Plaintiff holding company sought review of the order of the Court of Appeal of California, Fourth Appellate District, reversing the trial court’s grant of summary judgment in its favor, in a negligence action arising from a refinance transaction.
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The maker of a promissory note secured by a deed of trust on real property in Corona Del Mar, California, refinanced his secured obligations by obtaining a new loan from a new lender, a portion of the proceeds of which was to pay the earlier note in full. A title company provided escrow services for the refinance transaction and was instructed by the parties to the escrow to pay the note to the assignor. The title company followed that instruction on closing of the refinance transaction. In this lawsuit, the holding company sued the title company for negligence. The holding company contended that, in the refinance transaction, the title company should have paid the note by issuing a check to him rather than the assignor. The reviewing court determined the holding company had no viable cause of action. As a stranger to the escrow, the holding company was not owed a duty of care by the title company.
The judgment of the court of appeal was affirmed.