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“An escrow involves the deposit of documents and/or money with a third party to be delivered on the occurrence of some condition.”  (Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 711.)  While an escrow holder is an agent and fiduciary of the parties to the escrow, the agency created by the escrow is “limited to the obligation to the escrow holder to carry out the instructions of each of the parties to the escrow.”  (Id., citing Vournas v. Fidelity Nat. Tit. Ins. Co. (1999) 73 Cal.App.4th 668, 674.)  Accordingly, an escrow holder “has no general duty to police the affairs of its depositors. [Citations.]”  (Id.)  Here, there are no allegations concerning the content of the escrow instructions at issue and thus no facts which demonstrate that Chicago Title breached its obligations as escrow holder.  The Court is also not aware of any authority, and Plaintiffs do not identify any, which provides that an escrow holder has an obligation to verify all signatures before it absent instructions requiring as much.

Consequently, Chicago Title’s demurrer to the sixth (Escrow Negligence), seventh (Negligent Supervision) and eighth (Breach of Fiduciary Duty) causes of action on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

With regard to Chicago Title’s second argument, “[t]he rule of respondeat superior is familiar and simply stated: an employer is vicariously liable for the torts of its employees committed within the scope of the employment.”  (Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal. 4th 291, 296.)  The term “scope of employment” has been interpreted broadly, with courts holding that “the employer’s liability extends beyond his actual or possible control of the employee to include risks inherent in or created by the enterprise.”  (Farmers Ins. Group v. County of Santa Clara (1995) 11 Cal. 4th 992, 1004.)  Courts have similarly found that “the fact that an employee is not engaged in the ultimate object of his employment at the time of his wrongful act does not preclude attribution of liability to an employer.”  (Id.)  Consequently, “an employer’s vicarious liability may extent to the employee’s negligence, willful and malicious torts, or acts that contravene an express company rule and confer no benefit to the employer.”  (Id.)  Generally, the question of whether an employee has acted within the scope of employment is one of fact; however, it becomes a question of law when “the facts are undisputed and no conflicting inferences are possible.”  (Mary M. v. City of Los Angeles (1991) 54 Cal. 3d 202, 213.)  

“[A]n employer may be vicariously liable for an employee’s tort if the employee’s act was an outgrowth of his employment, inherent in the working environment, typical of or broadly incidental to the employer’s business, or, in a general way, foreseeable from the employee’s duties.”  (Purton v. Marriott International, Inc. (2013) 218 Cal.App.4th 499, 505 (internal quotations and citations omitted).)  In the context of respondeat superior liability, foreseeability means that “in the context of the particular enterprise an employee’s conduct is not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer’s business.”  (Farmers Ins. Group, supra, 11 Cal. 4th at 1004.)  At this juncture of the proceedings, it cannot necessarily be said that Do’s, an escrow officer employed by Chicago Title, alleged falsification of documents relating to the escrow proceedings for the purpose of inducing Plaintiffs to invest with Phan is “so unusual or startling that it would seem unfair to include the loss resulting from it among other costs” of Chicago Title’s business.  Thus, for the purposes of demurrer, Plaintiffs have sufficiently pleaded respondeat superior liability against Chicago Title based on Do’s conduct.

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