R.E. Loans v. Investors Warranty of America CA2/6

Filed 8/27/15 R.E. Loans v. Investors Warranty of America CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

R.E. LOANS, LLC, 2d Civil No. B256149 (Super. Ct. No. CV090732) Plaintiff and Appellant, (San Luis Obispo County)

v.

INVESTORS WARRANTY OF AMERICA, INC., et al.,

Defendants and Respondents.

In R.E. Loans v. Investors Warranty of America (2013) 212 Cal.App.4th 1432 (RE-1), the trial court granted summary judgment to a lender seeking to avoid a subordination agreement on the ground that the senior lender breached the agreement. We reversed. We determined that a senior lender did not breach the subordination agreement; that the subordinated junior lender was subordinated only to a loan in the amount of $4,006,600, not the entire $21 million in loans held by the senior lender; and that the junior lender could have prevented foreclosure of the senior loan by tendering the amount sufficient to cure the default on the $4,006,600 senior loan.

On remand, the subordinated lender amended its complaint to allege the senior lender prevented it from curing the default on the $4,006,600 loan. Nevertheless, the trial court sustained the senior lender's demurrer on the ground that the subordinated lender did not allege tender of payment to cure the default. But as alleged, the subordinated lender was prevented from doing so. We reverse again. FACTS Martin Weyrich Winery, LLC and related entities (collectively Weyrich) owned a parcel of real property in San Luis Obispo County known as "Jack's Ranch." The ranch was encumbered by a number of loans, including a third trust deed held by R.E. Loans, LLC (RE), securing a loan of $6.5 million. In 2006, Weyrich refinanced the loans secured by Jack's Ranch. Weyrich paid the first two loans and paid RE $3.5 million on its existing loan. In return, RE subordinated its existing deed of trust to a new loan from Transamerica Financial Life Insurance Company (Transamerica) in the amount of $4,006,600. The subordination agreement provides that RE will subordinate its trust deed to "a new loan in the principal sum of $4,006,600[] secured by [a] new first deed of trust . . . in favor of [Transamerica]." After RE recorded the subordination agreement, Transamerica recorded a trust deed encumbering Jack's Ranch in April 2007. The trust deed recites that it secures a note in the principal amount of $4,006,600. It also recites that it secures "any and all obligations and covenants of Trustor under . . . any other agreement . . . including without limitation . . . that certain . . . Loan Agreement dated as of even date herewith between Trustor and Beneficiary." The loan agreement between Weyrich and Transamerica provides that the trust deed not only secures a note in the amount of $4,006,600, but also notes in the amount of $11,227,500 and $5,912,750. The loan agreement states that the loans are intended to be "cross-defaulted." A default under any of the loans is a default under all the loans. The loan agreement also states that the loans are