DREYFUSS v. UNION BANK OF CALIFORNIA (1999)

i. INTRODUCTION

The question presented is whether a lender holding multiple deeds of trust as security for a loan can nonjudicially foreclose on each parcel in succession by credit bid without crediting the debtor with the fair market value of each such property.   The trial court concluded the law did not provide for a fair market value credit in those circumstances.   It entered a summary judgment in favor of Union Bank of California (defendant) on a complaint for wrongful foreclosure and breach of the implied covenant of good faith and fair dealing.   Gilbert Dreyfuss, Evelyn H. Dreyfuss, and LCF Income Group (LCFIG) (plaintiffs) appeal from the ensuing judgment.   They contend defendant underbid the value of the foreclosed properties thereby recovering assets with a fair market value in excess of the debt.   We conclude existing law does not require a lender to credit the debtor with the fair market value of property when it nonjudicially forecloses successively on multiple parcels of real property collateral.   Further, we cannot engraft such a requirement onto the law.   Rather, this is a matter for the Legislature to consider, if it deems it wise to do so.   Therefore, we affirm the judgment.

iI. BACKGROUND

 The material facts were undisputed.   The loan in question was for $8.7 million.¹  Initially, it was secured by a deed of trust on property in Simi Valley, California-the Peppertree parcel.   In addition, Gilbert and Evelyn H. Dreyfuss personally guaranteed the loan.   The note was to mature on July 1, 1991.   Later, the parties extended the due date of the loan to October 1, 1993.   Additional collateral was provided consisting of two pieces of real property-the Clinton property in Maryland, and Lot 66 in La Canada, California.²  The borrowers defaulted in October 1993.   Defendant instituted non-judicial foreclosure proceedings on the three properties.   However, on the eve of the foreclosure of the Clinton property, LCFIG filed a chapter 11 bankruptcy petition.   Defendant obtained relief from the automatic stay.

The parties subsequently entered into a “Limited Forbearance Agreement.”   Defendant agreed to discount the debt to $5.2 million if paid in full by December 1, 1995.   At the borrowers' request, the final date for payment under the forbearance agreement was later extended to December 21, 1995.   However, the borrowers failed to pay $5.2 million in full by December 21, 1995.

Defendant recommenced non-judicial foreclosure proceedings.   On the morning of the scheduled non-judicial foreclosure sale of the Peppertree property, LCFIG filed a second bankruptcy petition.   Defendant immediately moved for and obtained relief from the automatic stay.

As of January 30, 1996, the remaining indebtedness was in excess of $3.75 million.³  On January 30, 1996, defendant nonjudicially foreclosed on the Peppertree property.   It made a successful $2.15 million credit bid at the sale, leaving more than $1.6 million due and owing on the debt.   On February 22, 1996, defendant nonjudicially foreclosed on the Clinton property, acquiring the property by a $1.4 million credit bid.   After that sale, there remained more than $200,000 due and owing on the debt.   On May 5, 1996, defendant nonjudicially foreclosed on Lot 66, making a successful $200,000 credit bid.   Defendant never sought to enforce a deficiency judgment or other personal judgment against any of the borrowers or guarantors.   The only steps defendant took to enforce the loan were the three foreclosures of the real property collateral.

Plaintiffs filed a complaint alleging, in the first cause of action, defendant's foreclosures of the Clinton property and Lot 66 were wrongful attempts to pursue a deficiency remaining from its foreclosure of the Peppertree property in violation of Code of Civil Procedure section 580d.⁴  That statute precludes a deficiency judgment following a nonjudicial foreclosure.   Plaintiffs further alleged even if defendant's actions did not constitute an attempt to obtain a deficiency, it was still required to credit plaintiffs with the fair value of the Peppertree property pursuant to section 580a before seeking any other assets.   Section 580a provides for judicial determination of the fair market value of a foreclosed asset prior to entry of a deficiency judgment against a borrower.   In their first cause of action, plaintiffs sought to set aside the Clinton property and Lot 66 foreclosures.⁵  The second cause of action alleged, in the alternative, plaintiffs were entitled to compensation, including punitive damages, for wrongful foreclosures of the Clinton property and Lot 66.   In their third cause of action, plaintiffs alleged defendant breached the implied covenant of good faith and fair dealing and acted in conscious disregard of plaintiffs' rights when it foreclosed on the Clinton property and Lot 66 “even though [it] was prevented by the antideficiency statues from participating in such foreclosures.”   The fourth cause of action was for declaratory relief.   Plaintiffs sought a declaration “that [defendant's] foreclosure on the Clinton Property and Lot 66 was unauthorized and improper and in violation of California's antideficiency and other statutory and common law protections․”

The trial court granted summary judgment in defendant's favor.   The trial court found the undisputed facts established defendant's conduct was not wrongful under section 580a or 580d;  further, plaintiffs failed to raise any triable issue of material fact. (§ 437c, subd. (c);  Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 579, 37 Cal.Rptr.2d 653.)

III. DISCUSSION

A. Plaintiffs' Contention

 Plaintiffs contend judicial intervention is required to prevent defendant from circumventing the policies underlying the antideficiency provisions and retaining an excess recovery at the expense of the debtor.   Plaintiffs rely on section 580a which provides for a judicial determination of the fair market value of a foreclosed asset prior to entry of a deficiency judgment against a borrower.⁶  Plaintiffs further rely on section 580d, which precludes a deficiency judgment following a nonjudicial foreclosure.⁷  Plaintiffs concede neither statute applies by its terms because resort to additional security following a nonjudicial foreclosure is not an attempt to secure a deficiency judgment.  (Western Security Bank v. Superior Court (1997) 15 Cal.4th 232, 251-252, 62 Cal.Rptr.2d 243, 933 P.2d 507;  Freedland v. Greco (1955) 45 Cal.2d 462, 465-466, 289 P.2d 463;  Hatch v. Security-First Nat. Bank (1942) 19 Cal.2d 254, 259-262, 120 P.2d 869.)   A deficiency judgment is a personal judgment against the debtor for the difference between the fair market value of the property held as security and the outstanding indebtedness with interest and costs of sale. (§§ 580a, 726;  Cornelison v. Kornbluth (1975) 15 Cal.3d 590, 603, 125 Cal.Rptr. 557, 542 P.2d 981;  Hatch v. Security-First Nat. Bank, supra, 19 Cal.2d at p. 261, 120 P.2d 869.)   As the Supreme Court held in Western Security Bank v. Superior Court, supra, 15 Cal.4th at page 252, 62 Cal.Rptr.2d 243, 933 P.2d 507:  “A creditor that draws on [additional security] does no more than call on all the security pledged for the debt.   When it does so, it does not violate the prohibition of deficiency judgments.”

Plaintiffs' “central thesis” in this case is “that the abiding purpose of [ ] section 580a is to limit windfall recoveries by means other than classic deficiency money judgments.”   They reason:  “[Section 580d, precluding deficiency judgments following a nonjudicial foreclosure] does not adequately protect the debtor in those instances where he has been required to give multiple items of real property security.   In those situations, [plaintiffs assert,] the creditor does not have any incentive to bid the fair market @value at the successive foreclosure sales and can attempt to make nominal bids, credit only that bid to create a technical or apparent deficiency, and obtain title to multiple parcels of property worth far more than the secured debt that was owed to the creditor.”  (Fn.omitted.)  Indeed, plaintiffs argue, that is what happened here:  defendant underbid and undercredited the sales on the first two properties it foreclosed, leaving a contrived deficiency and giving it a purported reason to foreclose the third property, thereby circumventing the fair value protection of section 580a and obtaining an excess recovery.⁸  Citing Bank of Hemet v. United States (9th Cir.1981) 643 F.2d 661, 669, to fail to apply section 580a in this circumstance, plaintiffs conclude, “ ‘would amount to a rejection of the spirit of California law in favor of its letter.’  [ ]”

B. Standards of Review

 The application of nonjudicial foreclosure and antideficiency laws to undisputed facts presents a question of law for our independent determination.  (Birman v. Loeb (1998) 64 Cal.App.4th 502, 508, 75 Cal.Rptr.2d 294;  Hodges v. Mark (1996) 49 Cal.App.4th 651, 655, 56 Cal.Rptr.2d 700;  cf.  Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799, 35 Cal.Rptr.2d 418, 883 P.2d 960 [usury].)  Plaintiffs concede this case presents a pure question of law as to the application of California antideficiency law.   Additionally, we examine the correctness of the order granting summary judgment de novo.  (Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 487, 59 Cal.Rptr.2d 20, 926 P.2d 1114;  Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 929, 30 Cal.Rptr.2d 440, 873 P.2d 613.)

C. Secondary Support for Plaintiff's Position

Support for plaintiffs' position, advocating protection for additional security by fair-value standards, is found in two secondary sources.   In California Mortgage and Deed of Trust Practice (Cont.Ed.Bar 2d ed.1990) section 8.5, page 399, Roger Bernhardt states:  “In Hatch v. Security-First Nat'l Bank (1942) 19 Cal.2d 254, 120 P.2d 869, ․ the supreme court held that the fair-value provisions of ․ § 580a do not apply to a creditor that disposes of its multiple security through piecemeal extrajudicial sales.   The debtor's argument that there should be no second sale until the fair value of the property sold at the first sale has been established was rejected on the grounds (1) that the pursuit of additional security is not the same as pursuit of a deficiency judgment and (2) that the [L]egislature did not intend to protect property that is only secondarily liable for the debt.  [¶] It is difficult, however, to find a significant difference between selling additional security and recovering a deficiency judgment, which is then satisfied by levy and sale of the debtor's other assets, much like a foreclosure sale of additional security.   The statement that the other property is only ‘secondarily liable’ seems irrelevant in light of the fact that it is owned by the same debtor who is primarily liable for the debt.   It is not the property but its owner who suffers when property is sold for less than its fair value.   Protection of additional security by fair-value standards would also justify the continued existence of ․ § 580a, which would apply to such situations․ In the absence of fair-value protection, a debtor who posts multiple security runs the risk that all of it may be sold to satisfy the obligation, even though the value of any one item of security might be more than sufficient to satisfy the debt.”

Similarly, in 4 Miller & Starr, California Real Estate (2d ed.1989) section 9:114, page 376, the authors state:  “When a creditor has a debt secured by several parcels of real property, or by real property and personal property, and the creditor forecloses against the individual collateral seriatim without judicial proceedings, existing authority holds that the ‘fair value’ limitations do not apply unless the creditor seeks a deficiency judgment.   If he does not seek a personal money judgment against the debtor, he can foreclose each parcel of property or other security for the debt successively, and he is only required to credit the net sales proceeds from the sale of each item of collateral against the debt regardless of the fair market value of the security that is sold.   In other words, if the debt is for $90,000 and it is secured by three items of collateral, whether real property or personal property, which each has a value of $50,000, the creditor could foreclose each of the items of collateral successively and credit bid only $30,000 at each sale and thereby acquire collateral with a value of $150,000 in satisfaction of a $90,000 debt.  [¶] This result would be contrary to the public policy objectives of the ‘fair value’ limitations and is subject to some question in light of subsequent decisions that reflect a different judicial attitude toward the remedies of the secured creditor.   Thus, contrary to older authority and despite the literal application of the statute, there is authority that the ‘fair value’ limitations will apply when a junior lienor purchases property at the foreclosure sale of the senior lien.”  (Fns. omitted.)  (See also Schiele v. First Nat. Bank of Linton (N.D.1987) 404 N.W.2d 479, 485 [holding that “when a mortgagee chooses to foreclose against only one of several items of real estate collateral, ․ the fair value of the foreclosed item [must] be determined by a jury before the remaining debt is enforced against the other items of real estate collateral”] and United Bank of Bismarck v. Glatt (N.D.1988) 420 N.W.2d 743, 745-746 [same as to real and personal property collateral].)

D. California Foreclosure and Anti-Deficiency Law

 As the above-quoted authors acknowledge, the Supreme Court has held section 580a does not require a creditor, which has resorted to the security furnished by a deed of trust, to obtain a judicial determination of the unpaid balance remaining before resorting to any additional collateral.   (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1236, 44 Cal.Rptr.2d 352, 900 P.2d 601;  Hatch v. Security-First Nat. Bank, supra, 19 Cal.2d at pp. 259-262, 120 P.2d 869.)   The creditor in Hatch, as here, made no attempt to secure a personal judgment for the unpaid balance of the loan.   (Ibid.)  Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at page 1236, 44 Cal.Rptr.2d 352, 900 P.2d 601, is consistent with Hatch.   In Rothwell, the Supreme Court explained:  “In a judicial foreclosure, if the property is sold for less than the amount of the outstanding indebtedness, the creditor may seek a deficiency judgment, or the difference between the amount of the indebtedness and the fair market value of the property, as determined by a court, at the time of the sale.  [Citation.]   However, the debtor has a statutory right of redemption, or an opportunity to regain ownership of the property by paying the foreclosure sale price, for a period of time after foreclosure.  [Citation.]  [¶] In a nonjudicial foreclosure, also know as a ‘trustee's sale,’ the trustee exercises the power of sale given by the deed of trust.  [Citation.]   Nonjudicial foreclosure is less expensive and more quickly concluded than judicial foreclosure, since there is no oversight by a court, ‘[n]either appraisal nor judicial determination of fair value is required,’ and the debtor has no postsale right of redemption.  [Citation.]   However, the creditor may not seek a deficiency judgment.  [Citation.]   Thus, the antideficiency statutes in part ‘serve to prevent creditors in private sales from buying in at deflated prices and realizing double recoveries by holding debtors for large deficiencies.’  [Citation.]”  (Ibid., italics added.)   In Western Security Bank v. Superior Court, supra, 15 Cal.4th at pages 251-252, 62 Cal.Rptr.2d 243, 933 P.2d 507, the Supreme Court held a creditor that nonjudicially foreclosed on real property security, and then attempted to draw on additional security in the form of letters of credit, did not violate section 580d.   The Supreme Court held:  “Code of Civil Procedure section 580d does not limit the security for notes given for the purchase of real property only to trust deeds;  other security may be given as well.  [Citation.]   Creditors may resort to such other security in addition to nonjudicial foreclosure of the real property security.  [Citations.]․  A creditor that draws on a letter of credit does no more than call on all the security pledged for the debt.   When it does so, it does not violate the prohibition of deficiency judgments.”  (Id. at p. 252, 62 Cal.Rptr.2d 243, 933 P.2d 507.)

 Moreover, the Supreme Court has held that at a nonjudicial foreclosure sale, the creditor is entitled to make a credit bid in whatever amount it thinks the property is worth up to the amount of the indebtedness.  (Cornelison v. Kornbluth, supra, 15 Cal.3d at p. 607, 125 Cal.Rptr. 557, 542 P.2d 981;  accord, Pacific Inland Bank v. Ainsworth (1995) 41 Cal.App.4th 277, 281, 48 Cal.Rptr.2d 489.)   The creditor may even enter a low credit bid to provide access to additional security.   (Cornelison v. Kornbluth, supra, 15 Cal.3d at p. 607, 125 Cal.Rptr. 557, 542 P.2d 981;  Western Fed. Savings & Loan Assn. v. Sawyer (1992) 10 Cal.App.4th 1615, 1620, 13 Cal.Rptr.2d 639, disapproved on another point in Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at pp. 1243-1251, 44 Cal.Rptr.2d 352, 900 P.2d 601.)   Further, the purpose of the trustee's sale is to resolve the question of value through competitive bidding.  (Cornelison v. Kornbluth, supra, 15 Cal.3d at p. 607, 125 Cal.Rptr. 557, 542 P.2d 981;  GN Mortgage Corp. v. Fidelity Nat. Title Ins. Co. (1994) 21 Cal.App.4th 1802, 1805, 27 Cal.Rptr.2d 47, disapproved on another point in Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at pp. 1243-1251, 44 Cal.Rptr.2d 352, 900 P.2d 601.)   A nonjudicial foreclosure sale, if regularly held, finally fixes the value of the property sold.  (Cornelison v. Kornbluth, supra, 15 Cal.3d at p. 607, 125 Cal.Rptr. 557, 542 P.2d 981;  Smith v. Allen (1968) 68 Cal.2d 93, 95-96, 65 Cal.Rptr. 153, 436 P.2d 65.)   As the Supreme Court explained in Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at pages 1236-1237, 44 Cal.Rptr.2d 352, 900 P.2d 601:  “The price at a foreclosure sale is not deemed the equivalent of the property's fair market value․  ‘An appraiser's reconstruction of “fair market value” could show what similar property would be worth if it did not have to be sold within the time and manner strictures of state-prescribed foreclosure.   But property that must be sold within those strictures is simply worth less.   No one would pay as much to own such property as he would pay to own real estate that could be sold at leisure and pursuant to normal marketing techniques.’  (BFP v. Resolution Trust Corp. (1994) 511 U.S. [531, 539] [114 S.Ct. 1757, 128 L.Ed.2d 556], italics in original.)  [Further], it is settled that ‘Where there is no irregularity in a nonjudicial foreclosure sale and the purchaser is a bona fide purchaser for value, a great disparity between the sales price and the value of the property is not a sufficient ground for setting aside the sale.’  [Citations.]”  (Id. at pp. 1236-1237, 44 Cal.Rptr.2d 352, 900 P.2d 601;  Moeller v. Lien (1994) 25 Cal.App.4th 822, 832, 30 Cal.Rptr.2d 777.)   The Supreme Court has concluded the Legislature clearly intended “that a properly conducted [nonjudicial] foreclosure sale should constitute a final adjudication of the rights of the borrower and the lender.”  (Smith v. Allen, supra, 68 Cal.2d at p. 96, 65 Cal.Rptr. 153, 436 P.2d 65;  Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at p. 1238, 44 Cal.Rptr.2d 352, 900 P.2d 601;  Moeller v. Lien, supra, 25 Cal.App.4th at p. 832, 30 Cal.Rptr.2d 777.)   Here, a nonjudicial foreclosure sale was regularly held.   Even if the sale price was less than the value of the property, defendant's conduct was neither wrongful nor in breach of the implied covenant of good faith and fair dealing.  (E.g., Moeller v. Lien, supra, 25 Cal.App.4th at p. 833, 30 Cal.Rptr.2d 777 [sale price was only 25 percent of value].)

E. Conclusion

Defendant's foreclosures did not violate sections 580a or 580d.   Further, there is no statutory or decisional authority for the proposition advanced-that a lender must credit the debtor with the fair market value of a property purchased by credit bid at a nonjudicial foreclosure sale.   The asserted requirement is neither expressly included in nor implied by the plain language of sections 580a and 580d.   This is not a case in which the lender sought to obtain a personal judgment against the borrower by subterfuge.  (E.g., Freedland v. Greco, supra, 45 Cal.2d at pp. 466-468, 289 P.2d 463.)   Moreover, we cannot, acting in a legislative role, enact law.   We cannot rewrite the antideficiency statutes to create a new, affirmative requirement. (§ 1858;  California Fed. Savings & Loan v. City of Los Angeles (1995) 11 Cal.4th 342, 349, 45 Cal.Rptr.2d 279, 902 P.2d 297;   Manufacturers Life Ins. Company v. Superior Court (1995) 10 Cal.4th 257, 274, 41 Cal.Rptr.2d 220, 895 P.2d 56.)   We conclude existing law does not require a lender to credit a borrower with the fair market value of property when it nonjudicially forecloses successively on multiple parcels of real property collateral.   Further, we cannot engraft such a requirement onto the law.   Rather, this is a matter for the Legislature to consider if it deems it appropriate to do so.   Therefore, we must affirm the judgment.

iV. DISPOSITION

The judgment is affirmed.   Defendant Bank of California is to recover its costs on appeal from plaintiffs, Gilbert Dreyfuss, Evelyn H. Dreyfuss, and LCF Income Group.

FOOTNOTES

1.   The money was borrowed from defendant's predecessor, Bank of California.

2.   Plaintiffs contend the additional properties in Maryland and La Canada were provided only as collateral in the event of a deficiency.   They assert defendant wrongfully coerced Mr. Dreyfuss to provide the additional collateral.   In his declaration, Mr. Dreyfuss said defendant told him he would be personally liable for any deficiency if the Peppertree property were ever foreclosed.   According to Mr. Dreyfuss, he was asked whether he had any property he could give to secure that deficiency.   Since the Peppertree property was then worth at least $3.9 million more than the debt, Mr. Dreyfuss did not believe there was any significant risk in giving the additional security.   He did not believe any foreclosure of the Peppertree property would ever occur.   Mr. Dreyfuss declared, “However, had I known that Bank would attempt to foreclose on the Peppertree Property and not credit us with its fair value, I would not have given it the additional collateral on the terms we discussed.”   The trial court held that evidence was barred by the parol evidence rule.   We agree.   The deeds of trust clearly stated the additional collateral was provided to secure the entire loan.   In addition, the deeds permitted recourse to the collateral, at defendant's option, “either before or concurrently ․ or after a sale” of any additional security.   The modification agreement extending the due date of the loan fully described the modified debt and collateral relationship between the parties.   It contained an integration clause stating:  “This Modification, the Loan Agreement, the Note and the agreements and instruments referred to herein and therein constitute the entire agreement and understanding between and among the parties hereto in respect of the subject matter hereof and supersede any and all prior agreements and understandings with respect hereto, whether oral or written.”   Therefore, plaintiffs' evidence of a contrary agreement or a promise directly at variance with the agreement was legally irrelevant.  (Code Civ. Proc., § 1856;  Civ.Code, § 1625;  Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258, 263-264, 48 P.2d 659;  Banco Do Brasil, S.A. v. Latian, Inc. (1991) 234 Cal.App.3d 973, 1000-1011, 285 Cal.Rptr. 870;  Bank of America v. Lamb Finance Co. (1960) 179 Cal.App.2d 498, 501-503, 3 Cal.Rptr. 877.)

3.   In their opposition to defendant's summary judgment motion, plaintiffs' asserted the loan invoice indicated an indebtedness of $3,662,879.37, i.e., less than $3.75 million.   In reply, defendant explained, as evident on the face of the invoice, plaintiffs had omitted $54,688.83 in interest due as of January 1, 1996.   This brought the total stated on the invoice to $3,717,568.20.   In addition, interest was accruing at a rate of 11.5 percent per annum.   Between January 1, 1996, and January 30, 1996, the accrued interest amounted to $33,474.56.   This brought the total indebtedness on January 30 to $3,751,042.70.

4.   All further statutory references are to the Code of Civil Procedure unless otherwise noted.

5.   Because the issue has not been raised, we do not address the question whether the superior court would have any jurisdiction to act with respect to real property in the state of Maryland.

6.   Section 580a provides:  “Whenever a money judgment is sought for the balance due upon an obligation for the payment of which a deed of trust or mortgage with power of sale upon real property or any interest therein was given as security, following the exercise of the power of sale in such deed of trust or mortgage, the plaintiff shall set forth in his or her complaint the entire amount of the indebtedness which was secured by the deed of trust or mortgage at the time of sale, the amount for which the real property or interest therein was sold and the fair market value thereof at the date of sale and the date of that sale.   Upon the application of either party made at least 10 days before the time of trial the court shall, and upon its own motion the court at any time may, appoint one of the probate referees provided for by law to appraise the property or the interest therein sold as of the time of sale.   The referee shall file his or her appraisal with the clerk and that appraisal shall be admissible in evidence.   The referee shall take and subscribe an oath to be attached to the appraisal that he or she has truly, honestly and impartially appraised the property to the best of his or her knowledge and ability.   Any referee so appointed may be called and examined as a witness by any party or by the court itself.   The court must fix the compensation of the referee in an amount as determined by the court to be reasonable, but those fees shall not exceed similar fees for similar services in the community where the services are rendered, which may be taxed and allowed in like manner as other costs.   Before rendering any judgment the court shall find the fair market value of the real property, or interest therein sold, at the time of sale.   The court may render judgment for not more than the amount by which the entire amount of the indebtedness due at the time of sale exceeded the fair market value of the real property or interest therein sold at the time of sale with interest thereon from the date of the sale;  provided, however, that in no event shall the amount of the judgment, exclusive of interest after the date of sale, exceed the difference between the amount for which the property was sold and the entire amount of the indebtedness secured by the deed of trust or mortgage.   Any such action must be brought within three months of the time of sale under the deed of trust or mortgage.   No judgment shall be rendered in any such action until the real property or interest therein has first been sold pursuant to the terms of the deed of trust or mortgage, unless the real property or interest therein has become valueless.”  (Italics added.)

7.   Section 580d states:  “No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property or an estate for years therein hereafter executed in any case in which the real property or estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.  [¶] This section does not apply to any deed of trust, mortgage or other lien given to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations, or which is made by a public utility subject to the Public Utilities Act (Part 1 (commencing with Section 201) of Division 1 of the Public Utilities Code).”

8.   We need not decide whether plaintiffs raised any triable issues as to the assertion defendant underbid at the foreclosure sales.   We assume for purposes of this discussion that plaintiffs were not credited with the fair market value of the properties.

TURNER, P.J.

ARMSTRONG, J., and GODOY PEREZ, J., concur.