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section 580b of the California Code of Civil Procedure (section
580b) prevented him from obtaining a deficiency judgment against
either Stephanie or David for the balance of the debt, in effect
rendering worthless the balance of the note.
Respondent contends that petitioner either made a gift to
Stephanie and David when he did not take collection action, or
that he failed to prove the debt was worthless. Respondent
emphasizes that Stephanie earned $87,148 and $100,744 in 1995 and
1996, respectively, and sold houses in both of those years.
Respondent also disputes the application of section 580b.
Petitioner’s decision to take a deed in lieu of foreclosure
to the Atascadero property and conclude that the outstanding
balance of the Atascadero loan was worthless in 1995 under
section 166 reflected an exercise of sound business judgment.
Petitioner’s inquiries into the ways in which Stephanie
might satisfy the debt refute respondent’s argument that
petitioner made gifts to Stephanie and David and support the
conclusion that the debt was worthless. In 1995, Stephanie was
in dire economic straits from having to service both the Great
Western loan and the loan on her home in Oakland, as well as pay
rent on an apartment in Texas. Stephanie informed petitioner
that she had to keep her apartment in Texas where she lived and
worked, and that she was unwilling to evict her mother to sell
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