Montoya

Max andMary Montoya appeal a judgment denying them recovery in their constructive fraud action against Frances McLeod, a licensed real estate salesperson who solicited their unsecured loan on behalf of the investment broker by whom she was employed as an investment counselor.

Max Montoya and his wife Mary invested their life savings in a loan to be placed by Universal Financial. They received an unsecured promissory note they erroneously believed to be adequately secured by a real property deed of trust as required by law. Shortly after the loan, Universal Financial *61 went into receivership and the note reflecting the loan is now worth perhaps 25 cents on the dollar. Contrary to the trial court’s determination, we find McLeod breached her fiduciary relationship with the Montoyas by not advising them it was illegal for Universal Financial to accept their funds in exchange for an unsecured promissory note, and in failing to take reasonable steps to learn and advise them that the actual “borrower” of the money was her broker-employer. We hold the evidence conclusively shows McLeod’s conduct amounted to constructive fraud and reverse the judgment and remand with…