MEMORANDUM*

Because the bank has presented material evidence that it was a holder in due course of the note, the Rosses can only raise their counterclaims if, at negotiation, Ameritrust had notice of Yegen Marine's February 7, 1990, letter. Cal.Com.Code §§ 3302(a)(2)(F); 3305(b). The Rosses presented no evidence of notice. Contrary to their claim on appeal, they knew that SNB sought summary judgment in its in personam claim, ER at 103, and presented no evidence, outside of their counterclaims, to defeat it. Summary judgment on SNB's claims was, thus, appropriate.

Most of SNB's in rem fees and costs are attributable to its unreasonable blocking of the Rosses' proposed sale. Courts award fees and costs only to the extent reasonably necessary for accomplishing the foreclosure and sale. See New York Dock Co. v. Steamship Poznan, 274 U.S. 117, 121 (1927) (equitable principles justify reimbursement for services to arrested ship from sale proceeds); RTC v. BVS Dev., Inc., 42 F.3d 1206, 1215-16 (9th Cir.1994) (failure to mitigate costs affects amount of deficiency); Tobler v. Yoder & Frey Auctioneers, Inc., 462 F.Supp. 788, 798 (S.D.Ga.1978) (allowing only reasonable costs), aff'd, 620 F.2d 508 (5th Cir.1980). The Rosses offered uncontroverted evidence that on August 19, 1992, they presented a willing buyer who proposed to pay SNB's own estimate of the boat's value, but SNB rejected the offer. SNB explains the rejection only by citing illusory "strings" on the proposed lien release. We see no justification on this record for SNB's action and therefore allow SNB only costs incurred before August 19, 1992.

We therefore AFFIRM the grants of summary judgment, but REVERSE the judgment as to the amount of the debt and allowable costs and REMAND for a recalculation of the deficiency. In conducting the calculation, the district court shall deduct from the original debt $20,000 for sale of the boat and include no fees and costs (including the costs of arresting and selling the boat) incurred in pursuing the in rem action after August 19, 1992. Each party shall bear its own costs on appeal.