Wong v. Beneficial Savings and Loan Association

Margaret Roerden developed an eight-building apartment complex. For purely regulatory and financing reasons, Roerden subdivided the complex into eight parcels (one for each building). Roerden financed the development with a loan for each parcel from Beneficial Savings and Loan Association (Beneficial) (defendant). The eight loans were secured by eight deeds of trust, one for each parcel. The deeds of trust contained a dragnet clause providing that each deed of trust secured all eight loans. The eight buildings functioned as a single complex, sharing a pool and a parking lot. Roerden sold the complex to the Wongs (plaintiffs), who purchased the entire development in a single transaction by paying a single lump sum. As part of the transaction, the Wongs assumed the loans. The loans went into default, and Beneficial posted notices of sale under the deeds of trust. The Wongs attempted to tender payment adequate to redeem and cure from default only four of the eight deeds of trust. Beneficial refused the tender, arguing that, under the dragnet clause, the Wongs had to cure the defaults on all eight loans to redeem any single deed of trust. Eventually, Beneficial executed the trustee sales, at which Beneficial purchased the eight parcels. Beneficial later sold the complex to a third party. The Wongs filed a lawsuit seeking damages for Beneficial’s refusal to accept their tender to redeem a portion of the deeds of trust. The trial court held that the dragnet clause was enforceable against the Wongs and ruled in favor of Beneficial. The Wongs appealed.