Court Opinion

ID: 9724474
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:57:43.160033+00
Date Added: 2024-06-11T18:25:00.722477
License: Public Domain

GATES, J.
I wholeheartedly concur in my colleagues’ decision to reverse the judgment upon the pleadings entered in this particular action. I write here only to caution against too broad an interpretation being given to our holding.
Accepting as true, as we must, the allegations of appellant’s complaint, respondents, acting in the role of “dummy” purchasers, joined with others in a conspiracy to perpetrate a deliberate fraud which could conceivably have caused injury even to a lender who had exercised reasonable care in the conduct of its business affairs.
This state’s antideficiency statutes were never designed to allow such' persons to escape the consequences stemming from their part in this joint tort while their cohorts yet remained liable. Nevertheless, I trust this fact will not be mistakenly construed by our various lending institutions and their counsel, or by our trial courts themselves, as indicating we believe the careful limitations imposed upon fraud actions by our Legislature (see Fin. Code, §§ 779, 7459, 7460 and 15102), may be ignored and open season declared on more traditional defaulting borrowers.
Our present extremely limited record, of course, reveals virtually none of the determinative events surrounding appellant’s alleged loss and, as jurists, we have little pragmatic experience in this arcane field of mortgage financing. Appellant’s counsel, however, did advise us at oral argument that at one point her client actually had held title to the very property which, presumably after an appropriate investigation and appraisal, it had agreed to accept, at least in the absence of a judicial foreclosure, as full satisfaction for its loan. She further stated that this period of ownership had occurred *1516after the Federal Home Loan Mortgage Corporation had closed out other potential purchasers by means of a “full credit” bid.
Were these facts not disturbing enough, counsel further informed us that thereafter, by means of some unknown private transaction that lacked even the protection provided by a trustee sale, appellant had unilaterally fixed its losses at $50,000. This sum it now seeks to recover together with an additional $50,000 by way of punitive damages. Such a scenario obviously has the potential for the gravest of abuses. (How any company can rationally expect to remain solvent when it accepts as security property worth only one-half the amount it lends, is a question we did not pose.)
Radio, television, and the newspapers, to say nothing of one’s daily “junk mail,” are replete with the importunities of various lenders and mortgage brokers. They assure any who will harken to their siren call that, since they are concerned solely with the ownership of property, to them it matters not that a potential borrower has been turned down by banks and savings and loan associations, that he cannot verify his income, that his credit is not established, etc., etc. In addition, it is at least rumored that certain real estate salesmen eager for a commission have been known to urge prospective purchasers to adopt “creative-financing” schemes which, should they collapse, might readily provide a superficially firm foundation for an assertion of fraud.
Rare indeed is the attorney intellectually incapable of dictating a complaint setting forth any cause of action known to the law. Although, hopefully, an inappropriately accused borrower would ultimately prevail at trial, or upon a motion for summary judgment, or even after a succession of demurrers had forced a sufficient specificity of pleading, nonetheless, such counsel provided defenses would be of little significance to a defendant too impoverished to make his mortgage payments.
In sum, while we must be ever alert to foil the type of gross fraud allegedly perpetrated here, not every factual inaccuracy or piece of “puffing” by a borrower, unrelated to the value of the security the lender has voluntarily agreed to accept, will sustain an action for fraud brought by a lender who is not a bank, savings and loan, or credit union, or even by one of these institutions upon an indebtedness of less than $ 150,000 incurred in connection with a single-family, owner occupied residence.
To hold otherwise would completely emasculate our long honored antideficiency statutes and render meaningless the restricted exceptions thereto our Legislature has so recently promulgated. It would also cause individual borrowers who are not, as here alleged, engaged in a conspiracy, either *1517(1) to bear the potentially impossible cost of a lawsuit, or (2) to continue to pay for land their lender earlier had taken unto itself by means of a full credit bid made in a nonjudicial foreclosure, and which it thereafter had disposed of in a privately conducted sale.
A petition for a rehearing was denied August 31, 1987.