I.E. Associates (Associates) appeals from a summary judgment granted in favor of defendant Safeco Title Insurance Company (Safeco). The principal issue presented is whether, in addition to the notification procedures prescribed by statute, a trustee in a nonjudicial foreclosure has a common law duty to make reasonable efforts to contact a defaulting trustor/debtor. We conclude that the statutory procedures are exclusive and affirm the judgment.
In April 1977, Associates, a general partnership, purchased certain real property from the Bishops for $105,000. As part of the purchase price, Associates gave the Bishops a promissory note for $8,250, secured by a deed of trust in favor of the Bishops, naming Safeco as trustee. The trust deed contained the signatures of each of the four partners but no printed version of their names. It listed Associates' address as "480 Camino Del Rio South, San Diego, California 92108," and stated that any notice of default or notice of sale pursuant to foreclosure was to be mailed to the trustor at the address stated on the trust deed. Associates hired Mission Professional Properties (MPP) to manage the property and to make monthly payments on the note.
Unknown to Associates, MPP stopped making the monthly payments in July 1981. In January 1982, the Bishops notified Safeco of Associates' default.
Safeco recorded a notice of default and election to sell. In accordance with the procedures prescribed in Civil Code section 2924b,
Safeco's recorded notice of sale was posted on the property described in the deed of trust and at the San Diego County Courthouse, and was published in accordance with the statutory requirements. The notice of sale was again mailed to Associates at both previously used addresses, and the letters were again returned unopened.
The surplus of the sale was distributed to the partners of Associates in care of their attorney. The communication regarding the surplus was the first actual notice Associates or its partners received.
Associates brought an action for damages against MPP and Safeco, alleging as to the latter negligence and breach of trust in failing to take reasonable steps to notify Associates of the default and impending foreclosure sale.
On appeal, Associates contends (1) there were triable issues of fact regarding Safeco's compliance with the statutory procedures, and (2) there is, in addition, a common law duty to make reasonable efforts to notify a defaulting trustor.
II. COMPLIANCE WITH STATUTORY PROCEDURES
Section 2924b, subdivisions (2)(a) and (2)(b) require the trustee to mail the specified notices to the trustor "at his last known address if different than the address specified in the deed of trust...." Subdivision (2)(c) provides that "As used in subdivisions (a) and (b), the `last known address' ... means the last business or residence address actually known by the ... trustee...."
III. COMMON LAW DUTY
The statutory provisions regulating the nonjudicial foreclosure of deeds of trust are contained in sections 2924-2924i. These provisions cover every aspect of exercise of the power of sale contained in a deed of trust. Herewith a brief overview:
After the notice of default has been recorded, the trustee must allow three months to elapse to afford the trustor or junior lienholders an opportunity to cure the default. (§ 2924c.) The statute also specifies the costs and fees that may be charged in conjunction with curing the default. (Ibid.)
Before any foreclosure sale may take place, a notice of trustee's sale must be posted on the property at least 20 days before the date of the sale. The notice must also be posted in a conspicuous public place, published, recorded and mailed to all of the people who were entitled to receive notice of default. (§ 2924f.)
The property must be sold at public auction to the highest bidder. The statute specifies the time and place for the sale, who may postpone, under what circumstances and how postponements are to be announced. (§ 2924g.) It also specifically sets forth the procedures relating to bidding: the right of the trustee to first qualify bidders, the acceptable forms of cash or cash equivalents, the requirement that the funds be deposited before the sale is concluded, the right of the foreclosing beneficiary to offset his debt ("bid his paper"), the liability of a high bidder who fails to deposit the purchase price, and the liability of persons conspiring to chill bidding. (§ 2924h.) The amount of expenses and trustees fees that may be charged is also prescribed. (§§ 2924c, 2924d.)
Finally, there are now statutory provisions requiring that special notice be given when balloon payments are involved and preventing the foreclosure process from being commenced unless such notice is given. (§§ 2924i, 2966.)
We reviewed this statutory scheme in Garfinkle v. Superior Court (1978) 21 Cal.3d 268 [146 Cal.Rptr. 208, 578 P.2d 925], where we unanimously
In apparent response to our remarks in Garfinkle, supra, 21 Cal.3d 268, the Legislature amended section 2924b in 1979 to add the requirement that the trustee must mail the required notices to the trustor "at his last known address if different than the address specified in the deed of trust or mortgage with power of sale." (Stats. 1979, ch. 1015, § 1, p. 3466, italics added.) The "last known address" is defined as the last business or residence address actually known by the trustee. A further provision imposes a duty on the beneficiary to inform the trustee of any such address actually known by the beneficiary, but it specifically exempts the trustee from any "liability for failing to send any notice to such last address unless the trustee has actual knowledge of it." (§ 2924b, subd. (2)(c).) The Legislature amended the nonjudicial foreclosure provisions again in 1981, 1983, and 1984, but made no further changes in the notice provisions. (Stats. 1981, ch. 427; Stats. 1983, chs. 112, 1217; Stats. 1984, chs. 919, 1730.)
The rights and powers of trustees in nonjudicial foreclosure proceedings have long been regarded as strictly limited and defined by the contract of the parties and the statutes. (See Sargent v. Shumaker (1924) 193 Cal. 122, 130 [223 P. 464], Witter v. Bank of Milpitas (1928) 204 Cal. 570, 572-573 [269 P. 614]; Billings v. Farm Development Co. (1925) 74 Cal.App. 254, 264 [240 P. 298]; Meyer v. Zuber (1928) 92 Cal.App. 767, 772 [268 P. 954]; Ley v. Babcock (1931) 118 Cal.App. 525, 528-529 [5 P.2d 620]; McClatchey v. Rudd (1966) 239 Cal.App.2d 605, 608-609 [48 Cal.Rptr. 783]; Lupertino v. Carbahal (1973) 35 Cal.App.3d 742, 747 [111 Cal.Rptr. 112].) No case holding that a trustee of a deed of trust has any additional
In short, there is no authority for the proposition that a trustee under a deed of trust owes any duties with respect to exercise of the power of sale beyond those specified in the deed and the statutes. There are, moreover, persuasive policy reasons which militate against a judicial expansion of those duties. The nonjudicial foreclosure statutes — an alternative to judicial foreclosure — reflect a carefully crafted balancing of the interests of beneficiaries, trustors, and trustees. Beneficiaries, of course, want quick and inexpensive recovery of amounts due under promissory notes in default. Trustors, on the other hand, need protection against the forfeiture of valuable property rights. Trustees, the middlemen, need to have clearly defined responsibilities to enable them to discharge their duties efficiently and to avoid embroiling the parties in time-consuming and costly litigation. In taking all of these concerns into account, the statutes strike an overall balance favoring the protection of trustors. (Garfinkle v. Superior Court, supra, 21 Cal.3d at p. 278; Smith v. Allen (1968) 68 Cal.2d 93, 96 [65 Cal.Rptr. 153, 436 P.2d 65].)
The Legislature's decision not to require the trustee to search for the trustor's current address, but to compel him to use it if it is actually known, is consistent with this careful balancing of competing interests to maintain the overall working of the system under which a trustor should normally
The judgment is affirmed.
Bird, C.J., Mosk, J., Broussard, J., Reynoso, J., Grodin, J., and Lucas, J., concurred.
On September 25, 1985, the opinion was modified to read as printed above.
This case deals only with the question of notice that must be given before a foreclosure sale. Nothing in this opinion is designed to affect the duties imposed on the trustee concerning the conduct of the sale by such authorities as Pacific Ready-Cut Homes v. Title G. & T. Co. (1929) 103 Cal. App.1 [283 P. 963]; Kleckner v. Bank of America (1950) 97 Cal.App.2d 30 [217 P.2d 28]; Brown v. Busch (1957) 152 Cal.App.2d 200 [313 P.2d 19]; Hill v. Gibraltar Sav. & Loan Assn. (1967) 254 Cal.App.2d 241 [62 Cal.Rptr. 188]; Block v. Tobin (1975) 45 Cal.App.3d 214; [119 Cal.Rptr. 288]; Baron v. Colonial Mortgage Service Co. (1980) 111 Cal.App.3d 316 [168 Cal.Rptr. 450]; compare Civil Code, sections 2924g, 2924h.
It is a small matter for a passive investor to avoid the risk of forfeiture by keeping the beneficiary informed of any change in address or by recording a request for special notice.