Plaintiff investor sought review of a decision of the Superior Court of Los Angeles County (California), which granted defendant escrow agent’s demurrer without leave to amend on the grounds that the statute of limitations had run in plaintiffs action for fraud, breach of contract, negligence, and conversion arising out of a real property transaction.
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Overview
Plaintiff investor filed an action for fraud, breach of contract, negligence, and conversion five years after defendant escrow agent withdrew money from an escrow account established for the purchase of land. The withdrawals were made pursuant to a forged amendment to the escrow agreement. The court reversed the dismissal of plaintiff’s suit and found that the fiduciary relationship between plaintiff and defendant relaxed plaintiff’s duty to discover the fraud such that plaintiff’s delay in bringing the action was reasonable and there was no violation of the statute of limitations. The court also found that the relaxed duty to discover applied to the claim for breach of contract because that cause of action was premised upon the identical wrongful disbursement of funds as plaintiff’s fraud cause of action. The court found that the limited nature of defendant’s duty as an escrow agent to inform plaintiff about possible forgery did not preclude plaintiff from stating a cause of action because the fiduciary contract required verification of amendments by the parties. Finally, the court found that plaintiff alleged sufficient facts to form the basis of a fraud cause of action.
Outcome
The court reversed the trial court’s dismissal of plaintiff investor’s action for fraud, breach of contract, negligence, and conversion against defendant escrow agent because plaintiff’s delay in bringing the action was reasonable and there was no violation of the statute of limitations.