Legal Question in Business Law in California

Unless the promissory note provides otherwise, the security does not limit damages.

The sellers can sue -- and get a judgment -- for whatever sum gives them the "benefit of the bargain," which is the usual measure of damages for breach of contract. In this case, this would probably be the payoff amount due on the note, principal plus interest. Of course, you are entitled to credit for whatever they got from repossessing the collateral and disposing of it in some "commercially reasonable manner." What's reasonable is quite situation-specific, unless there is also a security agreement or some other contract document with a clause discussing valuation and disposal of the collateral. Even in small claims, the sellers can sue for up to $7,500 of heretofore unrecovered damages on either nonpayment of the note or breach of the contract of sale.