CLTC

McDONALD, J.

In 1994 Dr. Furnish, the maker of a promissory note secured by a deed of trust on real property in Corona Del Mar (referred to as the note, the deed of trust and the property, respectively), refinanced his secured obligations by obtaining a new loan from a new lender, a portion of the proceeds of which was to pay the note in full. Appellant Continental Lawyers Title Company (CLTC) provided escrow services for the refinance transaction and was instructed by the parties to the escrow to pay the note by issuing a check to Talbert Financial (Talbert). CLTC followed that instruction on closing of the refinance transaction.

In this lawsuit, respondent Summit Financial Holdings, Ltd. (Summit) sued CLTC for negligence. Summit alleged that in the refinance transaction CLTC should have paid the note by issuing a check to Summit rather than Talbert because CLTC knew Talbert had assigned its rights in the note and deed of trust to Summit. The trial court, relying on Kirby v. Palos Verdes Escrow Company, Inc. (1986) 183 Cal.App.3d 57 , 227 Cal.Rptr. 785 ( Kirby ), concluded CLTC as escrow holder owed a duty of care to third parties, including Summit, who were not parties to the…