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Procedural Posture

Petitioner mortgage insurer filed an application for a writ of mandate, seeking reversal of an order from respondent Superior Court of Los Angeles County (California) granting summary adjudication of issues and barring petitioner’s claims for breach of contract and punitive damages for fraud against real party in interest mortgagors.

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Overview

Real party in interest mortgagors borrowed money to purchase condominiums and executed promissory notes that were insured by petitioner mortgage insurer. After real parties in interest defaulted on the notes, the property was sold. Petitioner paid the policy amount to the mortgagee bank, which purchased the condominiums at a nonjudicial trustee’s sale. Petitioner sued real parties in interest for fraud and breach of contract. Summary adjudication was granted, and petitioner sought a writ of mandate to reverse the order. The court held that the indemnity agreements, on which the breach of contract claim was based, were void because they allowed recovery of a deficiency in violation of the anti-deficiency statute, Cal. Civ. Proc. Code § 580d. The court found that petitioner failed to state a claim for fraud; because the mortgagee bank made a full credit bid, petitioner did not sustain damages. Further, there was no proof petitioner relied on any alleged misrepresentation made by real parties in interest and no proof petitioner’s payment under its policy was caused by the alleged fraud. Summary adjudication was affirmed, and petitioner’s application for writ of mandate was denied.

Outcome

Petitioner mortgage insurer’s application for a writ of mandate was denied because summary adjudication of issues that barred petitioner’s breach of contract, fraud, and punitive damage claims was proper. The indemnity clause on which the breach of contract claim was based was void, and the fraud claim was groundless because there was no proof that petitioner either suffered damages or relied on any misrepresentation.

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