Note. Exercising its right under the Loan
Documents to sell the Aircraft in order to reduce the balance owed,
Harley-Davidson arranged for Specialty Aircraft Services, Inc.
("Specialty"), a dealer specializing in the sale of repossessed
aircraft, to help. William O'Brien communicated with Galvin on
behalf of Specialty.
On August 24, 2010, O'Brien wrote in an email responding
to Galvin's question about a potential sale price that,
"[d]epending on the actual paint and boot condition, we will

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advertise around 225-230 [thousand] / Expect 180-200 [thousand]
within 90 days." In that email, O'Brien then asked Galvin about
the Aircraft's annual inspection. Galvin responded that the plane
would need a "fresh" inspection, elaborated on the Aircraft's
condition, and stated, "[e]verything else good."
Despite Specialty's request, Galvin did not deliver the
plane to Specialty in 2010. In January 2011, Galvin emailed
O'Brien to tell him that a mechanic had identified damage to the
plane's rudder caused by exposure to "heavy winds," which had
rendered the Aircraft unmovable. In March 2011, Galvin emailed
Mark Strassel, Director of Operations, Aircraft, at Harley-
Davidson, and explained that, in coordinating the rudder's
repairs, Galvin had looked into having a Cessna dealership, Maine
Aviation, assume responsibility for the sale to see if it "made a
better situation," but that "[he didn't] see any advantage to them
as a broker over your guy in Florida," referring to O'Brien. On
September 6, 2011, Harley-Davidson repossessed the Aircraft and
moved it to Florida and into Specialty's custody.
On September 7, 2011, Strassel informed Galvin that one
of the plane's logbooks was missing. Galvin testified that he
immediately "sent it overnight via UPS, insured for $5,000., [sic]
directly to Mr. O'Brien per instructions received from Mr.
Strassel." The parties agree that a missing logbook would decrease
the plane's value.

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Galvin testified that when he called Specialty on behalf
of a potential buyer on November 4, 2011, he learned that while in
Specialty's possession, the Aircraft had been vandalized and
equipment from its audio panel taken. Galvin also testified that
when he then tried to locate advertising materials related to the
Aircraft on Specialty's website and "Controller," a prominent
aircraft sales website where aircraft are listed for sale, he found
none. Galvin emailed O'Brien, who responded that Specialty was
"looking for bids on the aircraft," but that the plane needed "some
exh[aust] work, the autopilot is inop[erable] and the
pressurization is only 3.0 differential." O'Brien instructed
Galvin to have the buyer call him and said the plane was in fact
listed on Controller. Galvin testified that after his
communications with Specialty and O'Brien, he "dropped the
potential buyer."
On November 30, 2011, Harley-Davidson executed a
purchase agreement for the plane with an individual buyer for
$155,000. According to the purchase agreement, the Aircraft was
sold in an "as is" condition, and the buyer waived any warranty
with respect to the plane's "airworthiness." In the agreement,
Harley-Davidson promised to replace the missing avionics
components, "a Garmin 530, Garmin 340 and Garmin 327," no later
than December 5, 2011. An invoice for the avionics as well as
additional repairs is dated December 9, 2011, the same as the

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purchase agreement's stated closing date. Following the sale,
Harley-Davidson calculated the outstanding debt, deducted the
costs of repairs to the audio panel, and sent Galvin a letter
requesting $108,681.50. 1 Galvin did not pay.
II.
On October 5, 2012, Harley-Davidson filed a breach of
contract action against Galvin and RASair to collect the
$108,681.50 deficiency in New Hampshire district court, pursuant
to 28 U.S.C. § 1332(a) diversity jurisdiction.
The district court entered default judgment against
RASair on March 12, 2013. On June 5, 2013, Harley-Davidson moved
for summary judgment against Galvin, Fed. R. Civ. P. 56, which the
court denied without prejudice. On May 23, 2014, after further
discovery, Harley-Davidson renewed its motion for summary
judgment. Galvin opposed the motion on the grounds that Harley-
Davidson failed to comply with the Loan Documents and a provision
of the Nevada Commercial Code, Nev. Rev. Stat. Ann. § 104.9610,
1 The district court explained Harley-Davidson's
calculations: "The remaining balance was determined as follows in
accordance with paragraph ten of the Aircraft Security Agreement:
At the time of the sale, the total amount due to Harley-Davidson
from RASair was $261,681.50, which included $243,162.98 owed under
the Loan Documents, $7,750 for a Repossession/Broker Fee, $375 in
Escrow Fees, and $12,393.52 in Aircraft Repairs, Storage, and
Maintenance. The Aircraft was sold for $155,000, which resulted
in a remaining balance of $108,681.50."

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requiring disposition of collateral after a debtor's default to be
"commercially reasonable." 2
Under Nevada commercial law, which follows the Uniform
Commercial Code ("UCC"), one method of demonstrating that a
disposition was "commercially reasonable" is to show that the
disposition was conducted "in conformity with reasonable
commercial practices among dealers in the type of property that
was the subject of the disposition." Nev. Rev. Stat. Ann.
§ 104.9627(2)(c); see U.C.C. § 9-627 (2000).
On September 4, 2014, the district court granted partial
summary judgment for Harley-Davidson, finding that Galvin had not
raised a genuine issue of material fact as to the commercial
reasonableness of the sale. Stating that "selling repossessed
collateral through a dealer, if such sale is 'fairly conducted, is
recognized as commercially reasonable,'" Harley-Davidson Credit
Corp. v. Galvin, No. 12-cv-374, 2014 WL 4384632, at *3 (D.N.H.
Sept. 4, 2014) (quoting Jones v. Bank of Nev., 535 P.2d 1279, 1282
(Nev. 1975)), the district court credited that Harley-Davidson had
employed a recognized dealer of repossessed aircraft. Although
2 Nevada Revised Statutes § 104.9610(2) provides as
follows: "Every aspect of a disposition of collateral, including
the method, manner, time, place, and other terms, must be
commercially reasonable. If commercially reasonable, a secured
party may dispose of collateral by public or private proceedings,
by one or more contracts, as a unit or in parcels, and at any time
and place and on any terms."

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not expressly stating so, the district court appears to have relied
on that finding in determining that Harley-Davidson satisfied its
initial burden at summary judgment to show commercial
reasonableness, such that the district court, citing Colonial Pac.
Leasing Corp. v. N & N Partners, LLC, 981 F. Supp. 2d 1345, 1349-
50 n.1 (N.D. Ga. 2013), shifted the burden of proof to Galvin to
raise a genuine issue of material fact. The district court
rejected Galvin's arguments, inter alia, that Specialty's response
to the vandalism of the Aircraft led to a diminished sales price
and was commercially unreasonable. The district court held that,
"Galvin has raised no genuine issues of material fact concerning
the commercial reasonableness of the disposition of the Aircraft."
Harley-Davidson Credit Corp., 2014 WL 4384632, at *7. Galvin filed
a motion for reconsideration, which was denied on December 15,
2014. This appeal followed.
III.
We review entry of summary judgment de novo, Ray, 799
F.3d at 112, and denial of a motion for reconsideration for abuse
of discretion, Biltcliffe v. CitiMortgage, Inc., 772 F.3d 925, 930
(1st Cir. 2014).
We hold that the district court's analysis of Harley-
Davidson's motion for summary judgment prematurely shifted the
burden of proof onto Galvin. Evaluating the record under the
correct standard, we find that a genuine dispute of material fact

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exists regarding whether Specialty's handling of the damage to the
Aircraft caused by the vandalism that occurred while in its custody
rendered Harley Davidson's disposition of the Aircraft
commercially unreasonable. For the reasons explained below, we
reverse the district court's judgment and remand.
A. Burden of Proof
Summary judgment is proper "if the movant shows that
there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law." Fed. R. Civ. P. 56.
When the movant bears the burden of proof at trial, he must
demonstrate every element of his case such that "no reasonable
trier of fact could find other than for [him]." Lopez v.
Corporación Azucarera de P.R., 938 F.2d 1510, 1516 (1st Cir. 1991)
(quoting Paul v. Monts, 906 F.2d 1468, 1474 (10th Cir. 1990) (per
curiam)). If he does so, the burden shifts to the nonmovant to
establish that a genuine material dispute exists. See id. at 1517.
The district court and the parties all agree that Nevada
Revised Statutes § 104.9610(2) places the burden on Harley-
Davidson to show at trial that the sale of the Aircraft was
"commercially reasonable," and so we assume without deciding that
this interpretation of Nevada law is correct. As Harley-Davidson
is the party moving for summary judgment and the party who bears
the burden of proof on the issue of commercial reasonableness at
trial, Harley-Davidson bears the burden of proof at summary

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judgment to show that no reasonable trier of fact could find other
than that the sale was "commercially reasonable." See Lopez, 938
F.2d at 1516.
The district court prematurely shifted the burden of
proof onto Galvin. Under Nevada law, a creditor may demonstrate
that a sale through a dealer was "commercially reasonable" by
showing that the sale was conducted "in conformity with reasonable
commercial practices among dealers in the type of property that
was the subject of the disposition." Nev. Rev. Stat. Ann.
§ 104.9627(2)(c). The district court and Harley-Davidson point to
Jones v. Bank of Nevada, 535 P.2d 1279 (Nev. 1975), to suggest
that using a dealer alone meets this requirement.
Reliance on Jones is misplaced. In reviewing a sale of
collateral, the Jones court explained the rationale of a trial
court by noting the trial court's quoting of a comment to a former
provision of the UCC. Id. at 1282. That comment, no longer
existent in the UCC, stated that a sale through a dealer, if
"fairly conducted, is recognized as commercially reasonable," id.
(quoting UCC § 9-507, cmt.). But Jones did not hold that using a
dealer alone qualifies a sale as "commercially reasonable"
regardless of whether the sale was "fairly conducted." Indeed, it
rather plainly states the opposite: use of a dealer must also be
"fairly conducted." Id. at 1282. Harley-Davidson points to no
Nevada authorities supporting the district court's holding that a

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creditor's use of a dealer alone demonstrates commercial
reasonableness, and we find none. 3
The district court erred in shifting the burden of proof
to Galvin. Cf. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)
(holding that when the nonmoving party bears the burden of proof
at trial, the moving party may obtain summary judgment by showing
that "there is an absence of evidence to support the non-moving
party's case").
B. Genuine Dispute of Material Fact
Our task is to determine, viewing the record in the light
most favorable to Galvin, whether any reasonable trier of fact
could find other than that the sale was "commercially reasonable"
within the meaning of Nevada Revised Statutes § 104.9610. See
Lopez, 938 F.2d at 1516. We conclude that there is a genuine
dispute of material fact, such that a reasonable trier of fact
could find against Harley-Davidson.
3 We need not and do not decide the weight Nevada law gives
to a creditor's use of a dealer in most circumstances. We note
that even were we to accept Harley-Davidson's suggestion that,
once a dealer is used, it is the debtor's burden to show that the
sale "was in some manner atypical," here, there is more than enough
to find that the circumstances were "atypical." Significant damage
occurred to the plane because of vandalism while in the dealer's
custody; the plane was rendered not airworthy as a result. Under
such conditions, even assuming use of a dealer were as significant
as Harley-Davidson contends, it is not enough for the creditor to
point to the mere fact that a dealer was used, especially where
the governing statute requires that it show "[e]very aspect of a
disposition" was "commercially reasonable." Nev. Rev. Stat. Ann.
§ 104.9610(2).

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Harley-Davidson asserts that the sale of the Aircraft
was "commercially reasonable" because of its use of a dealer. We
have already rejected that fact alone as insufficient. Rather,
Harley-Davidson must show that in these particular circumstances,
where the repossessed collateral was vandalized while in the
dealer's care such that the plane could not be flown, that
Specialty's disposition of the Aircraft was "in conformity with
reasonable commercial practices among dealers in the type of
property that was the subject of the disposition." Nev. Rev. Stat.
Ann. § 104.9627(2)(c); see Royal W. Airways, Inc. v. Valley Bank
of Nev., 747 P.2d 895, 897 (Nev. 1987) (per curiam) (holding that
"neglect of the [repossessed] airplane and the change in its market
value" while in the creditor's possession failed to satisfy the
creditor's duty to "dispose" of the collateral and remanding to
determine whether the conduct was commercially unreasonable); Iama
Corp. v. Wham, 669 P.2d 1076, 1079 (Nev. 1983) (scrutinizing
actions of creditor while in possession of collateral).
Harley-Davidson also contends that Galvin's consent to
using Specialty as a dealer and alleged "participation" in the
sale rendered the sale "commercially reasonable." Harley-Davidson
has pointed to no Nevada authorities to support this interpretation
of Nevada law. Rather, relying on Piper Acceptance Corp. v.
Yarbrough, 702 F.2d 733 (8th Cir. 1983) (per curiam) (applying
Arkansas law), a case in which a debtor's lawyer wrote to a

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creditor, "go ahead and sell the airplane without our having
checked it further," id. at 734, Harley-Davidson suggests that
express authorization "arguably makes the question of commercial
reasonableness of the sale immaterial," id. at 735. To begin, the
court in Piper did not hold that consent to sale through a dealer
renders a sale "commercially reasonable." But in any event, this
case is distinguishable, as there is no evidence on the record
that Specialty ever informed Galvin of the November 30 sale, much
less that Galvin gave his "express authorization." 4
On these arguments, a reasonable trier of fact could
decide against Harley-Davidson. Furthermore, we agree with Galvin
that there is a genuine dispute of material fact as to whether
Specialty's handling of the sale after the vandalism fell below
the standard of reasonable commercial practices among such
dealers. Galvin contends the Aircraft's missing avionics would
likely have turned away buyers. See Levers v. Rio King Land &
4 We are also not persuaded by Harley-Davidson's citation
to Ralston-Purina Co. v. Bertie, 541 F.2d 1363 (9th Cir. 1976)
(applying Idaho law). In Bertie, a chicken farmer's poultry
inventory was repossessed and sold by Ralston-Purina Company for
a supply-feed debt secured by the inventory. Id. at 1364-65. The
trial court made an evidentiary ruling disallowing Bertie's
testimony as an expert for his defense on the basis that he
conceded he was "well informed" about and had "participated in the
disposition of the live chickens," yet "he and his wife had not
attempted to enjoin or restrict" the disposition, despite having
the ability to do so under Idaho law. Id. at 1366. The appeals
court was listing the evidentiary basis for the trial court's
application of Idaho estoppel law -- the case is not on point.

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Inv. Co., 560 P.2d 917, 920 (Nev. 1977) (considering number of
potential buyers); Jones, 535 P.2d at 1281 (considering seller's
efforts to attract buyers). The district court found Galvin had
not properly supported that contention because he "simply points
to his own affidavit." While self-serving affidavits that do not
"contain adequate specific factual information based on personal
knowledge" are insufficient to defeat summary judgment, Spratt v.
R.I. Dep't of Corr., 482 F.3d 33, 39 (1st Cir. 2007) (quoting
Quinones v. Buick, 436 F.3d 284, 290 (1st Cir. 2006)), Galvin's
personal knowledge is backed up by thirty years of experience as
a private pilot, having purchased and sold at least seven aircraft,
and having owned and operated three aviation-related businesses.
He testified, "[t]he missing avionics and resulting
questionability to the history of the aircraft, would turn away
all but those who . . . 'bottom fish' for bargains," resulting in
lower offers. And beyond his affidavit, the record also contains
the purchase agreement between Specialty and the individual buyer.
Replacement of the avionics was specifically written into that
agreement, which strongly indicates that having the avionics was
important, as the buyer insisted upon their replacement as a
condition of the sale.
We note that although O'Brien's November 5, 2011, email
states that Specialty was "looking for bids on the aircraft," that
evidence does not show buyers were as interested in the plane as

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they would have been had the vandalism been corrected prior to
marketing of the plane or had the vandalism been prevented in the
first place. The fact that "Specialty encouraged Galvin to have
an allegedly interested party contact it about purchasing the
Aircraft," does not alter our conclusion that, in light of all the
evidence, viewed most favorably to Galvin, a reasonable trier of
fact could find Specialty's actions dissuaded buyers.
Galvin also contends that Specialty sold the Aircraft
for an "unreasonably lower sales price" as a result of the
vandalism. 5 Under Nevada law, "[a]lthough the price obtained at
the sale is not the sole determinative factor, nevertheless, it is
one of the relevant factors in determining whether the sale was
commercially reasonable." Levers, 560 P.2d at 920; see also FDIC
v. Moore Pharm., Inc., No. 2:12-cv-00067, 2013 WL 1195636, at *3
(D. Nev. Mar. 22, 2013) ("The conditions of a commercially
reasonable sale should reflect a calculated effort to promote a
sales price that is equitable to both the debtor and the secured
creditor." (quoting Dennison v. Allen Grp. Leasing Corp., 871 P.2d
288, 291 (Nev. 1994) (per curiam))). Galvin points to the
allegedly low invoice prices Harley-Davidson submitted as evidence
5 We need not decide how wide a discrepancy in price and
value of collateral must be to trigger "close scrutiny" under
Nevada law, Levers, 560 P.2d at 920, as the vandalism alone gives
us reason enough to scrutinize the sale. And in any case, Nevada
Revised Statutes § 104.9610(2) requires "[e]very aspect of a
disposition of collateral" to be "commercially reasonable."

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that the Aircraft was not properly repaired, and that if not
properly repaired, it was likely sold as not airworthy and would
have obtained a lower price. Although Harley-Davidson has argued
the plane was in poor condition and damaged when delivered to
Specialty, it has not disputed Galvin's testimony that the plane
was nonetheless airworthy before the vandalism. The November 30,
2011, purchase agreement, however, states that the plane is being
sold "as is" and expressly disclaims its "airworthiness." Given
the facts on the record, there is a genuine dispute of material
fact regarding whether the vandalism's effect on the plane's
airworthiness may have affected the price obtained. This
conclusion is not altered by damage that already existed at the
time of repossession. Simply put, a fact-finder could reasonably
conclude that an airworthy craft would attract more interest and
a higher price than would a non-airworthy craft that had been
vandalized, even if the seller promised to repair the known damage.
With the latter craft, the buyer may wonder what else happened to
the plane and has no chance to test it out. 6
Harley-Davidson attempts to show that "Galvin did not
expect the Aircraft to sell for a significantly higher price than
it did," pointing to an email exchange between O'Brien and Galvin
6 We do not reach Galvin's arguments that the sale was not
an arm's-length transaction or that the plane was not sold in its
"present condition," as they were not raised below.

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in which O'Brien informed Galvin, "[e]xpect 180-200 within 90
days." In reply, Galvin responded to O'Brien's other remarks and
then affirmed, "[e]verything else good." Galvin has not disputed
that he made that statement. However, he has not admitted that
stating "[e]verything else good," referred to the potential price
and not to the plane's condition being otherwise good. Galvin
also points to Bluebook values for the make and model of his plane
showing average retail values of approximately $269,000. It is
possible that a trier of fact may determine that Galvin should not
receive $269,000, and instead should receive at most $200,000, as
the maximum amount he expected. However, we cannot say that no
reasonable trier of fact would find he should have received more
than $155,000, and that at least some of the difference between
the expected and received value was due to Specialty's handling of
the vandalism.
Based on these facts, we find Harley-Davidson has failed
to show that no reasonable trier of fact could find other than
that the sale was "commercially reasonable." Summary judgment
should have been denied. That said, we note that given the amount
in dispute, we see no reason why the parties should not be able to
resolve this matter without further costly litigation.
We need not reach Galvin's motion for reconsideration.
IV.
For the reasons stated, we reverse and remand.

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