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Soifer v. Chicago Title Co.

August 10, 2010


APPEAL from a judgment of the Superior Court of Los Angeles County, Ann I. Jones, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC405970).

The opinion of the court was delivered by: Croskey, Acting P. J.


In this case, the plaintff and appellant, Ben Soifer, appeals a judgment entered after the trial court sustained a demurrer to his first amended complaint without leave to amend. In Southland Title Corp. v. Superior Court (1991) 231 Cal.App.3d 530 (Southland), we held that a title company could not be held liable for the negligent preparation of a preliminary report of title. Rather, if a representation was sought from the title company as to the condition of the title to a particular property, an abstract of title should have been obtained. Here, plaintiff neither sought, obtained nor desired a policy of title insurance or an abstract of title, but nonetheless seeks to hold the respondent, Chicago Title Company (Chicago), liable in both tort and contract for alleged negligence and misrepresentations with respect to the seniority status of encumbrances on certain properties that were in the process of trust deed foreclosure.

We adhere to our analysis in Southland and extend and apply it here to the several claims asserted by plaintiff. We hold that a plaintiff cannot recover for errors in a title company's statements regarding the condition of title to a property in the absence of a policy of title insurance or the purchase of an abstract of title. We therefore will affirm the judgment.


As this case comes to us on demurrer, we accept as true the facts alleged by plaintiff in his complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Essentially, plaintiff alleges that in late 2007, he was an investor in distressed real estate. His business plan involved the purchase of real properties that were being foreclosed upon by mortgage holders. In order to decide whether to bid on a particular property, he needed to know if the foreclosing lender was in fact the senior lender on that property. Put another way, if he made a successful bid at a foreclosure sale and the foreclosing lender held a secured position junior to other more senior liens, then plaintiff's title would be subject to such liens.

In order to avoid such a result, plaintiff alleges that he entered into an oral agreement with Chicago's agent, Miguel Escutia, in which it was agreed that Escutia, on behalf of Chicago, would provide title information upon which plaintiff would rely in deciding whether to make a bid at a particular foreclosure sale. In exchange, plaintiff alleges that he agreed that he would place business with Chicago upon the subsequent resale of the foreclosed properties. The information that plaintiff wanted from Chicago was limited, specific and time sensitive. He needed, usually within twenty-four hours before a particular foreclosure sale, a "yes" or "no" answer to the question of whether a particular designated foreclosing loan was a senior lien.

Plaintiff emphasizes he neither sought nor obtained a "preliminary title report." What he sought and what Escutia allegedly provided were simple short e-mail answers to his questions as to the senior status of multiple loans. Other than his promise of future title insurance business, plaintiff neither paid nor agreed to pay for these services.

On March 6, 2008, plaintiff requested seniority information as to a loan that was being foreclosed upon a property located on Woodley Avenue in Encino, California. Through Escutia, Chicago allegedly informed plaintiff that the foreclosing loan (in the amount of $990,000) was in a senior position. In fact, it was junior to a first deed of trust held by Citimortgage, Inc., in the sum of $1,600,000.

Plaintiff alleges that, in reliance on Chicago's one-word "yes" e-mail response to his inquiry about the Woodley loan, he submitted a bid at the foreclosure sale on March 11, 2008 in the sum of $1,000,000.01. He further alleges that he was only able to sell the property for $1,200,000 and, after negotiating a reduction in and then paying the balance remaining on the senior Citimortgage lien, he sustained a loss in the sum of $1,000,000.

He then brought this action against Chicago for negligence and negligent misrepresentation. After Chicago successfully demurred to the original complaint, plaintiff filed his first amended complaint which added causes of action for breach of oral contract and so-called "abstractor negligence." The first amended complaint is the operative pleading in this matter. Chicago again demurred. The trial court agreed with Chicago's arguments and sustained the demurrer without leave to amend.

Relying primarily on two cases, Southland, supra, 231 Cal.3d 530 and Siegel v. Fidelity National Title Ins. Co. (1996) 46 Cal.App.4th 1181 (Siegel), as well as two important statutes (Ins. Code, ยง 12340.10 and 12340.11), the trial court reasoned that since plaintiff had neither sought nor obtained a policy of title ...

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