Cathay Bank v. Fidelity National Title Insurance

Plaintiff Cathay Bank (bank) appeals from a judgment after court trial, in favor of defendant Fidelity National Title Insurance Company (Fidelity), in an action for damages allegedly caused by Fidelity’s recording a release of a deed of trust. We agree with the trial court that Fidelity’s act was not the legal cause of the bank’s losing its security, and we therefore affirm.

Facts

The evidence at trial was generally stipulated to and undisputed. In 1990 the bank extended a $100,000 line of credit to one Tong. The note was secured by a recorded deed of trust on two parcels in Rancho Cucamonga, one known as the Port Street property and the other as the Silverspur property. In December 1991, Tong engaged to sell the Port Street property, and opened an escrow with Modem Escrow (Modem). Fidelity served as the title insurer and “sub-escrow.”

Modem sent the bank a request for a payoff demand statement, setting forth the amounts necessary to discharge Tong’s loan. (Civ. Code, § 2943, subd. (a)(5); section citations hereafter are to that code.) On January 3, 1992, the bank responded to Fidelity, with a payoff demand statement in the amount of $91,539.11 plus interest. A few…