Resolution Trust Corp. ex rel. Occidental Nebraska Savings Bank, F.S.B. v. Titan Financial Corp.

Appellee Gilbert Sellan was a personal guarantor of a promissory note secured by a deed of trust. When the principal debtor defaulted on the note, the property was foreclosed in a nonjudicial sale. The Resolution Trust Corporation (“RTC”) sued Sellan, seeking a deficiency judgment for the difference between the amount realized at the sale and the amount due on the promissory note. The district court awarded summary judgment to Sellan, and the RTC appeals. 1 We affirm the summary judgment on the authority of Union Bank v. Gradsky, 265 Cal.App.2d 40 , 71 Cal.Rptr. 64 (2d Dist.1968), and Cathay Bank v. Lee, 14 Cal.App. 4th 1533 , 18 Cal.Rptr.2d 420 (4th Dist.1993).

I

In Gradsky , the court held that a lender is estopped from obtaining a deficiency judgment against a guarantor if the lender elects to subject the security to a nonjudicial sale, which has the effect of destroying the guarantor’s subrogation rights against the principal debtor. 2 In Cathay Bank , the *925 court held that even though the “Gradsky' defense” may be waived by a guarantor, see Aruba Bonaire Curacao Trust Co. v. United California Bank, 32 Cal.App.3d 281, 285 , 107 Cal.Rptr. 924 (2d Dist.1973), the waiver…