SMS Fin. XXIII, LLC v. Cornerstone Title Co.

*1094 A bank made a business loan that was guaranteed by the principals of the business and secured by a deed of trust on property the principals owned. Years later, the bank assigned the note and deed of trust to plaintiff SMS Financial XXIII, LLC (SMS). After the borrower defaulted on payment, SMS undertook preparations to foreclose on the deed of trust and in the process discovered that, unbeknownst to the bank, a title company had improperly released the obligation on the deed of trust *563 before the assignment was made. SMS sued the borrower, the principals and the title company. The sole issue on appeal is whether SMS's second amended complaint states a cause of action against the title company for damages under Civil Code section 2941 arising from its preparation, execution and recordation of the release of the deed of trust. The trial court sustained the title company's demurrer without leave to amend, relying on our previous decision in Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972 , 156 Cal.Rptr.3d 26 ( Heritage Pacific ), and dismissed the title company from the case. This was error, and we shall reverse. *1095 FACTUAL AND PROCEDURAL…