Norwest Mortgage, Inc. v. State Farm

McCONNELL, J.

Norwest Mortgage, Inc. (Norwest) appeals from a judgment granting State Farm Fire and Casualty Company's (State Farm) motion for summary judgment and dismissal of its complaint for insurance bad faith. State Farm had denied a claim by Norwest for the proceeds of a fire insurance policy on a residence that Norwest acquired through a nonjudicial foreclosure sale. The trial court concluded that Norwest was insured only to the extent it had a security interest in the residence and the security interest was extinguished when it tendered a full credit bid at the foreclosure sale.

Norwest appeals, contending it made a mistake in tendering full credit bids and the trustee's sales at which the bids were made were later properly rescinded.

In December 1993, Jesus and Norma Marroquin, the owners of real property located at 16746 MacKennas Gold Avenue in Palmdale, obtained a loan secured by a first deed of trust on the property. Norwest's predecessor was the beneficiary on the deed of trust. The Marroquins, who used the property as a rental unit, obtained a rental dwelling policy from State Farm, policy number 90-LP-5761-6. The policy included the following provision:

By the…