Judge: Curtis A. Kin, Case: 21STCV18913, Date: 2022-09-06 Tentative Ruling
Case Number: 21STCV18913 Hearing Date: September 6, 2022 Dept: 72
MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE,
SUMMARY ADJUDICATION
Date: 9/6/22
(9:30 AM)
Case: Simantov “Sam” Eshaghian v.
Provident Title Company (21STCV18913)
TENTATIVE RULING:
Defendant Provident Title Company’s Motion for Summary
Judgment, or in the Alternative, Summary Adjudication of Issues is DENIED.
A.
EVIDENTIARY OBJECTIONS
Pursuant to CCP § 437c(q), the Court declines to rule on
plaintiff Simantov “Sam” Eshaghian’s evidentiary objections because none of the
objections pertain to evidence that is material to the disposition of the
motion. Regardless of the merit of the objections, plaintiff demonstrates
triable issues as to each issue presented by defendant Provident Title Company
(“Provident”) in the motion.
B.
FIRST CAUSE OF ACTION: NEGLIGENCE (ISSUE 2)
Citing Markowitz v. Fidelity Nat. Title Co. (2006)
142 Cal.App.4th 508 and Siegel v. v. Fidelity Nat. Title Co. (1996) 46
Cal.App.4th 1181, defendant Provident argues that it acted as the sub-escrow
with respect to escrow company, Equimax Mortgage & Loan (“Equimax”), and
that Provident accordingly had no duty to plaintiff with respect to its error
in wire transferring funds from escrow.
In Markowitz and Siegel, the courts
held that the defendant title company owed no duty as the sub-escrow to the
owner or purchaser of real property. (Markowitz, 142 Cal.App.4th at 526,
528; Siegel, 46 Cal.App.4th at 1193-95.)
As explained by the Markowitz court, any duty of the sub-escrow
was “defined, and limited, by the terms of th[e] [escrow] instructions.” (Markowitz, 142 Cal.App.4th at 527; see
also Siegel, 46 Cal.App.4th at 1194 [“If the agency and fiduciary
responsibilities owed by [the escrow company] to the [plaintiff purchasers]
were limited by the terms of the escrow instructions, the responsibilities of
[defendant] acting as sub-escrow were even more limited”].) Thus, in Markowitz, the Court found
that the defendant title company acting as sub-escrow had no duty to the
plaintiff property owner, because the defendant received no escrow instructions
from plaintiff and because the escrow instructions defendant did receive from
the bank “did not expressly evince the intent to benefit [plaintiff].” (Markowitz, 142 Cal.App.4th at 527
[noting a third-party beneficiary may enforce a contract made for its benefit
if the contract is expressly made for the benefit of the third party”].) Likewise, the Siegel court concluded
the defendant sub-escrow did not become a fiduciary of the plaintiff purchasers
because the defendant merely received and followed oral instructions from the
escrow company; the defendant had no interaction with or reason to know of
plaintiff. (Siegel, 46
Cal.App.4th at 1193.)
Here, by contrast, the Court does not find as a matter of
law that defendant owed no duty to plaintiff.
To the contrary, the evidence submitted by moving defendant is
sufficient to support a finding that defendant had a duty. As attached to the declaration of Steve Lopez,
Chief Title Officer and Senior Vice President for Provident, the Sub-Escrow
Statement for Provident indicates “Proceeds to ESHAGIAN FAMILY TRUST –
BENEFICIARY PROCEEDS” in the amount of $1,784,575.16. (Lopez Decl. ¶¶ 1, 8 & Ex. 2.) Further, the Lender’s Instructions, which
were found in Provident’s sub-escrow file, notably state: (1) that the
“Borrower” is “Simantov Eshaghian as Trustee of the Eshaghian Family Trust”;
(2) that “The PGM Family Trust (‘Lender’) is making a loan to Borrowers in the
amount of $1,800,000 (the ‘Loan’)’; (3) that “Lender will be NET funding. The amount of net funding is: $1,797,900.00”;
and (4) that “Net loan proceeds . . . is to be wired to Borrower as per
attached Borrower’s Wire Instruction.”
(Lopez Decl. ¶ 9 & Ex. 4.)
Further, the “Borrower’s Wire Instruction” indicates the “Beneficiary
Name: Eshaghian Family Trust” and bank to which wired money should be
sent. (Lopez Decl. Ex. 4.) Such evidence may demonstrate defendant knew
plaintiff was an express intended beneficiary of the escrow for which defendant
acted as sub-escrow and accordingly may establish defendant had a duty to
plaintiff.
The motion as to Issue 2 is DENIED.
C.
SECOND CAUSE OF ACTION: BREACH OF FIDUCIARY DUTY
(ISSUE 3)
Provident argues that it owed no fiduciary duty to plaintiff
because plaintiff was not a party to the escrow instructions and because it was
not plaintiff’s agent. (DMF 3, 4.) However, as discussed above with respect to
the first cause of action for negligence and the instructions Provident
received as the sub-escrow, there is a triable issue as to whether Provident
was plaintiff’s fiduciary. (See
Markowitz, 142 Cal.App.4th at 526 [“An escrow holder is an agent and
fiduciary of the parties to the escrow”]; Siegel, 46 Cal.App.4th at 1193
[“It is indisputably true that ‘an escrow holder is the limited agent and
fiduciary of all parties to an escrow.’]”.)
The motion as to Issue 3 is DENIED.
D.
THIRD CAUSE OF ACTION: BREACH OF CONTRACT (ISSUE
4)
Plaintiff alleges that the terms of the contract between him
and Provident are comprised of the escrow instructions and a deed of trust.
(Compl. ¶ 33.) Provident argues that plaintiff was not a party to the escrow
instructions between Equimax and Provident. (UMF 3, 4.) Provident also argues
that, under the deed of trust, it owed no fiduciary obligations to plaintiff. (Vournas
v. Fidelity Nat. Title Ins. Co. (1999) 73 Cal.App.4th 668, 677 [“The
trustee of a deed of trust is not a true trustee, and owes no fiduciary obligations;
he merely acts as a common agent for the trustor and the beneficiary of the
deed of trust”].)
However, “[a] third party beneficiary may enforce a contract
made for its benefit.” (Markowitz, 142 Cal.App.4th at 527, citing Civ.
Code § 1559.) As discussed with respect to the first cause of action for
negligence, the escrow instructions Provident received expressly identify
plaintiff as the beneficiary of the net loan proceeds and required Provident to
wire the net loan proceeds to plaintiff at his bank account. (DMF 15.)
Accordingly, plaintiff demonstrates that he may have been more than an
incidental beneficiary under the escrow instructions and was instead a
third-party beneficiary who is entitled to sue for breach of the escrow instructions.
(See Civ. Code § 1559 [“A contract, made expressly for the benefit
of a third person, may be enforced by him at any time before the parties
thereto rescind it”].)
The motion as to Issue 4 is DENIED.
E.
FOURTH CAUSE OF ACTION: BREACH OF THE IMPLIED
COVENANT OF GOOD FAITH AND FAIR DEALING (ISSUE 5)
Provident argues that, because there was no contract between
it and plaintiff, there could have been no covenant of good faith and fair
dealing. (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 349-50
[implied covenant of good faith and fair dealing “cannot impose substantive
duties or limits on the contracting parties beyond those incorporated in the
specific terms of their agreement”].)
For the reasons discussed with respect to the third cause of
action for breach of contract, plaintiff demonstrates that he may be entitled
to enforce the escrow instructions as a third-party beneficiary. Accordingly,
because plaintiff’s breach of contract cause of action is viable, the cause of
action for breach of the implied covenant of good faith and fair dealing is
also viable.
The motion as to Issue 5 is DENIED.
F.
FIFTH CAUSE OF ACTION: NEGLIGENT INTERFERENCE
WITH ECONOMIC INTERESTS (ISSUE 6)
“The tort of negligent interference with prospective economic
advantage is established where a plaintiff demonstrates that (1) an economic
relationship existed between the plaintiff and a third party which contained a
reasonably probable future economic benefit or advantage to plaintiff; (2) the
defendant knew of the existence of the relationship and was aware or should
have been aware that if it did not act with due care its actions would
interfere with this relationship and cause plaintiff to lose in whole or in
part the probable future economic benefit or advantage of the relationship; (3)
the defendant was negligent; and (4) such negligence caused damage to plaintiff
in that the relationship was actually interfered with or disrupted and
plaintiff lost in whole or in part the economic benefits or advantage reasonably
expected from the relationship.” (North American Chemical Co. v. Superior
Court (1997) 59 Cal.App.4th 764, 786.)
Provident maintains that plaintiff cannot establish the
second element because it was not privy to plaintiff’s intended use of the loan
proceeds at the time the loan closed on February 23, 2021. (Lopez Decl. ¶ 14;
Miele Decl. ¶ 2 & Ex. A at 39-40.) Plaintiff disputes this assertion by
presenting emails that escrow company Equimax sent to Provident beginning on
February 25, 2021, notifying representatives at Provident that the purpose of
the funds was so that plaintiff could close on a separate, time-sensitive
transaction. (DMF 28-29.) At the very least, such evidence demonstrates defendant
was aware of the potential harm to plaintiff’s business interests when
defendant did not immediately recover the transferred funds or otherwise
replace them after the initial erroneous transfer of the loan proceeds. (See Compl. ¶ 51 [alleging
Provident failed to exercise its duties of reasonable care, diligence, and
judgment . . . by failing to rectify its mistake in a timely manner and instead
taking approximately two weeks to reverse and correct the wire transfer . .
.”].)
The motion as to Issue 6 is DENIED.
G.
PUNITIVE DAMAGES (ISSUE 7)
Provident argues that plaintiff cannot demonstrate any
malice on the part of Provident, because Provident immediately took steps to
recall the erroneous wire transfer. (UMF 7-9.)
Plaintiff demonstrates that Equimax told Provident on
February 26, 2021 that, due to the urgency of the loan, Provident should “send
the borrower what was due to him plus his interest and then deal with getting
the money back.” (DMF 31; Agoncillo Decl. ¶ 5 & Ex. C at PLTF 00529.)
Equimax continued to follow up with Provident demanding that Provident advance
the funds. (DMF 31.) However, Provident did not advance the loan funds until
March 5, 2021—seven days later. (DMF 33.) As a result of the delay in wiring
the funds to plaintiff, plaintiff asserts that he suffered damages resulting
from having to procure another loan to close a real estate transaction and from
being unable to close a different real estate transaction. (PMF 23, 24, 35-40.)
The record before this Court contains no explanation from Provident as to why
the funds could not have been advanced to plaintiff earlier. (PMF 34.)
A reasonable juror could find that, during the seven-day
period when Provident was on notice of a possible solution to effectuate
plaintiff’s time-sensitive transaction, Provident willfully and consciously
disregarded the rights of plaintiff to receive the funds as directed by the
escrow instructions. (See Civ. Code § 3294(c)(1) [malice].)
The motion as to Issue 7 is DENIED.
H.
ATTORNEY FEES (ISSUE 8)
Provident argues that plaintiff cannot recover attorney’s
fees pursuant to the attorney fee provision in the deed of trust securing the
underlying loan. (See Compl. ¶¶ 38 [third cause of action for breach of
contract], 45 [fourth cause of action for breach of the implied covenant of
good faith and fair dealing].)
Regardless of whether plaintiff is entitled to recover fees
under the deed of trust, this issue is not amenable to summary
adjudication. CCP § 437c(f)(1) “does not permit summary adjudication
of a single item of compensatory damage which does not dispose of an entire
cause of action.” (DeCastro West Chodorow & Burns, Inc. v.
Superior Court (1996) 47 Cal.App.4th 410, 422.) Here, resolving the
issue of attorney fees would not dispose of the breach of contract or the
breach of the implied covenant of good faith and fair dealing causes of action.
The underlying compensatory damages, including cost of the separate loan that
plaintiff took to complete a real estate transaction and the lost equity
resulting from the other failed transaction, would remain unresolved. (PMF 36,
40.)
Provident’s citation to Lilienthal & Fowler v.
Superior Court (1993) 12 Cal.App.4th 1848 is unavailing. Lilienthal stands
for the proposition that a party may seek summary adjudication of “a separate
and distinct wrongful act even though combined with other wrongful acts alleged
in the same cause of action.” (Lilienthal, 12 Cal.App.4th at 1854-55.) It
does not authorize a court to adjudicate items of damage piece meal for any
particular cause of action or the Complaint as a whole.
The motion as to Issue 8 is DENIED.
I.
DAMAGES AND PENALTIES ARISING FROM PLAINTIFF’S
PURCHASE OF SLAUSON PROPERTY (ISSUE 9)
Provident maintains that plaintiff cannot recover on the
damages arising from the untimely purchase of the Slauson Property because the
loan that plaintiff took to complete the purchase was usurious. (DMF 10.) Irrespective
of whether that contention is correct, for the reasons stated with respect to
plaintiff’s prayer for attorney fees, defendant cannot seek summary
adjudication as to a portion of compensatory damages. (DeCastro, 47
Cal.App.4th at 422.)
The motion as to Issue 9 is DENIED.
J.
CONCLUSION
Because the motion as to Issues 2 through 9 is DENIED, the
motion for summary judgment (Issue 1) is also DENIED.
The motion is DENIED in its entirety.