Lender proceeded against multiple properties in California Case

Creditor did not violate antideficiency provision in California Case

GILBERT DREYFUSS et al., Plaintiffs and Appellants, v. UNION BANK OF CALIFORNIA, Defendant and Respondent.
No. S082261.

Case Law
SUPREME COURT OF CALIFORNIA
24 Cal. 4th 400; 11 P.3d 383; 101 Cal. Rptr. 2d 29; 2000 Cal. LEXIS 8279; 2000 Cal. Daily Op. Service 8914; 2000 Daily Journal DAR 11875

November 6, 2000, Decided

Facts: Plaintiff borrowers defaulted on a loan secured by separate deeds of trust on three parcels of real property. Defendant bank conducted a nonjudicial foreclosure of one property and then proceeded with serial foreclosure sales of the remaining properties; prior to each successive sale, it did not seek a judicial determination of fair market value of the property sold or purport to credit such amount to the debt.

Issue: Whether creditor violated the antideficiency provisions of Cal. Civ. Proc. Code §§ 580a, 580d

Ruling: No. There was no violation. Section 580a did not limit creditor's right to proceed against multiple items of collateral. Nor did the sales fall under § section 580d's restriction against deficiency judgments. As a creditor, he had the right to exhaust all of the real property pledged to secure an obligation. Specifically, creditor could proceed seriatim in foreclosing against multiple items of collateral without commencing a judicial action to determine the fair market value of each item sold.

Lesson Learned: A creditor's resort to any and all security on a debt does not implicate the antideficiency provisions. Cal. Civ. Proc. Code § 580a applies only to shield a borrower from personal liability; it has no application to a situation where no attempt is made by the creditor to secure a personal judgment against a debtor for a deficiency remaining after sale under a deed of trust.

Written by Kevin Levonas and Jerry L.