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Millennium Rock Mortgage, Inc. v. T.D. Service Co.

November 24, 2009; as modified December 22, 2009


APPEAL from a judgment of the Superior Court of Sacramento County, Loren E. McMaster, Judge. Reversed with directions. (Super. Ct. No. 34-2008-00015011-CU-OR-GDS).

The opinion of the court was delivered by: Butz, J.


Defendant and appellant T.D. Service Company (TDS) appeals from an order granting a preliminary injunction that enjoined it from re-conducting a non-judicial foreclosure sale for certain real property in Sacramento. The auctioneer at the foreclosure sale used an auction script for a different foreclosure, but erroneously called out the street address of the subject property. As a result, he opened the bidding with a credit bid that was only a fraction of what was actually owed on the subject property. Plaintiff and respondent Millennium Rock Mortgage, Inc. (Millennium) bid slightly more than the opening credit bid and was declared the successful bidder. Later the same day, TDS discovered the error and sought to conduct the sale again. Millennium sued to quiet title to the property.

The trial court issued a preliminary injunction barring TDS from conducting a new foreclosure sale. The issue on appeal is whether the auctioneer's mistake, discovered after the close of bidding but prior to the issuance of a trustee's deed, constituted an "irregularity" sufficient to give the trustee the right to rescind the sale. The trial court believed it did not. We disagree and shall reverse the order.


The relevant facts are not in dispute. JP Morgan Chase Bank (JP Morgan) was the beneficiary under a deed of trust securing the subject property located on Arcola Avenue in Sacramento. TDS was retained by JP Morgan as trustee to conduct a non-judicial foreclosure sale on the property. Prior to the sale, JP Morgan instructed TDS to submit a credit bid on the property of $377,710.57, plus foreclosure fees and costs. After adding on fees and costs, TDS submitted a credit bid price of $382,544.46 to Trustee's Assistance Corporation, which served as the auctioneer for the foreclosure sale.

The sale was held on June 19, 2008. On the same day, the auctioneer for Trustee's Assistance Corporation was also conducting a foreclosure sale for another property located on 13th Avenue in Sacramento. The beneficiary's credit bid for that property was $51,447.50.

As was his custom and practice, the auctioneer used a script to conduct the sale. Every script includes a trustee sale (or "TS") number, a legal description of the property, and the property address. The script for the 13th Avenue property contained a clerical error--although it had the correct TS number, legal description, and credit bid amount, the Arcola Avenue address was inserted, rather than the 13th Avenue address.

In announcing the sale for the 13th Avenue property, the auctioneer opened the bidding with the beneficiary's credit bid of $51,447.50. However, due to the mistake in the script, he called out the Arcola Avenue address instead of the 13th Avenue address. Millennium submitted a bid for $51,500. No other bids having been submitted, the auctioneer closed the bidding and announced the property "sold." Millennium promptly tendered a cashier's check for more than the amount of the bid and demanded a receipt. The auctioneer gave Millennium a receipt for $51,500 containing the TS number for the Arcola Avenue property.*fn1

Later the same day, the auctioneer discovered his mistake. He telephoned Millennium's representative and advised him that the sale was invalid due to a procedural error. The representative replied that Millennium would commence legal action. TDS returned the bid funds to Millennium and announced its intention to hold a new trustee's sale.


Millennium filed a complaint against TDS and others for failure to issue a trustee's deed in violation of Civil Code section 2924h,*fn2 and to quiet title to the Arcola Avenue property. The complaint sought an order compelling TDS to issue a trustee's deed and a judgment quieting Millennium's title to the Arcola Avenue property.

Millennium then filed an order to show cause re: preliminary injunction, seeking to restrain TDS from holding a new sale for the Arcola Avenue property. After a hearing, the trial court granted the injunction. The court ruled that the error by the auctioneer was not an irregularity sufficient to invalidate ...

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