Facts

MRA Funding Corp. loaned money secured by two parcels of real property. Orange Coast Title Co. insured title and handled the recording of the lien. When the loan went into default, MRA Funding attempted to foreclose on subject property "Rideout." It then learned that its Deed of Trust was missing a legal description for the Rideout property. Plaintiff, who was the successor owner of Rideout, filed this action and succeeded in obtaining a preliminary injunction to stop the foreclosure.

Subsequently, MRA Funding released its claim on Rideout in exchange for $212,500 and the main action was dismissed. MRA Funding pursued a cross-complaint against Orange Coast Title. Only the cross-claims proceeded to trial.

PLAINTIFFS' CONTENTIONS:
MRA Funding alleged that Orange Coast Title negligently altered its deed of trust prior to recording by removing the legal description for Rideout. MRA Funding also alleged that Orange Coast Title had negligently handled the lender's title insurance order, failing to obtain coverage for the Rideout property despite an order to do so. The missing coverage would have indemnified MRA Funding against the loss caused by the defective deed of trust.

DEFENDANT'S CONTENTIONS:
Orange Coast Title denied that it altered the subject deed of trust and contended that the title insurance that it supplied was exactly what was ordered.

Orange Coast Title also cross-complained against Design Escrow Inc., alleging that its negligence was responsible for the omission of the Rideout property from the title insurance order.

Settlement Discussions

At a private mediation held before Judge James Gray, retired, Orange Coast Title offered $5,000. Just before trial, Orange Coast Title increased its offer to $20,000. There was no counter-offer.

Damages

MRA Funding sought to recover the unpaid balance of its loan from ORANGE COAST TITLE, as well as attorney fees that it incurred to defend its lien against the challenge of the plaintiff property owner.

Result

MRA Funding settled with plaintiff Nichols, the property owner, before trial by agreeing to release its claim of lien against the Rideout property in exchange for $212,500. The court also awarded $95,000 in attorney fees under the "tort of another" principle of Prentice v. North Am. Title Guaranty Corp. (1963) 59 Cal.2d 618. The total judgment amount was $267,221.

Other Information

The court found negligence on the part of Orange Coast Title in the processing of the title insurance order that was supposed to cover MRA Funding's security interest in the subject Rideout property. It awarded MRA Funding judgment in the sum of $267,221. The court found that there was no evidence of negligence on the part of Design Escrow Inc. and granted a nonsuit on Orange Coast Title Co.'s cross-complaint against Design Escrow. Taking into account the pretrial settlement with plaintiff and the judgment against Orange Coast Title, MRA Funding Corp.'s total recovery was $479,721. FILING DATE: March 11, 2008.