Mead v. Sanwa Bank California

In Mead v. Sanwa Bank California (1998) 61 Cal.App.4th 561, the owners of real property signed a long-term lease with a developer who had plans to develop commercially the property. In order to facilitate the developer's obtaining of a loan, the owners executed a deed of trust in favor of the developer's lender. The developer defaulted, and the assignee of the lender foreclosed. The owners sued the lender, claiming they were merely sureties. The trial court sustained the lender's demurrer finding that the owners had not established a suretyship. The Court of Appeal found that the owners had properly pled a suretyship. The Court of Appeal noted that only the developer signed the note to the lender and that the owners had advised the lender that the deed of trust was given to "secure repayment of the developer's obligations." ( Mead v. Sanwa, supra, 61 Cal.App.4th at p. 567.) It should also be noted that although the Mead court found sufficient facts to plead a surety, the Court of Appeal did affirm the dismissal of the owners' claim against the lender.