Procedural Posture

The Superior Court of San Joaquin County (California) sustained respondent escrow holders’ demurrer to appellant purchasers’ amended complaint without leave to amend in the purchaser’s action for fraud, breach of contract, breach of trust, and malpractice to recover damages resulting from a real estate transaction. The purchasers appealed.

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Overview

The purchasers acquired certain improved real property and alleged that (1) the escrow holders knew that the $ 135,000 first trust deed against the real property secured only a $ 100,000 loan but failed to notify the purchasers of this fact and that (2) the escrow holders knew that the other defendants named in the complaint were defrauding the purchasers in connection with the transaction which the escrow holders were handling in escrow but also failed to inform the purchasers of these facts. On appeal, the court considered the issue of whether the escrow holders had an obligation to go beyond the escrow instructions and notify the purchasers of these facts, assuming that the escrow holders were aware of these facts. The court concluded that the trial court correctly held that the cause of action against the escrow holders in the amended complaint did not state a cause of action and that the trial court properly sustained the escrow holders’ demurrer without leave to amend. The court held that no liability attached to an escrow holder for his failure to do something not required by the terms of the escrow or for a loss incurred while obediently following his escrow instructions.

Outcome

The judgment of the superior court sustaining the escrow holders’ demurrer to the purchasers’ amended complaint without leave to amend was affirmed.