Banc of America Leasing & Capital v. 3 Arch Trustee Services
Defendant, 3 Arch Trustee Services, Inc. (Arch) conducted a nonjudicial foreclosure sale that resulted in excess sale proceeds. The sole issue raised on appeal is whether Arch had a duty to search for, verify, prioritize, and distribute the surplus funds to a junior lien holder, Banc of America Leasing & Capital, LLC (BofA), who had recorded a judgment lien against the property owner. We conclude the comprehensive statutory scheme regarding nonjudicial foreclosures (Civ. Code, 2924 to 2924k)[1] clearly delineates the limited role and duties of a trustee in a nonjudicial foreclosure sale, and those duties do not include the responsibility for searching and finding all possible judgment creditors. Given the recent rise in foreclosures, we appreciate the trial courts concerns regarding the issues posed by BofA in this case. However, the solution is better left to the Legislature as we find no legal or factual support for ignoring the clear statutory rules regarding the limited role of trustees. As will be discussed, there are significant public policies underlying the current legislative scheme. Attorneys for amicus curiae, United Trustees Association, warn a judicially created common law duty, over and above the enumerated statutory duties, will compel trustees to use the far more costly and time consuming interpleader procedure to determine how and to whom to distribute surplus proceeds. This would defeat the speedy remedy goals envisioned by the Legislature. Currently, junior lien holders have a complete notice and claim procedure outlined in section 2924j that requires no expansion by the judiciary. Accordingly, Court reverse the judgment.
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