Black Sky Capital v. Cobb

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. Years later, the Cobbs obtained a second loan from Citizens Business Bank, which was secured by a second deed of trust on the same property. Black Sky Capital purchased both notes from Citizens Business Bank. 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 after the Cobbs defaulted on the junior loan. Black Sky filed the suit seeking to recover the amount still owed on the junior note. The Cobbs moved for summary judgment, pertinent here, relying on section 580d. They contended that the monetary judgment would be a deficiency judgment, which is prohibited by section 580d. The trial court granted the Cobbs’ motion and entered judgment for them. Black Sky appealed, contending that the caselaw used as grounds for the Cobbs' motion and trial court's judgment erroneously expanded section 580d, based on an incorrect reading of Roseleaf Corp. v. Chierighino (1963) 59 Cal.2d 35 (Roseleaf). Black Sky contended that section 580d, by its express terms, did not apply here. It maintained that it was a “sold-out junior” lienholder within the meaning of Roseleaf, and that it had the right to seek a judgment for the balance owed on the junior note. The Court of Appeal agreed that section 580d did not apply under the circumstances of this case. Accordingly, the Court reversed the judgment. View "Black Sky Capital v. Cobb" on Justia Law