California Court of Appeals, Third District, Nevada
GREGORY W. BOCK, as Trustee, etc., Plaintiff and Appellant,
CALIFORNIA CAPITAL LOANS, INC. et al., Defendants and Respondents.
Reposted 5/21/13 to attach opinion
Filed 5/14/13 Unmodified version
APPEAL from a judgment of the Superior Court of Nevada County No. 76151, Sean P. Dowling, Judge. Affirmed.
John J. Hartford; Wilson & Wilson and Donald A. Wilson for Plaintiff and Appellant.
Jay-Allen Eisen Law Corporation, Jay-Allen Eisen, Aaron S. McKinney; The Law Offices of Kirk S. Rimmer and Kirk S. Rimmer for Defendant and Respondent.
MODIFICATION OF OPINION
TH E COURT:
The opinion of this court filed May 14, 2013, in the above entitled case is modified as follows:
The second sentence of the second paragraph on 8 page beginning “According to Bock” is deleted and the following sentence is inserted in its place:
According to Bock, the interest that the lender, California Capital, was to have earned on the loan cannot be considered compensation to Speckert for purposes of section 1916.1, even though Speckert was the sole shareholder of the corporation, and since Speckert did not take a commission on the transaction, Speckert did not act for compensation or in expectation of compensation in arranging the loan.
This modification does not affect the judgment.
ROBIE, Acting P. J.
In California, a loan secured by a lien on real property is exempt from the constitutional prohibition on usury if the loan is made or arranged by a licensed real estate broker. (Cal. Const., art. XV, § 1; Civ. Code,  § 1916.1.) Section 1916.1 explains that “a loan... is arranged by a person licensed as a real estate broker when the broker... acts for compensation or in expectation of compensation for soliciting, negotiating, or arranging the loan for another.”
In this case, we conclude that even when the lender on such a loan is a corporation that is wholly owned by the arranging broker, the broker can still be found to have arranged the loan “for another” for purposes of section 1916.1. We also conclude that in such a situation, the broker may be found to have arranged the loan “in expectation of compensation” even if the only compensation the broker will receive is the profit his wholly owned corporation reaps from the interest on the loan. Based on these conclusions, we affirm the judgment here.
FACTUAL AND PROCEDURAL BACKGROUND
When plaintiff Gregory W. Bock, trustee of the Bock Family Trust, needed a loan, a third party put him in contact with defendant Leo Speckert, a licensed real estate broker and the sole shareholder of defendant California Capital Loans, Inc. (California Capital). Speckert told Bock what the terms of the loan would be and made out disclosure statements regarding the loan. California Capital loaned Bock $1.2 million secured by a ...