## Facts

- E & G Investments, Ltd. sold real property and later became beneficiary under an all-inclusive trust deed (AITD) that incorporated senior encumbrances.
- A subsequent buyer executed a note and deed of trust in favor of an entity holding legal title for RE–HAB’s benefit after RE–HAB advanced funds for the purchase; this created a junior lien position for RE–HAB.
- The buyer defaulted on RE–HAB’s obligation, and the AITD also went into default, although senior encumbrances were kept current.
- E & G caused its affiliated entity, Stonebridge Management Corporation, acting as trustee under the AITD, to record a notice of default and proceed toward a trustee’s sale.
- The trustee noticed a foreclosure sale for the entire AITD indebtedness, cash only.
- RE–HAB alleged the sale was conducted to chill bidding and permit E & G to acquire the property below market value, eliminating RE–HAB’s junior security.
- RE–HAB sued for damages and equitable relief, asserting theories including trustee misconduct, self-dealing, conspiracy, fraud, unjust enrichment, and constructive trust.
- The economic evidence showed the aggregate senior liens and E & G’s superior equity position exceeded the property’s fair market value, leaving no residual equity for the junior lien.

## Issues

1. Whether a junior lienholder must tender amounts due on senior obligations to pursue damages or equitable relief based on alleged irregularities in a trustee’s sale.
2. Whether the junior lienholder raised a triable issue of material fact on damages from alleged chilled bidding where the property lacked equity beyond senior liens and superior interests.

## Decision

- The Court of Appeal affirmed summary judgment for E & G and the other respondents.
- The court affirmed on the ground that RE–HAB failed to establish provable damages caused by the alleged sale irregularities.
- The court did not rely on the trial court’s tender rationale, concluding the absence of damages independently defeated all claims.

## Legal Principles

- A plaintiff attacking a trustee’s sale must prove actual, compensable damages caused by the alleged irregularities.
- A junior lienholder cannot recover for alleged defects in a foreclosure sale when the property’s value is insufficient to satisfy senior liens and superior equities, leaving the junior lien with no realizable economic value.
- An appellate court may affirm a correct judgment on any theory supported by the record, even if the trial court relied on a different rationale.
- Alleged trustee self-dealing or bidding irregularities are not actionable by a junior lienholder absent proof that an untainted sale would have yielded value for the junior security interest.

## Conclusion

The court held that a junior lienholder’s challenge to a trustee’s sale fails without evidence of economic loss; where senior encumbrances and superior equity exceed the property’s value, alleged bidding misconduct causes no compensable damage, and summary judgment is proper.


FPCI RE-HAB 01 v. E & G Invs., Ltd., 207 Cal. App. 3d 1018 (Cal. Ct. App. 1989)