Chanda

Private lenders sued a private mortgage broker for negligence and breach of fiduciary duty after it was discovered that a loan they had financed had been obtained through fraud and forgery. In this case, the trial court excluded evidence of title insurance procured by the private mortgage broker as part of the lending transaction to protect the lenders from fraud and forgery as barred by the collateral source rule and refused to instruct the jury on superseding cause. We conclude the trial court prejudicially abused its discretion in excluding this evidence because it was relevant to liability. We also conclude the trial court properly declined to instruct the jury on superseding cause. The judgment is reversed and the matter is remanded for a new trial.

FACTUAL AND PROCEDURAL BACKGROUND

Federal Home Loans Corporation (FHLC) is a private mortgage broker that did equity lending, meaning that the loans originated through it were primarily based upon the value of the property, with loan-to-value ratios much lower than a traditional banking institution. Canizalez Associates, Inc. (Canizalez), and Valley Family Practice Medical Associates, Inc. (VFPM, together the Property…