California Court of Appeals, Fourth District, Second Division
from the Superior Court of San Bernardino County No.
CIVDS1416584. Bryan Foster, Judge. Reversed.
Offices of Ronald Richards & Associates, Ronald N.
Richards; Law Offices of Geoffrey Long and Geoffrey S. Long
for Plaintiff and Appellant.
Law, Scott L. Levitt; Lex Opus, Eric M. Schiffer; Schiffer
ǀ Buus and Eric M. Schiffer for Defendants and
McKINSTER, Acting P. J.
and appellant Black Sky Capital, LLC, (Black Sky) appeals a
summary judgment entered in favor of defendants and
respondents Michael A. Cobb and Kathleen S. Cobb (the
about August 18, 2005, the Cobbs borrowed $10, 229, 250 from
Citizens Business Bank. The note was secured by a deed of
trust on a parcel of commercial real property in Rancho
Cucamonga. On or about September 13, 2007, the Cobbs obtained
a second loan from Citizens Business Bank, in the amount of
$1, 500, 000, which was secured by a second deed of trust on
the same property. Black Sky purchased both notes from
Citizens Business Bank for an undisclosed sum. After the
Cobbs defaulted on the senior loan, Black Sky opted to
conduct a trustee's sale under the senior deed of trust.
It acquired the property on or about October 28, 2014 for $7,
500, 000. On November 4, 2014, after the Cobbs defaulted on
the junior loan, Black Sky filed the suit which is the
subject of this appeal, seeking to recover the amount still
owed on the junior note.
Cobbs moved for summary judgment. Relying on Simon v.
Superior Court (1992) 4 Cal.App.4th 63 (Simon),
they argued that Code of Civil Procedure section
580d prohibits a party holding both a
senior and a junior lien on real property from both
conducting a trustee's sale after default on the senior
note and obtaining a monetary judgment for the balance owing
on the note secured by the junior lien. They contended that
the monetary judgment would be a deficiency judgment, which
is prohibited by section 580d.
trial court granted the Cobbs' motion and entered
judgment for them. Black Sky appealed.
appeal, Black Sky contends that Simon,
supra, 4 Cal.App.4th 63, and the cases following it
have erroneously expanded section 580d, based on an incorrect
reading of Roseleaf Corp. v. Chierighino (1963) 59
Cal.2d 35 (Roseleaf). It contends that section 580d,
by its express terms, does not apply to the present
circumstances. It contends that it is a “sold-out
junior” lienholder within the meaning of
Roseleaf, and that it has the right to seek a
judgment for the balance owed on the junior note.
agree that neither the rule enunciated in Simon nor
section 580d applies under the circumstances of this case.
Accordingly, we will reverse the judgment.
SKY'S CLAIM FOR ANY BALANCE DUE ON THE SECOND LOAN IS NOT
BARRED BY SECTION 580d OR BY SECTION 726