## Facts

- Sellers transferred a motel to Cal-Coast Development Corporation, which executed a single $25,000 promissory note as part of the consideration.
- The note was secured by a deed of trust on separate real property (a Lake Tahoe lot), not the motel.
- The deed of trust recited that it secured the $25,000 note and stated an agreed valuation of the collateral at $8,000.
- Cal-Coast failed to pay the note at maturity.
- The sellers elected nonjudicial foreclosure and caused a trustee’s sale under the deed of trust’s power of sale; the property sold for $2,500 on December 4, 1964.
- The sellers later sued on the note (filed April 15, 1965), asserting that $17,000 of the note was effectively “unsecured” (the amount above the $8,000 agreed valuation) and seeking a money judgment for that amount.
- The trial court entered judgment for the sellers on the claimed $17,000 “unsecured” portion, and Cal-Coast appealed.

## Issues

1. After a creditor elects a trustee’s sale under a deed of trust, does Code of Civil Procedure § 580d bar a money judgment on any portion of the same secured note, despite an agreed valuation clause suggesting the security is worth less than the debt?
2. If a deficiency-type action could proceed notwithstanding § 580d, is it barred by the three-month limitations period in Code of Civil Procedure § 337(1) following a trustee’s sale?

## Decision

- The Court of Appeal reversed and directed entry of judgment for Cal-Coast.
- Section 580d barred any deficiency judgment on the note because the creditor sold the collateral under the power of sale.
- The sellers could not split a single promissory note into “secured” and “unsecured” portions based on an agreed valuation term to avoid § 580d.
- Independently, the action was time-barred under § 337(1) because it was filed more than three months after the trustee’s sale.

## Legal Principles

- When a note is secured by a deed of trust and the creditor elects nonjudicial foreclosure under a power of sale, Code of Civil Procedure § 580d bars any deficiency judgment on that note.
- A creditor cannot evade § 580d by characterizing part of a single secured note as “unsecured” using a stipulated collateral valuation in the deed of trust.
- Code of Civil Procedure § 337(1) imposes a short limitations period (three months, as applied) for bringing a post-trustee’s-sale deficiency-type action; filing outside that period bars the action.

## Conclusion

Because the sellers chose a trustee’s sale, § 580d barred any post-sale money judgment on the secured note, including an amount recast as “unsecured” by reference to an agreed valuation; the suit also failed as untimely under § 337(1).


Loretz v. Cal-Coast Dev. Corp., 249 Cal. App. 2d 176 (Cal. Ct. App. 1967)