Rainer Mortgage v. Silverwood, Ltd.

Defendants appeal from judgments declaring deficiencies in favor of plaintiff Rainer Mortgage (Rainer) of $161,049 and $91,276, following judicial foreclosure sales of real property. In this consolidated appeal, defendants contend the trial court used an erroneous standard in determining the amount of the deficiency judgments, and further that the determination ultimately made was not supported by the evidence. We agree the trial court employed an incorrect measure of the deficiency judgments and shall reverse.

Facts

The partnership defendants are two limited partnerships, Golden Oaks, Ltd. and Silverwood, Ltd. The general partner in each was North Valley Developers, Inc., a California corporation, of which the shareholders were defendants William Huggitt and Geri Huggitt. Each limited partnership borrowed monies from Rainer to finance two real estate developments. Golden Oaks was a planned development containing nine condominium units. Defendants executed two promissory notes for $110,000 and $373,680 secured by deeds of trust on the Golden Oaks property. Silverwood was a subdivision containing 10 lots. Defendants gave two promissory notes in the amounts of $147,000…