Title Ins. Co.
Filed 3/15/13 Logan v. Chicago Title Ins. Co. CA2/5
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
FIVE
BRUCE LOGAN,
Plaintiff and Respondent,
v.
CHICAGO TITLE INSURANCE COMPANY
et al.,
Defendants and Appellants.
B238348
(Los Angeles
County
Super. Ct.
No. EC050057)
APPEAL from
a judgment of the Superior Court
of
County.
Laura Matz, Judge.
Affirmed.
Fidelity
National Law Group, Teresa Y. Hillery, Amy J. Cooper, Mathias Maciejewski for
Defendants and Appellants.
Law Offices
of Michael D. Imfeld, Michael D. Imfeld for Plaintiff and Respondent.
_______________
Chicago Title Insurance Company, Chicago Title Company,
Michael Salazar, and Elena Hernandez appeal from the judgment entered in favor
of respondent Bruce Logan, after jury trial, on Logan's
complaint. We affirm.
Facts
The case
concerns a fraudulent real estate transaction.
The sole contention on appeal is that Logan, plaintiff below, had no
standing, but a summary of the facts is nonetheless required:
A man named
Jimmie Lewis owned real property in Anaheim. In December 2005, a woman named Karina Ruiz
filled out a loan application for purchase of his property. She also signed escrow papers. She did this because she was paid $3,000 by
an acquaintance. Escrow for this
"sale" was with Inland Escrow.
Lewis apparently did not know of the "sale," but had earlier
given some personal identifying information to Inland Escrow, in connection
with an attempt to refinance.
In
connection with the transaction, Inland Escrow sent a request to Chicago Title
policy.
Chicago
Title would not issue a title policy without opening a sub-escrow, which it
did. A lender called Southstar Funding
wired $744,958 to Chicago Title. About
$600,000 of the money was to fund a first trust deed loan to Ruiz for the
purchase of Lewis's home. The remainder,
$153,863, was to fund a second trust deed loan to Ruiz, for the remainder of
the purchase.
Inland
Escrow sent documents to Chicago Title, including Southstar's escrow
instructions and a forged grant deed from Lewis to Ruiz which misspelled
Lewis's first name.
Lewis
discovered some of these doings when he received a call from a mortgage broker
he had consulted about the refinance, telling him that there was money at a
local Chicago Title office. He and his
adult daughter went to that office and asked to speak to the person in
charge. They told him that Lewis had not
signed any financing documents, that they did not understand why money would be
waiting for Lewis at Chicago Title, and that "the mortgage brokers"
were trying to defraud Lewis. The
"sale" to Ruiz had not yet closed, but Chicago Title did not halt the
transaction, but instead distributed the funds, recorded the forged grant deed,
and closed the transaction.
Lewis and
his daughter finally contacted the police, who went to Inland Escrow's offices
only to find that they had "packed up and moved out."
Southstar
sold the first trust deed to Goldman Sachs, and the second to UM Capital.
After
learning about the forged grant deed, Lewis sued Goldman Sachs and Ruiz.
Logan
bought UM Capital's note and deed of trust,
action for, inter alia, breach of fiduciary duty, breach of contract, and
negligence, alleging that Chicago Title was negligent in its role as escrow
holder. He also sued Ruiz, who settled,
and Inland Escrow and various individuals connected with Inland Escrow, who
defaulted.
At trial,
the parties agreed that Logan was
the successor-in-interest to Southstar.
Thus, by agreement of the parties, the jury was instructed that
"Bruce Logan was not a party to the original contract. However, he may bring a claim for breach of
contract because Southstar Funding, LLC, transferred its rights under the
contract to UM Capital, LLC, which transferred the rights to Bruce Logan."
In
addition, the joint statement of the case read to the jury said, "Bruce
Logan is the successor to UM Capital, LLC, which was the successor of Southstar
Funding, LLC," and numerous jury instructions, requested by both parties,
began "Bruce Logan claims that his predecessor, Southstar Funding, LLC.,
was harmed because . . . ." The
special verdicts asked the jury to determine Southstar's damages.
Logan's
evidence of negligence included evidence that, contrary to Southstar's
instructions, Chicago Title's own procedures, and Chicago Title's own
understanding of its duties, Chicago Title did not compare the forged grant
deed with earlier trust deeds signed by Lewis, which it had in the title file;
that if it had, it would have noticed that the signature on the forged deed did
not match those earlier signatures and included a misspelling of Lewis's first
name (Lewis spelled his name "Jimmie," the deed was signed
"Jimmy"); and would have informed Southstar and halted the
transaction. Logan presented evidence
that Chicago Title breached its duties in this manner because it was busy and
understaffed.
Logan also
produced evidence that if Southstar had been informed that Lewis's name and
signature were wrong on the grant deed, it would have halted the transaction
and investigated the entire file, and discovered, among other things, that the
forged grant deed was notarized with a stamp which had been reported stolen
months earlier. Logan also presented
expert evidence concerning standard of care and breach of standard of care.
Chicago
Title's defense was that it did nothing outside the custom and practice of the
industry, and that Southstar was negligent because it made the loan without
checking the representations Ruiz made on her application, many of which were
false. Chicago Title called one witness,
an expert who testified concerning standard of care and breach.
On special
verdicts, the jury found for Chicago Title on many of the causes of action, but
also found that all the Chicago Title defendants were negligent and that
Chicago Title Insurance Company and Chicago Title had breached a fiduciary duty
to Southstar. The jury found that the
negligence and breach of duty caused damages to Southstar, and that Southstar's
total damages were $153,863. The jury
also found contributory negligence by Southstar and by Inland Escrow,
attributing specified amounts of negligence to each.
Judgment
was entered jointly and severally against Chicago Title and all other
defendants except Ruiz in the amount of $150,863, an amount which reflected the
jury verdict and Ruiz's $3,000 settlement; and against Salazar and Hernandez in
the amount of $104,704, an amount which reflected the jury verdict, Ruiz's
settlement, and Southstar's comparative negligence.
Discussion
Chicago
Title phrases its sole argument as one about standing. It agrees that Southstar had standing to
bring negligence and breach of fiduciary duty claims, but contends that Logan
did not.
Chicago
Title's argument is that "as a matter of law, an assignee of a party to
the escrow is a stranger to the escrow," from which Chicago Title
concludes that it owed Logan no duty, and that the lack of duty means that
Logan had no standing. In legal support,
it cites Summit
Financial Holdings, Ltd. v. Continental Lawyers Title Company (2002) 27
Cal.4th 705 and Markowitz v. Fidelity
Nat. Title Co. (2006) 142 Cal.App.4th 508.
In
his real property loan. Continental
Lawyers Title Company provided escrow services, and pursuant to the escrow
instructions, issued a check to Talbert Financial Services, which had held a
note secured by that property. However,
Talbert had since assigned its rights to the note to Summit, which sued
Continental for negligence, contending that the check should have been issued
to it, not to Talbert. (
708.) It was in that context that the
court wrote, "The question presented by this case is whether an escrow
holder owes a duty of care to a nonparty to the escrow based on an
by another nonparty to the escrow. We
answer this question in the negative."
(Id. at pp. 707-708.)
supra, 142 Cal.App.4th 508, also cited by
Title, is similar. It held that
"'An escrow holder is an agent and fiduciary of the parties to the
escrow,'" (id. at p. 526) and
that the escrow holder in that case had no duty to the plaintiff, who had not
submitted any instructions to escrow and who was not a party to the
escrow. (Id. at p. 527.)
Here, of
course, Southstar was not a stranger to the escrow, but submitted instructions
to escrow and was a party to the
escrow, and, as Chicago Title agreed at trial, Logan stood in its shoes. The facts of Summit and Markowitz are
so different from the facts of this case that those holdings have no
application here.
Chicago
Title's argument is not truly about standing, it is about duty, or about the
assignment. While standing may be raised
for the first time on appeal, because lack of standing is a jurisdictional defect (Common Cause v.
Board of Supervisors (1989) 49 Cal.3d 432, 438) these arguments, which
directly contradict Chicago Title's position at trial, cannot be.
Further, as
Logan argues (and as appellants acknowledged in the trial court) he had
standing as Southstar's assignee. A
cause of action is assignable, and "[A]n assignee of a chose in action
does not sue in his own right but stands in the shoes of the assignor. [Citation.]
A thing or chose in action would never be assignable if the assignee
independently had to meet the requirements already satisfied by the
assignor. If he could meet the
requirements he would need no assignment; if not he could not use the
assignment."
title="">[5] (Bush
v. Superior Court (1992) 10 Cal.App.4th 1374, 1380.)
However,
although we rule in favor of Logan, we deny his motion to dismiss the appeal
and motion for sanctions, both of which are based on the argument that this
appeal is so meritless, especially given Chicago Title's positions in the trial
court, that it is frivolous. (
Cal.3d 637, 650.) We cannot say
that this appeal is frivolous and that sanctions are appropriate.
Disposition
The
judgment is affirmed. Respondent to
recover costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
ARMSTRONG,
Acting P. J.
We concur:
KRIEGLER,
J. O'NEILL,
J.
distinguishes between Chicago Title Insurance Company and Chicago Title, both
named as plaintiffs in the lawsuit and as appellants here. They, appellant Salazar (the Chicago Title
officer responsible for Ruiz's loans), and appellant Hernandez (the Chicago
Title employee responsible for reviewing the documents for accuracy) are
referred to, collectively, herein as "Chicago Title."
notice of the summons and complaint in that action, and documents from other
actions tangentially related to this one.
Since the documents do not assist us in our analysis, and were
apparently not before the trial court, the request is denied.
