Money Store Investment Corp. v. Southern California Bank

The Money Store Investment Corporation (the Money Store) appeals the judgment entered after the trial court granted summary judgment in favor of Southern California Bank (the Bank), contending there was a triable issue of fact concerning the Bank’s disbursal of loan proceeds contrary to the Money Store’s instructions in an escrow transaction. We reverse with directions.

Robert McKinley contracted with Teddy Springfield to buy Springfield’s chiropractic practice. To facilitate the purchase, Springfield and McKinley entered into an escrow with the Bank. The escrow instructions the parties submitted on May 23, 1997, reflected a purchase price of $450,000. McKinley was to secure a Small Business Administration (SBA) guaranteed loan in the amount of $497,000. Of that amount, $450,000 represented the purchase price, $35,203 was designated as working capital, and $11,797 was for the SBA loan guaranty fee.

Under the escrow instructions, the Bank was authorized to comply with the lender’s instructions and to provide copies of the escrow instructions, amendments, and other exhibits the lender might request. The escrow was to close on or after June 25, and all net proceeds due to…