Gates

Background Plaintiff was a physician who had made a few loans in the past before being approached by Maki in 1994. Maki identified herself as a mortgage broker, the branch manager of American Capital Mortgage. Maki explained that she was "working with" a dentist, Michael Dennehy, who wanted to borrow against a few properties he owned in order to develop more real estate. During meetings about the proposed transaction, Maki explained to plaintiff that his loan would be in second position. Plaintiff believed that loans in second position usually commanded an interest rate of 14 to 15 percent, so he indicated that he would want 14 percent. Maki told plaintiff that she would prepare the paperwork for the transaction. Plaintiff made his first loan to Michael and Valerie Dennehy in August 1994 for $125,000, secured by a deed of trust for Dennehy's property at 930 San Benito Street in Hollister. A few months later Maki arranged another loan from plaintiff to the Dennehys, this time for $100,000, secured by a deed of trust on the same property, though it listed a different Assessor's Parcel Number (APN). This document was executed on October 4, 1994, but it was not…