## Facts

- A developer built an eight-building apartment project and subdivided the land into eight parcels, executing eight separate $28,000 notes secured by eight deeds of trust.
- Each deed of trust contained an “other indebtedness” (dragnet) clause purporting to secure obligations beyond the single note associated with that parcel.
- The parcels functioned as a single complex, including shared improvements (a pool on one parcel and a parking lot on two parcels) with limited express easements.
- The Wongs and partners bought the entire project in a single transaction for a lump sum and assumed all eight loans (and an additional furniture loan); one partner handled the negotiations and payments.
- After financial trouble, the other partners transferred their interests to the Wongs, who became sole owners.
- The lender recorded eight notices of default and election to sell.
- The Wongs tendered enough to cure default as to four parcels only; the lender refused, asserting the dragnet clauses required curing all eight notes to redeem any parcel.
- Trustee’s sales proceeded; the lender acquired all parcels and later resold the complex.
- The Wongs sued for damages, alleging the lender wrongfully refused their partial tender.

## Issues

1. Whether the dragnet clauses made each deed of trust security for all eight notes, permitting the lender to demand cure of the entire indebtedness before releasing any parcel.
2. Whether the borrowers, as assuming purchasers, had a right to partially redeem by tendering only the amounts necessary to cure default on selected parcels.
3. Whether refusal to accept partial tender constituted a wrongful refusal of tender supporting damages.

## Decision

- The Court of Appeal affirmed judgment for the lender.
- The court held the dragnet clauses were enforceable under the instruments and circumstances, and the eight deeds of trust were validly cross-collateralized.
- Because each parcel secured the entire indebtedness, the lender could require tender sufficient to cure default on all eight notes before allowing redemption or release of any single parcel.
- The lender’s refusal to accept partial tender was not wrongful and did not support liability for damages.

## Legal Principles

- Dragnet (“other indebtedness”) clauses in deeds of trust are not per se invalid; their scope is determined from the instrument language and the surrounding transaction showing the parties’ intent.
- When a development is planned, financed, and operated as a single economic unit, courts may treat subdivided parcels and multiple notes as one integrated security arrangement if the documents and circumstances support that intent.
- An assuming purchaser takes the property subject to enforceable deed-of-trust terms, including cross-collateralization provisions, absent waiver or agreement by the beneficiary.
- If all parcels secure all notes, the trustor cannot compel partial redemption by curing only some notes and demanding release of corresponding parcels.

## Conclusion

The court enforced broad dragnet clauses to treat the eight-parcel apartment project as a single, cross-collateralized security package, holding the lender could reject a tender that cured only part of the default and could foreclose on all parcels without incurring damages liability.


Wong v. Beneficial Sav. & Loan Ass’n, 56 Cal. App. 3d 286 (Ct. App. 1976)