Alliance Mortgage Co. v. Rothwell
California Supreme Court
10 Cal. 4th 1226, 44 Cal. Rptr. 2d. 352, 900 P.2d 601 (1995)
Facts
Laurie Rothwell and others (appraiser group) (defendants) created false documents and conspired to convince Alliance Mortgage Company (Alliance) (plaintiff) to loan money to fictitious buyers to purchase nine properties at highly inflated values. Based on the false documents, Alliance issued the loans and then sold some of the loans. All the loans went into default. For the loans that Alliance still owned, Alliance sold the properties that secured the loans at nonjudicial-foreclosure sales. At these sales, Alliance made full-credit bids to buy the properties for the unpaid loan balance. Later, Alliance learned that the properties were not as described in the loan-support documents. Alliance brought multiple claims, including a claim that the appraiser group had defrauded Alliance by intentionally misrepresenting the properties’ characteristics to induce Alliance to issue the loans. The trial court dismissed the lawsuit for several reasons, including a finding that Alliance’s full-credit bids meant that Alliance had been fully repaid for those loans and, therefore, had not suffered any compensable damages. The appellate court reversed, finding that a full-credit bid did not prevent a lender from pursuing fraud claims. The California Supreme Court agreed to review the issue.
Rule of Law
Issue
Holding and Reasoning (Arabian, J.)
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