Bank of America, N.A. v. Roberts
217 Cal. App. 4th 1386
| Cal. Ct. App. | 2013Background
- Bank of America, N.A. loaned Roberts $250,000 under a home equity line; deed of trust security on Roberts' Three Rivers property; short sale consented by BofA released its lien on the second deed of trust; Roberts remained personally liable for the loan balance; BofA sued for the deficiency after Roberts defaulted; Roberts argued statutes 580e and 726 barred deficiency and raised unclean-hands and TARP defenses; trial court granted summary judgment for BofA for $235,402.47; Roberts appealed seeking reversal based on these defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amended §580e applies retroactively to Roberts' preexisting short sale. | Roberts—amendment retroactive shield. | BofA—amendment prospective; not retroactive. | Amendment not retroactive; not covering Roberts' short sale. |
| Whether §726 prevents a deficiency judgment where a short sale occurred. | Roberts—§726 bars deficiency. | BofA—short sale waives §726; not barred. | §726 did not preclude the action; deficiency judgment allowed. |
| Whether Roberts can rely on TARP contract as a defense to deficiency. | Roberts—TARP contract creates private beneficiary rights. | TARP/EESA provides no private rights; no third-party beneficiary. | TARP defense rejected; no private right under EESA. |
| Whether the unclean-hands doctrine bars BofA's action. | Roberts—BofA acted inequitably during short sale negotiation. | No unconscionable conduct; short sale consent was voluntary. | Unclean-hands defense rejected. |
Key Cases Cited
- Security Pacific National Bank v. Wozab, 51 Cal.3d 991 (Cal. 1990) (one-form-of-action rule; security first; exhausted security before monetary judgment)
- Alliance Mortgage Co. v. Rothwell, 10 Cal.4th 1226 (Cal. 1995) (anti-deficiency; foreclose before deficiency; security exhaustion)
- National Enterprises, Inc. v. Woods, 94 Cal.App.4th 1217 (Cal. App. 2001) (section 726 objectives; security-first and one-action)
- Shin v. Superior Court, 26 Cal.App.4th 542 (Cal. App. 1994) (one-form-of-action principle in mortgage context)
- McClung v. Employment Development Dept., 34 Cal.4th 467 (Cal. 2004) (presumption against retroactive legislation)
- Espinoza v. Bank of America, N.A., 823 F.Supp.2d 1053 (S.D. Cal. 2011) (federal authority; §580e retroactivity discussions)
- Quarry v. Doe I, 53 Cal.4th 945 (Cal. 2012) (interpretation of retroactivity; ambiguity resolves prospectively)