Sean & Shenassa v. Chicago Title Co. CA4/1

• Court: California Court of Appeal
• Decided: October 31, 2014
• Docket: D063003
• Status: Unpublished

Opinion

Filed 10/31/14 Sean & Shenassa v. Chicago Title Co. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

SEAN & SHENASSA 26, LLC, D063003

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2011-00094742- CU-CO-CTL) CHICAGO TITLE COMPANY,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of San Diego County,

Timothy B. Taylor, Judge. Affirmed.

Wilson Elser Moskowitz Edelman & Dicker and Robert Cooper for Plaintiff and

Appellant.

Garrett & Tully, Ryan C. Squire, Edward W. Racek; Andersen Hilbert & Parker

and Jason L. Satterly for Defendant and Respondent.

Sean & Shenassa 26, LLC (S&S) appeals a judgment in favor of Chicago Title

Company (Chicago Title) on S&S's claims for breach of fiduciary duty and negligent

performance of contract. S&S argues (1) the trial court erred by failing to properly instruct the jury on the principle of causation on its claim for negligent performance of

contract, and (2) the trial court did not instruct and the special verdict form did not

require the jury to find S&S gave "informed" consent to Chicago Title performing its

fiduciary duty the way it did. We reject these arguments and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In March 2008, S&S entered into a contract to purchase property in San Diego,

California. Chicago Title served as the title company and escrow holder for the

transaction. S&S put $1.2 million down to purchase the property and gave the seller a

purchase money note and deed of trust for the remaining amount of the approximately

$5 million purchase price.

The purchase agreement and opening escrow instructions provided that S&S's

obligation to purchase the property was contingent upon its ability to obtain an

"[American Land Title Association (ALTA)] owner's policy of title insurance" and

escrow would be deemed closed when, among other things, a title insurance company

irrevocably and unconditionally committed to issue that policy. Doris Goodrich, Chicago

Title's escrow officer for the transaction, contacted Shahram Elyaszadeh, S&S's

managing member, and informed him that a survey was required to issue an ALTA

policy. Elyaszadeh declined to obtain a survey.

S&S intended to resell or "flip" the property. According to Goodrich, Elyaszadeh

wanted an "interim binder," which is often requested when the buyer intends to resell the

property at some near point in the future. The "interim binder" is not a title insurance

2 policy; rather, it is a commitment to issue a policy to the insured or insured's vestee at

some point in the future.

Chicago Title issued multiple preliminary reports stating S&S would receive a

California Land Title Association (CLTA) standard coverage policy, not an ALTA

policy. Both CLTA and ALTA policies provide coverage against title defects that may

arise from forgeries in the chain of title. The estimated closing statement showed a

charge of $624 for an interim binder. Similarly, the final closing statement included a

charge for an interim binder. If S&S flipped the property, the interim binder may have

resulted in cost savings to S&S.

Escrow closed in July 2008. Thereafter, Chicago Title provided S&S with an

interim binder for a CLTA policy. The binder obligated the insurer to issue, without

additional cost, a CLTA policy to S&S or someone who bought the property from S&S,

if requested within 730 days. According to Elyaszadeh, S&S never wanted an interim

binder and never discussed the binder with Chicago Title. Further, Elyaszadeh had never

heard of the concept of an interim binder until it was mailed to him in September or

October 2008, after the close of escrow.

S&S's first payment under the promissory note to the seller was due in August,

2008. S&S failed to make any payments on the note and thus, the seller foreclosed on the

property. In April 2009, S&S lost the property due to foreclosure.

In 2011, S&S sued Chicago Title for breach of fiduciary duty and negligent

performance of contractual obligations, namely the escrow instructions. Specifically,

S&S alleged, among other things, that Chicago Title improperly allowed the escrow to

3 close and released its $1.2 million down payment without obtaining the ALTA title

policy required by the escrow instructions.

Following a jury trial, the jury returned special verdicts in favor of Chicago Title.

The trial court entered judgment in favor of Chicago Title and this appeal followed.

DISCUSSION

I. General Principles and Standard of Review

In their briefs, both parties discuss at length matters that are not relevant to this

appeal, including alleged title issues concerning the property based on forged documents

and S&S's efforts to resell the property. However, this is not an action upon a title

insurance policy; rather, S&S sought to recover damages for Chicago Title's alleged

failure to carry out the escrow instructions. In essence, S&S claimed that if Chicago Title

would have advised S&S it would not issue an ALTA policy, the escrow would not have

closed and S&S would not have lost its $1.2 million down payment. Thus, S&S claims

its ability to secure an ALTA policy functioned as a "transactional circuit breaker." On

appeal, S&S's arguments are limited to instructional error and we focus our discussion on

those points.

" '[E]rror in instructing the jury shall be grounds for reversal only when the

reviewing court, "after an examination of the entire cause, including the evidence,"

concludes that the error "has resulted in a miscarriage of justice." The test of reversible

error has been stated in terms of the likelihood that the improper instruction misled the

jury. [Citation.]' [Citations.] Thus, if a review of the entire record demonstrates that the

improper instruction was so likely to have misled the jury as to become a factor in the

4 verdict, it is prejudicial and a ground for reversal. [Citation.] 'To put it another way,

"[w]here it seems probable that the jury's verdict may have been based on the erroneous

instruction prejudice appears and this court 'should not speculate upon the basis of the

verdict.' " ' " (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 335

(Mock).) " 'The determination whether, in a specific instance, the probable effect of the

instruction has been to mislead the jury and whether the error has been prejudicial so as

to require reversal depends on all of the circumstances of the case, including the evidence

and the other instructions given. No precise formula can be drawn.' " (Ibid., italics

omitted.)

II. Causation Instruction

A. Background

At trial, S&S argued it would have canceled the transaction if it could not secure

an ALTA policy. However, Chicago Title improperly closed escrow without obtaining

an ALTA policy and released S&S's $1.2 million down payment to the seller. Chicago

Title, on the other hand, argued S&S lost its money because it failed to make its mortgage

payments and S&S's losses had nothing to do with the type of title insurance policy it

received.

On S&S's negligent performance of contract claim, the trial court instructed the

jury that "[t]o recover damages from Chicago Title for negligent performance of an

escrow contract, S&S must prove all of the following: First, that S&S and Chicago Title

entered into a contract. Second, that S&S did all or substantially all of the significant

things that the contract required it to do. Third, that Chicago Title negligently failed to

5 do something that the contract required it to do. Four, that S&S was harmed by that

failure." (Italics added.)

In a special verdict on the negligent performance of contractual obligations claim,

the jury found the following:

"1. Did S&S and Chicago Title enter into a contract requiring Chicago Title to obtain an ALTA Owner's policy of title insurance for S&S? [¶] Answer 'yes' or 'no.'

"Answer: Yes

"[¶] . . . [¶]

"2. Did S&S modify the contract by providing Chicago Title with oral escrow instructions whereby Chicago Title was required to get a Binder for a CLTA Standard Coverage policy of title insurance and not required to get an ALTA Owner's policy? [¶] Answer 'yes' or 'no.'

"Answer: No

"3. Did S&S waive any requirement by Chicago Title to get an ALTA Owner's policy of title insurance when S&S executed the Second Amendment to Purchase and Sale Agreement? [¶] Answer 'yes' or 'no.'

"4. Did S&S consent to Chicago Title issuing a Binder for a CLTA Standard Coverage policy of title insurance by reviewing and acknowledging the preliminary reports issued by Chicago Title and by reviewing and executing the estimated closing statements? [¶] Answer 'yes' or 'no.'

6 "[¶] . . . [¶]

"5. Did [Chicago Title] negligently fail to follow the escrow instructions? [¶] Answer 'yes' or 'no.'

"6. Was S&S harmed by [Chicago Title's] failure to follow the escrow instructions? [¶] Answer 'yes' or 'no.'

"Answer: No"

B. Analysis

S&S argues the trial court erred by failing to instruct on the principle of concurrent

causation. Specifically, S&S contends it was only required to show "[Chicago Title's]

conduct was a substantial factor in contributing to the harm, . . . regardless of whether

there were other contributing causes or whether those contributing causes were sufficient,

on their own to cause the damage." S&S asserts that in the absence of a concurrent

causation instruction, the jury was not informed that Chicago Title could be liable for

S&S's damages even if S&S's failure to make mortgage payments was also a cause of

harm. Further, S&S takes issue with the instruction providing the elements S&S must

establish to prove negligent performance of the escrow contract because that instruction

combined the elements of causation and damages by stating S&S must prove it was

"harmed" by Chicago Title's conduct.

Chicago Title contends S&S waived its claim of instructional error by failing to

request a "concurrent causation" instruction or a more specific causation instruction.

Chicago Title's contention has merit.

7 We find no indication in the record and S&S does not point to any request for a

modification or addition to the instructions concerning causation. The record also does

not reveal whether S&S objected to the court's instruction on the elements of negligent

performance of the escrow instructions. S&S thus waived its right to claim instructional

error by acquiescing in the court's instruction. In Mesecher v. County of San Diego

(1992) 9 Cal.App.4th 1677, 1686 (Mesecher), we explained principles of waiver "apply

with particular force in the area of jury instructions." "A civil litigant must propose

complete instructions in accordance with his or her theory of the litigation and a trial

court is not 'obligated to seek out theories [a party] might have advanced, or to articulate

for him that which he has left unspoken.' [Citations.]" (Ibid.)

Anticipating Chicago Title's waiver argument, S&S contends the trial court had a

sua sponte duty to instruct the jury on the principle of concurrent causation. It relies on

case law standing for the proposition that the trial court has a duty to instruct on

controlling legal principles in the case. (See Pepper v. Underwood (1975) 48 Cal.App.3d

698, 709-710; Agarwal v. Johnson (1979) 25 Cal.3d 932, 951 (Agarwal).) This rule

applies where there is a "complete failure to instruct on material issues and controlling

legal principles . . . ." (Agarwal, at p. 951.) Otherwise, there is ordinarily no duty to

instruct in the absence of a specific request by a party. (Ibid.)

S&S's reliance on the above-stated rule is unavailing because this is not a case

where the trial court entirely failed to instruct on material principles. The trial court

instructed the jury that S&S must prove it was "harmed by" Chicago Title's negligent

failure to do something required by the contract. This is the same terminology used in

8 standard jury instructions approved by the Judicial Council of California, such as the

instruction setting forth the elements of breach of contract (CACI No. 300) and the

standard verdict form for breach of contract (CACI No. VF-300). In fact, the court's

instruction on the essential factual elements of negligent performance of contractual

obligations appears to be modeled off of CACI No. 303 on breach of contract. In our

view, the court's instruction was at most deficient by reason of generality. Under these

circumstances, S&S was required to object and propose a more specific or more complete

instruction. (See Agarwal, supra, 25 Cal.3d at pp. 948-949.) By not requesting

instructions more clearly explaining principles of causation, S&S waived its claim of

error. (Ibid.)

III. Consent Instruction

At trial, Chicago Title argued that S&S consented to Chicago Title obtaining a

CLTA interim binder rather than an ALTA policy by not objecting to the preliminary

reports and closing statements. S&S claimed, however, that it never wanted an interim

binder, never discussed the binder with Chicago Title, and had never heard of the concept

of an interim binder until after the close of escrow.

The trial court instructed the jury that on S&S's claim for breach of fiduciary duty,

the jury must resolve "Chicago Title['s] alleg[ation] that S&S accepted or consented to

Chicago Title's alleged conduct, [and] S&S waived the provisions in the Purchase and

Sale Agreement conditioning the close of escrow on S&S's ability to obtain an ALTA[]

owner's policy of title insurance." In a special verdict, the jury found S&S did not waive

9 the performance of Chicago Title's fiduciary duty, but S&S did "consent to [Chicago

Title] in performing its fiduciary duty as it did." Although the special verdict form did

not require the jury answer any other questions on the form, the jury proceeded to answer

the next question, which asked, "Did [Chicago Title] breach its fiduciary duty owed to

S&S." By a vote of eleven to one, the jury responded, "No."

S&S contends the trial court erred by failing to instruct that on Chicago Title's

consent defense, the jury must find S&S gave "informed" consent allowing Chicago Title

to perform its fiduciary duty the way it did. S&S also argues the special verdict form was

incomplete because it did not require a finding of "informed" consent and the jury's

consent finding on the fiduciary duty claim conflicted with its finding on the contract

claim.

1. Jury Instruction on Consent

"[F]ailure to object to civil jury instructions will not be deemed a waiver where the

instruction is prejudicially erroneous as given, that is which is an incorrect statement of

the law. On the other hand, a jury instruction which is incomplete or too general must be

accompanied by an objection or qualifying instruction to avoid the doctrine of waiver."

(Bishop v. Hyundai Motor America (1996) 44 Cal.App.4th 750, 760.)

Here, the trial court informed the jury it must resolve Chicago Title's allegation

that S&S consented to Chicago Title's conduct. Based on our review of the record, S&S

did not object to this instruction or request an amplifying instruction informing the jury

that Chicago Title must have obtained S&S's informed consent. Thus, S&S forfeited its

10 argument that the trial court failed to instruct on the principle of informed consent as it

was obligated to request a qualifying instruction if it wanted one.

Even if S&S did not forfeit its argument, we conclude the alleged error was not

likely to have misled the jury and did not result in a miscarriage of justice. In

determining whether an alleged instructional error resulted in prejudice, we look to all of

the circumstances of the case, including the evidence, the other instructions given,

counsel's argument, and any indications by the jury that it was misled. (Mock, supra, 4

Cal.App.4th at p. 335; Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 580.)

There is no indication that the jury was misled regarding the nature or timing of

the consent required to prove Chicago Title's defense. The jurors did not pose any

questions in this regard. Further, the other jury instructions informed jurors regarding an

escrow holder's heightened duties pertaining to the escrow instructions. For example, the

instructions provided that escrow holders must "comply strictly" with the escrow

instructions, substantial performance of the escrow instructions was not enough, and the

escrow holder had a duty to take corrective steps to clear up conflict or error in the

escrow instructions.

The jury's findings on S&S's negligent performance of contractual obligations

claim also reveals the jury did not find consent based on S&S's failure to object to the

preliminary reports and closing statements. On the contract claim, the jury expressly

found S&S did not "consent to Chicago Title issuing a Binder for a CLTA Standard

Coverage policy of title insurance by reviewing and acknowledging the preliminary

reports issued by Chicago Title and by reviewing and executing the estimated closing

11 statements[.]" Thus, any suggestion that the jury based its consent finding on the

fiduciary duty claim on S&S's acquiescence to the title reports and closing statements

lacks merit. Lastly, we note that although the jury was not required to answer whether

Chicago Title breached its fiduciary duty to S&S, the jury concluded it did not.

Based on the record before us, we conclude the alleged instructional error did not

prejudice S&S.

2. Special Verdict

S&S contends the special verdict form was incomplete because it did not require a

finding of "informed" consent. S&S also argues the jury's finding that S&S consented to

the way Chicago Title performed its fiduciary duty conflicted with the jury's finding on

the contract claim.

"Unlike a general verdict (which merely implies findings on all issues in favor of

the plaintiff or defendant), a special verdict presents to the jury each ultimate fact in the

case. The jury must resolve all of the ultimate facts presented to it in the special verdict,

so that 'nothing shall remain to the court but to draw from them conclusions of law.'

[Citation.] [¶] The requirement that the jury must resolve every controverted issue is one

of the recognized pitfalls of special verdicts. '[T]he possibility of a defective or

incomplete special verdict, or possibly no verdict at all, is much greater than with a

general verdict that is tested by special findings . . . .' " (Falls v. Superior Court (1987)

194 Cal.App.3d 851, 854-855.) In the case of a special verdict form, reversal is not

merited for an internally inconsistent verdict if the inconsistency was invited by the

appellant, i.e., if the appellant drafted or stipulated to the special verdict form. (See

12 Mesecher, supra, 9 Cal.App.4th at pp. 1686-1687; Myers Building Industries, Ltd. v.

Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 960, fn. 8; see also Stevens v.

Owens-Corning Fiberglas Corp. (1996) 49 Cal.App.4th 1645, 1653.) Further, a jury's

findings will be treated as inconsistent only if they are clearly antagonistic and absolutely

irreconcilable with each other under any rational view of the evidence. (Lowen v. Finnila

(1940) 15 Cal.2d 502, 504.)

Here, the parties stipulated to special verdict forms. Although S&S stated it

continued to object to "issues [it] raised during the jury instructions," we see no

indication in the record that S&S specifically requested an instruction on "informed

consent" or that it requested to modify the special verdict form to include that language.

S&S also does not point us to its specific objection on this issue. Instead, S&S only

points to a general objection that Chicago Title's waiver and consent affirmative defenses

do not apply to breach of fiduciary duty. This was not sufficient to alert the trial court

that S&S sought to modify the verdict form and instructions to require the jury to make a

finding of "informed consent." If S&S wanted such an instruction or finding, it was

incumbent on S&S to request it. Accordingly, S&S is barred by the invited error doctrine

from complaining about inconsistencies in the verdict on appeal. S&S also forfeited its

claim regarding the completeness of the special verdict form by failing to raise the issue

below.

Furthermore, S&S's claim fails on the merits as the jury's findings are not clearly

antagonistic and absolutely irreconcilable with each other. (Lowen v. Finnila, supra, 15

Cal.2d at p. 504.) The jury determined that S&S did not consent to Chicago Title issuing

13 a CLTA binder by failing to object to the preliminary reports and closing statements.

The jury, however, also found that S&S did consent to Chicago Title "performing its

fiduciary duty as it did." These are two separate findings. The first provided discrete

issues for the jury to resolve while the second was a general finding on consent in the

fiduciary duty context. At trial, S&S argued Chicago Title breached its duties in multiple

ways that did not relate to Chicago Title's contractual obligation to obtain an ALTA

policy. For example, S&S argued, among other things, that Chicago Title failed to

comply with its duty to clarify ambiguities in the escrow instructions and to remain

neutral in the transaction. Because there were at least two separate courses of conduct on

which the jury's findings could have been based, the jury's determinations are not clearly

irreconcilable. The verdict is thus not inconsistent.

DISPOSITION

The judgment is affirmed. Respondent is entitled to its costs on appeal.

MCINTYRE, J.

WE CONCUR:

HUFFMAN, Acting P. J.

NARES, J.