McGovern Escrow Services v. Artap CA1/4

BACKGROUND

This dispute arises from appellants’ sale of a Wingstop franchise store. McGovern acted as the escrow officer for the sale. Before the close of escrow, a dispute arose between appellants and the buyer regarding the disclosure of information related to the franchise’s operation, and the buyer filed a complaint against appellants for, among other claims, breach of contract and recission. The buyer named McGovern as a defendant. McGovern filed a cross-complaint in interpleader, alleging that, prior to the buyer’s lawsuit, appellants had demanded that McGovern pay a final California tax bill from the net proceeds in escrow, and the buyer instructed McGovern not to pay the bill and return any refund due to the buyer. McGovern interpleaded the escrow funds with the trial court. Appellants subsequently filed a cross-complaint against McGovern alleging breach of fiduciary duty. The litigation proceeded to a trial between McGovern and appellants after the court dismissed the buyer’s complaint when the buyer failed to appear for trial. On July 31, 2023, the day before the start of trial, McGovern filed a motion seeking discharge from liability (§§ 386, 386.5, 386.6) and an award…