1

Filed 11/16/16; pub. order 12/9/16 (see end of opn.)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

TAGHI ALEREZA,

Plaintiff and Appellant,

v.

CHICAGO TITLE COMPANY,

Defendant and Respondent.

C075547

(Super. Ct. No. 

34201000072856CUBCGDS)

The sole issue in this appeal arises in the context of the sale of a gas station 

business and whether escrow company Chicago Title Company (Chicago Title) owed a 

legal duty of care to Taghi Alereza, who was not a party to the escrow nor mentioned as a 

third party beneficiary in the escrow instructions. Chicago Title admitted its employee 

negligently listed the wrong name of the insured (the purchaser of the gas station 

business) when securing a new certificate of insurance for the business. This was the first 

of a series of missteps by several persons that eventually led to Alereza giving a personal

guarantee to save the gas station business. Claiming damages for losses incurred after 
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giving his personal guarantee, Alereza sued Chicago Title. The trial court granted 

Chicago Title’s motion for nonsuit, and Alereza appeals.

Focusing only on his negligence cause of action, Alereza argues he was owed a 

duty of care by Chicago Title under the test articulated by the California Supreme Court 

in Biakanja v. Irving (1958) 49 Cal.2d 647 (Biakanja). We conclude Chicago Title did 

not owe a duty of care to Alereza because he was not a party to the escrow, not 

mentioned in the escrow instructions as a third party beneficiary, and did not sustain his 

losses as a direct result of the escrow company’s negligence. Accordingly, we affirm the 

judgment.

FACTUAL AND PROCEDURAL HISTORY

The facts pertaining to Alereza’s claim of negligence against Chicago Title are 

undisputed. 

In early 2008, Alereza agreed to help his nephew Habib1(Bobby) purchase a 

business consisting of a gas station and convenience store in Sacramento. They planned 

to have Bobby run the business. Alereza’s role involved nothing more than providing the 

initial purchase funds and a $100,000 note secured by his residence. Bobby’s 

observations and an analysis of the gas station’s profit and loss statements led him to 

conclude the business had “a high-volume store, a lot of foot traffic, and a lot of gas 

sales.” The gas station building and land underneath it were owned by John and Jackie 

Fagnani. Bains Brothers LLC (Bains) ran the gas station business and had a lease with 

the Fagnanis. It was the Bains’s business that Bobby wanted to purchase. 

 

1 Since plaintiff and his nephew share the same last name, we refer to plaintiff as 

Alereza and his nephew as “Bobby” for clarity.
3

Escrow 1

To facilitate the sale of the gas station business, an escrow was opened with 

Chicago Title. Nancy Pearson was the escrow officer at Chicago Title who handled the 

transaction.

Alereza initially planned that he and his wife would purchase the gas station as 

individuals. However, he decided against this plan after the Fagnanis demanded a 

personal guarantee from him in order to transfer the lease. At the suggestion of his 

attorney, Alereza formed a limited liability company, TANL, LLC (TANL), to purchase 

the gas station business. The escrow instructions were amended to change the buyer 

from Alereza and his wife to TANL. However, the Fagnanis refused to approve of the 

change in tenants without a new personal guarantee. As a result, the first escrow was 

cancelled.

Escrow 2

One of the members of Bains suggested a solution to the Fagnani’s demand for a 

new personal guarantee. The suggestion was that, rather than buying the gas station 

business outright, TANL would buy the membership interest in Bains and Bains would 

remain the tenant on the lease. The idea was to keep Bains as the tenant and there would 

be no lease transfer subject to approval by the Fagnanis. Thus Alereza would avoid 

giving a personal guarantee. To implement the new plan, Chicago Title transferred the 

Escrow 1 documents to Escrow 2.

While the transaction was pending, the Fagnanis learned of what they considered 

to be an “end run” around the requirement that they approve any transfer of the lease. 

The Fagnanis declared they would consider any change in the ownership of Bains 

without their approval to be a breach of the lease. Nonetheless, Escrow 2 closed with 

Bains remaining the tenant on the lease, without approval by the Fagnanis, and without 

Alereza giving a personal guarantee. 
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Under the terms of the lease, the tenant was required to maintain business 

insurance that included the Fagnanis as additional insured. To satisfy this requirement, 

Alereza decided to retain insurance from the same company that had provided coverage 

for the previous owners of Bains. Alereza gave Pearson the insurance contact 

information and assumed she would take care of the insurance and pay the premium 

through escrow. As part of Escrow 1, Pearson obtained insurance certificates showing 

the insured to be TANL. For Escrow 2, however, the insurance certificate should have 

been under the name of Bains. No one informed the insurer when Escrow 1 was 

cancelled or when Escrow 2 was opened. At the close of Escrow 2, Pearson requested 

that the insurer provide evidence of insurance and incorrectly stated the insurance should 

vest with “Tanl, LLC, a California limited liability company (doing business as Bains 

Brothers, LLC).” The parties agree this information was incorrect. The parties also 

agree Pearson sent a superseded bill of sale from Escrow 1 that incorrectly showed the 

business being transferred to TANL.

Alereza Decided to Give a Personal Guarantee 

The insurer issued a new certificate in the name of “Tanl, LLC, a Limited 

Liab. Co. dba Bains Brothers LLC” and cancelled insurance previously issued to 

“Bains Brothers LLC.” The insurer did not send the new certificate of insurance to 

Alereza. During the period when insurance coverage became an issue, Alereza, the 

Fagnanis, and the insurer were not communicating with each other. The insurer 

communicated only with Bobby based on the mistaken assumption he was their contact 

person. Bobby wrongly assumed Alereza was informed of the insurance issue and 

would take care of it. The insurer was not initially aware there was any problem with 

the insurance certificate. And the Fagnanis had not been included in the discussions 

about insurance coverage.

When the insurer sent a notice of cancellation of the original policy, the Fagnanis 

became concerned the gas station was operating without insurance. In May 2009, the 
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Fagnanis gave Alereza a 10-day period in which to secure insurance, provide a personal 

guarantee, and pay their attorney fees. When the personal guarantee was not 

forthcoming, the Fagnanis filed an unlawful detainer action. The unlawful detainer 

action ended with a settlement agreement in which Alereza agreed, among other things, 

to give a personal guarantee under the lease in exchange for dismissal of the Fagnani’s 

legal action. At the time, business at the gas station was satisfactory. 

A year later, gasoline sales slumped by 40 percent due to the slowing economy

and loss of a major state account, and the gas station began losing approximately $10,000 

to $12,000 per month. Alereza testified he paid and borrowed more than $400,000 to 

keep the gas station business from defaulting on the lease. 

Alereza’s Action Against Chicago Title

Alereza (joined by TANL and Bains) sued Chicago Title and Pearson based on the 

incorrect identification of the insured on the insurance certificate that eventually led to 

the demand for a personal guarantee by the Fagnanis. The complaint alleged causes of 

action for breach of contract, negligence, breach of fiduciary duty, implied contractual 

indemnity, and implied equitable indemnity. After Pearson, Bains, and TANL were 

dismissed, the case proceeded to trial against Chicago Title. Chicago Title moved for 

nonsuit at the close of Alereza’s case. The trial court continued to receive evidence while 

the parties briefed the nonsuit motion. The trial court granted the motion for nonsuit as to 

all causes of action and entered judgment in favor of Chicago Title.

In granting the motion, the trial court noted that “[t]he negligence of C[hicago 

Title] in relation to the incorrect name and communications regarding insurance to an 

insurance broker are not in dispute. C[hicago Title] has admitted for purposes of this 

motion and at trial that its employee was negligent.” Because there was no contractual 

relationship between Chicago Title and Alereza, his entitlement to damages depended on 

whether he could establish a tort cause of action. The trial court determined Chicago 

Title did not owe a duty of care to Alereza because “the escrow contract for Escrow 2 did 
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not mention, relate or refer to Alereza in his personal capacity.” The trial court also 

found that “the injury Alereza has alleged as an individual against C[hicago Title] was 

not foreseeable as a result of a professional error by C[hicago Title] in performing the

escrow services in Escrow 2, even if all the potential ramifications of the insurance 

placement and volatility of the Fagnanis lease were known to C[hicago Title] at the 

time.” 

From the judgment, Alereza filed a timely notice of appeal.

DISCUSSION

I

Standard of Review

The principles of review for a judgment entered on a motion for nonsuit are well 

established. “ ‘A nonsuit in a jury case or a directed verdict may be granted only when 

disregarding conflicting evidence, giving to the plaintiffs’ evidence all the value to which 

it is legally entitled, and indulging every legitimate inference which may be drawn from 

the evidence in plaintiffs’ favor, it can be said that there is no evidence to support a jury 

verdict in their favor. [Citations.]’ (Elmore v. American Motors Corp. (1969) 70 Cal.2d 

578, 583.) Nonsuit is appropriate where the plaintiff’s proof raises nothing more than 

speculation, suspicion or conjecture. (Helm v. K.O.G. Alarm Co. (1992) 4 Cal.App.4th 

194, 198, fn. 1.) [¶] In reviewing a grant of nonsuit, the appellate court evaluates the 

evidence in the light most favorable to the plaintiff. (Nally v. Grace Community Church

(1988) 47 Cal.3d 278, 291.) The judgment of nonsuit will be affirmed if a judgment for 

the defendant is required as a matter of law, after resolving all presumptions, inferences 

and doubts in favor of the plaintiff. (Ibid.) The review of a grant of nonsuit is de novo. 

(Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1541–1542.)” (Hernandez v. Amcord, 

Inc. (2013) 215 Cal.App.4th 659, 669.)
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II

Whether Chicago Title Owed a Duty of Care to Alereza

Alereza contends Chicago Title owed him a duty of care that it breached when its 

escrow officer negligently miscommunicated the name of the insured (the purchaser of 

the gas station business) to the insurer. We conclude Chicago Title did not owe a duty of 

care to Alereza and therefore is not liable to him for its negligence.

A.

The Biakanja Test for Tort Liability

The three elements for a cause of action for negligence are: a legal duty of 

care, breach of the duty, and damages resulting from the breach. (Paz v. State of 

California (2000) 22 Cal.4th 550, 559.) “The existence of a duty is the threshold 

element of a negligence cause of action. (Paz v. State of California, supra, 22 Cal.4th 

at p. 559; Artiglio v. Corning Inc., supra, 18 Cal.4th at p. 614.) The Supreme Court 

has held, ‘ “ ‘The threshold element of a cause of action for negligence is the existence 

of a duty to use due care toward an interest of another that enjoys legal protection 

against unintentional invasion. [Citations.]’ ” ’ (Paz v. State of California, supra, 22 

Cal.4th at p. 559; see Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. 

(2002) 27 Cal.4th 705, 715.)” (Friedman v. Merck & Co. (2003) 107 Cal.App.4th 454, 

463.)

The test for determining the existence of a duty of care to a particular person was 

articulated by the California Supreme Court in Biakanja, supra, 49 Cal.2d 647. Biakanja

involved an action for negligence by the sole beneficiary of a will against a notary public 

who prepared a will that turned out to be ineffective for lack of proper attestation. (Id. at 

p. 648.) The issue before the Supreme Court was whether the notary was “under a duty 

to exercise due care to protect [sole beneficiary] from injury and was liable for damage 

caused [to the sole beneficiary] by his negligence even though they were not in privity of 

contract.” (Ibid.) 
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In addressing the question of legal duty, the Biakanja court noted that 

“[i]mposition of liability for injuries to intangible interests has been refused . . . in the 

absence of privity where any potential advantage to the plaintiff from the performance of 

the contract was only a collateral consideration of the transaction or where the injury to 

the particular person bringing suit was not foreseeable.” (Biakanja, supra, 49 Cal.2d at p. 

650.) Based on this observation, the California Supreme Court articulated the test for 

determining the existence of a legal duty as follows: “The determination whether in a 

specific case the defendant will be held liable to a third person not in privity is a matter of 

policy and involves the balancing of various factors, among which are the extent to which 

the transaction was intended to affect the plaintiff, the foreseeability of harm to him [or 

her], the degree of certainty that the plaintiff suffered injury, the closeness of the 

connection between the defendant’s conduct and the injury suffered, the moral blame 

attached to the defendant’s conduct, and the policy of preventing future harm.” 

(Biakanja, supra, 49 Cal.2d at p. 650.) Applying this test, the Biakanja court held the 

notary owed the sole beneficiary a duty of care and directly caused injury to the 

beneficiary. (Id. at p. 651.)

The California Supreme Court applied the Biakanja test in an action against an 

escrow company by a person not a party to the escrow in Summit Financial Holdings, 

Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705. Summit arose out of an 

escrow to complete the refinancing of real property by John Furnish who intended a 

portion of a new loan from Dundrel Securities (Dundrel) to pay off the original 

promissory note held by Talbert Financial. (Id. at p. 708.) The escrow company acted 

according to the escrow instructions by issuing a check to Talbert Financial. (Ibid.) 

Summit Financial Holdings, Ltd. (Summit) then sued the escrow company on grounds the 

escrow company knew Summit had received the note by assignment and yet the escrow 

company still paid Talbert Financial. (Ibid.) Even though neither Talbert Financial nor 

Summit was a party to the escrow transaction, the trial court ruled the escrow company 
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owed Summit a duty of care. (Ibid.) The California Supreme Court, however, held the 

escrow company did not owe a duty of care to Summit. (Ibid.)

The Summit court began its analysis by noting, “An escrow holder is an agent and 

fiduciary of the parties to the escrow. (Amen v. Merced County Title Co. (1962) 58 

Cal.2d 528, 534 (Amen); Rianda v. San Benito Title Guar. Co. (1950) 35 Cal.2d 170, 

173.) 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.] If the escrow holder fails to carry out an instruction it has contracted to 

perform, the injured party has a cause of action for breach of contract.” (Summit, supra, 

27 Cal.4th at p. 711.) “Absent clear evidence of fraud, an escrow holder’s obligations are 

limited to compliance with the parties’ instructions. (Lee v. Title Ins. & Trust Co. (1968) 

264 Cal.App.2d 160, 162; 3 Miller & Starr, Cal. Real Estate [(3d ed. 1989)] § 6:26, 

p. 68.) Here, even though the escrow holder . . . was aware of the assignment from 

Talbert to Summit, there is no evidence [that the escrow company] was aware of any 

collusion or fraud in the fund disbursement that would have adversely affected any party 

to the escrow.” (Summit, at p. 711.)

Under the Biakanja test, supra, 49 Cal.2d 647, the Summit court concluded the 

escrow company did not owe a duty of care to Summit. The Supreme Court reasoned, “ 

‘First, the transaction [the escrow company] undertook was not intended to affect or 

benefit Summit. [The escrow company] was engaged by Dundrel and Furnish to assist 

them in closing a loan transaction between Dundrel and Furnish, and any impact that 

transaction may have had on Summit was collateral to the primary purpose of the escrow. 

Second, although the certainty of injury element is satisfied because the evidence 

supports the conclusion that Summit did not receive the funds paid to Talbert, the 

foreseeability of harm element does not support a duty because there is no suggestion [the 

escrow company] could have foreseen that Talbert would not disburse the funds to 

Summit.’ With regard to the moral blame factor, compliance by [the escrow company] 
10

with its fiduciary duty to follow the instructions of the parties to the escrow was not 

blameworthy and is, instead, a policy consideration that militates against concluding the 

company had a tort duty in this case. Finally, there is not a sufficiently close connection 

between the payment of Talbert and the injury suffered by Summit to warrant imposition 

of a duty of care. Although the payment to Talbert was found by the bankruptcy court to 

have extinguished Furnish’s obligation under the note, Summit’s injury was caused by 

Talbert’s breach of its contractual obligation to Summit.” (Summit, supra, 27 Cal.4th at 

pp. 715-716, fn. omitted.) By rejecting the assertion of a legal duty to a nonparty to the 

escrow, the Summit court “decline[d] to adopt a rule that would, by subjecting an escrow 

holder to conflicting obligations, undermine a valuable business procedure . . . .” (Id. at 

p. 716.) 

B.

Chicago Title Did Not Owe a Duty of Care to Alereza

Applying the Biakanja test in this case (Biakanja, supra, 49 Cal.2d 647), we 

conclude Chicago Title did not owe a duty of care to Alereza.

First, Alereza was not a party to Escrow 2, which involved only the transfer of 

membership interests in Bains to TANL. Even though Alereza provided the purchase 

funds and provided a note secured by his residence, the escrow completed a sale that did 

not involve Alereza personally as buyer or seller. Alereza was not a party to the escrow 

instructions nor was he a third party beneficiary of the transaction.

We reject Alereza’s assertion he benefited from the transaction by the “psychic 

and emotional reward” of helping his nephew, Bobby, acquire a job. The escrow 

agreement was not designed to provide emotional satisfaction to Alereza, but only to 

complete a business transaction between Bains and TANL. Although the transaction was 

structured in a manner to shield Alereza from giving a personal guarantee, as the trial 

court found, “Escrow 2 did not mention, relate or refer to Alereza in his personal 

capacity.” At most, the benefit to Alereza was a collateral benefit of the escrow 
11

transaction. Thus, the first Biakanja factor counsels against a duty of care to Alereza. 

(Biakanja, supra, 49 Cal.2d 647.)

Second, foreseeability of harm also fails to support the imposition of a legal duty

to Alereza. At the close of escrow, Alereza had no personal liability for any gas station 

business losses. His subsequent decision to provide a personal guarantee was not 

something Chicago Title could reasonably foresee.

Third, the degree of certainty that Alereza suffered harm as a result of Chicago 

Title’s negligence also does not support imposition of a legal duty. As the trial court 

found, Chicago Title’s “mistakes, while negligent, were not potentially fatal, as a 

correction to the name on the certificates later showed.” Instead, it was a cascade of 

errors by several different individuals that finally led to the claimed damages. Correction 

of the certificate was delayed because the insurer mistakenly assumed its 

communications with Bobby sufficed. Bobby ignored the insurance issues on the 

erroneous assumption Alereza would take care of it. The newly reconstituted Bains did 

not learn of the problem in a timely manner because it did not promptly change its agent 

for service of process. Alereza decided to give his personal guarantee as part of a 

settlement of the unlawful detainer action. He was not personally liable for any part of 

the gas station business until he decided to give his personal guarantee. Finally, the 

giving of the personal guarantee itself did not cause Alereza’s losses. Instead, the 

financial losses Alereza sustained were caused by a drop in the monthly gas sales and 

loss of a major state account.

Fourth, there was only a remote connection between the misidentification of the 

insured by Pearson and Alereza’s eventual financial losses when the gas station business 

declined. As noted above, several independent errors separated Chicago Title’s negligent 

acts from the ultimate financial losses later claimed by Alereza.

Fifth, Chicago Title’s negligence is not morally blameworthy. Although 

negligent, the mistake in providing the name of the Escrow 1 purchaser of the gas station 
12

business to the insurer instead of the Escrow 2 purchaser does not constitute moral blame. 

We reject Alereza’s contention negligence is inherently morally blameworthy. Here, the 

escrow officer did not act fraudulently, illegally, or with any intent to cause anyone 

disadvantage. 

Finally, the policy of preventing future harm does not require imposition of a new

legal duty on Chicago Title in this case. Escrow companies already owe a fiduciary duty 

to parties to an escrow to properly carry out all escrow instructions. (Summit, supra, 27 

Cal.4th at p. 711.) Failure of an escrow company to perform gives parties to the escrow a 

cause of action for breach of contract for any proximately caused damages. (Ibid.) For 

this reason, escrow companies already have both duties and incentives to faithfully 

execute the escrow instructions of the parties. 

Because escrow companies have obligations limited to carrying out escrow 

instructions (Summit, supra, 27 Cal.4th at p. 711), we reject as inapposite Alereza’s 

reliance on Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP

(2014) 59 Cal.4th 568, Connor v. Great Western Sav. & Loan Ass’n (1968) 69 Cal.2d 

850, and Seeley v. Seymour (1987) 190 Cal.App.3d 844. Beacon and Connor do not 

involve the duty of escrow companies. In Beacon, the California Supreme Court held 

architectural firms and developers had a responsibility to homeowners that the homes 

they built were safe. (Beacon, at p. 582.) Similarly, the Connor court held a construction 

lender owed a duty to third party home buyers to prevent major defects in homes 

financed by the lender because of a lender’s unique ability in the development process to 

ensure quality in construction. (Connor, at p. 864.) Although Seeley involved a tort 

claim against an escrow company, the claim was not based on failure to properly carry 

out escrow instructions. (Seeley, at p. 860.) Instead, the escrow company in Seeley acted 

negligently in accommodating its customer by recording a memorandum with the county 

recorder that eventually made the sales transaction more difficult to complete. (Id. at 

p. 861.) 
13

In sum, all of the considerations set forth in the Biakanja test for tort liability 

militate against imposing on Chicago Title a legal duty of care to Alereza. The trial court 

therefore properly granted the motion for nonsuit.

DISPOSITION

The judgment is affirmed. Chicago Title Company shall recover its costs on 

appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)

 /s/

HOCH, J.

We concur:

 /s/

HULL, Acting P. J.

 /s/

DUARTE, J.
14

Filed 12/9/16

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

TAGHI ALEREZA,

Plaintiff and Appellant,

v.

CHICAGO TITLE COMPANY,

Defendant and Respondent.

C075547

(Super. Ct. No. 

34201000072856CUBCGDS)

ORDER CERTIFYING OPINION 

FOR PUBLICATION

[NO CHANGE IN JUDGMENT]

APPEAL from a judgment of the Superior Court of Sacramento County, Judy 

Holzer-Hersher, Judge. Affirmed.

LAW OFFICES OF MELINDA JANE STEUER and Melinda Jane Steuer for 

Plaintiff and Appellant.

FIDELITY NATIONAL LAW GROUP and Helen P. Hoeffel for Defendant 

and Respondent.
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The opinion in the above-entitled matter filed on November 16, 2016, was not 

certified for publication in the Official Reports. For good cause it now appears the 

opinion should be published in the Official Reports and it is so ordered.

 /s/

HULL, Acting P. J.

 /s/

DUARTE, J.

 /s/

HOCH, J.