Judge Thomas D. Long, Case Number: 20STCV09255, Date: 2025-01-07 Tentative Ruling

On September 5, 2023, Plaintiffs Sok Hun Yun and Sun Yung Ahn (“Plaintiffs”) filed a third amended complaint (“TAC”) alleging (1) Fraudulent Conveyance – Real Property; (2) Accounting; (3) Intentional Infliction of Emotional Distress; and (4) Negligent Infliction of Emotional Distress.

On January 30, 2024, the Court sustained Defendants Jamie Park, Chris Hong, Audrey Jung, Propent Real Estate, Inc., and B&B Investment Properties, LLC’s demurrer to the second, third, and fourth causes of action in the TAC without leave to amend.

On September 3, 2024, Defendant Eon Escrow, Inc. (“Eon”) filed a motion for summary judgment, or in the alternative, summary adjudication. Deborah Koh (“Koh”) was not included as a moving party in the notice of motion and the motion was not briefed as though she was a moving party. (Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1125. (“As a general rule, the trial court may consider only the grounds stated in the notice of motion but an omission in the notice may be overlooked if the supporting papers make clear the grounds for the relief sought. The purpose of these requirements is to cause the moving party to ‘sufficiently define the issues for the information and attention of the adverse party and the court.’”)) Here the briefing does not make it clear that Koh is a moving party.

These objections would not impact the court’s ruling and so the court does not rule on them.

On April 18, 2017, Plaintiff filed a personal injury Complaint, bearing case number BC657933 against Defendants Bae Guen Song and Jung Sook Song (collectively “the Song Defendants”). (Undisputed Material Fact “UMF” 2.) On September 25, 2019, a jury verdict was rendered in that case, finding the Song Defendants liable for Plaintiff’s damages. A monetary judgment was not entered until March 25, 2020 as the result of a bifurcated trial. (UMF 3.)

On December 6, 2019, Eon opened escrow on the Subject Property, on behalf of Defendant Bae Guen Song. (UMF 4.)

On December 9, 2019, Koh was assigned as the escrow agent to the transaction. (UMF 5.) As part of the initial seller disclosures, Defendant Bae Guen Song disclosed a lawsuit involving prior tenants. (UMF 6.) Defendant Bae Guen Song never provided the case name or number for the pending lawsuit. (UMF 7.) Koh requested all information pertaining to that lawsuit from Defendant Bae Guen Song. (UMF 8.) Defendant Bae Guen Song stated that the lawsuit had been taken care of and was of no concern to the present escrow transaction, and accordingly did not provide any further details. (UMF 9.)

Koh requested that Provident Title Company perform a search on the property and Defendant Bae Guen Song to determine the existence of any judgments, liens or lis pendens that would affect the transaction. Provident Title Company’s search yielded no such information. (UMF 10.)

On December 27, 2019, Koh then had Defendant Bae Guen Song, Defendant CHRIS WONG Hong (hereinafter “Defendant Hong”), and Defendant JAMIE Park (hereinafter “Defendant Park”) execute an amended escrow instruction which reads as follows:

“Disclosures: The undersigned parties have both been disclosed of a pending lawsuit mentioned on the Real Estate Transfer Disclosure Statement dated December 6, 2019. The undersigned Seller shall hereby and herewith severally and jointly forever indemnity and keep the undersigned Buyer(s), Agents, Brokers, Eon Escrow, Inc and it's employees and Provident Title Company harmless and free of all liabilities in regards to these lawsuit between previous tenant. Buyer(s) is aware and acknowledges no information about this lawsuit is available. The undersigned Buyer(s) acknowledge and INSTRUCT Escrow holder and all parties to proceed to close escrow. Parties herein agree to indemnify, defend and hold Eon Escrow, Inc., its agents, employees and officers of the corporation, harmless from any liability or loss in connection with this instruction.”

Additionally, on December 30, 2019, Koh had Defendants Song, Hong, and Park execute another amended escrow instruction which reads as follows:

“Seller herein acknowledges and discloses the pending lawsuit mentioned on the Real Estate Transfer Disclosure statement dated December 6, 2019 has been satisfied. Escrow holder shall not be concerned with nor held liable for same. Escrow holder is hereby instructed to close Escrow without any further instructions regarding this matter. Parties herein agree to indemnify, defend and hold Eon Escrow, Inc., its agents, employees and officers of the corporation, harmless from any liability or loss in connection with this instruction.”

On December 27, 2019, Defendant Bae Guen Song executed a grant deed to transfer the Subject Property to Defendants Hong and Park. (UMF 13.) The grant deed was notarized by Koh and recorded by Koh and Eon. (UMF 14.) Escrow officially closed on January 6, 2020, and the subject property was sold. (UMF 15.) Koh and Eon were not debtors as it relates to the transfer of the subject property as neither of them ever had any ownership interest in the Subject Property. (UMF 16.)

On March 6, 2020, Plaintiffs brought this lawsuit alleging, inter alia, that Eon and Koh engaged in a fraudulent scheme to transfer the Subject Property. (UMF 17.)

For each claim in the complaint, the defendant moving for adjudication must satisfy the initial burden of proof by showing that one or more elements of a cause of action cannot be established or that there is a complete defense to a cause of action. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520 (Scalf).) Then the burden shifts to the plaintiff to show that a triable issue of material fact exists as to that cause of action or a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf, supra, 128 Cal.App.4th at p. 1520.) To establish a triable issue of material fact, the party opposing the motion must produce “substantial responsive evidence.” (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163 (Sangster).)

ISSUE NO.1: Plaintiffs are unable to establish their First Cause of Action for Fraudulent Conveyance - Real Property.

ISSUE NO.2: Plaintiffs are unable to establish their Second Cause of Action for Accounting.

ISSUE NO.3: Plaintiffs are unable to establish their Third Cause of Action for Intentional Infliction of Emotional Distress.

ISSUE NO.4: Plaintiffs are unable to establish their Fourth Cause of Action for Negligent Infliction of Emotional Distress.

A. Plaintiffs Are Unable to Establish a Cause of Action for Fraudulent Conveyance Since Eon Owed No Duty to Plaintiffs.

Eon seeks summary adjudication of the First Cause of Action for Fraudulent Conveyance of Real Property under Civil Code section 3439 et. seq.

(a) A transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows:

(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:

(A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.

(B) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.

(b) In determining actual intent under paragraph (1) of subdivision (a), consideration may be given, among other factors, to any or all of the following:

(2) Whether the debtor retained possession or control of the property transferred after the transfer.

(4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.

(8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.

(9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.

(10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred.

(11) Whether the debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor.

(c) A creditor making a claim for relief under subdivision (a) has the burden of proving the elements of the claim for relief by a preponderance of the evidence.

The first cause of action alleges that Eon conspired with and/or assisted the Song Defendants, and Defendants Hong and Park, in executing and completing the fraudulent transfer of the subject real property by a) Acting as real estate brokers and assisting with the secret marketing and sale of the subject property; b) Rapidly opening and closing a secret escrow on the sale of the subject property; c) Notarizing the grant deed signed by the Song Defendants; and d) Recording the grant deed signed by the Song Defendants. (See TAC ¶ 65.) Plaintiffs allege that Eon had actual knowledge of the personal injury lawsuit "because all of the Defendants discussed this case with each other and were aware of the First Judgment.” (TAC ¶ 50.)

It is undisputed that Eon was not a debtor as it relates to the transfer of the subject property it never had any ownership interest in the Subject Property. (UMF 16.) It is also undisputed that Defendant Bae Guen Song executed a grant deed to transfer the Subject Property to Defendants Hong and Park. (UMF 13.) Accordingly, Eon argues that it cannot be considered a “Debtor” since it does not have an ownership interest in the Subject Property, nor can it be considered an "Insider" under Civil Code section 3439.04 (b)(I) as the transfer of the Subject Property was not made to or from Eon. Eon argues that because it was not a debtor or insider, Plaintiffs cannot establish their cause of action for Fraudulent Conveyance against Eon.

Eon also argues that it did not owe Plaintiffs any duties pertaining to the Subject Property beyond following the principals’ instructions that were outlined in the Escrow Instructions, and as such purported duties serve as the premise for all of Plaintiffs’ causes of action, all causes of action fail on this basis. To establish a lack of duty owed to Plaintiffs, Eon offers the following facts and supporting evidence:

1. At the time that Eon and Koh were retained, the principals to the Escrow Instructions neither specifically informed them about the underlying personal injury lawsuit, nor about Plaintiffs' alleged equitable lien on the Subject Property. (Koh Decl. ¶ 10.)

2. While Plaintiffs claim that Defendants Eon and Koh had actual knowledge of the personal injury lawsuit merely "because all of the Defendants discussed this case with each other,” Plaintiffs do not provide any other support for their contention. (TAC ¶ 50.) Further, it is undisputed that no judgment was entered until March 25, 2020, over two months after the close of escrow. (UMF 3.)

3. Defendant Bae Guen Song disclosed a lawsuit involving prior tenants. (Koh Decl. ¶ 3.) Defendant Bae Guen Song did not provide the case name, case number or any substantive details of the case. (Koh Decl. ¶ 4.) Koh then requested all information pertaining to that lawsuit from Defendant Bae Guen Song. (Koh Decl. ¶ 6.) However, Song stated that the lawsuit had been taken care of and was of no concern to the present escrow transaction, and accordingly did not provide any further details. (Koh Decl. ¶ 7.)

4. Koh requested that Provident Title Company perform a search on the property and Defendant Bae Guen Song to determine the existence of any judgments, liens or lis pendens that would affect the transaction. Provident Title Company's search yielded no such information. (Koh Decl. ¶ 8.)

5. Plaintiffs allege that the Subject Property was worth over $2,000,000 and yet was sold below market value at $1,720,000. The principals to the Escrow Instructions neither disclosed the true fair market value of the property nor provided instructions to Defendants Eon and Koh pertaining to the true fair market value. (Koh Decl. ¶ 9). Koh had no knowledge regarding the market value of the property. (Koh Decl. ¶ 9).

6. Plaintiffs allege that Eon and Koh "acted intentionally in order to help Defendant Bae Guen Song liquidate his only asset." (Compl. ¶ 80). Yet, Koh was unaware that the Subject Property was Defendant Bae Guen Song's only valuable asset. (Koh Decl. ¶ 5).

“An escrow holder has no general duty to police the affairs of its depositors; rather, an escrow holder's obligations are limited to faithful compliance with [the depositors'] instructions ... Absent clear evidence of fraud, an escrow holder's obligations are limited to compliance with the parties' instructions.” (Summit Fin. Holdings, Ltd. v. Cont'l Laws. Title Co. (2002) 27 Cal.4th 705, 711, as modified on denial of reh'g (May 15, 2002) (Summit).)

Here, Eon fulfilled its duty to faithfully comply with the principals’ instructions and did not owe a further duty to Plaintiffs, nonparties to the escrow. Under Summit, Eon only owed a duty to the principal seller Defendant Song to comply with his escrow instructions and owed no further duty to Plaintiffs. Because Plaintiffs were not a party to the escrow and did not submit escrow instructions to Eon, Eon was not acting as Plaintiffs’ agent with respect to the transaction. There were no instructions submitted by Plaintiffs, or to which they were a signatory, with which Eon was obligated to comply, or which Eon was obligated to carry out with reasonable care in the exercise of ordinary skill and diligence. Escrow holders like Eon cannot be liable to Plaintiffs, strangers to the escrow, for injuries allegedly caused by Eon’s faithful following of the principals' escrow instructions. As Eon followed the principals’ directions by disclosing the pending lawsuit to the seller and continuing to close escrow, Eon owed no general duty to Plaintiffs to further police the affairs of its depositors per Summit.

Further, even if Eon did owe a duty to Plaintiffs, although Eon was aware of the underlying lawsuit, there is no evidence that Eon was aware of any collusion or fraud by Defendant Song that would have adversely affected any party to the escrow. It is also undisputed that no judgment was entered in the underlying action until March 25, 2020, over two months after the close of escrow on January 6, 2020, which calls into question Eon’s alleged intent to aid Defendant Song in allegedly defrauding Plaintiffs. (UMFs 3, 15.)

Accordingly, the Court finds that Eon satisfies its initial moving burden of proof by showing that duty cannot be established for the First Cause of Action for Fraudulent Conveyance of Real Property under Civil Code section 3439.04.

The burden now shifts to Plaintiffs to show that a triable issue of material fact exists as to the first cause of action by producing substantial responsive evidence showing that Eon engaged in Fraudulent Conveyance of Real Property.

Plaintiffs argue that based on competent evidence before the Court, 1) Eon Escrow never contacted the title company to inform it about pending litigation (UMF 25-27), 2) did nothing to ascertain the status of that pending lawsuit (25-33) and 3) relied against common sense, industry standards, and Fin. Code, § 17404 on Defendant Seller’s statement that there existed no documents related to that pending action and that it had been resolved. (UMF 34, 43, 44 and 47).

In addition to mentioning Financial Code section 17404, Plaintiffs also cite Financial Code section 17414, which states as follows:

a) It is a violation for any person subject to this division or any director, stockholder, trustee, officer, agent, or employee of any such person to do any of the following:

(1) ... knowingly or recklessly to direct, participate in, or aid or abet in a material way, any activity which constitutes theft or fraud in connection with any escrow transaction.

(2) Knowingly or recklessly make or cause to be made any misstatement or omission to state a material fact, orally or in writing, in escrow books, accounts, files, reports, exhibits, statements, or any other document pertaining to an escrow or escrow affairs.

In ruling on a motion for summary judgment, the Court is bound by the issues framed the complaint. “The pleadings play a key role in a summary judgment motion. ‘The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues’ and to frame ‘the outer measure of materiality in a summary judgment proceeding.’” (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493; Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1250 [“The materiality of a disputed fact is measured by the pleadings [citations], which ‘set the boundaries of the issues to be resolved at summary judgment.’ [Citations.]”].)

“Accordingly, the burden of a defendant moving for summary judgment only requires that he or she negate plaintiff’s theories of liability as alleged in the complaint; that is, a moving party need not refute liability on some theoretical possibility not included in the pleadings. [Citations.]” (Hutton, supra, 213 Cal.App.4th at p. 493.) New factual issues presented in opposition to a summary judgment motion should be considered if the pleading, construed broadly, encompasses them. (Ibid.) “In making this determination, courts look to whether the new factual issues present different theories of recovery or rest on a fundamentally different factual basis.” (Ibid.) In cases that find new factual issues are not encompassed by the original pleadings, “the plaintiff did not merely elaborate or add further detail to a claim which was predicated on the same fundamental facts set forth in the complaint. Rather, there was a complete shift in allegations, usually involving an effort to premise civil liability on acts or omissions committed at different times or by different persons than those described in the claim.” (Blair v. Superior Court (1990) 218 Cal.App.3d 221, 226.)

Several cases are instructive on this issue. (See, e.g., Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 646-647 [finding that three additional claims of how defendant breached its fiduciary duties were not pled or encompassed by plaintiff’s second cause of action for breach of fiduciary duty and therefore trial court correctly disregarded them from plaintiff’s opposition to motion for summary judgment]; but see Blair, supra, 218 Cal.App.3d at p. 226 [finding that broad allegations of negligent construction and maintenance of highway encompassed later allegations of negligent placement of highway guard rails, slope of road, and inadequate warnings signs because they were predicated on the same fundamental facts].)

Here, Plaintiffs do not make any allegations in the TAC regarding Eon’s alleged violations of Financial Code sections 17404 or 17414, nor do they contend that they have reported such violations to the Commissioner of Financial Protection and Innovation per the reporting procedures contained in Financial Code section 17400 et seq. Using the language of Financial Code section 17414, Plaintiffs argue that “[e]scrow officers are liable as a matter of common law and statute for failures to communicate facts material to their agency, assisting in fraud and causing to misstate a fact material to the transaction.” (Opposition, 1:19-21.) These additional claims of how Eon allegedly breached fiduciary duties owed to Plaintiffs based on violations of Financial Code sections 17404 and 17414 were not pled or encompassed by any of Plaintiffs’ four causes of action. Therefore, such claims are disregarded from Plaintiffs’ opposition.

Plaintiffs concede that “while it is true that as a general principle, the escrow agents are not obligated to police the parties, the record here demonstrates that Eon Escrow became aware of the pending litigation involving prior tenants, it helped Defendant Seller conceal it and in so doing, aided and abetted fraudulent transfer of the 3rd Ave. Property.” (Opposition, 1:22-25.)

The fraud exception set forth in Summit stands for the proposition that an escrow holder can be liable to parties to the escrow, not a stranger to the escrow, even if the escrow holder follows its escrow instructions, if there is clear evidence that the escrow holder acted fraudulently. (Markowitz v. Fidelity Nat. Title Co. (2006) 142 Cal.App.4th 508, 526-528.) As noted above, Plaintiffs were not a party to the escrow in which Eon was the escrow holder, and Plaintiffs admit that Eon followed the instructions of the parties to the escrow. (TAC ¶ 33.) Therefore, Eon owed Plaintiffs no duty and cannot be held liable for fraudulent conveyance as alleged in the first causes of action because the fraud exception relied on by Plaintiffs does not apply to strangers to the escrow such as Plaintiffs.

Plaintiffs argue that Eon can still be liable for aiding and abetting Seller Principal’s alleged fraudulent transfer under Taylor v. S & M Lamp Co., citing the following rule: “A debtor and those who conspire with him to conceal his assets for the purpose of defrauding creditors are guilty of committing a tort and each is liable in damages.” (Taylor v. S & M Lamp Co. (1961) 190 Cal.App.2d 700, 706.)

To support their aiding and abetting argument, Plaintiffs contend that the evidence confirms that the escrow of this unlisted sale was rushed (UMF 18), that Koh notarized the grant deed (UMF 14 and 48) and that Eon Escrow recorded it (UMF 14). Plaintiffs offer no evidence to support the allegation that the escrow was “rushed” outside of a citation to the TAC’s conclusory allegations that Eon and Koh conspired with the Song Defendants by “acting as real estate brokers and assisting with the secret marketing and sale of the subject property... and rapidly opening and closing a secret escrow on the sale of the subject property.” (TAC ¶ 65.) Further, Eon and Koh’s act of notarizing and recording the grant deed alone does not establish clear evidence of a conspiracy with Defendant Song to conceal his assets for the purpose of defrauding creditors, as these acts of notarizing and recording do not show that Eon was aware of any collusion or fraud by Defendant Song.

Plaintiffs also argue that, in addition to the conduct alleged in the operative pleading, the record reflects that Eon aided and abetted the fraudulent transfer by concealing the fact that the pending lawsuit was not resolved. (UMF 22, 27 and 34.) UMF 22, cited by Plaintiffs to support this allegation, specifically states that on December 6, 2019, Eon and Koh amended the Seller disclosures to indicate that “there is a pending lawsuit between previous tenants and landlord.” UMF 22 does not establish that Eon concealed the fact that the pending lawsuit was not resolved, as the disclosure clearly stated that the lawsuit was pending.

Plaintiffs also argue that Eon aided and abetted the fraudulent transfer by actively assisting Defendant Song in creating a false affidavit concealing the fact that the pending lawsuit was not resolved. (UMF 45-59). This affidavit dated December 30, 2019, states that, “Seller herein acknowledge and disclose the pending lawsuit mentioned on the Real Estate Transfer Disclosure statement dated December 6, 2019 has been satisfied. Escrow holder shall not be concerned with nor held liable for same. Escrow holder is hereby Instructed to close Escrow without any further Instructions regarding this matter.” (Compendium of Evidence, Ex. E.) However, Plaintiffs offer no clear evidence to establish that Eon had knowledge that the lawsuit was still pending as of December 6, 2019, nor that Eon had knowledge that Defendant Song made the affidavit with fraudulent intent. As discussed above, Eon satisfied its duties in following the December 6, 2019 amended escrow instructions which explicitly stated that Eon shall not be concerned with nor held liable for the pending lawsuit and instructing Eon to close Escrow without any further instructions. Eon owed no further duty to Plaintiffs at this time. Therefore, Plaintiffs have failed to meet their burden to establish a triable issue of material fact under the first cause of action for Fraudulent Conveyance as to Eon.

Summary adjudication of the first cause of action is granted as to Defendant Eon.

B. Plaintiffs Are Unable to Establish a Cause of Action for Accounting as Eon
Owed No Duty to Plaintiffs and Had No Relationship With Plaintiffs.

“A cause of action for accounting requires a showing of a relationship between the plaintiff and the defendant . . . that requires an accounting or a showing that the accounts are so complicated they cannot be determined through an ordinary action at law.” (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1413.)

Eon contends in its notice of motion that it “did not owe any other duty beyond the Escrow Instructions, thereby establishing that Plaintiffs’ claims for damages for fraudulent conveyance, accounting, intentional infliction of emotional distress, and negligent infliction of emotional distress, alleged against Defendant, are without merit as a matter of law.” (Notice of Motion for Summary Judgment, 2:19-23.) In the body of the memorandum of points and authorities, Eon argues that “Plaintiffs' Complaint fails to show that Defendants Eon and Koh owed any duty beyond the principals' instructions that were outlined in the Escrow Instructions, which serves as the premise for each of Plaintiffs' causes of action.” (Motion, 14:5-8.)

Here, as discussed above, Eon has established that it owed no duty to Plaintiffs and accordingly has no relationship with Plaintiffs, who were strangers to the escrow. However, Plaintiffs argue that Eon provides no actual argument as to the second cause of action for Accounting in the body of its memorandum of points and authorities, such that Eon failed to satisfy its moving burden. However, Eon clearly established that it owed no fiduciary duty to Plaintiffs, strangers to the escrow, while carrying its burden under the first cause of action. While Eon fails to specifically mention accounting in its memorandum, Eon states that “Plaintiffs' Complaint fails to show that Defendants Eon and Koh owed any duty beyond the principals' instructions that were outlined in the Escrow Instructions, which serves as the premise for each of Plaintiffs' causes of action.” (Motion, 14:5-8.) Thus, it is clear that Eon’s argument regarding a lack of duty or relationship is made as to each cause of action.

Plaintiffs fail to meet their burden to establish a triable issue of material fact. The TAC alleges that non-moving Defendants Bae Guen Song and Jung Sook Song entered into agreements with the Defendants Jamie Park, Chris Hong, Audrey Jung, Propent Real Estate Inc., B&B Investment Properties LLC to secretly transfer the Songs’ property to Defendants Hong and Park in order to hinder Plaintiffs’ collection of a judgment against the Songs in a prior personal injury case. (E.g., TAC ¶¶ 32-33, 44.) Plaintiffs offer no evidence of Eon having any relationship or involvement with Plaintiffs other than a conclusory allegation in the complaint that “a legal relationship exists between Plaintiffs and the Defendants due to Plaintiff[s’] equitable interest in the subject properly created by the First Judgment creating constructive Notice of same.” (TAC ¶ 70.) Thus, Plaintiffs fail to meet their burden to establish a triable issue of material fact as to the second cause of action for Accounting.

Summary adjudication of the second cause of action is granted as to Defendant Eon.

C. Eon Has Shown That Plaintiffs Cannot Establish Intent, an Essential Element for IIED.

Eon seeks summary adjudication as to the third cause of action for Intentional Infliction of Emotional Distress (“IIED”).

“‘[T]o state a cause of action for intentional infliction of emotional distress a plaintiff must show: (1) outrageous conduct by the defendant; (2) the defendant’s intention of causing or reckless disregard of the probability of causing emotional distress; (3) the plaintiff’s suffering severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.’ [Citation.] ‘Conduct, to be ‘outrageous’ must be so extreme as to exceed all bounds of that usually tolerated in a civilized society.’ [Citation.]” (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1259.) “Liability under the rule attaches only if the actor intended or should have recognized his conduct is likely to cause the resultant harm.” (Spackman v. Good (1966) 245 Cal.App.2d 518, 529.)

Eon argues that “Plaintiffs cause of action for Intentional Infliction of Emotional Distress is predicated on the same facts as their cause of action for Fraudulent Conveyance. Plaintiffs causes of action for Fraudulent Conveyance fails as a matter of law. As such, their cause of action for Intentional Infliction of Emotional Distress fails for the reasons set forth above.” (Motion, 14:11-14.)

Plaintiffs argue that “EON Escrow makes no argument with respect to its third issue on summary judgment and the third cause of action, for Intentional Infliction of Emotional Distress (IIED) except that it fails on the same facts and law as the first cause of action. As set forth above, the material facts advanced by Eon Escrow are unfounded hearsay. Moreover, the elements of the cause of action for IIED are entirely distinct from the cause of action for aiding and abetting fraudulent transfer and no authorities whatsoever are cited in support of the third issue. Therefore, Eon Escrow failed to meet its initial burden on summary adjudication and never shifted it to Plaintiff.” (Opposition, 11:4-11.)

For the reasons set forth above, Eon meets its moving burden to establish that it had no knowledge of Plaintiffs’ interests and owed no duty to Plaintiffs, and accordingly, that Eon did not intend or should not have recognized that its conduct was likely to cause the resultant harm to Plaintiffs, who were strangers to the escrow.

In opposition, Plaintiffs fail to meet their burden to establish a triable issue of material fact.

Summary adjudication of the third cause of action is granted as to Defendant Eon.

D. Eon Has Shown That Plaintiffs Cannot Establish Duty, the Essential Element for NIED.

Eon seeks summary adjudication as to the fourth cause of action for Negligent Infliction of Emotional Distress (“NIED”).

“[T]here is no independent tort of negligent infliction of emotional distress. [Citation.] The tort is negligence, a cause of action in which a duty to the plaintiff is an essential element. [Citations.] That duty may be imposed by law, be assumed by the defendant, or exist by virtue of a special relationship. [Citation.]” (Potter v. Firestone Tire &Rubber Co. (1993) 6 Cal.4th 965, 984-985.)

Eon argues that “Plaintiffs cause of action for Negligent Infliction of Emotional Distress is predicated on the same facts as their cause of action for Fraudulent Conveyance. Plaintiffs causes of action for Fraudulent Conveyance fails as a matter of law. As such, their cause of action for Negligent Infliction of Emotional Distress fails for the reasons set forth above.” (Motion, 14:17-20.)

Plaintiffs argue that “EON Escrow makes no argument with respect to its fourth issue on summary judgment and the fourth cause of action, for Negligent Infliction of Emotional Distress (NIED) except that it fails on the same facts and law as the first cause of action. As set forth above, the material facts advanced by Eon Escrow are unfounded hearsay. Moreover, the elements of the cause of action for NIED are entirely distinct from the cause of action for aiding and abetting fraudulent transfer and no authorities whatsoever are cited in support of the third issue. Therefore, Eon Escrow failed to meet its initial burden on summary adjudication and never shifted it to Plaintiff.” (Opposition, 11:15-22.)

Here, as discussed above, Eon has proffered sufficient evidence to establish that it owed no duty to Plaintiffs based on Eon’s status as escrow holders for Defendant Song. The evidence shows that Eon had no relationship with Plaintiffs, who were strangers to the escrow. Duty to the plaintiff is an essential element of NIED. Thus, Eon has met its moving burden to negate the duty element of NIED.

Plaintiffs state in opposition that “escrow holder’s negligence can result in liability to third parties if the officer’s actions foreseeably cause harm,” citing Seeley v. Seymour (1987) 190 Cal.App.3d 844, 860–861.

Upon the Court’s own examination, it appears that Seeley further states, “a defendant can be liable for economic harm inflicted upon a third party with whom he has no direct dealing, provided that the consideration of the appropriate factors warrants the imposition of a duty to the third party. [Citations.] Those factors are: ‘(1) the extent to which the transaction was intended to affect the plaintiff; (2) the foreseeability of harm to the plaintiff; (3) the degree of certainty that the plaintiff suffered injury; (4) the closeness of the connection between the defendant's conduct and the injury suffered; (5) the moral blame attached to the defendant's conduct; and (6) the policy of preventing future harm.’” (Seeley v. Seymour (1987) 190 Cal.App.3d 844, 860–61 (Seeley).)

While Seeley lays out six (6) factors to consider when deciding whether a defendant can be liable for economic harm inflicted upon a third party with whom he has no direct dealing, Plaintiffs only identify and discuss factor two (2), foreseeability of harm to plaintiff. Plaintiffs offer expert Curtis A. Novy’s declaration, in which he opines that Eon failed to handle the transaction in accordance with the industry standards and practices, among other things, by failing to make and keep notes and records, failing to obtain documents confirming Seller’s statements, and by assisting the Seller with executing a false affidavit that the lawsuit had been resolved. (See generally, Novy Decl.) While Plaintiffs argue that Eon knew that a “pending lawsuit” could constitute a cloud on title, and it was reasonably foreseeable that a tenant involved in that disclosed “pending lawsuit” would be affected by the transfer of the 3rd Ave Property, they offer no evidence to establish this foreseeability. The evidence shows that Eon had no knowledge of Plaintiffs specifically, that Eon satisfied its duty to follow Defendant Song’s instructions to proceed with closing despite the pending lawsuit, and that Eon had no duty to further police Defendant Song’s actions. Further, even if Plaintiffs proffered sufficient evidence to establish foreseeability, they fail to establish or even mention the other five (5) Seeley factors involved in finding Eon liable for economic harm inflicted upon Plaintiffs, who were third parties with whom Eon had no direct dealing,

Based on the evidence offered, Plaintiffs fail to carry their burden to establish a triable issue of material fact as to NIED.

Summary adjudication of the fourth cause of action is granted as to Defendant Eon.

The motion for summary judgment is GRANTED as to Defendant Eon. Defendant Eon is ordered to submit a proposed judgment within five days.

A Non-Appearance Case Review Re: Submission of Proposed Judgment is scheduled for January 15, 2025 at 9:00 a.m.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court