Court Opinion

ID: 6557595
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:01:41.658435+00
Date Added: 2024-06-11T12:50:03.152020
License: Public Domain

Filed 7/20/22 Ticor Title Co. of Cal. v. Minkovitch CA2/5
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
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purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                                    DIVISION FIVE

TICOR TITLE COMPANY OF                                          B312634
CALIFORNIA et al.,
                                                                (Los Angeles County
        Plaintiffs and Respondents,                             Super. Ct. No.
                                                                BC701437)
        v.

YAN MINKOVITCH,

        Defendant and Appellant.

      APPEAL from a judgment of the Superior Court of Los
Angeles County, Elaine Lu, Judge. Affirmed.
      Yan Minkovitch, in pro. per., for Defendant and Appellant.
      Fidelity National Law Group and Kevin R. Broersma for
Plaintiffs and Respondents.
      We consider whether a title insurer or an escrow agent
owes a duty of care to the spouse of a purchaser of real property
where the spouse and the purchaser expressly agreed the
purchaser would procure the property in the purchaser’s name
alone, and the spouse was not a party to the purchase or the
related escrow instructions.

                         I. BACKGROUND1
       A.     The Underlying Purchase
       In 2013, cross-complainant and appellant Yan Minkovitch
(Yan) engaged the services of cross-defendants and respondents
Ticor Title Company of California (Ticor) and Lawyers Title
Company (Lawyers Title) to provide him and his then-wife, Lina
Minkovitch (Lina), with title insurance and escrow services in
connection with their purchase of real property located at 4949
Palo Drive, Tarzana, California 91356 (the property). The parties
discovered Yan had a credit history that jeopardized the couple’s
ability to jointly obtain financing. Lina, however, could qualify
for the loan on her own. Yan and Lina accordingly decided she
would purchase the property in her name alone.
       Before the purchase transaction closed, Ticor and Lawyers
Title demanded Yan execute a real property quitclaim deed in
favor of Lina. The final escrow instructions, however, did not
specifically demand the execution of the quitclaim deed. They did
provide, though, that Lawyers Title was “authorized to prepare,

1
      Our factual recitation is taken from the operative cross-
complaint’s allegations and attached exhibits. (See generally
Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919,
924, fn. 1 (Yvanova).)

                                 2
obtain, record, and deliver the necessary instruments to carry out
the terms and conditions of this escrow and to order the policy of
title insurance to be issued at the close of escrow as called for in
these instructions.”
       Yan told Ticor and Lawyers Title that he held a community
property interest in the property and the property was being
taken in Lina’s name alone solely to facilitate the transaction.
But Ticor and Lawyers Title continued to demand Yan execute a
quitclaim deed, and he felt compelled to sign what they required
to ensure the purchase could be completed. The deed Ticor and
Lawyers Title ultimately presented to Yan was an interspousal
transfer grant deed (not a quitclaim deed). Ticor and Lawyers
Title neither explained the form to Yan nor gave him time to seek
counsel. Yan signed the deed presented.

      B.     The Property Is Sold While Yan and Lina Are in
             Divorce Proceedings; a Lawsuit Ensues
       In April 2016, Lina, as seller, opened escrow with Ticor in
order to sell the property. At the time of escrow, Lina and Yan
were in the midst of divorce proceedings.2 Ticor received
competing claims for the property sale proceeds that remained
after the close of escrow, and Ticor filed a complaint in
interpleader naming Yan, Lina, and the United States (i.e., the
Internal Revenue Service) as parties with an interest in the
funds.

2
      We affirmed the trial court’s judgment of dissolution in In
re Lina & Yan Minkovitch (Oct. 16, 2020, Nos. B297022,
B300374, B301994) [nonpub. opn.].

                                 3
      In August 2019, Yan filed a cross-complaint against Ticor
in the interpleader action. Ticor demurred. The trial court
sustained the demurrer and granted leave to amend. In March
2020, Yan filed a first amended cross-complaint (the operative
complaint) alleging causes of action against both Ticor and
Lawyers Title.
      The operative cross-complaint asserts causes of action for
negligence, breach of fiduciary duty, and interference with
prospective economic advantage. Generally, the operative cross-
complaint alleges: Yan lost the ability to make a community
property claim on the property sale proceeds in the divorce
proceeding because Ticor and Lawyers Title required him to sign
the interspousal transfer deed; Ticor wanted the deed to be
signed in the interest of its own risk management, perhaps in
protection of the lender, and without consideration of his
community property interest; and Lawyers Title acted only in
Ticor’s interest and without regard for the escrow instructions,
which did not call for recording any deed other than the seller’s
grant deed.
      Turning to the specific causes of action, the negligence
claim alleges Yan was a customer of Ticor and Lawyers Title and
paid for their services. It further alleges cross-defendants “and
particularly, Lawyers [Title], Escrow Division, had a legally
cognizable duty to [Yan] to administer the escrow according to
the Escrow Instructions, no more and no less.” As alleged, Ticor
and Lawyers Title acted in excess of the final escrow instructions
by demanding Yan execute the interspousal transfer grant deed
and breached their duty to him to operate under and within the
confines of the escrow instructions. The breach of fiduciary duty
cause of action alleges Lawyers Title agreed to act as the escrow

                                4
holder for the purchase of the property, thereby assumed
fiduciary responsibilities as to Yan because it knew he held
potential and actual community property interests in the
property, and breached its fiduciary duty by forcing Yan to sign
the interspousal transfer deed. The interference with prospective
economic advantage cause of action alleges Ticor and Lawyers
Title forced him to sign away his community property interest in
the home in order to decrease their own risk.
       The operative cross-complaint attached two exhibits.
Exhibit A, the form Residential Purchase Agreement and Joint
Escrow Instructions, listed “Lina Mikovitch” as the buyer of the
property. “Yan Minkovitch” was mentioned only as an “agent.”
Exhibit B, the Supplemental Escrow Instructions, similarly
stated that title was to be vested in Lina only.

       C.    The Demurrers
       Lawyers Title demurred to the operative cross-complaint.
The company argued the negligence claim failed to state a cause
of action because an escrow company does not owe any duty to a
third party to the transaction because there is no contract
between them. Lawyers Title argued the cause of action for
breach of fiduciary duty failed for a similar reason, i.e., Lawyers
Title owned no such duty to Yan. As for the cause of action for
interference with prospective economic advantage, Lawyers
Title’s demurrer argued it did not state a claim because Yan did
not allege an independently wrongful act.
       Ticor, too, demurred to the operative cross-complaint. It
argued the cause of action for negligence failed to state a claim
because Lina purchased the property alone, Yan was not an
insured under the title policy, and Ticor owes a duty only to

                                 5
insureds under the title policy. Ticor’s arguments as to the
breach of fiduciary duty and interference with prospective
economic advantage were the same as Lawyers Title’s: no
fiduciary duty was owed and Yan alleged no independently
wrongful act.
       Yan’s opposition to the demurrers contended that any duty
Ticor and Lawyers Title owed to Lina was similarly owed to him
because he had a community property interest in the property,
the community funds being used in the transaction, and the
escrow contract Lina executed during the marriage. Though his
specific arguments were nominally directed to both cross-
defendants, the substance of his arguments referenced only the
duties owed by escrow holders and did not specifically address
title insurers.3
       Ticor filed a reply arguing in pertinent part that Yan did
not address Ticor’s specific role as a title company. Ticor
reiterated its argument that Lina, not Yan, was the purchaser

3
       Yan also asked the trial court to judicially notice a
reporter’s transcript of proceedings that took place in his
marriage dissolution case (case number BD630832) and the final
supplemental escrow instructions for Lawyers Title Escrow
Number WHL17573 ST. The transcript reflects the family court
received the interspousal transfer grant deed into evidence and
stated the document included the following language: “Grantors,
Yan Minkovitch, spouse of grantee, hereby grants to Lina
Minkovitch, a married woman as her sole and separate property.”
The family court then said, “if there was anything respondent
even owned, he’s transferred it by this document to petitioner. So
it is her sole and separate property.” The final supplemental
escrow instructions provided title would be vested in “Lina
Minkovitch.”

                                6
and the named insured on the policy, which precluded negligence
liability. Lawyers Title’s reply argued in pertinent part that an
escrow holder is a limited fiduciary to the parties to the escrow
only, Yan was not a party to the transaction, and Yan had not
alleged and could not allege Lawyers Title failed to follow any
escrow instructions.

      D.     The Trial Court’s Ruling
      The trial court sustained both demurrers (and granted
Yan’s request for judicial notice).
      In addressing the negligence cause of action, the trial court
recognized the duties Ticor and Lawyers Title were alleged to
owe to Yan arose from their respective roles as title insurance
company and escrow agent. The court then analyzed whether
Ticor or Lawyers Title had a legally cognizable duty to Yan. It
noted Yan was not listed as a party or beneficiary on either the
real estate purchase forms or the escrow instructions. Yan was
thus neither the buyer nor an intended third-party beneficiary.
He was, at most, an incidental beneficiary and therefore neither
Ticor nor Lawyers Title had a duty to him.
      The trial court then turned to whether a duty could exist by
virtue of the relationship of the parties. The court analyzed the
question by applying the factors identified by our Supreme Court
in Biakanja v. Irving (1958) 49 Cal.2d 647 (Biakanja).4 With

4
       The Biakanja factors “are used to determine whether
persons must exercise reasonable care to avoid negligently
causing economic loss to others with whom they were not in
privity (sometimes referred to as third parties).” (Sheen v. Wells
Fargo Bank, N.A. (2022) 12 Cal.5th 905, 937-938.) The factors
are “‘[1] the extent to which the transaction was intended to

                                 7
respect to Ticor, the court found Yan was not an intended third-
party beneficiary of any contract with Ticor (and Yan did not
argue otherwise). As at most an incidental beneficiary, Ticor
owed no duty to Yan. With respect to Lawyers Title, the court
applied the Biakanja factors and concluded they militated
against finding a duty. As a result, the court found as a matter of
law that neither Ticor nor Lawyers Title owed a duty to Yan, and
his negligence cause of action therefore failed as a matter of law.
       Regarding the other two causes of action, the trial court
found the breach of fiduciary duty cause of action failed to state a
claim because neither Ticor nor Lawyers Title owed a fiduciary
duty to Yan and the cause of action for interference with
prospective economic advantage failed because the operative
cross-complaint did not allege any independently wrongful act on
the part of Ticor or Lawyers Title. Having sustained the
demurrers, the court denied leave to amend as to all three causes
of action, reasoning neither the opposition nor the arguments at
the hearing demonstrated any possibility of a successful
amendment.

affect the plaintiff, [2] the foreseeability of harm to him, [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.’” (Centinela Freeman Emergency Medical Associates v.
Health Net of California, Inc. (2016) 1 Cal.5th 994, 1013-1014
(Centinela).)

                                  8
                         II. DISCUSSION
       Yan’s appeal of the trial court’s ruling challenges only the
court’s analysis of the Biakanja factors to conclude cross-
defendants owed him no duty. The trial court reached that
conclusion only in connection with the negligence claim. We
therefore confine our analysis to that claim and that issue, and
we hold the trial court correctly concluded Ticor and Lawyers
Title did not owe Yan a duty of care.5 The transactions between
Lina, Ticor, and Lawyers Title were aimed at facilitating Lina’s
purchase of the property. They were not meant to affect Yan.
Though his injury might have been foreseeable to some degree, it
was the result of Yan and Lina’s independent decision that Lina
would purchase the property in her name only so the transaction
could go forward. Ticor’s business decision to require Yan to sign
the grant deed in order for it to issue title insurance was well
within its rights, and Lawyers Title was merely executing the
escrow instructions by helping Ticor obtain the signed deed.
There is no moral blame attributable to cross-defendants’ actions
and there is no need to impose a duty to prevent future harm.

      A.    Standard of Review
      We review an order sustaining a demurrer without leave to
amend de novo. (Centinela, supra, 1 Cal.5th at 1010; Morales v.
22nd Dist. Agricultural Assn. (2016) 1 Cal.App.5th 504, 537.)
“[W]e accept the truth of material facts properly pleaded in the
operative complaint, but not contentions, deductions, or

5
      In so narrowing the question on appeal, Yan agrees he was
a third party to the transactions between Lina and each of the
cross-defendants.

                                 9
conclusions of fact or law. We may also consider matters subject
to judicial notice. [Citation.]” (Yvanova, supra, 62 Cal.4th at
924, fn. omitted.) “‘[T]he plaintiff has the burden of showing that
the facts pleaded are sufficient to establish every element of the
cause of action and overcoming all of the legal grounds on which
the trial court sustained the demurrer, and if the defendant
negates any essential element, we will affirm the order
sustaining the demurrer as to the cause of action.’” (Rossberg v.
Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1490-1491.)

      B.      Yan’s Negligence Cause of Action Fails to State a
              Claim
       “[T]he threshold question in an action for negligence is
whether the defendant owed the plaintiff a duty to use care.”
(Summit Financial Holdings, Ltd. v. Continental Lawyers Title
Co. (2002) 27 Cal.4th 705, 715 (Summit).) A defendant generally
does not owe a duty to prevent purely economic loss to third
parties under negligence law. (Quelimane Co. v. Stewart Title
Guaranty Co. (1998) 19 Cal.4th 26, 58 (Quelimane).) Rather,
“[r]ecognition of a duty to manage business affairs so as to
prevent purely economic loss to third parties in their financial
transactions is the exception, not the rule . . . .” (Ibid.)
       “Title insurance is a contract by which the title insurer
agrees to indemnify its insured against losses caused by defects
in or encumbrances on the title not excepted from coverage.”
(Vournas v. Fidelity Nat. Tit. Ins. Co. (1999) 73 Cal.App.4th 668,
675 (Vournas).) “Put another way, the function of title insurance
is to protect against the possibility that liens and other items not
found in the search or disclosed in the preliminary report exist.”
(Siegel v. Fidelity Nat. Title Ins. Co. (1996) 46 Cal.App.4th 1181,

                                 10
1191 (Siegel).) “An insured’s claim against his title insurer is
under the policy, and an insured has no separate claim against a
title insurer based on negligence or negligent misrepresentation.”
(Vournas, supra, at 675-676.) “A party who does not purchase
title insurance may not rely on the title insurer to protect his or
her interests or to disclose all detrimental information contained
in the recorded files.” (Siegel, supra, at 1193.) Title insurers
“may opt to limit their potential liability by declining certain
risks without violating any statutory or common law obligation.”
(Quelimane, supra, 19 Cal.4th at 59.)
       “An escrow may be defined as any transaction in which one
person, for the purpose of effecting a sale, transfer or
encumbrance of real or personal property to another person,
delivers any written instrument, money, evidence of title or other
thing of value to a third party, the escrow holder or depository, to
be held by him for ultimate transmittal to the other person upon
the happening of an event or the performance of certain specified
conditions.” (Markowitz v. Fidelity Nat. Title Co. (2006) 142
Cal.App.4th 508, 526.) “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, supra, 27 Cal.4th at 711.)
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.’
[Citations.]” (Ibid.)
       In assessing whether a title insurer (here Ticor) or an
escrow holder (here Lawyers Title) owed a duty of care to a third
party, we consider the aforementioned Biakanja factors. (See,

                                11
e.g., Summit, supra, 27 Cal.4th at 715-716; Quelimane, supra, 19
Cal.4th at 58-59; Alereza v. Chicago Title Co. (2016) 6
Cal.App.5th 551, 557-562 (Alereza); Stagen v. Stewart-West Coast
Title Co. (1983) 149 Cal.App.3d 114, 123-124 (Stagen).) To
review, the factors are the extent to which the transaction was
intended to affect the plaintiff, the foreseeability of harm to the
plaintiff, the degree of certainty that the plaintiff suffered injury,
the closeness of the connection between the defendant’s conduct
and the injury suffered, any moral blame attached to the
defendant’s conduct, and the policy of preventing future harm.
We believe, as the trial court did, that these factors do not
support finding either cross-defendant owed a duty of care to
Yan.

            1.     The extent to which the transaction was
                   intended to affect Yan
       We look first to the extent to which the transactions were
intended to affect Yan. Or, as Biakanja also described it, we
examine the “‘end and aim’” of the transaction. (Biakanja, supra,
49 Cal.2d at 650.) The matter is rather straightforward in our
view: the end and aim of the transaction between Lina and Ticor
was to protect the buyer, Lina, and the end and aim of the escrow
instructions was the completion of the sale of the property from
the seller to the buyer, Lina. (Alereza, supra, 6 Cal.App.5th at
560; Stagen, supra, 149 Cal.App.3d at 124.) Yan, quite
consciously, was not an intended beneficiary of either.
       Yan disputes this, contending the sale of a home to a
married couple necessarily means the spouse of the purchasing
customer will be affected by the transaction and the end and aim
of the transaction is to benefit the marital community. But that

                                  12
was not the sale agreed upon here—by Lina and Yan’s own
design. The property was not sold to a married couple but to
Lina alone, and this is demonstrated both by the allegations in
the operative cross-complaint (alleging Yan’s credit profile
jeopardized the couple’s ability to obtain financing) and the terms
of the purchase agreement and escrow instructions (specifying
Lina was the sole buyer). Lina and Yan structured the purchase
to purposely exclude Yan.

            2.     Harm, foreseeability, and closeness of
                   connection between conduct and injury
       The next Biakanja factors concern injury and
foreseeability. Yan’s allegation that he was harmed by the loss of
his community property interest in the home is sufficient to
establish harm at the demurrer stage. And his injury was, in a
certain sense, foreseeable: he signed an interspousal transfer
deed granting the property to Lina, and the function of the deed
was to transfer any interest Yan might have arguably had in the
property to Lina. That the injury may have been foreseeable (at
least insofar as Yan could acquire an interest in the property
while married and a divorce between Lina and Yan could be
foreseen) does not by itself mean Lawyers Title or Ticor had a
duty to avoid the harm. (Quelimane, supra, 19 Cal.4th at 58
[“Foreseeability of financial injury to third persons alone is not a
basis for imposition of liability for negligent conduct”].)
       The more probative factor, in our view, is the relation
between Ticor and Lawyers Title’s conduct and the injury
suffered. Ticor required Yan to sign the interspousal transfer
deed in order to issue a title insurance policy as a result of Yan
and Lina’s decision that Lina would purchase the property in her

                                13
name alone. As Yan alleged, it did so in the interest of its own
risk management, and perhaps to protect the lender. Ticor was
well within its rights to impose such a requirement. Title
insurers “may opt to limit their potential liability by declining
certain risks without violating any statutory or common law
obligation.” (Quelimane, supra, 19 Cal.4th at 59.) Further,
“insurer[s] do[ ] not have a duty to do business with or issue a
policy of insurance to any applicant for insurance.” (Id. at 43.)
       Similarly, by assisting Ticor in obtaining the signed deed,
Lawyers Title was following the instruction that directed it to
ensure a title insurance policy was issued, as it was bound to do.
(E.g., Summit, supra, 27 Cal.4th at 711 [escrow holder is obliged
to carry out instructions of parties to escrow].) Yan was thus
presented with a choice—he could agree to sign the deed and the
title insurance policy would issue, or he could refuse, and it would
not. His knowing and voluntary decision to accept those terms is
what caused the transfer of whatever right he had to the
property.
       Yan resists this conclusion and believes the cross-
defendants’ conduct was the cause of his injury because, in his
view, there were alternative courses of action Ticor and Lawyers
Title could have pursued—e.g., to let title vest in Lina without
requiring him to sign the interspousal transfer grant deed
(perhaps by having him sign a quitclaim deed that would not
have transmuted the property)6 or to exclude community property

6
     Contrary to Yan’s assertion, the execution of a quitclaim
deed would not necessarily have allowed him to retain a
community property interest in the property. A quitclaim deed
may constitute “sufficient evidence that a transmutation of his

                                14
claims from coverage under the title insurance policy. That Ticor
and Lawyers Title could, in theory, have made alternative
business decisions does not mean they had any duty to do so.
(Quelimane, supra, 19 Cal.4th at 58 [declining to “recognize a
duty to avoid business decisions that may affect the financial
interests of third parties”].) Ticor had the right to place
conditions on its issuance of the title insurance policy. It was
under no obligation to tailor its decisions to attempt to ensure
Yan could permit Lina to obtain financing contingent upon his
absence from the purchase transaction while still somehow
retaining a community property interest in the property.

            3.      Moral blameworthiness and prevention of
                    future harm
      Finally, we look to the moral blameworthiness of the
conduct and the policy of preventing future harm. Yan contends
the steps Ticor chose to reduce its liability for facilitating the
purchase and sale transaction, and Lawyers Title’s execution of
the transaction as directed, are morally blameworthy because
Ticor could have limited its liability in some other manner. As
we have already explained, that Ticor might have attempted to
reduce its liability in some other fashion does not render the
steps it took morally blameworthy. (Quelimane, supra, 19
Cal.4th at 59.) Lawyers Title also committed no morally
blameworthy act by complying with the escrow instructions.
(Summit, supra, 27 Cal.4th at 716 [escrow agency complying with
fiduciary duty to follow escrow instructions is not blameworthy].)

community interest in the property resulted.” (In re Marriage of
Stoner (1983) 147 Cal.App.3d 858, 864.)

                               15
       The policy of preventing future harm also does not require
the imposition of a new legal duty on either Lawyers Title or
Ticor. To the extent the financial arrangement Yan and Lina
arrived at in this case arises especially frequently, spouses who
agree not to be listed as a buyer on a real estate transaction
under conditions similar to these have a built-in and obvious
incentive to understand the consequences of their decisions. (See
Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 403 [“As a
matter of economic and social policy, third parties should be
encouraged to rely on their own prudence, diligence, and
contracting power, as well as other informational tools”].)
Imposing upon title insurers and escrow agents a duty to both
discover and guard any community property interest had by
spouses of purchasers who have been knowingly and
intentionally excluded from purchase documents would impose a
duty to affirmatively assist purchasers to obtain title in a manner
that differs from that represented in their purchase documents
(or to their lenders). That would not serve the public interest.

                                16
                         DISPOSITION
     The judgment is affirmed. Ticor and Lawyers Title are
awarded costs on appeal.

   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                          BAKER, J.

We concur:

     RUBIN, P. J.

     KIM, J.

                              17