Pacific Trust Co. TTEE v. Fidelity Federal Savings & Loan Ass'n

I

Plaintiff, Pacific Trust Company TTEE, Community Hospital of Los Gatos-Saratoga Pension Trust #16075, appeals from a summary judgment entered in favor of defendant Fidelity Federal Savings and Loan Association. The parties have presented questions of law for our independent review by agreeing certain material facts are undisputed. (AARTS Productions, Inc. v. Crocker Nat. Bank (1986) 179 Cal.App.3d 1061, 1064-1065 [ 225 Cal.Rptr. 203 ].) We agree with the trial court that a junior trust deed holder who seeks to take over a senior trust deed lien by paying it off must pay what the borrower was obliged to pay under the contract, including any prepayment penalty. Consequently we affirm the judgment.

II

Undisputed Facts

On May 22, 1980, the borrowers, Charles and Sharon Acker and Kurt Kuester, borrowed $200,000 from defendant Fidelity Federal, in exchange for a promissory note secured by a recorded deed of trust on the borrower’s realty in Santa Clara County. Defendant is a federal association chartered by the Federal Home Loan Bank Board.

The note provided: “Borrower may prepay the principal amount outstanding in whole or in part.” An amendment further provided: “The…