Angell

When does a mistake or irregularity in a nonjudicial foreclosure sale justify the trustee’s refusal to issue a trust deed after accepting a high bid? We hold that a material mistake which is discovered after the acceptance of a bid but before issuance of a trustee’s deed justifies the trustee’s refusal to complete the sale. Accordingly, we affirm the trial court’s decision granting the trustee’s summary judgment motion.

Facts

Glendale Federal Bank held a single deed of trust to secure payment of two promissory notes on a certain apartment building on 17th Street in San Bernardino. One note was for $2,750,000 and the second note was for $350,000. In early 1996, the debtor advised Glendale Federal Bank that it would be unable to make payments on its loans. The bank officer in charge of the account was under the impression that each loan was secured by its own deed of trust. She therefore authorized Verdugo Trustee Service Corporation to act as foreclosure trustee and directed it to foreclose the presumed second deed of trust for $350,000. She reasoned that “if a third-party purchased the subject property at the trustee’s sale, then the third-party would have purchased it…