Summary
The Supreme Court of California held that an escrow holder owes no fiduciary or tort duty to a nonparty based solely on an assignment between other nonparties to the escrow. Continental Lawyers Title Company followed the escrow instructions by paying the original lender, and the court rejected liability for negligence to the assignee. The court disapproved Kirby v. Palos Verdes Escrow Co. to the extent it was inconsistent with this holding.
Holdings
- An escrow holder does not owe a fiduciary duty to a stranger to the escrow merely because it knows that one stranger to the escrow assigned rights in the note and deed of trust to another stranger.
- Continental owed Summit no tort duty of care because the Biakanja factors did not justify departing from the general rule that an escrow holder is not liable for following the escrow instructions or for failing to perform an act not required by those instructions.
Questions Presented
- Whether an escrow holder owes a fiduciary or other duty of care to a nonparty to the escrow based solely on an assignment to that nonparty by another nonparty.
- Whether an escrow holder may be liable in negligence for following the escrow parties' instructions to pay the original lender despite knowledge of the assignment.
- Whether Kirby v. Palos Verdes Escrow Co. correctly treated notice of an assignment between escrow strangers as amended escrow instructions.
Disposition
affirmed
Cases Cited (15)
- Amen v. Merced County Title Co., 58 Cal. 2d 528, 375 P.2d 33 (1962)(followed)
- Rianda v. San Benito Title Guar. Co., 35 Cal. 2d 170, 217 P.2d 25 (1950)(followed)
- Vournas v. Fidelity Nat. Tit. Ins. Co., 73 Cal. App. 4th 668, 674, 86 Cal. Rptr. 2d 490 (1999)(followed)
- Schaefer v. Manufacturers Bank, 104 Cal. App. 3d 70, 77-78, 163 Cal. Rptr. 402 (1980)(followed)
- Blackburn v. McCoy, 1 Cal. App. 2d 648, 655, 37 P.2d 153 (1934)(followed)
- Claussen v. First American Title Guaranty Co., 186 Cal. App. 3d 429, 435-436, 230 Cal. Rptr. 749 (1986)(followed)
- Romo v. Stewart Title of California, 35 Cal. App. 4th 1609, 1618 n.9, 42 Cal. Rptr. 2d 414 (1995)(followed)
- Axley v. Transamerica Title Ins. Co., 88 Cal. App. 3d 1, 9, 151 Cal. Rptr. 570 (1978)(followed)
- Lee v. Title Ins. & Trust Co., 264 Cal. App. 2d 160, 162, 70 Cal. Rptr. 378 (1968)(followed)
- Kirby v. Palos Verdes Escrow Co., 183 Cal. App. 3d 57, 227 Cal. Rptr. 785 (1986)(disapproved)
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