Kurtz v. Calvo

California Court of Appeal Sep 27, 1999 No. D031301Published

Before: McINTYRE

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Holding. The antideficiency rule of Code of Civil Procedure section 580b does not apply when a trust deed securing a purchase money note is recorded against a property other than the property purchased in the transaction.

Issues

Does the antideficiency rule of section 580b apply when the trust deed securing a purchase money note is not recorded against the purchased property?
Did the sale of the subject properties constitute a single transaction under the rule established in Conley v. Matthes?

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“Section 580b prohibits a deficiency judgment after a judicial or nonjudicial foreclosure under a trust deed securing a purchase money loan.”

“Roseleaf Corp. v. Chierighino (1963) 59 Cal.2d 35, 41 [27 Cal.Rptr. 873, 378 P.2d 97], held that the prohibition against a deficiency judgment in section 580b generally applies only where the foreclosure is under a trust deed on the purchased property.”

“Plaintiffs’ trust deed securing payment of the purchase price was recorded against the National City property, not against the purchased El Cajon property. Thus, Plaintiffs’ action on the note does not seek a deficiency judgment within the terms of section 580b.”

[193]

Opinion

McINTYRE, J.

Samuel T. Kurtz and Jerelyn Kurtz (collectively, Plaintiffs) sued Paul Calvo, Peggy Calvo, Howard Yonet, and Daniele Yonet (collectively, Defendants) to collect on a promissory note. They appeal a judgment in favor of Defendants after the first phase of a bifurcated trial in which the court determined the action is barred by the antideficiency rule of Code of Civil Procedure section 580b (section 580b). They contend (1) the antideficiency rule does not apply because the trust deed securing the note was not recorded against the purchased property, and (2) the court improperly decided an issue of fact concerning whether the trust deed beneficiary was a “vendor” within the terms of the statute. We reverse the judgment.

Factual and Procedural Background

Defendants purchased an apartment building in El Cajon. Real estate broker David Savage received from Defendants a commission or “finder’s fee” of $10,000 in cash and a $48,500 promissory note in connection with the purchase. The note was secured by a junior deed of trust against a property in National City that Defendants had purchased three years earlier. Savage assigned the note to Plaintiffs. Defendants later lost both properties in foreclosures by senior lienholders.

Plaintiffs sued Defendants for breach of contract alleging nonpayment of the promissory note. The court bifurcated the issue of a defense under section 580b and heard testimony without a jury. Concluding that the evidence was not in conflict and that

Conley

Matthes

(1997) 56 Cal.App.4th 1453 [66 Cal.Rptr.2d 518] was directly on point, the court determined the antideficiency rule of section 580b precluded an action on the note and entered judgment in favor of Defendants in January 1998.

Discussion

Section 580b states in pertinent part: “No deficiency judgment shall lie in any event after a sale of real property . . . under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property . . . .”

Kurtz v. Calvo

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