Gaffney

Defendant Downey Savings and Loan Association appeals from a judgment awarding plaintiffs Donna and Michael Gaffney $77,250 for emotional distress and $250,000 in punitive damages. Defendant is the owner of a promissory note secured by a first deed of trust on property owned by plaintiffs. In November 1983, defendant commenced a private foreclosure against the property by filing a notice of default and plaintiffs filed a complaint for “extinguishment of lien and money debt.” Under circumstances to be recounted, plaintiffs later filed a supplemental complaint seeking damages for emotional distress. Following a bench trial, the trial court found that the filing of the notice of default breached a duty of care to plaintiffs, was in bad faith, and was malicious and oppressive and undertaken with a total disregard of the rights of the plaintiffs. Plaintiffs were awarded damages for emotional distress and pain and suffering and punitive damages. Defendant appeals challenging the judgment in a number of respects. We shall reverse.

Factual and Procedural Background

In 1981 plaintiffs purchased a home in Galt. The property was subject to a deed of trust securing an obligation of…