Lawler
Lawler v. Jacobs
Opinion
Lead Opinion
Reardon, J.
Two developers purchased 91 acres of raw land for $6 million down and a $3 million purchase money note secured by the real property. They agreed to waive antideficiency protection; 1 the vendor, in turn, subordinated his promissory note to that of a third party commercial lender. Upon the developers’ default and the senior lender’s foreclosure sale, the vendor sued for his deficiency.
In this suit and countersuit, both parties have claimed fraud. The issue of the vendor’s ability to pursue a deficiency judgment was bifurcated for a court trial. Relying on Spangler v. Memel (1972) 7 Cal.3d 603 [ 102 Cal.Rptr. 807 , 498 P.2d 1055 ] (Spangler), the lower court ruled that the transaction was not subject to 580b and entered an interlocutory deficiency judgment. The matter proceeded to a jury trial, with a verdict finding the developers— but not the vendor—liable for fraud.
We hold that the sales transaction came within the scope of 580b and hence reverse the judgment in favor of the vendor on his suit for fraud and breach of contract. However, we affirm the judgment rendered against the developers on their countersuit.