63 Cal.App.5th 734
Cal. Ct. App.2021Background
- Plaintiff Victor Tung owned a two-unit San Francisco property that was sold in a transaction later revealed to involve forged documents and an unlicensed realtor (Wendy Lo); Chicago Title Company and escrow officer Maureen Dullea closed the escrow.
- Tung sued for rescission and damages; he later resolved and rescinded the sale with the buyer and proceeded to trial against Chicago Title, Dullea, and Lo.
- Respondents moved in limine (also styled as a nonstatutory motion for judgment on the pleadings) to exclude evidence of key damages: attorney fees to quiet title, fees defending eviction proceedings, rent Tung paid to remain in the home, and lost rental income.
- The trial court excluded the loss‑of‑use items as speculative/unforeseeable and held that attorney fees to quiet title were unpleaded and therefore inadmissible; Tung’s midtrial motion for leave to amend to plead attorney‑fees damages was denied as untimely and prejudicial.
- With the principal damages excluded, Tung withdrew remaining direct claims; the court entered judgment for respondents and a stipulated fee award against Tung was stayed pending appeal. The Court of Appeal reversed, allowing Tung to amend to allege Prentice‑type attorney‑fee damages and reversing the judgment and stipulated fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were "loss‑of‑use" damages (rent paid to buyer, eviction‑defense fees, lost rental income) foreseeable and recoverable from escrow holder? | Such damages naturally flow from escrow misconduct that precipitates competing possession claims; foreseeability is a factual question for the jury. | These harms were caused by independent acts of the buyer and Tung (not respondents) and thus unforeseeable as a matter of law. | Court: Reversal — foreseeability is generally a jury question; it was error to decide these items legally unforeseeable at in limine stage. |
| Must attorney fees incurred to quiet title (Prentice damages) be specifically pleaded, and was plaintiff allowed to amend midtrial? | Fees fall within Prentice doctrine and respondents had long notice via discovery; amendment should be allowed absent real prejudice. | Complaint did not plead Prentice damages; allowing midtrial amendment would prejudice respondents (need for experts, extra discovery) and change theory of recovery. | Court: Denial of leave to amend was an abuse of discretion given discovery evidence showing respondents knew of the claim; plaintiff may amend on remand to allege Prentice damages. |
| Was respondents’ in limine motion, styled as a nonstatutory motion for judgment on the pleadings filed on the eve of trial, appropriate and timely? | (Plaintiff) Such dispositive attacks are improper at in limine and may unfairly deprive plaintiff of procedural protections. | (Respondents) Motion challenged sufficiency of pleadings and was aimed to avoid trial on unpled damages. | Court: Caution — trial courts should be wary of adjudicating dispositive nonstatutory JOPs via in limine on eve of trial; CCP §438 timing concerns and procedural protections favor statutorily prescribed motions. |
| Did the trial court properly apply the standard for judgment on the pleadings / nonsuit when it excluded major damage categories? | The court improperly resolved proximate cause/foreseeability and pleading issues prematurely. | The court concluded plaintiff failed to plead recoverable damages and some items were speculative. | Court: Reversed — the trial court overstepped by resolving factual foreseeability and by denying amendment where prejudice was not shown. |
Key Cases Cited
- Prentice v. North American Title Guaranty, 59 Cal.2d 618 (1963) (attorney fees reasonably incurred to quiet title because of another’s tort are recoverable as damages against escrow holder)
- Chanda v. Federal Home Loans Corp., 215 Cal.App.4th 746 (2013) (analysis of foreseeability and intervening superseding causes—the general character of the harm is the test)
- Duchrow v. Forrest, 215 Cal.App.4th 1359 (2013) (midtrial amendment to add new theory/damages may be denied where it prejudices the opposing party and changes the litigation substantially)
- Amtower v. Photon Dynamics, Inc., 158 Cal.App.4th 1582 (2008) (critique of using in limine motions as substitutes for dispositive statutory motions)
- Smiley v. Citibank, 11 Cal.4th 138 (1995) (discusses motions for judgment on the pleadings and procedural limits)
- Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co., 27 Cal.4th 705 (2002) (escrow holder duties and liability for failing to follow instructions)
- Amen v. Merced County Title Co., 58 Cal.2d 528 (1962) (escrow holders’ strict duty to comply with instructions; liability for losses caused by negligence)
- Tribeca Companies, LLC v. First American Title Ins. Co., 239 Cal.App.4th 1088 (2015) (discussion of causation elements in title/escrow disputes)