Evidence Of Title Insurance Should Have Been Admitted.

The signatures on loan documents were forged. Interest-only payments were made. A larger replacement loan was made, again based upon forged documents. When the property owners realized what had happened, they brought an action for fraud against various persons. Everything settled, except a cross-complaint of one lender against another lender. At trial, a jury decided a private mortgage broker breached fiduciary duties owed to a private lender and that the mortgage broker acted with malice, fraud or oppression, and awarded $590,469.51 in compensatory damages and $62,500 in punitive damages. Arguing the collateral source rule, the private lender had successfully prevailed upon the trial court to exclude evidence of payments it received under a title insurance policy. The mortgage broker appealed. The appellate court reversed, finding prejudicial error in excluding evidence of the private lender’s title insurance receipts since the mortgage broker presented an offer of proof that industry standards required it to obtain title insurance covering fraud and forgery for a loan transaction. Chanda v. Federal Home Loans Corporation (Cal. App. Fourth Dist., Div. 1; April 19, 2013) 215 Cal.App.4th 746.