Hefetz v. Beavor

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The one-action rule, which generally requires a creditor seeking to recover debt secured by real property to proceed against the security prior to seeking recovery from the debtor personally, must be timely interposed as an affirmative defense in a party’s responsive pleadings or it is waived.Plaintiff contributed more than $2 million toward funding a loan that was secured by the personal residence of Defendant. When the borrower defaulted on the loan and Defendant refused to repay the loan under a personal guaranty agreement, Plaintiff filed a complaint to recover damages against Defendant. The jury entered a verdict in favor of Defendant. Thereafter, Plaintiff filed a motion for a new trial, which the district court granted based on Defendant’s failure to oppose the motion on the merits. Defendant moved to dismiss Plaintiff’s complaint, raising the one-action rule defense for the first time. The district court granted Defendant’s motion to dismiss based on the one-action rule. The Supreme Court reversed, holding that because Defendant failed to raise the one-action rule defense until prior to the commencement of the second trial in this case, Defendant failed timely to interpose the one-action rule defense. View "Hefetz v. Beavor" on Justia Law