This case was last updated from Los Angeles County Superior Courts on 12/27/2022 at 11:36:58 (UTC).

JORDAN YOUNG, ET AL. VS U.S. BANK N.A. A NATIONAL BANKING ASSOCIATION AND SUBSIDIARY OF U.S. BANCORP A DELAWARE CORPORATION

Case Summary

On 10/20/2021 JORDAN YOUNG, filed a Contract - Other Contract lawsuit against U S BANK N A A NATIONAL BANKING ASSOCIATION AND SUBSIDIARY OF U S BANCORP A DELAWARE CORPORATION. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are YOLANDA OROZCO and MARY H. STROBEL. The case status is Pending - Other Pending.
Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******8508

  • Filing Date:

    10/20/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

YOLANDA OROZCO

MARY H. STROBEL

 

Party Details

Plaintiffs

VALDIVIA LAURA

YOUNG JORDAN

Defendants and Cross Defendants

CHARTWELL ESCROW INC.

COLDWELL BANKER REALTY

U.S. BANK N.A.

ROES 1-50

Cross Plaintiff

COLDWELL BANKER RESIDENTIAL BROKERAGE COMPANY DBA COLDWELL BANKER REALTY

Attorney/Law Firm Details

Plaintiff Attorney

BLUT ELLIOT STEVEN

Defendant Attorneys

SHULKIN ROBERT L.

DAVIS MATTHEW STEPHEN

YGUICO CARLOS VICTOR

WILSON JOHN D.

Cross Defendant Attorney

SIMONETTI LISA

 

Court Documents

Answer

11/2/2022: Answer

Motion to Strike (not initial pleading)

10/28/2022: Motion to Strike (not initial pleading)

Request for Judicial Notice

10/28/2022: Request for Judicial Notice

Demurrer - with Motion to Strike (CCP 430.10)

10/28/2022: Demurrer - with Motion to Strike (CCP 430.10)

Order - ORDER OF DISMISSAL OF CROSSDEFENDANT U.S. BANK NATIONAL ASSOCIATION

10/14/2022: Order - ORDER OF DISMISSAL OF CROSSDEFENDANT U.S. BANK NATIONAL ASSOCIATION

Motion for Determination of Good Faith Settlement (CCP 877.6)

6/9/2022: Motion for Determination of Good Faith Settlement (CCP 877.6)

Declaration - DECLARATION OF SHIRLEY MASTERSON IN SUPPORT OF NOTICE OF SETTLEMENT AND APPLICATION FOR DETERMINATION OF GOOD FAITH SETTLEMENT

6/9/2022: Declaration - DECLARATION OF SHIRLEY MASTERSON IN SUPPORT OF NOTICE OF SETTLEMENT AND APPLICATION FOR DETERMINATION OF GOOD FAITH SETTLEMENT

Request for Judicial Notice

6/9/2022: Request for Judicial Notice

Opposition - OPPOSITION PLAINTIFFS OPPOSITION TO DEMURRER

6/15/2022: Opposition - OPPOSITION PLAINTIFFS OPPOSITION TO DEMURRER

Notice of Change of Address or Other Contact Information

8/4/2022: Notice of Change of Address or Other Contact Information

Reply - REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN REPLY TO PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA'S OPPOSITION TO DEFENDANT CHARTWELL ESCROW, INC.'S DEMURRR TO FIRST AMENDED COMPLAINT

8/5/2022: Reply - REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN REPLY TO PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA'S OPPOSITION TO DEFENDANT CHARTWELL ESCROW, INC.'S DEMURRR TO FIRST AMENDED COMPLAINT

Order Appointing Court Approved Reporter as Official Reporter Pro Tempore - ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE KATHLEEN SMITH-MYLER, CSR #12500 (VIA LACC)

8/22/2022: Order Appointing Court Approved Reporter as Official Reporter Pro Tempore - ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE KATHLEEN SMITH-MYLER, CSR #12500 (VIA LACC)

Minute Order - MINUTE ORDER (HEARING ON DEMURRER - WITHOUT MOTION TO STRIKE BY DEFENDANT C...)

8/22/2022: Minute Order - MINUTE ORDER (HEARING ON DEMURRER - WITHOUT MOTION TO STRIKE BY DEFENDANT C...)

Notice of Ruling

8/22/2022: Notice of Ruling

Stipulation and Order - [PROPOSED] AMENDMENT TO STIPULATION FOR PROTECTIVE ORDER RE: DISCLOSURE AND EXCHANGE OF CONFIDENTIAL INFORMATION AND ORDER THEREIN

8/30/2022: Stipulation and Order - [PROPOSED] AMENDMENT TO STIPULATION FOR PROTECTIVE ORDER RE: DISCLOSURE AND EXCHANGE OF CONFIDENTIAL INFORMATION AND ORDER THEREIN

Objection - OBJECTION EVIDENTIARY OBJECTIONS OF COLDWELL BANKER TO PORTIONS OF DECLARATION OF SHIRLEY MASTERSON IN SUPPORT OF MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT

9/7/2022: Objection - OBJECTION EVIDENTIARY OBJECTIONS OF COLDWELL BANKER TO PORTIONS OF DECLARATION OF SHIRLEY MASTERSON IN SUPPORT OF MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT

Opposition - OPPOSITION BY COLDWELL BANKER TO MOTION TO DETERMINE GOOD FAITH SETTLEMENT

9/7/2022: Opposition - OPPOSITION BY COLDWELL BANKER TO MOTION TO DETERMINE GOOD FAITH SETTLEMENT

Opposition - OPPOSITION DEFENDANT CHARTWELL ESCROW, INC.'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO CROSS-DEFENDANT U.S. BANK, N.A.'S MOTION FOR DETERMINIATION OF GOOD FAITH SETTLEMENT; A

9/8/2022: Opposition - OPPOSITION DEFENDANT CHARTWELL ESCROW, INC.'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO CROSS-DEFENDANT U.S. BANK, N.A.'S MOTION FOR DETERMINIATION OF GOOD FAITH SETTLEMENT; A

98 More Documents Available

 

Docket Entries

  • 09/05/2023
  • Hearing09/05/2023 at 10:00 AM in Department 31 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 08/22/2023
  • Hearing08/22/2023 at 09:00 AM in Department 31 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 06/13/2023
  • Hearing06/13/2023 at 09:00 AM in Department 31 at 111 North Hill Street, Los Angeles, CA 90012; Post-Mediation Status Conference

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  • 04/10/2023
  • Hearing04/10/2023 at 08:30 AM in Department 31 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Demurrer - with Motion to Strike (CCP 430.10)

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  • 11/04/2022
  • DocketUpdated -- DEMURRER OF DEFENDANT CHARTWELL ESCROW, INC. TO SECOND AMENDED COMPLAINT OF PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA; MEMORANDUM OF P&A IN SUPPORT THEREOF; AND DECLARATION OF MATTHEW S. DAVIS (Hearing Date 04/10/2023) [Res ID: 227762838618]: Exact Name: DEMURRER OF DEFENDANT CHARTWELL ESCROW, INC. TO SECOND AMENDED COMPLAINT OF PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA; MEMORANDUM OF P&A IN SUPPORT THEREOF; AND DECLARATION OF MATTHEW S. DAVIS (Hearing Date 04/10/2023) [Res ID: 227762838618]; As To Parties: removed

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  • 11/04/2022
  • DocketUpdated -- DEFENDANT CHARTWELL ESCROW, INC.S REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF DEMURRER AND MOTION TO STRIKE THE SECOND AMENDED COMPLAINT OF PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA (Hearing Date 04/10/2023) [Res ID: 227762838618]: Exact Name: DEFENDANT CHARTWELL ESCROW, INC.S REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF DEMURRER AND MOTION TO STRIKE THE SECOND AMENDED COMPLAINT OF PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA (Hearing Date 04/10/2023) [Res ID: 227762838618]; As To Parties: removed

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  • 11/04/2022
  • DocketUpdated -- MOTION OF DEFENDANT CHARTWELL ESCROW, INC. TO STRIKE PORTIONS OF SECOND AMENDED COMPLAINT OF PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA; AND MEMORANDUM OF P&A IN SUPPORT THEREOF (Hearing Date 04/10/2023) [Res ID: 227762838618]: Exact Name: MOTION OF DEFENDANT CHARTWELL ESCROW, INC. TO STRIKE PORTIONS OF SECOND AMENDED COMPLAINT OF PLAINTIFFS JORDAN YOUNG AND LAURA VALDIVIA; AND MEMORANDUM OF P&A IN SUPPORT THEREOF (Hearing Date 04/10/2023) [Res ID: 227762838618]; As To Parties: removed

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  • 11/04/2022
  • DocketUpdated -- Answer Of Coldwell Banker Residential Brokerage Company DBA Coldwell Banker Realty To Plaintiffs' Second Amended Complaint: Name Extension: Of Coldwell Banker Residential Brokerage Company DBA Coldwell Banker Realty To Plaintiffs' Second Amended Complaint; As To Parties: removed

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  • 11/04/2022
  • DocketUpdated -- Coldwell Banker Residential Brokerage Company: Organization Name changed from Coldwell Banker Realty to Coldwell Banker Residential Brokerage Company

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  • 11/04/2022
  • DocketUpdated -- ROES 1-50 (Defendant): Organization Name changed from ROES 1-25 to ROES 1-50

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210 More Docket Entries
  • 10/20/2021
  • DocketMinute Order (EX PARTE APPLICATION OF PLAINTIFF, JORDAN YOUNG, FOR TEMPORAR...)

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  • 10/20/2021
  • DocketEx-parte Hearing on Ex Parte Application Temporary Restraining order scheduled for 10/20/2021 at 08:30 AM in Stanley Mosk Courthouse at Department 82 updated: Result Date to 10/20/2021; Result Type to Held

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  • 10/20/2021
  • DocketCivil Case Cover Sheet; Filed by: Jordan Young (Plaintiff); Laura Valdivia (Plaintiff)

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  • 10/20/2021
  • DocketSummons on Complaint; Issued and Filed by: Clerk

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  • 10/20/2021
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by: Clerk

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  • 10/20/2021
  • DocketCase assigned to Hon. Yolanda Orozco in Department 31 Stanley Mosk Courthouse

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  • 10/20/2021
  • DocketEx Parte Application Temporary Restraining order; Filed by: Jordan Young (Plaintiff); Laura Valdivia (Plaintiff)

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  • 10/20/2021
  • DocketEx-parte Hearing on Ex Parte Application Temporary Restraining order scheduled for 10/20/2021 at 08:30 AM in Stanley Mosk Courthouse at Department 82

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  • 10/20/2021
  • DocketDeclaration of Laura Valdivia in Support of Plaintiffs' Application for Temporary Restraining Order; Filed by: Jordan Young (Plaintiff); Laura Valdivia (Plaintiff)

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  • 10/20/2021
  • DocketDeclaration of Jordan Young in Support of Plaintiffs' Application for Temporary Restraining Order; Filed by: Jordan Young (Plaintiff); Laura Valdivia (Plaintiff)

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Tentative Rulings

Case Number: *******8508 Hearing Date: October 6, 2022 Dept: 31

DEMURRER TO CROSS-COMPLAINT IS SUSTAINED WITHOUT LEAVE TO AMEND

Background

On October 10, 2021, Jordan Young and Laura Valdivia (collectively, “Plaintiffs”) filed a Complaint against U.S. Bank N. A (“U.S. Bank”); Chartwell Escrow, Inc. (“Chartwell”); Coldwell Banker Realty (“Coldwell”) and Does 1 to 20. The operative second amended complaint (SAC) alleges:

1) Breach of Escrow Contract (against Chartwell and Does 1 to 20)

2) Breach of the Implied Covenant in Escrow Contract (against Chartwell and Does 1 to 20)

3) Money had and received Common Counts (against U.S. Bank)

4) Breach of Fiduciary Duty (against Chartwell and Does 1 to 20)

5) Negligence (against Chartwell and Does 1 to 20)

7) Negligence (against Coldwell and Does 1 to 20)

8) Conversion (U.S. Bank and Does 1 to 20)

9) Preliminary and Permanent Injunction (against U.S. Bank and Chartwell)

On March 11, 2022, Defendant Coldwell Banker Residential Brokerage Company dba Coldwell Banker Realty filed a Cross-Complaint against U.S. Bank, N.A., alleging causes of action for tort of another, comparative equitable indemnity, contribution and apportionment, and declaratory relief.

This action arises out of Plaintiffs engaging defendants Chartwell Escrow, Inc. (“Chartwell”) and Coldwell Banker (“Coldwell”) to assist them in purchasing real estate. On October 6, 2021, Plaintiffs allegedly received an email from someone purporting to be their designated escrow agent at Chartwell, directing Plaintiffs to wire funds to a U.S. Bank account. Defendant U.S. Bank is not listed in any of the documents and is a stranger to the parties and their real estate transaction. The Plaintiffs wired $920,000.09 to the U.S. Bank account number provided via email by the individual purporting to be the Plaintiffs’ designated escrow agent. The Plaintiffs spoke with Chartwell on Friday, October 8, 2021, and were advised Chartwell did not receive the funds.

U.S. Bank recovered $843,111.62 of the funds that Plaintiffs wired to the bank. This was the amount of the settlement reached by Plaintiffs and U.S. Bank, in exchange for a dismissal with prejudice. The remaining $76,888.47 was not recovered.

U.S. Bank initially filed a Notice of Settlement and Application for Determination of Good Faith Settlement on January 13, 2022. The settlement was rejected on April 28, 2022, because U.S. Bank failed to provide any evidence to determine if the settlement was in good faith. (Min. Or. 04/28/22.)

On June 09, 2022, U.S. Bank renewed its application for Determination of Good Faith Settlement. On September 28, 2022, the Court granted U.S. Bank’s Motion For Determination Of Good Faith Settlement.

On September 16, 2022, U.S. Bank was dismissed as a Defendant.

On April 18, 2022, Cross-Defendant U.S. Bank filed a demurrer to Defendant Coldwell’s Cross-Complaint.

On September 22, 2022, Coldwell filed opposition papers. On September 28, 2022, U.S. Bank filed a Reply.

MEET AND CONFER

Before filing a demurrer, the demurring party is required to meet and confer with the party who filed the pleading demurred, in person or telephonically, to determine whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc. (CCP) 430.41.)

U.S. Bank’s counsel asserts that she communicated by email and telephone with counsel for Coldwell, including on March 29 and April 15, 2022. (Simonetti Decl. 3.) No resolution was reached, and U.S. Bank filed its demurrer. (Id. 4.) Thus, the meet and confer requirement is met.

Legal Standard

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)

Request for Judicial Notice

Cross-Defendant U.S. Bank requests Judicial Notice of:

1) Exhibit A: First Amended Complaint and supporting exhibits filed in this action on December 15, 2021.

2) Exhibit B: Plaintiffs’ Request for Dismissal with prejudice of all causes of action against U.S. Bank filed in this action on January 4, 2022.

3) Exhibit C: U.S. Bank’s Application for Finding of Good Faith Settlement and attached settlement agreement filed in this action on January 18, 2022.

4) Exhibit D: Coldwell Banker’s Cross-Complaint filed in this action on March 10, 2022.

Cross-Defendant U.S. Bank’s request for Judicial Notice is GRANTED, pursuant to Evidence Code sections 452(c), (d), (h), and 453.

Defendant Coldwell Banker requests Judicial Notice of:

1) Exhibit A: Ex Parte Application for a Temporary Restraining Order filed by Plaintiffs in this action on October 20, 2021.

Defendant Coldwell’s request for Judicial Notice is GRANTED, pursuant to Evidence Code section 452(d).

Discussion

Cross-Defendant U.S. Bank asserts that because this Court granted U.S. Bank’s good faith settlement application and all claims asserted in the Cross-Complaint are derivative, the Cross-Complaint is rendered moot. The Court agrees.

Coldwell acknowledges that its claims for comparative equitable indemnity, contribution, and apportionment do not survive as such claims are prohibited by the good faith settlement under Code of Civil Procedure section 877.6(c). Nevertheless, Coldwell asserts that its claim for tort of another survives the good faith settlement. The Court disagrees.

Tort of Another

The tort of another doctrine holds that ‘[a] person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney's fees, and other expenditures thereby suffered or incurred.’ (Citation.)” (Mega RV Corp. v. HWH Corp. (2014) 225 Cal.App.4th 1318, 1337.) “The tort of another doctrine applies to economic damages (i.e., attorney fees incurred in litigation with third parties) suffered as a result of an alleged tort. As such ‘nearly all of the cases which have applied the [tort of another] doctrine involve a clear violation of a traditional tort duty between the tortfeasor who is required to pay the attorney fees and the person seeking compensation for those fees.’ (Citations.)” (Id. at 1339-1340.)

Therefore, in order for Coldwell’s tort of another claim to survive, U.S. Bank needs to face tort liability. The good faith settlement approved by the Court results in Plaintiff’s release of all claims, including tort claims against U.S. Bank. Consequently, there is no tort under which Coldwell’s tort of another claim survives. (See Mega RV Corp., supra, 225 Cal.App.4th at 1340 [“we disagree with the majority opinion in Manning v. Sifford (1980) 111 Cal.App.3d 7, 10-11 [168 Cal.Rptr.387], wherein the court suggested it could award tort of another damages even if no tort duty existed.”]; see also Sooy v. Peter (1990) 220 Cal.App.3d 1305, 1311.) Since CCP section 877.6 became effective January 1, 1981, the Court finds that Coldwell’s reliance on Sun'n Sand, Inc. v. United California Bank (1978) 21 Cal. 3d 671 and Manning v. Sifford (1980) 111 Cal.App.3d 7 to be unavailing.

Therefore, the demurrer for the tort of another is SUSTAINED WITHOUT LEAVE TO AMEND.

Declaratory Relief

Coldwell requests a judicial determination of its rights and the respective obligations of U.S. Bank relative to claims arising out of the event and transactions alleged in the FAC. The good faith settlement settled any obligations U.S. Bank owed. Moreover, absent a cause of action, Coldwell’s request for declaratory relief cannot survive. (See City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80 [“‘a request for declaratory relief will not create a cause of action that otherwise does not exist.’”]; see also Gilkyson v. Disney Enterprises, Inc. (2016) 244 Cal.App.4th 1336, 1347 [declaratory relief cause of action cannot exist without valid underlying claim].)

Based on the foregoing, U.S. Bank’s demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.

Conclusion

Cross-Defendant U.S. Bank’s N.A.’s demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.

Cross-Defendant to give notice.



Case Number: *******8508 Hearing Date: September 28, 2022 Dept: 31

MOTION FOR DETERMINATION OF

GOOD FAITH SETTLEMENT IS GRANTED

Cross-Defendant U.S. Bank’s N.A.’s Motion for Determination of Good Faith Settlement is GRANTED.

Background

On October 10, 2021, Jordan Young and Laura Valdivia (collectively, “Plaintiffs”) filed a Complaint against U.S. Bank N. A (“U.S. Bank”); Chartwell Escrow, Inc. (“Chartwell”); Coldwell Banker Realty (“Coldwell”) and Does 1 to 20. The operative second amended complaint (SAC) alleges:

1) Breach of Escrow Contract (against Chartwell and Does 1 to 20)

2) Breach of the Implied Covenant in Escrow Contract (against Chartwell and Does 1 to 20)

3) Money had and received Common Counts (against U.S. Bank)

4) Breach of Fiduciary Duty (against Chartwell and Does 1 to 20)

5) Negligence (against Chartwell and Does 1 to 20)

7) Negligence (against Coldwell and Does 1 to 20)

8) Conversion (U.S. Bank and Does 1 to 20)

9) Preliminary and Permanent Injunction (against U.S. Bank and Chartwell)

On March 11, 2022, Defendant Coldwell Banker Residential Brokerage Company dba Coldwell Banker Realty filed a Cross-Complaint against U.S. Bank, N.A., alleging causes of action for tort of another, comparative equitable indemnity, contribution and apportionment, and declaratory relief.

This action arises out of Plaintiffs engaging defendants Chartwell Escrow, Inc. (“Chartwell”) and Coldwell Banker (“Coldwell”) to assist them in purchasing real estate. On October 6, 2021, Plaintiffs allegedly received an email from someone purporting to be their designated escrow agent at Chartwell, directing Plaintiffs to wire funds to a U.S. Bank account. Defendant U.S. Bank is not listed in any of the documents and is a stranger to the parties and their real estate transaction. Plaintiffs wired $920,000.09 to the U.S. Bank account number provided via email by the individual purporting to be the Plaintiffs’ designated escrow agent. The Plaintiffs spoke with Chartwell on Friday, October 8, 2021, and were advised Chartwell did not receive the funds.

U.S. Bank recovered $843,111.62 of the funds that Plaintiffs wired. This was the amount of the settlement between Plaintiffs and U.S. Bank, in exchange for a dismissal with prejudice. The remaining $76,888.47 was not recovered.

U.S. Bank initially filed a Notice of Settlement and Application for Determination of Good Faith Settlement on January 13, 2022. The settlement was rejected on April 28, 2022, because U.S. Bank failed to provide any evidence to determine if the settlement was in good faith. (Min. Or. 04/28/22.)

On June 09, 2022, Cross-Defendant U.S. Bank renewed its application for Determination of Good Faith Settlement.

On September 07, 2022, Cross-Complainant Coldwell filed Opposition papers. On September 08, 2022, Defendant Chartwell also filed Opposition papers.

On September 14, 2022, Cross-Defendant U.S. Bank filed two responses, one for Chartwell and one for Coldwell.

On September 16, 2022, U.S. Bank was dismissed as a Defendant.

Legal Standard

Under Code of Civil Procedure (CCP) section 877.6, the court applies the factors identified by the California Supreme Court in Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488 to determine whether a settlement is in good faith and if the settlement amount is “in the ballpark” of the settling party’s share of liability for injuries:

1. a rough approximation of the plaintiff's total recovery;

2. an approximation of the settling party's share of the liability;

3. recognition that a settling party should pay less in settlement than if found liable after a trial;

4. the allocation of the settlement proceeds among plaintiffs;

5. the settling party's financial condition and insurance policy limits;

6. evidence that the plaintiff and the settling party acted with an intent to make the non-settling parties pay more than their fair share (considered fraud and collusion under Tech-Bilt).

Section 877.6 permits the court to evaluate a settlement made between a plaintiff and a defendant when the defendant is a joint tortfeasor with other non-settling defendants. A determination that the settlement is a good faith settlement under Section 877.6 will bar any claims for equitable contribution or comparative indemnity. The burden is on the party opposing the settlement to show it was not made in good faith. (Code Civ. Proc., 877.6, subd. (d).) Accordingly, the party asserting the lack of “good faith” may meet this burden by demonstrating that the settlement is so far “out of the ballpark” as to be inconsistent with the equitable objectives of the statute. (See Tech-Bilt, Inc., supra, 38 Cal.3d at pp. 499-500.) Such a demonstration would establish that the proposed settlement was not a “settlement made in good faith” within the terms of Section 877.6. (Id.)

Request for Judicial Notice

Cross-Defendant U.S. Bank requests Judicial Notice of:

1) Exhibit A: First Amended Complaint and supporting exhibits filed in this action on December 15, 2021.

2) Exhibit B: Settlement Agreement dated December 23, 2021.

3) Exhibit C: Coldwell Banker’s Cross-Complaint against U.S. Bank.

Cross-Defendant U.S. Bank’s request for Judicial Notice is GRANTED, pursuant to Evidence Code sections 452(c), (d), (h), and 453.

Cross-Defendant U.S. Bank’s secondary request for Judicial Notice pertains to:

1) Exhibit A: Declaration of Laura Valdivia filed on October 20, 2021 in support of Plaintiffs’ Application for Temporary Restraining Order and Order to Show Cause Re Preliminary Injunction.

Defendant Chartwell filed an objection to Plaintiff’s second request for Judicial Notice on the basis that the Plaintiffs’ declaration is incomplete and does not contain a “filed” stamp from the Court Clerk or other evidence that the declaration is a reliable record of the court of this state.

Under Evidence Code section 452, the Court may judicially notice the “[r]ecords of ... any court of this state.” Accordingly, U.S. Bank’s second request for Judicial Notice is GRANTED.

Evidentiary Objections

Cross-Complainant Coldwell filed evidentiary objections to the Declaration of Shirley Masterson in Opposition to U.S. Bank’s Motion for Determination of Good Faith Settlement. U.S. Bank filed a response to the evidentiary objections.

Cross-Complainant’s Coldwell’s evidentiary objections Nos. 1 to 8 are OVERRULED.

Defendant Chartwell filed evidentiary objections to the Declaration of Shirley Masterson in Opposition to U.S. Bank’s Motion for Determination of Good Faith Settlement as to the following:

Paragraph 5, lines 1-2: “I am informed that, in this litigation, the non-customer victims/plaintiffs sought to recover the amount of $920,000.09 from various defendants, including U.S. Bank.”

U.S. Bank filed a Reply. Chartwell’s objection is OVERRULED.

Discussion

Cross-Defendant U.S. Bank moves for an Application of Good Faith Settlement between Plaintiffs Jordan Young and Laura Valdivia in the amount of $843,111.62. From October 6, 2021, to October 8, 2021, Plaintiffs wired $920,000.09 to a third party’s account at U.S. Bank instead of to the Chartwell escrow account as indicated in the escrow contract.

Six weeks after Plaintiffs filed their Complaint, Plaintiffs agreed to settle their claims against U.S. Bank in exchange for the return of funds that U.S. Bank managed to retain or recover. Cross-Defendant U.S. Bank represents that the $843,111.62 is the full amount that U.S. Bank could recover or retain due to fraud perpetrated by a U.S. Bank customer and an outside third party. (See, generally, Masterson Decl.)

A. Procedural Defects

Chartwell asserts that U.S. Bank’s Notice of Motion and Motion fails to Comply with California Rule of Court 3.1382. Rule 3.1382 requires that the notice of motion list each party and pleading or portion of the pleading affected by the settlement.

The Court finds that U.S. Bank complied with the requirements of Rule 3.1382. Moreover, even if the notice is defective, Chartwell fails to cite any authority that failure to abide by Rule 3.1382 is grounds to deny the motion.

Accordingly, the Court considers the Motion on the merits.

B. Chartwell’s Opposition

As noted above, U.S. Bank’s initial application for good-faith settlement was rejected because it was not supported by a declaration showing U.S. Bank’s conduct and knowledge. U.S. Bank now asserts it has perfected its motion and the burden is now on Chartwell and Coldwell to prove the settlement is “so far out of the ballpark” under the Tech-Bilt factors, such that it would be unfair to bar any further claims against U.S. Bank for equitable contribution or indemnity. (Tech-Bilt, supra, 38 Cal.3d at 489.) U.S. Bank asserts that the $843,111.62 settlement represents over 90% recovery of what the Plaintiffs lost, thus making the settlement fair and in good faith.

U.S. Bank asserts that any lack of information on what remaining damages Plaintiffs may seek against Chartwell or Coldwell is not a consideration under Teck-Bilt because all that is required is a rough approximation. The rough approximation is based on the information available at the time of settlement. (Tech-Bilt, supra, 38 Cal. 3d at 499; see also Dole Food Company, Inc. v. Superior Court (2015) 242 Cal. App. 4th 894, 904.) Here, at the time of settlement, U.S. Bank and Plaintiffs only knew the damages indicated in the Complaint, which was the $920,000.09 wired to an account as U.S. Bank.

Moreover, regardless of what the total damages amount may be, U.S. Bank’s settlement is fair. First, it ensures Plaintiffs recover about 90% of what they initially lost. Second, U.S. Bank was not a party to the initial transaction and was only the recipient of the ill-gotten funds when allegedly one of its customers fell for an “elder romance scam.” (Masterson Decl. 2.) U.S. Bank provides the declaration of Shirley Masterson, a Vice President and Fraud Risk Manager for U.S. Bank, who asserts that diligent efforts were taken in first noticing what appeared to be a fraudulent transaction and then recovering whatever funds they could to give back to Plaintiffs.

Whatever additional amounts Plaintiffs may recover from the remaining Defendants, U.S. Bank’s settlement amount is still significant and neither Chartwell nor Coldwell have proven the amount the amount of the settlement is insignificant, minuscule, or unfair. In Tech-Bilt, the California Supreme Court recognized that “a settlor should pay less in settlement than he would if he were found liable after trial.” (Tech-Bilt, supra, 38 Cal.3d at 489.)

Chartwell’s argument against settlement is that U.S. Bank did not contribute any of its own funds to settle the case. The argument is without merit because there is no requirement that the settlement source come directly from U.S. Bank under Tech-Bilt.

Second, it would be unfair to penalize U.S. Bank for its swift action to recover whatever funds it could once the fraud became known to U.S. Bank.

Third, the fact U.S. Bank did not provide evidence regarding its financial condition and insurance policy limits go to just one factor under Tech-Bilt. Assuming, U.S. Bank could pay more in the settlement, Chartwell fails to show that the settlement amount is not a rough approximation of Plaintiff’s total recovery or is not in conformity with U.S. Bank’s share of liability.

Chartwell and Coldwell assert that it was the Plaintiffs’ act of wiring funds to the incorrect escrow account that led to the Plaintiffs’ loss. The account was held by a U.S. Bank customer and the facts support the finding that U.S. Bank acted swiftly to recover $843,111.62 of the Plaintiffs’ payment.

Accordingly, Defendant Chartwell cannot show that the settlement is disproportionate to U.S. Bank’s liability or that U.S. Bank acted with an intent to make the non-settling parties pay more than their fair share under Tech-Bilt.

C. Coldwell’s Opposition

Cross-Complainant Coldwell opposes the Motion on similar grounds, that there is a lack of evidence regarding the damages Plaintiffs seeks such that it would be impossible to determine whether the settlement between Plaintiffs and U.S. Bank is “in the ballpark” under Tech-Bilt.

Coldwell asserts that U.S. Bank has not provided any documents to corroborate its assertion that all but $76,888.38 of the $920,000.00 in funds wired to U.S. Bank are no longer available. A declaration from Chartwell’s counsel, Mathew S. Davis, signed on September 8, 2022, asserts that the information requested has not been produced.

U.S. Bank asserts that on August 03, 2022, it circulated a draft stipulation asking to add U.S. Bank to the existing protective order but received no response. All parties finally consented to the proposed stipulation on August 23, 2022. Afterward, U.S. Bank asserts it submitted relevant and responsive documents consistent with Ms. Masterson’s declaration. (Reply to Chartwell at 6:17-18.) U.S. Bank adds that even if it still had access to some portion of the misdirected funds, the total settlement still represents over 90% of the funds.

Moreover, U.S. Bank adds:

“Absent a contractual or other special relationship, the settling parties do not have a duty to protect the interests of the nonsettling tortfeasors. ‘They have a duty only to settle in good faith, i.e., with honest, lawful intent.’ [Citation.] ‘As understood in law the phrase ‘in good faith’ has a settled and well-defined meaning, which generally imports that in any given case the transaction involved was honestly conceived and consummated without collusion, fraud, or knowledge of fraud, and without intent to assist in a fraudulent or otherwise unlawful design.’ [Citaiton.].”

(Tech-Bilt, supra. 38 Cal.3d at 505.)

Here, Coldwell fails to show that U.S. Bank’s settlement with the Plaintiffs was made in bad faith or the result of collusion or fraud.

Second, Coldwell asserts that U.S. Bank is directly responsible for conversion. However, as U.S. Bank points out in its motion, Plaintiffs wired funds into a third party’s account at U.S. Bank and U.S. Bank is not liable because Plaintiffs were not the depositors on the account and U.S. Bank cannot be liable for the subsequent transfer of money out of the third party’s account. (See Fong v. East West Bank (2018) 19 Cal. App. 5th 224, 232-33, 235 [holding that bank may be liable to its depositor for funds transferred out of depositor’s account.].) U.S. Bank also asserts that Plaintiffs relinquished ownership or possession of the funds when they transferred the funds to U.S. Bank, such that Plaintiffs cannot sustain a claim of conversion. (See Moore v. Regents of Univ. of California (1990) 51 Cal.3d 120, 136; Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal. App. 4th 221, 234.) U.S. Bank adds that a cause of action for the common count of money had and received cannot stand independent of the conversion claim. (See McBride v. Boughton (2004) 123 Cal. App. 4th 379, 394.)

The Court finds that Defendant Chartwell and Cross-Complainant Coldwell have failed to show that the settlement was not in “good faith” under the Tech-Bilt factors. Based on the foregoing, U.S. Bank’s application for Determination of Good Faith Settlement is GRANTED.

Conclusion

Cross-Defendant U.S. Bank’s N.A.’s Motion for Determination of Good Faith Settlement is GRANTED.

Cross-Defendant to give notice.

The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All masking protocols will be observed at the Courthouse and in the courtrooms.



Case Number: *******8508 Hearing Date: August 22, 2022 Dept: 31

DEMURRER IS SUSTAINED IN PART

Background

On October 10, 2021, Plaintiffs Jordan Young and Laura Valdivia filed a Complaint against U.S. Bank N.A; Chartwell Escrow, Inc. (“CEI”); Coldwell Banker Realty, and Does 1 to 20. The operative First Amended Complaint (“FAC”) alleges:

1) Breach of Escrow Contract against CEI and Does 1 through 20

2) Breach of Implied Covenant in Escrow Contract against CEI and Does 1 through 20

3) Money had and Received Common Counts against U.S. Bank

4) Breach of Fiduciary Duty against CEI and Does 1 to 20

5) Negligence against CEI and Does 1 through 20

6) Negligence against Coldwell Banker Realty and Does 1 to 20

7) Conversion against U.S. Bank and Does 1 to 20

8) Preliminary and Permanent Injunction against US Bank and CEI

On January 03, 2022, U.S. Bank N.A. was dismissed as a Defendant, as well as all causes of action alleged against U.S. Bank N.A.

On January 13, 2022, U.S. Bank filed a Notice of Settlement and Application for Determination of Good Faith Settlement, which Coldwell contested. (Min. Or. 04/28/22.) The Court denied U.S. Bank’s Application for Determination of Good Faith Settlement. (Id.)

On March 11, 2022, Defendant Coldwell Banker Realty filed a Cross-Complaint against U.S. Bank N.A.

On January 10, 2022, Defendant CEI filed this Demurrer as to Plaintiff’s FAC.

On June 15, 2022, Plaintiff filed Opposition papers. On August 05, 2022, Defendant CEI, filed a Reply.

Meet and Confer Requirement

Before filing a demurrer, the demurring party is required to meet and confer with the party who filed the pleading demurred, in person or telephonically, to determine whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc. (CCP) 430.41.)

Defense counsel declares he corresponded with Plaintiff’s counsel over various emails and telephone calls to resolve the issues raised in the demurrer, but no agreement was reached. (Wilson Decl. 3,4.) Therefore, the meet and confer requirement is met.

Legal Standard

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)

Request for Judicial Notice

Defendants CEI’s request for Judicial Notice of Plaintiffs First Amended Complaint (FAC) is GRANTED pursuant to Evidence Code sections 452 and 453.

Discussion

1. Summary of Case

In September of 2021, Plaintiffs opened escrow with Defendant CEI. (FAC 7.) The escrow officer assigned was Maria Namba, whom Plaintiffs assert was held out to be the Branch Manager for Defendant CEI. (Id.) Escrow instructions were signed by Plaintiffs, attached as Exhibit 1 to Plaintiffs’ FAC. (Id. 11, Ex. 1.)

Plaintiffs successfully completed their first deposit into an escrow trust maintained by Defendant CEI. (FAC 14.) On October 6, 2021, the day escrow was to close, Plaintiffs allege they received an email from someone purporting to be Maria Namba of Defendant CEI advising that the remainder of the funds were to be wired to a U.S. Bank account, account number 157528947862. (Id.) Between October 6, 2021, and October 8, 2021, Plaintiffs wired funds from various bank accounts totaling $920,000.09. (Id. at 15.) Plaintiffs immediately informed their realtor at Coldwell Banker Realty that the wires were being sent. (Id.)

On October 8, 2021, the Plaintiffs’ realtor received an email from Maria Namba asserting that she had not received the wire transfers. (FAC 18.) Plaintiffs were subsequently informed that they were the victims of wire fraud.

Defendant CEI demurs to Plaintiffs first, second, fourth, and fifth causes of action.

2. First COA: Breach of Escrow Contract

The elements of a claim for breach of contract are: "(1) the existence of the contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff." (Oasis West Realty, LLC v. Goldman (2011) 51 Cal. 4th 811, 821.)

Defendant CEI does not dispute that an Escrow Contract existed between CEI and Plaintiffs, but it asserts that Plaintiffs breached the Escrow Contract (aka “Escrow Instructions”) by not following the instructions in the Escrow agreement. Moreover, CEI asserts that the Escrow Instructions take precedence over any allegations made by Plaintiff if the FAC. “[Del E. Webb Corp. v. Structural Materials Co. (1981) [“exhibits attached to the complaint will also be accepted as true and, if contrary to the allegations in the pleading, will be given precedence.”].)

The Escrow Instructions expressly state that if the funds are to be transferred by wire, then the funds should only be transferred “to the bank and account detailed below” and not to the bank Plaintiffs transferred their funds. (FAC Ex. 1.) The Escrow Instructions go on to state:

“Escrow Holder has no duty regarding funds until its bank confirms deposit and credit. The parties to this escrow and depositors must independently confirm wire account details of Escrow Holder by telephone with Escrow Holder’s employee assigned to the transaction before initiating any wire transfer to Escrow Holder’s bank. Failure to verify wire transfer information with Escrow Holder shall bar any party or third-party depositor from claiming liability against the Escrow Holder should the funds be erroneously transmitted.” (Id. [emphasis added].)

Accordingly, Plaintiffs’ damages were caused by their explicit breach of the Escrow Instructions, such that their claim for breach of contract should be barred.

Plaintiffs do not dispute that they breached the Escrow Instructions but assert they can still allege a cause of action for breach of contract against CEI because “a finding that each party breached the contract, and that each party is entitled to damages for the other's breach, is legally permissible.” (Brawley v. J.C. Interiors, Inc., 161 Cal. App. 4th 1126, 1134, 74.)

Plaintiffs specifically allege that they relied on CEI’s “heightened skill and knowledge to successfully conclude the transaction.” (FAC 9.) Plaintiffs further allege that “Ms. Namba exercised substantial discretionary authority over significant aspects of Defendant CEI’s business, including responsibility for setting and maintaining proper methodologies and business fail-safes to protect against residential wire fraud.” (Id. 8.) Plaintiffs allege CEI breached the Escrow Contract “by failing to confirm the authenticity of the wiring instructions purportedly sent by CEI by one or more fictitiously named defendants, and specifically by failing to review and confirm the wiring instructions contained the proper routing information for disbursement; by failing to contact the Plaintiffs to confirm they had authorized the wiring instruction before disbursement; and by failing to supervise and audit the escrow transaction.” (FAC 21.)

Here, Plaintiffs failed to state facts to show what specific representations Ms. Namba made that reasonably and justifiably induced Plaintiffs to breach the Escrow Instructions. Moreover, the Escrow Instructions specifically place the duty on Plaintiffs to contact that Escrow Holder before commencing the wire transfer in order to confirm the account details. Plaintiffs seek to place more duties and obligations on CEI than are outlined in the Escrow Instructions and are beyond the scope of the agreement.

The Escrow Instructions further provide:

NO AMENDMENT OR INSTRUCTION TO AMEND THE ABOVE WIRE DETAILS FOR ESCROW HOLDER’S BANK AND ACCOUNT NUMBER WILL HAVE ANY FORCE, EFFECT, OR VALIDITY UNLESS SIGNED AND NOTARIZED BY THE ESCROW HOLDER.”

(FAC Ex. 1.)

“An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement.” (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1174.) In their moving papers, CEI does not argue that the Escrow agreement was a fully integrated contract or that the above provision should be read as an integration clause. There is no clause or provision expressly stating that the Escrow Instructions are the “final expression” of the Parties’ intent. Accordingly, Plaintiffs are permitted to introduce facts regarding contemporaneous agreements that induced Plaintiffs to breach the Escrow Instructions. However, Plaintiffs have not presented sufficient facts to show what those contemporaneous agreements were, what Ms. Namba’s alleged representations were or how they induced Plaintiffs to deviate from the Escrow Instructions.

Therefore, Defendant CEI’s Demurrer to the first cause of action is SUSTAINED with leave to amend.

3. Second COA: Breach of the Implied Covenant of Good Faith and Fair Dealing

In every contract there is an implied covenant of good faith and fair dealing to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made. (Guz v. Bechtel Nat. Inc.(2000) 24 Cal.4th 317, 349–350.) The covenant thus cannot “be endowed with an existence independent of its contractual underpinnings.” (Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1153.) “It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” (Guz, supra, 24 Cal.4th 317 at 350.)

Plaintiffs allege that Defendant CEI breached the covenant of good faith and fair dealing because: “Defendants denied Plaintiffs the benefits of the contract by failing to confirm the wiring instructions when received, by immediately contacting the Plaintiffs and the sender, but relied on the same to disburse funds without confirmation; and failed to account for more than $920,000.09 delivered to Defendants in accordance with the wiring instructions purportedly sent by Defendant CEI and DOES 1 through 20 issued to Plaintiffs.” (FAC 25.)

Plaintiffs admit that they did not contact Ms. Namba about the wire transfer but instead contacted their realtor at Coldwell Banker Realty via text message on October 6, 2021, when the first fraudulent wire transfer was sent. (FAC 16.) Another text message to their realtor was sent on October 7, 2021, when their realtor confirmed he would call escrow and confirm. (Id. at 17.) In fact, it was Ms. Namba who contacted Plaintiffs’ realtor and informed him that she had not received the wire transfers. (Id. at 18.)

Accordingly, Plaintiffs fail to allege any facts to show how Defendant CEI’s actions deprived Plaintiffs of the right to receive the benefits of the contract. Furthermore, Plaintiffs cannot impose obligations on CEI “beyond those incorporated in the specific terms of their agreement.” (Guz, supra, 24 Cal.4th 317 at 350.) The Escrow Instructions do not support Plaintiffs’ contention that CEI had the obligation to contact Plaintiffs before the wire transfer took place, and Ms. Namba did subsequently notify Plaintiffs that the transfer was not received. (FAC 18) The Escrow Instructions specifically state: “Escrow Holder has no duty regarding funds until its bank confirms deposit and credit.” (FAC Ex. 1.)

Moreover, CEI asserts that Plaintiffs’ claim for breach of the implied convent of good faith and fair dealing and breach of contract claims are duplicative because the claims seek the same remedies and are based on the same conduct such that the claim for breach of the implied covenant should “be disregarded as superfluous as no additional claim is actually stated.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal. App. 3d 1371, 1394.)

Therefore, Defendant CEI’s Demurrer as to the second cause of action is SUSTAINED with leave to amend.

4. Fourth COA: Breach of Fiduciary Duty

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. “In order to plead a cause of action for breach of fiduciary duty, there must be an adequate showing of each of these elements.” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 483.) An escrow holder is a fiduciary. (See Amen v. Merced County Title Co., 58 Cal. 2d 528, 534.) “An act such as breach of fiduciary duty may be both a breach of contract and a tort.” (Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th 1174, 1178.)

Defendant CEI asserts that because it did not breach the Escrow Instructions, Plaintiffs’ claim for breach of fiduciary duty also fails. Some authority exits for holding that if “the fiduciary claims arise out of the same facts that underlie the contract obligations” it would foreclose the fiduciary claim as “superfluous.” (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1197 [refereeing to Delaware Law].” However, both Colaco and Kangarlou support the proposition that a breach of fiduciary duty may exist that is independent of a contract claim.

Plaintiffs allege that CEI breached a fiduciary to act with reasonable skill and ordinary diligence by:

“(a) Failing to secure its bank accounts, databases, email systems and other electronic and physical business data against intrusion by unauthorized personnel;

Failing to warn Plaintiffs of the risk of theft of wired funds, and to incorporate systems and checkpoints in the escrow wiring process to ensure the funds are delivered to Defendant U.S. Bank for the benefit of Defendant CEI; and

Failing to promptly confirm the wire transfer information and destination for the wires with Plaintiffs upon being advised that Plaintiffs sent wire transfers relating to the closing of the transaction.”

(FAC 34.)

Taking Plaintiffs’ facts as true for purposes of a demurrer, Plaintiffs have articulated sufficient facts that Defendant CEI owed Plaintiffs a fiduciary duty outside of the Escrow Instructions, including the duty to safeguard Plaintiffs information, including email systems, that allowed a hacker to access Plaintiffs email and request that the wire funds be sent to a different account.

Therefore, Defendants’ demurrer is OVERRULED as to Plaintiffs’ fourth cause of action.

5. Fifth COA: Negligence

The elements for negligence are: (1) a legal duty owed to the plaintiff to use due care; (2) breach of duty; (3) causation; and (4) damage to the plaintiff. (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 318.) “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.” (Paz v. State of California (2000) 22 Cal.4th 550, 559 [internal citations omitted].)

Defendant CEI argues that because the Plaintiffs failed to follow the Escrow Instructions, it owed no duty to Plaintiffs outside of the Escrow Instructions. However, as explained above, CEI may owe a separate duty that exists outside of the Escrow agreement.

In their FAC, Plaintiffs, among other things, allege:

“Defendants failed to comply with the standard of practice in the community for real estate licensees - whether agents or escrow companies - by failing to maintain data security and prevent unauthorized access, phishing attempts, and the like, and by reason thereof, created the risk resulting in the loss of the Plaintiffs’ funds. In so doing, the Defendants failed to reasonably enact and enforce safety and confidential information protocols to prevent these loopholes being exploited as was done in this case.” (FAC 39.)

“It is common knowledge within the greater Los Angeles real estate lending and escrow industry that escrow and wire fraud has greatly increased in recent years, and so the employees of these Defendants should have undergone periodic and frequent training to spot the red flags or badges of wire fraud.” (Id. at 41.)

“Plaintiffs are informed and believe Defendants’ employees, were not equipped with sufficient training, or their employees were working with other actors outside the escrow process, to procure and then disseminate information from Plaintiffs’ confidential escrow account that would facilitate the theft of the Plaintiffs’ funds. This information included their down payment, sales price, loan amount (if any), and escrow identification information, all or some of which was used to facilitate the theft of Plaintiffs’ funds in this case.” (FAC 42.)

“Plaintiffs are further informed and believe that the Defendants failed to recognize, for example, the significance of the unsolicited payoff information, despite training available to Defendants to identify these red flags of attempted wire fraud.” (FAC 43.)

Taking Plaintiffs’ facts as true for purposes of a demurrer, Plaintiffs have articulated that Defendant CEI owed Plaintiffs a duty of care that existed beyond what was articulated in the Escrow Instructions. Accordingly, Defendant CEI’s Demurrer to the fifth cause of action is OVERRULED.

Conclusion

Defendant Chartwell Escrow Inc.’s Demurrer to Plaintiff’s First Amended Complaint is:

SUSTAINED WITH 20 DAYS LEAVE TO AMEND as to the first cause of action;

SUSTAINED WITH 20 DAYS LEAVE TO AMEND as to the second cause of action; and

OVERRULED as to the fourth and fifth cause of action.

Moving party to give notice.

The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All masking protocols will be observed at the Courthouse and in the courtrooms.



Case Number: *******8508 Hearing Date: April 28, 2022 Dept: 31

MOTION TO CONTEST GOOD FAITH SETTLEMENT APPLICATION IS GRANTED

Background

On December 15, 2021, Plaintiffs Jordan Young and Laura Valdivia (collectively, “Plaintiffs”) filed their operative First Amended Complaint alleging causes of action for breach of escrow contract, breach of implied covenant in escrow contract, money had and received in common counts, breach of fiduciary duty, negligence, conversion, and preliminary and permanent injunction.

On March 11, 2022, Defendants Coldwell Banker Residential Brokerage Company dba Coldwell Banker Realty filed a Cross-Complaint against U.S. Bank, N.A. (“U.S. Bank”), alleging causes of action for tort of another, comparative equitable indemnity, contribution and apportionment, and declaratory relief.

This action arises out of Plaintiffs engaging defendants Chartwell Escrow, Inc. (“Chartwell”) and Coldwell Banker (“Coldwell”) to assist them in purchasing real estate. On October 6, 2021, Plaintiffs allegedly received an email from someone purporting to be their designated escrow agent at Chartwell, directing Plaintiffs to wire funds to a U.S. Bank account. Defendant U.S. Bank is not listed in any of the documents and is a stranger to the parties and their real estate transaction. The Plaintiffs wired $920,000.09 to the U.S. Bank account number provided via email by the individual purporting to be Plaintiffs’ designated escrow agent. Plaintiffs spoke with Chartwell after close of business on Friday, October 8, 2021, and were advised Chartwell did not receive the funds.

U.S. Bank recovered $843,111.62 of the funds Plaintiffs wired. This was the amount of the settlement between Plaintiffs and U.S. Bank, in exchange for a dismissal with prejudice. The remaining $76,888.47 was not recovered.

On January 13, 2022, U.S. Bank filed a Notice of Settlement and Application for Determination of Good Faith Settlement. On February 7, 2022, Coldwell filed the instant Motion to Contest Good Faith Settlement Application by U.S. Bank.

Legal Standard

California Code of Civil Procedure section 877.6, subdivision (a)(1), provides, in relevant part, that, on noticed motion, “[a]ny party to an action wherein it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff . . . and one or more alleged tortfeasors or co-obligors . . . .” “A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” (Code Civ. Proc., 877.6, subd. (c).) Although a determination that a settlement was in good faith does not discharge any other party from liability, “it shall reduce the claims against the others in the amount stipulated” by the settlement. (Code Civ. Proc., 877, subd. (a).)

“The party asserting the lack of good faith shall have the burden of proof on that issue.” (Code Civ. Proc., 877.6, subd. (d).)

In City of Grand View Terrace v. Superior Court (1987) 192 Cal.App.3d 1251, 1261, the court provided the following guidance regarding a motion for a good faith settlement determination:

This court notes that of the hundreds of motions for good faith determination presented for trial court approval each year, the overwhelming majority are unopposed and granted summarily by the trial court. At the time of filing in many cases, the moving party does not know if a contest will develop. If each motion required a full recital by declaration or affidavit setting forth a complete factual response to all of the Tech-Bilt factors, literally thousands of attorney hours would be consumed and inch-thick motions would have to be read and considered by trial courts in an exercise which would waste valuable judicial and legal time and clients’ resources. . . . That is to say, when no one objects, the barebones motion which sets forth the ground of good faith, accompanied by a declaration which sets forth a brief background of the case is sufficient.

If the good faith settlement is contested, section 877.6, subdivision (d), sets forth a workable ground rule for the hearing by placing the burden of proving the lack of good faith on the contesting party. Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the non-settlor who asserts that the settlement was not made in good faith. If contested, declarations by the non-settlor should be filed which in many cases could require the moving party to file responsive counter-declarations to negate the lack of good faith asserted by the non-settling contesting party.

(192 Cal.App.3d 1251, 1260-1261 [citation omitted].)

In Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499, the California Supreme Court identified the following nonexclusive factors courts are to consider in determining if a settlement is in good faith under section 877.6: “a rough approximation of plaintiffs’ total recovery and the settlor's proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of non-settling defendants.”

The evaluation of whether a settlement was made in good faith is required to “be made on the basis of information available at the time of settlement.” (Tech-Bilt, Inc., supra, 38 Cal.3d at p. 499.) “‘[A] defendant’s settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant’s liability to be.’ [Citation.]” (Ibid.)

“The party asserting the lack of good faith, who has the burden of proof on that issue ( 877.6, subd. (d)), should be permitted to demonstrate, if he can, that the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of the statute. Such a demonstration would establish that the proposed settlement was not a ‘settlement made in good faith’ within the terms of section 877.6.” (Id. at pp. 499-500.)

“[A] court not only looks at the alleged tortfeasor's potential liability to the plaintiff, but it must also consider the culpability of the tortfeasor vis- -vis other parties alleged to be responsible for the same injury. Potential liability for indemnity to a non-settling defendant is an important consideration for the trial court in determining whether to approve a settlement by an alleged tortfeasor. [Citation.]” (TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 166.)

Request for Judicial Notice

U.S. Bank filed a request for judicial notice of the First Amended Complaint filed in this action as Exhibit A, the Application for Good Faith Settlement and attached settlement agreement as Exhibit B, Coldwell’s Motion to Contest Good Faith Application of U.S. Bank as Exhibit C, and Coldwell’s Cross-Complaint against U.S. Bank as Exhibit D.

U.S. Bank’s request for judicial notice is GRANTED.

With its Reply, Coldwell requests judicial notice of Plaintiff Laura Valdivia’s declaration in support of an Ex Parte Application to Obtain a Temporary Restraining Order, along with the exhibit thereto, as Exhibit D.

Coldwell’s request for judicial notice is GRANTED.

Discussion

Coldwell moves to contest the application for determination of good faith settlement sought by U.S. Bank on the grounds that (1) the good faith application is not supported by admissible, competent evidence, and (2) Coldwell has not yet been afforded a meaningful opportunity to conduct discovery concerning the factors a trial court must consider under Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488.

Where the non-settling defendants contest “good faith,” the moving party must make a sufficient showing of all the Tech-Bilt factors. Such showing may be made either in the original moving papers or in the counter-declarations filed after the non-settling defendants have filed an opposition challenging good faith of the settlement. (City of Grand Terrace v. Sup.Ct. (Boyter) (1987) 192 Cal.App.3d 1251, 1262.) Substantial evidence such as factual declarations showing the nature and extent of the settling defendant’s liability is required for a good faith determination. Without such evidence, a “good faith” determination is an abuse of discretion. (Mattco Forge, Inc. v. Arthur Young & Co. (1995) 38 Cal.App.4th 1337, 1348.) Section 877.6, subdivision b, provides “[t]he issue of the good faith of a settlement may be determined by the court on the basis of affidavits . . .” (Id.)

Here, U.S. Bank has not provided this Court with any evidence to make a good faith determination under Tech-Bilt. U.S. Bank’s Application for Determination of Good Faith Settlement filed on January 13, 2022, is devoid of any declarations containing the requisite evidence. Even in U.S. Bank’s filings in opposition to Coldwell’s Motion to Contest, U.S. Bank does not provide any declarations or affidavits with supporting evidence that touch upon the Tech-Bilt factors. While U.S. Bank did file a request for judicial notice with respect to documents – the First Amended Complaint and supporting exhibits, U.S. Bank Application for Determination of Good Faith Settlement, Coldwell’s instant Motion to Contest, and Coldwell’s Cross-Complaint – these exhibits are not the kind of evidence the Court can rely on to determine if the settlement was in good faith under the law.

U.S. Bank does provide arguments in its opposition to Coldwell’s Motion to Contest regarding the proportionality of the settlement in comparison to the potential liability. However, these arguments alone are insufficient for this Court to make a good faith determination because they remain unsupported by factual affidavits. (Code Civ. Proc., 877.6, subd. (b); Mattco Forge, Inc., supra, 38 Cal.App.4th at 1348.)

For the stated reasons, the Court must grant Coldwell’s Motion to Contest.

Conclusion

Coldwell’s Motion to Contest is GRANTED. U.S. Bank’s Application for Determination of Good Faith Settlement is DENIED, without prejudice.

Coldwell to give notice.



b"

Case Number: *******8508 Hearing Date: November 9, 2021 Dept: 82

Jordan Young, et al.

v.

U.S. Bank, N.A., et al.

Judge Mary Strobel

Hearing: November 9, 2021

*******8508

Tentative Decision on Application for Preliminary Injunction

Plaintiffs Jordan Young and Laura Valdivia (“Plaintiffs”) move for a preliminary injunction enjoining Defendants U.S. Bank, N.A. (“U.S. Bank”) and Chartwell Escrow, Inc. (“Chartwell”) from disbursing any funds from U.S. Bank account number 157528947862.

Procedural History

On October 20, 2021, Plaintiffs filed a complaint against Defendants U.S. Bank and Chartwell, and also against Defendants U.S. Bancorp and Coldwell Banker Realty for multiple causes of action, including breach of escrow contract, breach of fiduciary duty, negligence, conversion, and common counts.

On October 20, 2021, the court granted Plaintiffs’ ex parte application for a TRO and OSC re: preliminary injunction. The OSC signed by the court only applied to Defendants U.S. Bank and Chartwell, not Defendants U.S. Bancorp and Coldwell Banker Realty. The court ordered Plaintiffs to personally serve all moving papers, including the OSC, ex parte, summons, and complaint, by October 21, 2021, and to file proof of service by October 29, 2021. Any opposition was due November 2, 2021, and any reply November 4, 2021.

On October 29, 2021, Plaintiff filed a proof of service stating that it served Defendant U.S. Bank with the summons, complaint, OSC, and ex parte papers by personal service on an intake specialist at CT Corporation System on October 21, 2021.

On October 29, 2021, Plaintiff filed proof of personal service of the moving papers on Chartwell on October 21, 2021.

On November 2, 2021, Chartwell filed an opposition.

On November 4, 2021, Plaintiffs filed a reply to Chartwell’s opposition.

On November 5, 2021, Plaintiffs filed and served a declaration re: additional service of Defendant U.S. Bank.

No opposition has been received from U.S. Bank.

Summary of Applicable Law

The purpose of a preliminary injunction is to preserve the status quo pending a decision on the merits. (Major v. Miraverde Homeowners Ass’n. (1992) 7 Cal. App. 4th 618, 623.) In deciding whether or not to grant a preliminary injunction, the court looks to two factors, including “(1) the likelihood that the plaintiff will prevail on the merits, and (2) the relative balance of harms that is likely to result from the granting or denial of interim injunctive relief.” (White v. Davis (2003) 30 Cal.4th 528, 553-54.) The factors are interrelated, with a greater showing on one permitting a lesser showing on the other. (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1420.) However, the party seeking an injunction must demonstrate at least a reasonable probability of success on the merits. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 73-74.) The party seeking the injunction bears the burden of demonstrating both a likelihood of success on the merits and the occurrence of irreparable harm. (Savage v. Trammell Crow Co. (1990) 223 Cal.App.3d 1562, 1571.) Irreparable harm may exist if the plaintiff can show an inadequate remedy at law. (CCP ; 526(a).) “A preliminary injunction is not a determination on the merits.” (Yee v. American National Ins. Co. (2015) 235 Cal.App.3d 363, 458.)

Analysis

Notice

Code of Civil Procedure section 527(d) provides in pertinent part: “The party who obtained the temporary restraining order shall, within five days from the date the temporary restraining order is issued or two days prior to the hearing, whichever is earlier, serve on the opposing party a copy of the complaint if not previously served, the order to show cause stating the date, time, and place of the hearing, any affidavits to be used in the application, and a copy of the points and authorities in support of the application.” (CCP ; 527(d)(2).) “When the matter first comes up for hearing, … if the party has failed to effect service as required by paragraph (2), the court shall dissolve the temporary restraining order.” (CCP ; 527(d)(3).)

“Upon the filing of an affidavit by the applicant that the opposing party could not be served within the time required by paragraph (2), the court may reissue any temporary restraining order previously issued. The reissued order shall be made returnable as provided by paragraph (1), with the time for hearing measured from the date of reissuance.” (CCP ; 527(d)(5).)

“An OSC must be used when a temporary restraining order (TRO) is sought, or if the party against whom the preliminary injunction is sought has not appeared in the action. If the responding party has not appeared, the OSC must be served in the same manner as a summons and complaint.” (California Rules of Court 3.1150(a).)

In the November 5 declaration re: additional service, Plaintiffs’ attorney declares that the California Secretary of State’s website identified CT Corporation as a registered agent for service of process for U.S. Bank. (Blut Decl. ¶ 2, Exh. A.) Plaintiffs’ attorney also declares: “On November 3, 2021 I received a letter from CT Corporation advising that they are not the registered agent for service of process for US Bank. I then caused the entire package to be delivered to a branch. I wanted to bring this issue to the Court’s attention prior to the hearing.” (Id. ¶ 3.)

The California Secretary of State filing submitted as Exhibit A states that CT Corporation is the registered agent for U.S. Bancorp, not U.S. Bank. (Blut Decl. ¶ 2, Exh. A.) Plaintiffs allege that U.S. Bank is a subsidiary of U.S. Bancorp (Compl. ¶ 1), which suggests Plaintiffs’ reliance on the Secretary of State filing for U.S. Bancorp to obtain the service agent for U.S. Bank may have been reasonable. However, in context of the CT Corporation letter advising that it is not the agent for service for U.S. Bank, it now appears that the Secretary of State filing did not accurately state the authorized agent for service of process for U.S. Bank.

Attorney Blut declares that he “caused the entire package to be delivered to a branch” on or about November 3, 2021. (Blut Decl. ¶ 3.) An attached proof of service states that Plaintiff served the summons, complaint, OSC, and moving papers on Cameron K. Quiles, a client relationship consultant and authorized person to accept service of process for U.S. Bank on November 4, 2021. This proof of service appears to show valid personal service on U.S. Bank as of November 4. (See CCP ; 416.10(c) [if a corporation is a bank, personal service may be made on “a cashier or assistant cashier”]; see also ; 416.10(b) [service on person authorized to receive service of process].)

However, Plaintiffs did not personally serve U.S. Bank with the moving papers by October 21, 2021, as required by the OSC, but rather only three days before the hearing. No opposition has been received to waive the late service of the moving papers. Because Blut’s declaration sufficiently establishes that Plaintiffs could not serve U.S. Bank by October 21, 2021, the court will reissue the TRO and OSC as to U.S. Bank. (CCP ; 527(d)(5).)

Plaintiffs’ Likelihood of Prevailing as to Chartwell

Plaintiffs’ application against Chartwell is based on causes of action for negligence and breach of escrow contract. (See Ex parte 6; see also Id. at 5:12-13 [“the gravamen of the complaint is that the Defendants failed to take reasonable steps to prevent or limit these fraudulent wire transactions”].)

In September 2021, Plaintiffs opened escrow with Chartwell related to the purchase of a single-family residence in Venice Beach for $4,100,000. The escrow instructions identified Maria Namba as the escrow agent. The escrow instructions required Plaintiffs to make an initial deposit of $123,000 to an account at Citizens Business Bank, which Plaintiffs did. (See Valdivia Decl. ¶¶ 1-5 and Exh. 1, Supplemental Sale Escrow Instructions at p. 2 of 14.)

On October 6, 2021, the day escrow was to close, Plaintiffs received an email from someone purporting to be Maria Namba advising that their closing funds were to be wired to a U.S. Bank account, account number 157528947862. The email address used by the sender was escrow.officer@cox.net. (Valdivia Decl. ¶ 6, Exh. 2.) After some communication with the email sender, Plaintiffs wired their closing funds to the specified U.S. Bank account. (Id. ¶ 6 Exh. 3-10.)

On Friday, October 8, 2021, Plaintiff Young spoke with Maria Namba at approximately 6:30 pm. Namba stated that Chartwell never received the closing funds. (Young Decl. ¶ 8.) Plaintiffs then suspected wire fraud and reported the matter to the Sheriffs Department. (Id. ¶ 9.)

Plaintiff Valdivia declares: “I reached out via email to Maria Namba at Chartwell Realty at 5:41 a.m. on [Saturday] October 9, 2021. I never heard back from Ms. Namba or anyone from Chartwell Realty over the weekend despite the wire fraud.” (Valvidia Decl. ¶ 8.)

In opposition, Jeffery Spry, Chief Operations Officer of Chartwell, declares: “I have worked in the escrow industry for 15 years…. As Chief Operations Officer, I oversee Chartwell’s opening and maintaining of all bank accounts and supervise the banking activities at the corporate level. I also am familiar with Chartwell’s practices regarding establishing email addresses for its employees…. [T]he email address escrow.officer@cox.net is not an email address used, maintained, or hosted on any Chartwell server or email system utilized. Emails originating from Chartwell do not have ‘@cox.net’ as an address…. I also have reviewed the wiring instructions attached to the October 6, 2021 email in Exhibit 3 of the Declaration of Laura Valdivia that purport to be to an account maintained by Chartwell Escrow at U.S. Bank. Chartwell does not and has never maintained an account at U.S. Bank; and the wire instructions attached are not wire instructions utilized at Chartwell.” (Spry Decl. ¶¶ 2-4.)

“The elements of any negligence cause of action are duty, breach of duty, proximate cause, and damages.” (Peredia v. HR Mobile Services, Inc. (2018) 25 Cal.App.5th 680, 687; see generally Summit Financial Holdings, Ltd. V. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 715 [“the threshold question in an action for negligence is whether the defendant owed the plaintiff a duty to use care”]; see also Amen v. Merced County Title Co. (1962) 58 Cal.2d 528, 532 [“if the escrow holder acts negligently, ‘it would ordinarily be liable for any loss occasioned by its breach of duty”].)

Plaintiffs submit evidence that Chartwell owed a duty to exercise reasonable care in the performance of the escrow instructions and that Plaintiffs suffered damages as a result of wire fraud that occurred in the escrow. Given the size of the purchase transaction and Plaintiff’s final deposit; evidence that the fraudster used Nambia’s name and apparent signature block (see Valdivia Decl. Exh. 2-3); and evidence of slow response from Nambia to Plaintiffs’ email after fraud was suspected, there is some evidence that could plausibly support findings of breach of duty and proximate cause against Chartwell. For purposes of a preliminary injunction motion, the court concludes that Plaintiffs have at least some, reasonable probability of prevailing on a cause of action for negligence against Chartwell.

In the ex parte, Plaintiffs do not identify the specific terms of the escrow contract that they contend Chartwell breached. In the complaint, Plaintiffs allege that Chartwell breached the escrow contract by, inter alia, “failing to supervise the wiring of funds to U.S. Bank from Plaintiffs; and/or … failing to put into place security checkpoints to ensure the funds were not diverted or misused; and/or … failing to ensure proper delivery of funds to the correct bank account; … and/or failing to audit activities of the escrow officer to ensure the safety and security of the down payment funds, and/or embezzling the funds.” (Compl. ¶ 18.) These allegations against Chartwell are not fully developed by Plaintiffs in their ex parte, but the evidence cited above suggests the possibility that Chartwell or its agent Nambia failed to supervise Plaintiffs’ wiring of substantial escrow funds. (See Ex parte 6.)

Chartwell asserts that it has no liability because Chartwell has never maintained an account at U.S. Bank; its officers do not use an email address ending in “cox.net”; and the fraudulent wire instructions sent to Plaintiffs on October 6, 2021, “are not wire instructions utilized at Chartwell.” (Oppo. 3-4; Spry Decl. ¶¶ 2-4.) These contentions ignore and do not respond to the gravamen of Plaintiffs’ negligence and contract claims, which is that Chartwell failed to take proper security and supervisory measures in its handling of the escrow.

Based on this record and briefing, the court would not characterize Plaintiffs’ negligence claim or contract claim against Chartwell as being strong. However, Plaintiffs’ probability of success is reasonable and sufficient for the court to reach the balance of harms.

Balance of Hardships

For the second factor, the court must consider “the interim harm that the plaintiff would be likely to sustain if the injunction were denied as compared to the harm the defendant would be likely to suffer if the preliminary injunction were issued.” (Smith v. Adventist Health System/West (2010) 182 Cal.App.4th 729, 749.) “Irreparable harm” generally means that the defendant’s act constitutes an actual or threatened injury to the personal or property rights of the plaintiff that cannot be compensated by a damages award. (See Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.)

An injury to a plaintiff’s rights to real property often will be irreparable. (See Donahue Schriber Realty Group, Inc. v. Nu Creation Outreach (2014) 232 Cal.App.4th 1171, 1184-85; Christopher v. Jones (1964) 231 Cal.App.2d 408, 416; Civ. Code ; 3387.)

Based on the same evidence summarized above, Plaintiffs show irreparable harm if the proposed preliminary injunction is not granted. Further disbursement of the funds from the U.S. Bank account could cause Plaintiffs great financial harm and also loss of unique real property. Since the identity of the fraudster is not presently known by Plaintiffs (see Valdivia Decl. ¶ 10), the potential financial harm could potentially be difficult to remedy after any further disbursement occurs. Relatedly, since the identity of the fraudster is not presently known by Plaintiffs, Plaintiffs could potentially suffer irreparable harm if Chartwell, which managed the escrow and the wiring of funds, is not included in the preliminary injunction order.

Chartwell does not identify any irreparable harm from the proposed injunction. If it is true that “Chartwell does not now, and has never maintained accounts at U.S. Bank,” then Chartwell would suffer no harm from the injunction. (Oppo. 3.)

The balance of harms weighs heavily for granting the preliminary injunction against Chartwell. Having considered the balance of harms and Plaintiffs’ probability of success, the court grants the preliminary injunction against Chartwell.

Undertaking

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. (See Code Civ. Pro. ; 529(a); City of South San Francisco v. Cypress Lawn Cemetery Ass’n. (1992) 11 Cal. App. 4th 916, 920; see Abba Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 15-16 [“the prevailing defendant may recover that portion of his attorney's fees attributable to defending against those causes of action on which the issuance of the preliminary injunction had been based”].)

Neither party addresses the undertaking requirement. Subject to argument at the hearing, the court concludes that a $10,000 undertaking is sufficient for the circumstances of this case.

Conclusion

The OSC against U.S. Bank is continued to a date to be selected at the hearing. The TRO remains in effect until the new hearing date.

The application for a preliminary injunction against Chartwell is GRANTED. Plaintiffs to post an undertaking of $10,000.

"


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