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Ericksen Arbuthnot Secures Appellate Affirmance of Order Sustaining Demurrer Without Leave to Amend Based on Plaintiff's Lack of Standing in Malpractice Action Against Title Company

On April 28, 2016 the California Court of Appeal for the First Appellate District issued an unpublished decision affirming an order sustaining without leave to amend a demurrer we brought on behalf of our title company client. The plaintiff was an attorney who represented the Executor of a probate estate which consisted of three parcels of real property. The first two properties were sold and closed escrow without incident. The third parcel, however, was sold by the Executor without involvement of the Executor's attorney. That property purportedly closed escrow without necessary notice to estate beneficiaries. After one of the beneficiaries objected to the sale and to the extraordinary fee request of the Executor's attorney, the attorney hired separate counsel to assist him in representing the estate to respond to the beneficiary's objections. The Probate Court overruled the objection and denied the fee request. Executor's attorney then sued the title company, alleging that he sustained injury as a result of alleged error by the title company in closing the escrow without the required notice.

We brought a series of demurrers based on the argument that the Executor's attorney lacked standing to sue and was'ít owed any duty by the title company. We argued the title company's duty, if any, was owed to the Executor or the estate itself and not to the Executor's attorney. The trial court agreed with us but gave plaintiff leave to amend multiple times. Ultimately, the trial court sustained our demurrer to the Fourth Amended complaint without further leave to amend, accepting our argument that plaintiff was not capable of alleging that he had standing, was owed a duty, or had suffered cognizable harm.

The Court of Appeal affirmed, accepting our argument that only the Executor acting on behalf of the Estate was owed a duty or had standing to assert a cause of action against the title company. The Court held that any payment made by the attorney to separate estate counsel was made as a volunteer and wasn't recoverable. The attorney himself sustained no cognizable loss he could seek to recover from the title company. As the Executor had not brought a claim against our client, our client could have no liability for its alleged error.

Our client disputed liability, but we didn't need to address the merits of the case because plaintiff lacked standing.

Andrew Sclar of our San Francisco office represented the title company both in the trial court and on appeal. He secured orders from both courts awarding costs to our client. Ericksen Arbuthnot was retained by our client's insurer, AIG.

Mr. Sclar is a partner in the San Francisco office. He can be reached at (415) 362-7126 or .