Facts: A borrower obtained a loan from a lender secured by senior and junior trust deeds on their property. In the loan application, the borrower stated they did not know the seller, although the seller was a family member of the borrower. The borrower stopped making payments and the senior trust deed was foreclosed. The junior trust deed note was then sold to a collector.
Claim: The collector sought money damages from the borrower for alleged fraud in connection with the original loan application, claiming the collector was entitled to pursue the borrower for fraudulent statements since the lender assigned its tort rights to the collector with the sale of the loan.
Counterclaim: The borrower claimed the collector was not entitled to pursue the borrower for damages resulting from the original loan application since the lender did not expressly assign the collector its tort rights when it sold the collector the loan.
Holding: A California Court of Appeals held the collector may not pursue the borrower for money damages since the lender did not expressly assign the collector its tort rights on the sale of the loan, preventing the collector from seeking damages based on the original loan application entered into between the borrower and lender. [Heritage v. Monroy (2013) __ CA4th__]
