{"id":855,"date":"2015-09-04T08:12:04","date_gmt":"2015-09-04T15:12:04","guid":{"rendered":"http:\/\/fiduciarydutiesblog.com\/?p=855"},"modified":"2015-09-04T08:12:04","modified_gmt":"2015-09-04T15:12:04","slug":"tribeca-companies-v-first-american-escrowholder-not-liable-for-1-million-claim","status":"publish","type":"post","link":"https:\/\/fresnolawyerblog.com\/?p=855","title":{"rendered":"Tribeca Companies v. First American – Escrowholder Not Liable for $1 Million Claim"},"content":{"rendered":"

The recent decision in Tribeca Companies, LLC v. First American Title Insurance Company<\/strong> (Aug. 26, 2015) ___ Cal.App.4th ___ reaches an unsurprising result \u2013 an escrowholder is not liable for damages when it delivers money to the owner of the funds.<\/p>\n

If you continue to the end of the decision, however, you\u2019ll find a peculiar analysis of the \u201cfiduciary\u201d obligations of an escrowholder, a relationship that is better defined by reference to the obligations of a bailee.<\/p>\n

The facts were as follows.\u00a0 \u201cTribeca is a California limited liability company formed in October 2005 by William Faidi, its sole shareholder. It is a San Francisco-based private equity investment firm that makes investments in \u2018distressed\u2019 real estate by purchasing and foreclosing on defaulted mortgage loans.\u201d<\/p>\n

An escrow was opened at First American.\u00a0 Explained the court, \u201cTribeca and First American engaged in extensive negotiations regarding the form and content of the [escrow] instructions.\u00a0 The negotiations continued for more than a month.\u201d<\/p>\n

Memo to litigants<\/strong> \u2013 If the contract you helped write is unclear, don\u2019t expect the court to reform it in your favor.<\/p>\n

\"Fresno<\/a><\/p>\n

The transaction fell through and First American returned the funds on hand to the person who deposited them.\u00a0 A lawsuit followed.\u00a0 \u201cTribeca’s claim of damages was based entirely on its contention that First American’s failure to transfer the escrow funds pursuant to its instructions, and to instead refund the money to Grishin, caused Faidi to lose the $1 million in liquidated damages.\u201d<\/p>\n

After reviewing the liquidated damages, the court turned to the escrowholder\u2019s duties.\u00a0 The key to the decision was a finding that \u201cdamages would not have been recoverable from the First American escrow account because, again, Grishin maintained ownership over those funds.\u201d<\/p>\n

More to the point, \u201cthe deposit of moneys in the escrow does not alter or change the ownership thereof.\u00a0 First American held Grishin’s money in trust for his benefit, and no other party had any claim to his funds because he never designated another party as the beneficiary.<\/p>\n

\u201cBecause Grishin retained ownership, he was entitled to withdraw the money regardless of whether another party contended he was liable in damages for failure to consummate a transaction.\u00a0 It is established law that on failure of escrow the funds deposited with the escrow holder are returnable to the respective depositors.\u201d<\/p>\n

Query<\/strong>:\u00a0 Why is this escrow described as being \u201cfiduciary\u201d in nature?\u00a0 It more resembles a bailment than a fiduciary relationship.<\/p>\n

Further straining its analysis, the court stated that \u201cThe breach of fiduciary duty can be based upon either negligence or fraud, depending on the circumstances.\u201d\u00a0 That\u2019s a peculiar analysis of breach of fiduciary duty \u2013 to require the injured party to show negligence or fraud.<\/p>\n

Tribeca Companies, LLC v. First American Title Insurance Company<\/strong> (Aug. 26, 2015) ___ Cal.App.4th ___<\/p>\n","protected":false},"excerpt":{"rendered":"

The recent decision in Tribeca Companies, LLC v. First American Title Insurance Company (Aug. 26, 2015) ___ Cal.App.4th ___ reaches an unsurprising result \u2013 an escrowholder is not liable for damages when it delivers money to the owner of the funds. If you continue to the end of the decision, however, you\u2019ll find a peculiar […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,8],"tags":[],"class_list":["post-855","post","type-post","status-publish","format-standard","hentry","category-case-law","category-real-property"],"_links":{"self":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/855"}],"collection":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=855"}],"version-history":[{"count":0,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/855\/revisions"}],"wp:attachment":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=855"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=855"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=855"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}