Court Opinion

ID: 9789189
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:30:15.524542+00
Date Added: 2024-06-11T07:35:08.600009
License: Public Domain

WERDEGAR, J., Concurring.
I join the majority in concluding that defendant Continental Lawyers Title Company (CLTC) owed no duty, as a fiduciary or under the law of negligence, to make the loan payoff to plaintiff Summit Financial Holdings, Ltd. (Summit), rather than to the original lender, Talbert Financial (Talbert). I have signed the majority opinion because I understand its holding as limited to this and similar fact situations and, in particular, as not deciding whether an escrow holder might breach its fiduciary duty to a party to the escrow by paying off, pursuant to instructions, an original lender who had assigned and transferred the note and deed of trust to another.
Under Civil Code section 2935, paying the outstanding amount of a loan secured by a deed of trust to the original lender does not extinguish the debt if an assignment of the loan has been recorded and the original lender no longer holds the promissory note. (Rodgers v. Peckham (1898) 120 Cal. 238, 242 [52 P. 483].) As the majority observes, the Legislature may, in Civil Code section 2937, have intended to change this rule as to small residential properties and require personal notice to the borrower, though *717that statute speaks only of transfers of servicing of indebtedness, not of assignments. (Maj. opn., ante, at p. 710, fn. 3; see Bernhardt & Whitman, Escrow (Cont.Ed.Bar 2001) 24 Real Prop. L.Rptr. 160.) To the extent the rule of Civil Code section 2935 stands unmodified, however, a borrower could remain indebted to an assignee holding the note even after paying off the original lender in full, and thus be liable for double payment or face foreclosure on the security. Where the misdirected payment is made by and through an escrow agent, in the face of recorded notice of the assignment, the escrow agent might well be held to have breached its duty to the borrower. That such a misdirected payoff was made pursuant to the escrow instructions—typically drafted by the escrow agent itself or by the new lender, rather than by the borrower—would not necessarily excuse or negate the breach.
In short, a borrower subjected to double payment of a loan because the escrow agent paid the wrong party might be able to recover from the escrow agent in the amount of the payment or other damages, even if the escrow agent was only following its instructions. In the present case, however, we need not face this question, as here a federal bankruptcy court and the appellate court below held the payment to Talbert extinguished the borrower’s debt, and the parties no longer dispute that point.
Also properly left unaddressed in the majority opinion is Summit’s perfunctory claim that CLTC is liable for violating Civil Code section 2941, which governs the reconveyance of a deed of trust when the obligation it secures has been satisfied. Summit neither explains in what respect CLTC violated Civil Code section 2941 nor cites record evidence showing a violation. But Civil Code section 2941 does provide for a title company’s liability under some circumstances (see id., subd. (b)(6)), and the majority opinion, as I read it, does not preclude such liability in a proper case.
I concur in the majority opinion, which correctly resolves the narrow question presented by the parties to this case.
Moreno, J., concurred.
Respondent’s petition for a rehearing was denied May 15, 2002, and the opinion was modified to read as printed above.