Kalvans

FACTS AND PROCEDURAL BACKGROUND

In July 2004, American General Financial Services, Inc. (American General) loaned appellants money to purchase a single-family residence in Bradley, California (Property). The loan was secured by a first deed of trust on the Property. Appellants subsequently obtained a loan for repairs, secured by a second deed of trust naming Heritage Lending, Inc., as trustee, and Henrik Nielsen, Robbie Pickett and Ted Pickett as beneficiaries. Appellants consulted with respondents after discovering their home had been constructed without the requisite building permits. In July 2007, respondents filed a complaint in Monterey County Superior Court (Monterey Action) on appellants' behalf, seeking damages, injunctive relief and an order preventing foreclosure by the first lienholder, American General. The complaint did not reference the second deed of trust. A foreclosure sale was held on the second deed of trust in September 2009. Nielsen purchased the Property at the sale, taking ownership subject to the first deed of trust. On September 24, 2009, Nielsen posted a three-day notice to vacate on the Property. He followed up with an unlawful detainer action in…