CAROL COKER, Plaintiff and Appellant, v. JPMORGAN CHASE BANK, N.A., et al., Defendant and Respondent.
No. S213137
Supreme Court of California
Jan. 21, 2016.
667 | 364 P.3d 176 | 197 Cal. Rptr. 3d 663
Aimee Feinberg; Stilwell & Associates and Andrew R. Stilwell for Plaintiff and Appellant.
AlvaradoSmith, John M. Sorich, S. Christopher Yoo, Jenny L. Merris; Arnold & Porter, Peter Obstler, Jerome B. Falk, Jr., Steven L. Mayer, Marjory A. Gentry and Ginamarie Caya for Defendants and Respondents.
OPINION
LIU, J.—Under
I.
In reviewing a judgment sustaining a demurrer without leave to amend, we give the complaint a reasonable interpretation and treat the demurrer as admitting all material facts properly pleaded. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810 [27 Cal.Rptr.3d 661, 110 P.3d 914].) The operative complaint here alleges that on May 20, 2004, Carol Coker purchased a condominium in San Diego County with the help of a $452,000 loan from Valley Vista Mortgage Corporation. The loan was secured by a deed of trust recorded against the condominium. A few years later, Coker fell behind on her payments. On March 10, 2010, she received a “notice of default and election to sell” from Chase Home Finance, LLC, or JPMorgan Chase Bank, N.A. (Chase), Valley Vista‘s successor in interest on the loan. As Chase began the foreclosure process, Coker asked Chase if it would release its security interest so that she could sell her property to a third party for $400,000.
In January 2011, Coker received a collection letter from an authorized agent of Chase, demanding the $116,686.89 balance remaining on her loan. Coker brought this declaratory judgment action, claiming (among other things) that
II.
When a borrower defaults on a loan secured by real property, the lender can use one of three procedures to recover the debt. First, the lender can initiate a judicial foreclosure by filing a lawsuit. (
Third, the lender can recover money from the defaulting borrower by facilitating a short sale. In a short sale, the lender agrees to release its lien on the borrower‘s property so that the borrower can sell the property to a third party. In exchange, the borrower agrees to give the lender all of the proceeds from the sale. Both parties know that the sale proceeds will fall short of the total amount that the borrower owes. The Assembly Committee on Judiciary has observed that short sales “save banks millions in foreclosure costs” and can help homeowners “feel like they took responsibility for the obligation to pay [their creditors] back.” (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 931 (2009–2010 Reg. Sess.) p. 61.) Although there were virtually no short sales in California in 2007, the number grew to a few thousand in 2008, to 90,000 in 2009, and to approximately 110,000 in 2010. (See Sen. Com. on Banking & Financial Institutions, Analysis of Sen. Bill No. 412 (2011–2012 Reg. Sess.) as amended Mar. 21, 2011, p. 2.)
Our Legislature has enacted a cluster of statutes to protect borrowers who default on a loan secured by real property. (See 4 Witkin, Summary of Cal. Law (10th ed. 2005) Security Transactions in Real Property, § 179, p. 983.)
When an individual obtains a loan to purchase real property and uses the property as collateral, the transaction is called a purchase money loan. Section
The statutory text indicates that when a homeowner defaults on a purchase money loan, section 580b prevents the lender from obtaining a deficiency judgment against the borrower. We have said this protection is “a stabilizing factor in land sales” for two reasons. (Roseleaf Corp. v. Chierighino (1963) 59 Cal.2d 35, 42 [27 Cal.Rptr. 873, 378 P.2d 97] (Roseleaf).) First, lenders are less likely to overvalue the homes they finance when they cannot hold homeowners personally liable for any deficiency. (Ibid.) Second, when an economic downturn causes widespread depression of property values, section 580b “prevents the aggravation of the downturn that would result if defaulting purchasers were burdened with large personal liability.” (Roseleaf, at p. 42.)
It is well established that section 580b protects a purchase money borrower after a judicial or nonjudicial foreclosure sale. (See Kurtz v. Calvo (1999) 75 Cal.App.4th 191, 194 [89 Cal.Rptr.2d 99]; Birman v. Loeb (1998) 64 Cal.App.4th 502, 506 [75 Cal.Rptr.2d 294].) The question here is whether the antideficiency protection of section 580b also applies after a short sale.
III.
“We review de novo questions of statutory construction. In doing so, ‘“our fundamental task is ‘to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute.‘“’ [Citation.] As always, we start with the language of the statute, ‘giv[ing] the words their usual and ordinary meaning [citation], while construing them in light of the statute as a whole and the statute‘s purpose [citation].’ [Citation.]” (Apple Inc. v. Superior Court (2013) 56 Cal.4th 128, 135 [151 Cal.Rptr.3d 841, 292 P.3d 883] (Apple).)
Chase reads
In an amici curiae brief, Housing and Economic Rights Advocates and other groups contend that the text of section 580b may be parsed differently so that the term “under a deed of trust” does not modify the word “sale.” They read the statute as follows: “No deficiency judgment shall lie in any event [1] after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or [2] under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein, or [3] under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser.” (Bracketed numbers added.) On this reading, no sale is required to trigger section 580b‘s protection; the statute simply provides that “[n]o deficiency judgment shall lie in any event . . . under a deed of trust . . . .”
In 2012, the Legislature reformatted section 580b to expressly parse the text in the manner urged by amici curiae. (Stats. 2012, ch. 64, § 1, subd. (a); see Stats. 2014, ch. 71, § 18 [same parsing in current version of the statute].) Chase concedes that the statutory text, when parsed this way, does not limit antideficiency protection to foreclosure sales and bars a purchase money lender from obtaining a deficiency judgment against a defaulting homeowner after a short sale. But Chase argues that the Legislature‘s decision to reformat the statute in 2012 does not illuminate what section 580b meant at the time of
In considering these competing interpretations of the “sale” clause in section 580b, we do not write on a blank slate. For more than half a century, this court has understood the statute to limit a lender‘s recovery on a standard purchase money loan to the value of the security, no matter how the security has been exhausted—indeed, even if no sale has occurred under the deed of trust securing the unpaid loan. As explained below, our cases assigning to section 580b this broad construction have consistently looked to the purposes of the statute and to the substance rather than the form of loan transactions in deciding the statute‘s applicability. The Legislature has never repudiated our basic approach to interpreting section 580b despite ample opportunities to do so. (See IBP, Inc. v. Alvarez (2005) 546 U.S. 21, 32 [163 L.Ed.2d 288, 126 S.Ct. 514] [“Considerations of stare decisis are particularly forceful in the area of statutory construction, especially when a unanimous interpretation of a statute has been accepted as settled law for several decades.“]; Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 178 [83 Cal.Rptr.2d 548, 973 P.2d 527] (Cel-Tech).) We must consider the question presented here in light of our well-developed case law.
B.
Our starting point is Brown v. Jensen (1953) 41 Cal.2d 193 [259 P.2d 425] (Brown). The borrowers in that case used two purchase money notes to buy real property. Glendale Federal Savings and Loan Association (Glendale) held one note secured by a first deed of trust on the property, and the seller, Estelle Brown, held the other note secured by a second deed of trust. When the borrowers defaulted, Glendale foreclosed on the property. The sale produced enough money to pay Glendale‘s note, but Brown was left with nothing. Brown sued the borrowers for the outstanding balance on her note, arguing that section 580b did not apply because “there has not been a sale by plaintiff under her trust deed within the wording of section 580b.” (Brown, at p. 196.) Brown also argued that “the case is not one involving a ‘deficiency’ as there cannot be a deficiency if there is no security to sell because it presupposes a partial satisfaction of the debt by a sale which exhausts the security.” (Ibid.)
We subsequently found section 580b applicable in Bargioni v. Hill (1963) 59 Cal.2d 121 [28 Cal.Rptr. 321, 378 P.2d 593] (Bargioni), where a realtor brokered the sale of a motel and, as payment of his commission, accepted a promissory note from the purchaser secured by a second deed of trust. When the purchaser defaulted on her loan obligations, the senior lienholder foreclosed on the motel, leaving the second trust deed worthless. As in Brown, no sale had occurred under the second trust deed; the value of the security “ha[d] been lost through a private sale under a senior trust deed.” (Bargioni, at p. 122.) When the realtor sought to collect on the promissory note, “[t]he trial court found that the parties did not intend that plaintiff‘s commission be part of the purchase price of the motel” and thus held section 580b inapplicable. (Bargioni, at p. 123.)
We held that the trial court‘s “finding [was] not supported by the evidence.” (Bargioni, supra, 59 Cal.2d at p. 123.) In a unanimous opinion, we explained that the arrangement between the realtor and purchaser was, in substance, a purchase money loan: The parties had signed a sale contract that obligated the seller to pay the realtor‘s commission, but the purchaser thereafter agreed to pay the commission in exchange for a corresponding reduction in the sale price. “Thus, in accepting [the purchaser‘s] note in payment of the commission, [the realtor] extended credit that otherwise would have been extended by the seller. That credit was necessary to the
Cornelison v. Kornbluth (1975) 15 Cal.3d 590 [125 Cal.Rptr. 557, 542 P.2d 981] (Cornelison) likewise demonstrates our emphasis on substance over form in construing
While consistently affirming that section 580b applies to standard purchase money transactions, we have found the statute inapplicable where the transaction at issue differed substantially from the standard scenario and where applying the statute would not further its purposes. In Roseleaf, supra, 59 Cal.2d 35, the Roseleaf Corporation sold a hotel to Willy Chierighino and his family for consideration that included a note secured by a first deed of trust on the hotel and three notes each secured by a second deed of trust on real property owned by Willy. After the hotel was sold, the senior lienholders on the three notes exercised the powers of sale in their first trust deeds. Those sales rendered valueless the second trust deeds held by Roseleaf, and Roseleaf sued to recover the unpaid amounts on the three notes. (Id. at p. 38.) We held that Roseleaf‘s action was not barred by section 580b. (Roseleaf, at p. 41.) “The issue here,” we said, “is whether the three second trust deeds on land other than that purchased are purchase money trust deeds because they
Roseleaf found that the second trust deeds, unlike Roseleaf‘s first trust deed on the hotel, were not standard purchase money trust deeds. (Roseleaf, supra, 59 Cal.2d at pp. 41–42.) We then asked whether barring Roseleaf‘s action would further the purpose of
In Spangler v. Memel (1972) 7 Cal.3d 603 [102 Cal.Rptr. 807, 498 P.2d 1055] (Spangler), the borrowers obtained a $63,900 loan from the seller, May Spangler, to purchase a lot, with the mutual understanding that the loan would be subordinated to construction loans to develop the lot into a commercial office building. In return for Spangler‘s agreement to subordinate her loan, the borrowers waived their protection from deficiency judgments. The borrowers then engaged a bank for a $408,000 construction loan secured by a first deed of trust. When the office project failed and the borrowers defaulted, the bank foreclosed on the property. The entirety of the proceeds went to satisfy the construction loan, rendering Spangler‘s subordinated deed of trust valueless. Spangler sued the borrowers to enforce their personal guarantees on the note. The borrowers argued that the suit was barred by section 580b as construed in Brown, to which Spangler responded that Roseleaf had “impliedly overruled Brown v. Jensen to the extent that section 580b cannot be applied to sold-out junior lienors seeking recovery of the purchase price.” (Spangler, at pp. 608–609.)
In a unanimous opinion, we “reject[ed] [Spangler‘s] dilution of Brown v. Jensen and reaffirm[ed] its continued vitality.” (Spangler, supra, 7 Cal.3d at p. 609.) We quoted Brown‘s holding that section 580b “states that in no event
However, “if the transaction in question is a variation on the standard purchase money mortgage or deed of trust transaction, it should be examined so as to determine whether it subserves the purposes of section 580b as explicated by us in Roseleaf and Bargioni.” (Spangler, supra, 7 Cal.3d at p. 611.) Applying this inquiry, we concluded that “the subordination clause situation is sufficiently different from the standard purchase money mortgage situation to remove it from automatic application of section 580b.” (Id. at pp. 611–612.) We went on to explain that the purposes of section 580b would not be served by applying the statute to “the typical subordination clause situation” where “the vendor is selling the property for commercial development.” (Spangler, at p. 613Spangler, at p. 613.) Further, because “the success of the commercial development depends upon the competence, diligence and good faith of the developing purchaser,” it seems “proper, therefore, that the purchaser not the vendor bear the risk of failure, particularly since in the event of default, the junior lienor vendor will lose both the land and the purchase price.” (Ibid.) For these reasons, we held section 580b inapplicable and affirmed the judgment in Spangler‘s favor.
We discussed the limits of Spangler in DeBerard Properties, Ltd. v. Lim (1999) 20 Cal.4th 659 [85 Cal.Rptr.2d 292, 976 P.2d 843] (DeBerard), where we held unenforceable a defaulting borrower‘s waiver of section 580b‘s protection given as consideration for the vendor‘s agreement to ease the terms of a purchase money loan. The vendor relied on Spangler, but we said ”Spangler . . . creates only a narrow exception to the scope of section 580b, and we decline to create another one here.” (DeBerard, at p. 664Spangler applies only when “a pronounced intensification of the property‘s anticipated post-sale use both requires and eventually results in construction financing that dwarfs the property‘s value at the time of sale“; when the purchaser is “in a much better position than the vendor to assess the property‘s possible value and to understand the risks involved in capitalizing on the property‘s potential“; and when applying section 580b would saddle the vendor with “a commercially unreasonable burden” because the success
C.
From this review of the case law, it is evident that in determining the reach of section 580b, we have focused on the substance rather than form of the loan transaction in question, and our decisions have concluded that the statute limits a lender‘s recovery on any standard purchase money loan, regardless of how the security has been exhausted and regardless of whether a sale has occurred under the deed of trust securing the unpaid loan. In Cornelison, we held that the term “deficiency judgment” in section 580b encompasses damages in an action for waste because such damages can “in effect,” even if not in form, amount to a deficiency judgment. (Cornelison, supra, 15 Cal.3d at p. 603.) In Bargioni, we rejected the parties’ and trial court‘s characterization of the debt as payment of a commission and instead found that the debt was part of the purchase price based on the economics of the transaction. (Bargioni, supra, 59 Cal.2d at pp. 123–124; see Enloe v. Kelso (2013) 217 Cal.App.4th 877, 881 [158 Cal.Rptr.3d 881] [“In determining whether section 580b applies, courts look to the substance of the transaction, not its form.“].) In Spangler, we distinguished between standard and nonstandard purchase money loan transactions and “held that section 580b did not apply to the facts at issue, notwithstanding the statute‘s absolute bar to deficiency judgments in purchase money secured land sales.” (DeBerard, supra, 20 Cal.4th at p. 664, citing Spangler, supra, 7 Cal.3d 603.)
And in Brown, we held that section 580b applies to “a situation where a sale would be an idle act” because “the security has been exhausted.” (Brown, supra, 41 Cal.2d at pp. 197–198.) Chase‘s main contention—that section 580b applies only “after there has been a foreclosure sale“—is belied by Brown, Bargioni, and DeBerard, all of which found section 580b applicable where no sale had occurred under the trust deed held by the lender seeking to recover on the note. “The purpose of the ‘after sale’ reference in [section 580b] is that the security be exhausted . . . .” (Brown, at p. 198.) If this purpose can be satisfied where there was “no sale because the security has become valueless or is exhausted” (ibid.), it is hard to see why it cannot be satisfied where there was an actual sale that, like a foreclosure sale, exhausted the security‘s value and conveyed the entire value to the lender.
In DeBerard, we distilled “a two-part inquiry” to determine the applicability of section 580b: “does the sale vary from a standard purchase
1.
The loan at issue in this case was a standard purchase money mortgage. As amici curiae observe, Coker “did nothing more than buy a home to live in using purchase money financing. She did not buy the property as investment or commercial property, did not develop it, and did not refinance it or obtain construction financing to materially increase its value. There is nothing distinctive to remove her purchase money mortgage from the mass mainstream of home purchase transactions.” The parties do not dispute that when Coker obtained the loan, “[t]he present security value of the property . . . [was] a reliable indicator of its actual fair market value,” and Coker was in no better position than Chase to assess any future risk to the security‘s value resulting from an economic downturn. (Spangler, supra, 7 Cal.3d at p. 611.) Because this case involves a standard purchase money loan, section 580b “applies automatically” here. (Ibid.)
Chase resists this conclusion by arguing that the short sale agreement “transformed the purchase money loan from a secured to an unsecured loan,” thereby removing it from the ambit of section 580b. In support of this contention, Chase quotes language in DeBerard that says a lender may “‘destroy the purchase money nature of the transaction by reconveying the deed or mortgage on the original real estate.‘” (DeBerard, supra, 20 Cal.4th at p. 669.) But Chase ignores the full quotation from DeBerard, which says a purchase money creditor seeking to insulate itself from the risk of another creditor‘s foreclosure may “‘destroy the purchase money nature of the transaction by reconveying the deed or mortgage on the original real estate in exchange for the substitution of other security.‘” (Ibid., italics added.) There was no substitution of other security here; Chase agreed to reconvey the deed in anticipation of realizing the full value of its security. DeBerard did not hold that reconveyance in such circumstances destroys the purchase money nature of a loan.
Furthermore, Chase did not actually reconvey the deed when it agreed to the short sale. In its June 21, 2010 letter approving the sale, Chase advised Coker that “this is not the final approval for the referenced sale.” Chase conditioned reconveyance of the deed upon its receipt of “[a]ll proceeds” from the sale by the July 25, 2010 closing date, with a requirement that the proceeds amount to no “less than the stated net amount” of $375,061.86. If
Chase contends that the June 21, 2010 letter conditionally approving the short sale “prevented Chase from proceeding with foreclosure” prior to the July 25, 2010 closing date. But even so, a temporary and conditional suspension of Chase‘s right to foreclose did not destroy the purchase money character of the loan. Chase retained the trust deed until the sale closed, and this enabled Chase to dictate the terms of the sale. Chase‘s letter did not leave the note unsecured upon a mere expectation of payment; the letter said, “The amount paid to Chase is for the release of Chase‘s security interest(s) . . . .” (Italics added.) The short sale never put Chase at risk of losing the value of its security; the sale terms guaranteed that Chase would either capture that value or else continue to retain the trust deed. In essence, Chase reserved the right to foreclose if it did not timely receive the agreed-upon value of the property. The substance of this arrangement belies Chase‘s contention that its assent to the short sale destroyed its security and transformed the secured purchase money loan into an unsecured loan. The short sale, like a foreclosure sale, allowed Chase to realize and “exhaust[]” its security. (Brown, supra, 41 Cal.2d at p. 198.)
Chase relies on Jack Erickson & Associates v. Hesselgesser (1996) 50 Cal.App.4th 182 [57 Cal.Rptr.2d 591] (Jack Erickson), but that case is distinguishable. There the borrower obtained two loans to buy a house to fix up and quickly resell: a senior loan from Great Western Savings (Great Western) and a junior loan from Jack Erickson & Associates (Jack Erickson) due in one year. Over a year later, the borrower decided to rebuild most of the house and asked Jack Erickson to subordinate its purchase money note to a $300,000 construction loan from Union Bank. Jack Erickson agreed so long as the borrower gave his personal guarantee on the note. When the borrower defaulted, the banks foreclosed. A week before the foreclosure, the borrower sold the property and, in exchange for Jack Erickson‘s reconveyance of its trust deed to facilitate the sale, agreed that the reconveyance would not prejudice Jack Erickson‘s right to collect on the purchase money note. The
The Court of Appeal rejected the borrower‘s argument that
Although this reasoning by analogy to Spangler was sufficient to resolve the case, the court in Jack Erickson added four sentences at the end of its opinion: “A second waiver occurred when [the borrower] induced [Jack Erickson] to execute a deed of reconveyance and sold the property. [Jack Erickson] was left without security. [¶] It is well established that unsecured purchase money notes are not subject to section 580b. [Citations.] We reject the argument that [the borrower] could extinguish the security interest, sell the property to a third party, and invoke section 580b to shift the loss of the ill-fated project to [Jack Erickson].” (Jack Erickson, supra, 50 Cal.App.4th at pp. 188–189.)
Chase reads these sentences as authority for the proposition that section 580b does not apply to short sales. Setting aside whether the sentences are dicta, it is clear that the short sale in Jack Erickson was quite different from the short sale at issue in this case. In Jack Erickson, unlike here, the lender agreed to subordinate its priority in exchange for the borrower‘s personal guarantee. Thus, the loan was already outside section 580b‘s protective scope—because the subordination agreement had changed the nature of the risk to which Jack Erickson was exposed (Jack Erickson, supra, 50
2.
Our analysis above reaffirms and applies the rule that section 580b “applies automatically” to a standard purchase money loan, thereby obviating the need to “determine whether it subserves the purposes of section 580b.” (Spangler, supra, 7 Cal.3d at p. 611.) But Chase contends that we should not extend this established rule to short sales because it would not further section 580b‘s purpose of deterring overvaluation of property or its purpose of stabilizing the economy in times of distress. We disagree with Chase‘s policy arguments for exempting short sales from the analytical framework set forth in Spangler.
As to the first purpose, Chase argues that “[a] holding that Section 580b applies to short sales will have no effect on future loan decisions” because
Chase‘s overall argument with respect to statutory purpose is that “resolv[ing] the debate as to the wisdom of extending antideficiency protections to short sales” is “a legislative task.” Although this is true, it remains our responsibility to decide whether section 580b, properly construed, had already resolved the debate at the time of Coker‘s sale. The rule then, as now, is that section 580b “applies automatically” to a standard purchase money loan (Spangler, supra, 7 Cal.3d at p. 611), and Chase has not convinced us that the rule should govern only foreclosure sales and not short sales. Because Coker‘s short sale did not change the standard purchase money character of her loan, section 580b applies automatically here.
3.
Having concluded that section 580b applies to Coker‘s short sale, we further hold that Coker could not validly waive section 580b‘s protection in exchange for Chase‘s approval of the short sale. “Any one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement.” (
In DeBerard, we held that a borrower cannot waive section 580b‘s protection in exchange for the lender‘s agreement to ease the terms of the
Chase argues that Coker‘s waiver falls outside the rule of DeBerard because Chase, instead of retaining the security interest, “destroyed” it by agreeing to the short sale. But we have rejected Chase‘s contention that its conditional approval of the short sale destroyed its security; the sale terms provided that Chase would reconvey the trust deed only if and when it received the entire value of its security from the sale. Coker‘s secured purchase money loan was not transformed into an unsecured loan. Under DeBerard, Coker‘s purported waiver of section 580b‘s protection was invalid.
D.
Chase makes two additional arguments based on legislative history and context: first, that the Legislature could not have intended section 580b to apply to short sales because short sales were unknown when section 580b was passed in 1933, and second, that the Legislature‘s recent enactment of
1.
Even if short sales were unknown in 1933 (or in 1989 when the Legislature enacted the version of § 580b that controls this case), that does not mean section 580b cannot apply to a lender whose secured interest is exhausted in a short sale. “Fidelity to legislative intent does not ‘make it impossible to apply a legal text to [transactions] that did not exist when the text was created. . . . Drafters of every era know . . . that the rules they create will one day apply to all sorts of circumstances they could not possibly envision.’ ” (Apple, supra, 56 Cal.4th at p. 137, quoting Scalia & Garner, Reading Law: The Interpretation of Legal Texts (2012) pp. 85–86.)
In 1963, after our decision in Bargioni, the Legislature amended the statute to make clear that section 580b applies to a third party purchase money lender (i.e., a lender who is not the vendor of the property), as Bargioni held, but only where the borrower purchases “a dwelling for not more than four families . . . occupied, entirely or in part, by the purchaser.” (Stats. 1963, ch. 2158, § 1, p. 4500; see Kistler, supra, 71 Cal.2d at p. 263.) In essence, the 1963 amendment partially codified and cut back on our interpretation of section 580b in Bargioni. But the Legislature did not abrogate Brown‘s holding that section 580b applies “whether there is a sale under the power of sale or sale under foreclosure, or no sale because the security has become valueless or is exhausted.” (Brown, supra, 41 Cal.2d at p. 198.) Nor did it repudiate Roseleaf‘s statement of the statute‘s purposes or its assertion that section 580b applies to nonstandard purchase money loan transactions “if they come within the purpose of that section.” (Roseleaf, supra, 59 Cal.2d at p. 41.)
Similarly, in 1989, the Legislature expanded section 580b to protect borrowers after a sale of real property “or an estate for years therein.” (Stats. 1989, ch. 698, § 12, p. 2289.) But the 1989 amendment did nothing to undermine Spangler‘s approval of Brown (Spangler, supra, 7 Cal.3d at pp. 609–610) or Spangler‘s statement that section 580b‘s applicability turns on “whether it subserves the purposes of [the statute] as explicated by us in Roseleaf and Bargioni” (Spangler, at p. 611). Nor did the Legislature disturb our holding in Cornelison that section 580b bars an action for waste if the action would “permit . . . what is in effect a deficiency judgment.” (Cornelison, supra, 15 Cal.3d at p. 603.)
“When a statute has been construed by the courts, and the Legislature thereafter reenacts that statute without changing the interpretation put on that statute by the courts, the Legislature is presumed to have been aware of, and acquiesced in, the courts’ construction of that statute.” (People v. Bouzas (1991) 53 Cal.3d 467, 475 [279 Cal.Rptr. 847, 807 P.2d 1076].) As with most canons of statutory construction, the applicability of this guideline varies with context. (Compare Wilkoff v. Superior Court (1985) 38 Cal.3d 345, 353 [211 Cal.Rptr. 742, 696 P.2d 134], with Olson v. Automobile Club of Southern California (2008) 42 Cal.4th 1142, 1156 [74 Cal.Rptr.3d 81, 179 P.3d 882].)
2.
Chase further argues that when the Legislature finally decided to address short sales, it enacted
According to Chase, section 580e does not apply retroactively to protect borrowers who, like Coker, arranged a short sale before the statute was enacted. In addition, section 580e does not extend antideficiency protection to corporations, limited liability companies, limited partnerships, or political subdivisions (
But whatever the Legislature may have believed about section 580b‘s applicability to short sales when it enacted section 580e cannot dictate
As for Chase‘s concern that our holding will “allow corporate borrowers and others who would otherwise be ineligible for protection under Section 580e to obtain the identical protection under Section 580b,” it is evident that section 580b‘s applicability to third party lenders excludes loans to corporate borrowers, since the borrower must have used the loan to purchase “a dwelling for not more than four families” that is “occupied, entirely or in part, by the purchaser.” (
IV.
Finally, we address Chase‘s contention that even if section 580b applies to short sales, it cannot apply here because Coker waived her rights under
In Wozab, we observed that “the operation of
Relying on Bank of America, N.A. v. Roberts (2013) 217 Cal.App.4th 1386 [159 Cal.Rptr.3d 345] (Roberts), Chase contends that “a borrower who requests and acquiesces in a short sale waives her rights under Section 726.” In Roberts, a borrower obtained a non-purchase money loan from Bank of America and used her home as collateral. In order to avoid foreclosure, the borrower arranged a short sale of her property. Bank of America consented to the short sale in exchange for the borrower‘s promise to remain personally liable for the total amount of her loan. After the sale, Bank of America sued to recover the debt. The borrower claimed that section 726 barred the suit, arguing that “judicial foreclosure was the only form of action allowable for collecting on a debt secured by real estate, and inasmuch as [Bank of America] chose not to pursue a foreclosure action, it is barred from obtaining a deficiency judgment.” (Roberts, at pp. 1395–1396.) The Court of Appeal rejected this argument. (Id. at pp. 1396–1398.) Because the borrower “sought and obtained [Bank of America]‘s consent for a short sale that required the release of [the bank‘s security interest],” the court explained, the borrower could not “be heard to complain that [Bank of America] did not bring a foreclosure action against her.” (Id. at p. 1398.)
Like the borrower in Roberts, Coker asked her lender to consent to a short sale in lieu of a foreclosure sale. As a result, Coker cannot complain that Chase failed to bring a foreclosure action rather than a breach of contract action. Indeed, Coker never complained that Chase brought the wrong kind of lawsuit against her; she has instead maintained that Chase could not bring any kind of recovery action because the short sale triggered the protections of