Petitioner mortgage lenders sought mandate relief from an order of respondent Superior Court of Los Angeles County

 

Petitioner mortgage lenders sought mandate relief from an order of respondent Superior Court of Los Angeles County (California), which overruled their demurrer to a cause of action for fraudulent concealment asserted by real party in interest borrowers in the case of min wage san diego.

 

 

 

The borrowers alleged that the lenders had fraudulently concealed a scheme to bilk investors by selling pooled mortgages at inflated values, the demise of which scheme devastated home values across California and deprived the borrowers of access to equity lines and other financing. The court held that the lenders owed no duty to disclose the alleged scheme to the borrowers because no authority supported the imposition of additional liability on an intentional tortfeasor for failing to disclose tortious intent before committing a tort. The general duty was not to warn of the intent to commit wrongful acts, but to refrain from committing them. Thus, although the lenders had a duty to refrain from committing fraud, they had no independent duty to disclose to the borrowers the alleged intent to defraud investors. Moreover, there was no nexus between the alleged fraudulent concealment by the lenders and the economic harm sustained by the borrowers. All California homeowners, not just those who obtained mortgage loans from the lenders, experienced the same consequences of the decline in property values; thus, causation was not established.

 

 

 

The court granted the lenders' petition for writ of mandate and directed the superior court to vacate its order overruling the demurrer and to enter a new and different order sustaining the demurrer without leave to amend.

 

Because directors of a homeowners association were not engaging in transactions with the association when they apportioned costs and expenses while acting under a conflict of interest that precluded the application of the business judgment rule, the common-law standard of inherent fairness was more appropriate than the statutory standard of a just and reasonable transaction under Corp. Code, §§ 7231, 7233, subd. (a), but requiring the directors to show that the transaction was just and reasonable was not error because it closely approximated the common-law standard; [2]-The trial court should have found the directors liable in their personal capacities, whether or not they were motivated by self-interest, because they breached their fiduciary duties by apportioning costs and expenses in a manner that was inconsistent with the governing documents and resulted in damages.

 

 

 

Affirmed in part, reversed in part, and remanded.