198 Cal. App. 4th 903
Cal. Ct. App.2011Background
- Gramercy lent $35 million to Fiesta de Vida, LLC (the borrower) secured by a deed of trust on Riverside County real property; loan and guaranty documents provided New York law; Lakemont entities guaranteed the loan and waived certain defenses.
- Foreclosure occurred; trustee sale yielded $5.75 million to Gramercy’s assignee, with Gramercy seeking the balance of approximately $31 million plus costs.
- Guaranty contained a New York choice-of-law provision but included waivers of California antideficiency defenses (CCP §§580a, 726, and Civ. Code §2856).
- Judgment against Lakemont for the full deficiency amount was entered, and Lakemont appealed, arguing New York law should apply to limitations on deficiency.
- The trial court applied New York law in theory but concluded the waivers rendered any antideficiency protections unavailable; the appeal addresses enforceability of the choice-of-law provision and waivers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NY antideficiency law controls the deficiency | Gramercy relies on NY law per contract | Lakemont seeks NY protections under choice of law | Choice of law not controlling; NY antideficiency inapplicable to out-of-state property; waivers control |
| Whether the guaranty waivers estop antideficiency defenses | Waivers bar defenses under CCP §§580a/726, Civ. Code §2856 | Waivers insufficient to bar defenses | Waivers clear and enforceable; Lakemont estopped from asserting antideficiency protections |
| Whether Nevada law applies | Not applicable beyond mortgage context | Nevada law should apply if NY law not controlling | Nevada law has no application; property, contract, and governing law are California-centric |
Key Cases Cited
- 1-800-Got Junk? LLC v. Superior Court, 189 Cal.App.4th 500 (Cal. App. 2010) (enforceability of choice-of-law provisions in California)
- Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (Cal. 1992) (test for enforcing contractual choice-of-law provisions)
- Washington Mutual Bank v. Superior Court, 24 Cal.4th 906 (Cal. 2001) (confirms enforcement when fundamental California policy engaged)
- Beutz v. County of Riverside, 184 Cal.App.4th 1516 (Cal. App. 2010) (summary judgment standards and legal reasoning cited)
- Brack v. Omni Loan Co., Ltd., 164 Cal.App.4th 1312 (Cal. App. 2008) (pure legal question on choice of law under de novo review)
- River Bank America v. Diller, 38 Cal.App.4th 1400 (Cal. App. 1995) (waiver/enforceability of antideficiency defenses)