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

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…