Judge Sarah J. Heidel, Case Number: 24NNCV02638, Date: 2024-12-05 Tentative Ruling

Judge: Sarah J. Heidel, Case: 24NNCV02638, Date: 2024-12-05 Tentative Ruling

Case Number: 24NNCV02638 Hearing Date: December 5, 2024 Dept: V

HAGOP MKHCHIAN, an individual,

Plaintiff,

vs. MARGARITA MKRTCHYAN, an individual; ANI A. PETROSYAN, an individual; CAROLINE HAZARIAN, an individual; FIDELITY NATIONAL TITLE COMPANY, a Delaware corporation; COMPASS REAL ESTATE, a Delaware corporation; and All persons unknown, claiming any legal or equitable right, title, estate, lien, or interest in the property described in the Complaint adverse to Plaintiffs title, or any cloud on Plaintiff's title thereto; DOES 1-10, inclusive,

Defendants.
Case No.: 24NNCV02638
Hearing Date: December 5, 2024
Time: 8:30 a.m.

[TENTATIVE] ORDER RE: DEMURRER BY DEFENDANT FIDELITY NATIONAL TITLE COMPANY TO PLAINTIFF’S COMPANY

MOVING PARTIES: Defendant FIDELITY NATIONAL TITLE COMPANY

RESPONDING PARTY: Plaintiff HAGOP MKHCHIAN

The court considered the moving papers, opposition, and reply.

BACKGROUND

Plaintiff Hagop Mkhchian filed the complaint against defendants Margarita Mkrtchyan; Ani A. Petrosyan; Caroline Hazarian; Fidelity National Title Company; Compass Real Estate; and all persons unknown, claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to plaintiff’s title, or any cloud on plaintiff’s title thereto on July 1, 2024. Plaintiff alleges the following causes of action: (1) quiet title against alldefendants; (2) fraud and deceit against defendants Mkrtchyan, Petrosyan, and Hazarian; (3) cancelation of grant deed against defendant Petrosyan; and (4) negligence against defendants Fidelity and Compass. Plaintiff alleges that in June 2022, plaintiff agreed to enter into business with defendants Mkrtchyan and Petrosyan where they would purchase 8147 Lloyd Avenue, Los Angeles CA 91605 (subject property) to open an assisted living facility. Defendants Mkrtchyan and Petrosyan had already entered into a purchase agreement for the subject property but were unable to qualify for a loan to purchase the subject property, thus, defendants asked plaintiff to purchase the subject property and contribute $300,000 to the down payment. Defendants agreed to reimburse plaintiff one-half of the down payment within two months after escrow closed and that they would make one-half of the monthly mortgage payments and operating costs of the assisted living facility.

On June 14, 2022, plaintiff executed an Assignment Agreement Addendum whereby defendant Petrosyan would assign the purchase contract to plaintiff. Plaintiff alleges that defendant Mkrtchyan informed defendant Fidelity that plaintiff only spoke Armenian and that defendant Mkrtchyan would handle hiring a notary for plaintiff to sign the closing documents, thus, defendant Fidelity gave defendant Mkrtchyan the closing documents without clearing or confirming these actions with plaintiff. Plaintiff alleges that on June 30, 2022, plaintiff met with notary, defendant Hazarian, to sign the closing documents which included loan documents, a Deed of Trust, and additional typical documents that a buyer signs to close escrow. However, plaintiff alleges that hidden amongst the closing documents was a Grant Deed whereby plaintiff deeded the subject property to plaintiff and defendant Petrosyan as tenants in common as a gift. At the time, plaintiff believed that defendant Fidelity created each document, however, plaintiff believes and alleges that defendant Mkrtchyan provided defendant Hazarian with the Grant Deed and instructed defendant Hazarian to instruct plaintiff to execute the Grant Deed under the guise that defendant Fidelity prepared it. Plaintiff alleges he never had the intent to grant a one-half interest in the subject property as a gift to defendant Petrosyan and he never authorized defendant Fidelity to record the Grant Deed. Plaintiff has assumed all financial responsibility of the subject property since the closing of escrow.

Plaintiff discovered the Grant Deed added defendant Petrosyan to the title on August 6, 2022, when he received the first property tax bill because it was addressed both to plaintiff and defendant Petrosyan. Defendants Mkrtchyan and Petrosyan have yet to pay back the down payment as promised nor have they made improvements on the subject property or contributed any money to the subject property.

Defendant Fidelity National Title Company (defendant) filed the demurrer on August 2, 2024. Plaintiff filed the opposition on October 29, 2024. Defendant filed its reply on November 26, 2024.

LEGAL STANDARD

A party may object to a complaint or cross-complaint; the party may file a demurrer, an answer, or both. (Code of Civ. Proc., § 430.30.) The demurrer may be filed within 30 days after service of the complaint or cross-complaint unless extended by stipulation or court order. (Code of Civ. Proc. § 430.40(a).)

As a general matter, in a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Id.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Before filing a demurrer, the demurring party is required to meet and confer with the party who filed the pleading demurred to for the purposes of determining whether an agreement

can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code of Civ. Proc. § 430.41.)

DISCUSSION

A. Meet and Confer

Defendant’s attorney states that on July 26, 2024, he called plaintiff’s counsel to discuss the deficiencies in the complaint and the demurrer, however counsel was unavailable. (Hemar Decl., ¶ 2.) Defendant’s counsel sent an email stating his intention to file a demurrer. (Hemar Decl., ¶ 2; Exh. 1.) The court finds that defendant attempted to meet the requirement to meet and confer.

B. Demurrer

Defendant demurs to the first and fourth cause of action on the grounds that the complaint fails to state facts sufficient to constitute a cause of action.

1. First Cause of Action: Quiet Title

Defendant argues that there is no allegation that defendant currently has an adverse claim to plaintiff’s claim of title to the subject property. Defendant’s demurrer to this cause of action is moot because plaintiff dismissed defendant as to this cause of action on July 31, 2024.

2. Fourth Cause of Action: Negligence

The elements of a professional negligence claim are: (1) a duty of care is owed to plaintiff to use skill, prudence and diligence as other members of profession commonly possess and exercise; (2) breach; (3) causation; and (4) damages. (Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1077.)

Defendant served as the escrow company for the transaction of assigning the purchase contract for the subject property to plaintiff. Defendant argues that in its capacity as an escrow holder, it cannot be sued for negligence.

“An escrow involves the deposit of documents and/or money with a third party to be delivered on the occurrence of some condition.” [Citations.] An escrow holder is an agent and fiduciary of the parties to the escrow. [Citations.] The agency created by the escrow is limited—limited to the obligation of the escrow holder to carry out the instructions of each of the parties to the escrow. [Citations.]” (Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 711, as modified on denial of reh'g (May 15, 2002).) “[I]t is generally held that no liability attaches to the escrow holder for his failure to do something not required by the terms of the escrow or for a loss incurred while obediently following his escrow instructions.” (Lee v. Title Ins. & Trust Co. (1968) 264 Cal.App.2d 160, 163.) However, “if the escrow holder acts negligently, ‘it would ordinarily be liable for any loss occasioned by its breach of duty.’” (Amen v. Merced County Title Co. (1962) 58 Cal.2d 528, 532 (citing Rianda v. San Benito Title Guarantee Co. (1950) 35 Cal.2d 170, 173.) “It is elemental that the duty of an escrow holder is to comply strictly with the instructions of its principal and to exercise reasonable skill and ordinary diligence with respect to the employment. If the escrow holder fails to follow his instructions or acts negligently, he may be liable for any loss occasioned thereby.” (Diaz v. United California Bank (1977) 71 Cal.App.3d 161, 166.) California case law clearly shows that an escrow holder has a duty to follow the instructions of the parties to the escrow and a breach thereof would be a breach of contract, but an escrow holder also has the professional duty to use skill, prudence and diligence as other escrow holders, and a breach of that duty could constitute negligence.

Plaintiff alleges that “Fidelity owed a duty of due care to plaintiff during the transaction. Fidelity breached that duty of care by failing to communicate with plaintiff and instead, took directions from a third party that wasn't plaintiff’s real estate agent.” (Complaint, ¶ 52.) “Fidelity owed a duty of care to confirm with plaintiff that he needed an alternate notary and arrange one for plaintiff. Fidelity breached its duty to plaintiff when it allowed Mkrtchyan to become [a]n intermediary between plaintiff and Fidelity which ultimately was the gateway for Mkrtchyan,
Petrosyan, and Hazarian's fraudulent conduct. . . .” (Complaint, ¶ 53.) “Compass and Fidelity’s negligence was a substantial factor in causing plaintiff’s harm. As a result of the negligent conduct of Compass and Fidelity, and each of them, as here alleged, plaintiff has been harmed in the approximate amount of $790,000, the exact amount shall be proven at trial.” (Complaint, ¶ 54.) That is sufficient to state a claim for negligence.
Defendant also argues that plaintiff signed the escrow documents, and that plaintiff cannot now undo the legal effect of these documents by arguing that he did not understand what he was signing. That argument does not negate plaintiff’s claims of negligence that defendant had a duty to communicate with plaintiff and work with plaintiff’s authorized realtor and not third parties, such duty which plaintiff claims defendant breached.

Defendant’s demurrer to the fourth cause of action for negligence is overruled.

Based on the foregoing, the court OVERRULES the demurrer to the fourth cause of action for negligence. The demurrer to the first cause of action to quiet title is moot.