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Feb. 27, 2026 Get Citation Alerts Download PDF Add Note

Seeley v. Urwell Diversified Holdings CA4/1

California Court of Appeal

• Citations: None known
• Docket Number: D082547

• Precedential Status: Non-Precedential

• Opinion

• Authorities (35)

• Cited By (0)

• Summaries (0)

• Similar Cases (21.3K)

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Combined Opinion

Filed 2/27/26 Seeley v. Urwell Diversified Holdings CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

KENNETH R. SEELEY et al., D082547

Plaintiffs and Appellants,

v.
(Super. Ct. No. PSC1802622)
URWELL DIVERSIFIED HOLDINGS,
INC., et al.,

Defendants and Respondents;

INTEGRITY ESCROW et al,

Defendants and Appellants.

APPEAL from a judgment of the Superior Court of Riverside County,
Manuel Bustamante, Judge. Affirmed in part, reversed in part, and
remanded for further proceedings.
Apex Law, Thomas N. FitzGibbon; Ferguson Case Orr Paterson and
Wendy C. Lascher for Plaintiffs and Appellants, Kenneth R. Seeley, Eric
McLaughlin and Intervention911.
Meylan Davitt Jain Arevian & Kim and D. Damon Willens for
Defendant and Respondent, Cardenas Three.
Wood, Smith, Henning & Berman and Steven R. Disharoon for
Defendants, Respondents and Cross-Appellants, Integrity Escrow and Shu
Luu Hoang.
Fransen and Molinaro and Nathan Fransen for Defendant and
Respondent, Franklin Advantage, Inc.
Kenneth R. Seeley, Eric McLaughlin, and Intervention911 (collectively,
plaintiffs) appeal a judgment following a bench trial that involved competing
claims between them and Cardenas Three (Cardenas) pertaining to real
estate sale transactions in connection with which the buyers had fraudulently
accepted loans from Seeley and McLaughlin and from Cardenas. The
judgment:
− Awarded plaintiffs and Cardenas damages against the
buyers;
− Awarded plaintiffs damages against the escrow holder
and escrow officer—Integrity Escrow (Integrity) and Shu
Luu Hoang—involved in the real estate transactions (the
escrow defendants);
− Awarded Cardenas damages against plaintiffs; and
− Quieted title to the subject properties in Cardenas.
On appeal, plaintiffs contend the trial court erred: (1) in denying them
a jury trial; (2) in concluding Cardenas had rights in the properties that were
superior to theirs; (3) in awarding damages against them; (4) in not canceling
Cardenas’s security interests in the properties that were the subject of the
real estate transactions; and (5) in concluding that Franklin Advantage, Inc.
(Franklin), a loan broker that had assisted Cardenas, had not aided and
abetted a breach of the escrow defendants’ fiduciary duty to them.
The escrow defendants appeal the judgment, too. They contend the
trial court erred: (1) in not determining that fraud on the part of the buyers
was an intervening cause absolving the escrow defendants of liability; (2) in
not adjudicating their comparative-fault and failure-to-mitigate-damages
defenses; and (3) in awarding prejudgment interest against them.

2
We agree with some but not all of these contentions. Thus we affirm in
part, reverse in part, and remand the matter to the trial court for further
proceedings.
I. BACKGROUND
This case revolves around sales of three Palm Springs area properties.
In 2017, Intervention911 was operating the properties as detox, sober living,
and residential recovery facilities, when its owners—Seeley and
McLaughlin—were approached by Urwell Diversified Holdings, Inc. (Urwell)
with proposals to purchase both Intervention 911 and the properties.
Negotiations resulted in Seeley and McLaughlin (the sellers) and Urwell
entering into two different sets of transactions—one pertaining to the three
properties (the real estate sale transactions) and the other pertaining to
Intervention911 (the business sale transactions).
A. The Real Estate Sale Transactions
With regard to the real estate sale transactions, the sellers agreed to
Urwell’s proposal that each of the three sales be financed with a loan by the
sellers in what is commonly referred to as seller financing or a carryback
loan. In addition, though Urwell initially proposed that the carryback loans
be secured by the lien of a deed of trust in second priority position, it and the
sellers ended up agreeing that each of these loans instead would be secured
in first priority position.
To effectuate the real estate sale transactions, Urwell and the sellers
executed three real estate sale contracts—one for each of the three
properties—using California Association of Realtors (CAR) forms, with the
fields filled in to reflect the terms to which the parties had agreed. Among
these forms were: a template entitled “Commercial Property Purchase
Agreement and Joint Escrow Instructions” (the CAR commercial sale
template); a template entitled “Residential Purchase Agreement and Joint

3
Escrow Instructions” (the CAR residential sale template); and a template
entitled “Seller Financing Addendum and Disclosure” (the CAR seller

financing addendum template).1
In keeping with the agreements discussed ante, the fields in these
templates that were to be filled in for transactions involving “[s]eller
financing” were populated with an  signifying there would be seller
financing, and with the carryback loan amount and interest rate
corresponding to each transaction, and the fields that were to be filled in for

transactions involving any additional financing2—including “loans and/or
encumbrances that will be senior to [s]eller financing”—were left blank,
signifying that there was to be no other financing and that the carryback
loans were to be secured by the lien of a deed of trust recorded in first priority
position.
As can be seen, the terms of the real estate sale contracts provided for
there to be no financing in the real estate sale transactions other than the
seller financing, and no encumbrances senior to the seller deeds of trust that
were to be recorded in connection with that financing. But these terms
notwithstanding, Urwell—without informing plaintiffs—also arranged to
borrow funds for each of these transactions from another lender and agreed
with that lender—Cardenas—that each of its loans would be secured by the
lien of a deed of trust recorded in first priority position. This resulted in

1 The CAR commercial sale template was used for two of the real estate
sale transactions, the CAR residential sale template was used for the other
real estate transaction, and the CAR seller financing addendum template
was used for all three of these transactions.

2 These fields corresponded to sections of the form labeled “second loan,”
“senior loans and encumbrances,” and “junior financing;” however, as noted
post, the boxes remained unchecked and the fields were left blank.

4
there being two conflicting sets of escrow instructions (one from the buyers
and sellers and one from Cardenas) and in there being loan proceeds in

excess of the amounts needed to close each sale.3
Although escrow instructions for both sets of transactions were
accepted by one single escrow holder—Integrity—and handled in one single
escrow, no one at Integrity sought further instructions to resolve the clash
between the two competing sets of escrow instructions. Instead Integrity
simply (1) arranged for recordation of grant deeds to the three properties
identifying Urwell’s designee—Zenith Homes, LLC (Zenith)—as the grantee,

(2) remitted the excess funds to Zenith,4 and (3) (through the escrow officer’s
instructions to the title company) permitted the Cardenas deeds of trust to be
recorded in first priority position, ahead of the seller deeds of trust.
It was not until 10 weeks after the Cardenas deeds of trust had
recorded that plaintiffs learned the seller deeds of trusts had not been
recorded in first priority position. A few months after plaintiffs became

aware of this fact, the buyers defaulted on all six loans,5 leaving the sellers

3 Viewing the three real estate sale transactions in the aggregate: the
sale prices totaled $4,700,000; the carryback loans totaled $2,580,400; and
the Cardenas loans totaled $3,055,000. The difference between the sum of
the loans and the sum of the sale prices was $935,400. Reducing this amount
by closing costs and other fees yielded excess loan proceeds totaling $785,000.

4 The party that signed the three real estate contracts as “buyer” was
Urwell. However, Urwell and the sellers agreed that Urwell could assign the
role of buyer to another party; and the party that ended up taking title to the
three properties in place of Urwell when the transaction closed was Zenith.
For the sake of simplicity, we refer throughout this opinion to Urwell, Zenith,
and persons associated with them as “the buyers” or “the buyer defendants.”
5 The business sale transactions also did not turn out well.

5
and Cardenas pointing fingers at the buyers, at the escrow defendants, and
at one another.
B. The Litigation and Foreclosures
The events described ante led to the sellers retaking or retaining
possession of the properties and, in 2018, to their initiating the present action
with the filing of a complaint against the buyer defendants, the escrow
defendants, Cardenas, Franklin, and others. During the pendency of the
action, Cardenas acquired deeds to the three properties (trustee deeds)
through foreclosure and trustee’s sales, thereby seemingly extinguishing the

sellers’ interests in the properties.6 But Intervention911 continued in
possession of the properties instead of relinquishing them to Cardenas.
Deprived of possession of the three properties, Cardenas filed a cross-
complaint against the buyer defendants and plaintiffs in the present action
and initiated three new actions (one for each of the properties)—each seeking
unlawful detainer relief against Intervention911.
The unlawful detainer actions were consolidated into the present
action. But as trial approached, the trial judge (Judge Bustamante), over
plaintiffs’ objections, (1) bifurcated the action to separate the trial of the
unlawful detainer claims from the trial of the non-unlawful detainer claims,
(2) ruled that the non-unlawful detainer claims would be tried first, and (3)
further ruled that the trial of the non-unlawful detainer claims would be a
bench trial.
As of the date the bench trial commenced, five claims (not including the
unlawful detainer claims) remained pending between plaintiffs and

6 Cardenas represents that, following entry of judgment, it sold two of
the three properties. It has filed a request for judicial notice of two deeds
that it says pertain to these sales. The request is denied.

6
Cardenas, two claims remained pending against Franklin, six claims
remained pending against both escrow defendants, and one additional claim

remained pending against Integrity.7 The five remaining claims between
plaintiffs and Cardenas were: claims for quiet title and cancellation of
instruments pleaded by plaintiffs in their fourth amended complaint; and
claims for quiet title, waste, and ejectment pleaded by Cardenas in its second

amended cross-complaint.8 The two remaining claims against Franklin were
a claim for aiding and abetting fraud and breach of fiduciary duty and a
claim for violation of Business & Professions Code section 17200. The six
remaining claims against the two escrow defendants were claims for:
negligence; negligence per se; breach of fiduciary duty; fraud; violation of
Penal Code section 496; and violation of Business & Professions Code section
17200. The additional remaining claim against Integrity was for breach of
contract.
Twenty witnesses testified at trial over the course of 17 days during
2023. On the twelfth day of trial, shortly after plaintiffs had rested their
case, Franklin moved pursuant to Code of Civil Procedure section 631.8 for
judgment in its favor. During the hearing that ensued, the trial judge

7 Some of these claims, along with other claims, also remained pending
against the buyer defendants. All of the buyer defendants other than Urwell
were defaulted before trial, and Urwell’s operative answer was stricken by
order of the trial court on the first day of trial, shortly before opening
statements. Consequently, none of the buyer defendants participated in the
trial.

8 The claim for ejectment was to recover possession of the properties,
along with damages incurred as a result of being out of possession. The claim
for waste was to recover damages associated with allegations that the sellers
had permitted the properties to fall into disrepair.

7
indicated he was inclined to grant the motion, and he subsequently did grant
the motion.
Following the hearing on Franklin’s motion, the trial continued with
Cardenas’s and the escrow defendants’ presentations of their cases. Then, at
the conclusion of the trial, the judge issued an initial statement of decision
and, following further proceedings, a final statement of decision and then a
judgment. In the final statement of decision, the judge concluded that the
sellers and Cardenas had been defrauded by the buyer defendants, that none
of the other parties had participated in the fraud, and that the escrow
defendants had failed to live up to their obligations to the sellers.
More specifically, regarding the claims against the buyer defendants,
the court found: that the buyer defendants had breached the three real
estate sale contracts and a settlement agreement pertaining to the business
sale transactions; that they had defrauded plaintiffs in connection with the
real estate sale transactions and the business sale transactions; that they
had defrauded Cardenas in connection with its loan transactions; and that
they had violated Penal Code section 496.
Based on these findings, the court awarded, in favor of plaintiffs and
against the buyer defendants, compensatory and punitive damages totaling
$10,026,200 plus additional amounts for prejudgment interest and attorneys’
fees; and it awarded, in favor of Cardenas and against the buyer defendants,

$3,055,000 in compensatory damages.9
Regarding the claims between plaintiffs and Cardenas, the court
quieted title to all three properties in Cardenas, it adjudicated the
cancellation of instruments, waste, and ejectment claims in Cardenas’s favor,

9 No buyer defendant has appealed the judgment.

8
and it awarded Cardenas $1.2 million in damages against the sellers for
waste and ejectment.
Regarding plaintiffs’ claim against Integrity for breach of contract in its
role as escrow holder: The court found in favor of plaintiffs and awarded
them $2,580,400 in damages plus additional amounts for prejudgment
interest and attorneys’ fees. Regarding plaintiffs’ other claims against
Integrity and its identical claims against escrow officer Hoang (i.e., the
escrow defendants): The court found against the escrow defendants on the
claims for negligence and breach of fiduciary duty and awarded against them
the same $2,580,400 it had awarded against Integrity on the breach of
contract claim. And it found in favor of the escrow defendants on the claims
for negligence per se, fraud, violation of Penal Code section 496, and violation
of Business & Professions Code section 17200.
In the course of stating these findings, the court made comments
critical, not only of the buyer defendants, but also of the sellers, Cardenas,
and the escrow defendants. Thus, for example, with regard to the sellers and
Cardenas, it said that each of them “invited high risk and ultimately suffered
great loss as a result of less than ideal due diligence and best practices in the
respective transactions.”
Regarding the escrow defendants, the court’s comments distinguished
between the claims arising from the real estate sale transactions and the
claims arising from the business sale transactions. With regard to the
former, the court found that the plaintiffs had not established that the escrow
defendants: (1) “willfully deceived [p]laintiffs with any of the subject
property escrows,” (2) “aided and abetted theft or fraud in connection with
any of the escrow transactions,” or (3) “knowingly or recklessly disbursed
funds not in accordance with escrow instructions.” It also found that the

9
escrow defendants (4) “did not have a duty to perform due diligence on behalf
of the parties” and that the buyers and sellers’ escrow instructions (consisting
of designated provisions in the real estate sale contracts) were “extremely

unclear, convoluted, and inefficiently communicated.”10
Nonetheless, the court also determined that the escrow defendants did
have duties “to perform the instructions of the two sides in the respective
escrow transactions,” “to carry out written escrow instructions that would
have allowed [the sellers] to secure their seller financed carryback loans in
1st position,” “to inquire and clarify of . . . sellers and buyer[s] . . . what their

10 The instructions that Urwell and sellers furnished to the escrow
defendants for the two real estate sale contracts that had been prepared
using the CAR commercial sale template were set forth in paragraph 24 of
that form, as follows:
“24. JOINT ESCROW INSTRUCTIONS TO ESCROW HOLDER:
“A. The following paragraphs, or applicable portions thereof, of this
Agreement constitute the joint escrow instructions of Buyer and Seller to
Escrow Holder, which Escrow Holder is to use along with any related counter
offers and addenda, and any additional mutual instructions to close the
escrow: paragraphs 1, 3, 4B, 5A, 6, 7, 10, 11 D, 17, 18G, 21,22A, 23, 24, 30,
38, 39, 41, 42. The terms and conditions of this Agreement not set forth in
the specified paragraphs are additional matters for the information of Escrow
Holder, but about which Escrow Holder need not be concerned. Buyer and
Seller will receive Escrow Holder’s general provisions, if any, directly from
Escrow Holder . . . To the extent the general provisions are inconsistent or
conflict with this Agreement, the general provisions will control as to the
duties and obligations of Escrow Holder.”
The instructions that Urwell and sellers furnished to the escrow
defendants for the one real estate sale contract that had been prepared using
the CAR residential sale template were set forth in paragraph 20 of that form
and were to similar effect. The seller financing terms discussed ante were set
forth in paragraph 3 of each of these contracts and in the seller financing
addenda that were prepared using the CAR seller financing addendum
template. The trial court found, and no party disputes on appeal, that these
instructions were the only instructions that the sellers provided to the escrow
defendants.

10
respective instructions were,” and “to make sure . . . sellers[’] carryback loans
had first lien priority against each of the subject properties.” In addition, the
court determined that, “by failing to inquire [into the conflict between the
competing sets of escrow instructions, the escrow defendants] followed the
instructions of [Cardenas] to the detriment of the [sellers]” and “failed to
carry out the instructions of the . . . sellers” with respect to the real estate
sale transactions.
But with regard to the business sale transactions, the court concluded
those transactions were “separate” from the transactions involving the escrow
defendants and that the escrow defendants, therefore, should not be
considered “a parachute to soften the landing from” those transactions.
Following entry of judgment, plaintiffs and the escrow defendants
timely appealed.
While the appeal was pending, the trial court heard and denied motions
in which the escrow defendants argued, as they do on appeal, (1) that fraud
on the part of the buyer defendants was an intervening cause that absolved
the escrow defendants of liability, (2) that defenses that had not been
discussed in the final statement of decision should operate to reduce the
magnitude of the damages award against them, and (3) that the court should
not have awarded prejudgment interest against them.
II. DISCUSSION
A. Plaintiffs’ Assertions of Error
As noted ante, plaintiffs contend the trial court erred (1) in denying
them a jury trial; (2) in concluding Cardenas had rights in the properties that
were superior to their own; (3) in awarding damages against them; (4) in not
exercising its equitable powers to cancel the Cardenas deeds of trust; and
(5) in concluding that Franklin had not aided and abetted a breach of the
escrow defendants’ fiduciary duty to plaintiffs.

11
1. Right to a Jury Trial
To assess plaintiffs’ arguments that they were erroneously denied a
jury trial, we must first discuss certain aspects of the pretrial phase of this
case.
a. Additional Background
In 2018, the year in which plaintiffs initiated what they and Cardenas

refer to as the main action,11 they and Cardenas each filed case management
statements requesting a jury trial. Cardenas paid jury fees the same day it
filed its case management statement. But plaintiffs did not.
In March of 2020, the first case management conference occurred. The
following October, Cardenas initiated the three unlawful detainer actions
discussed ante. Then in February 2021 Cardenas again paid jury fees, this
time in connection with the unlawful detainer actions, and plaintiffs paid
jury fees in the main action for the first time.
Later that year, on May 13, following a trial status conference presided
over by Judge David M. Chapman, a minute order and trial setting order
issued. The minute order said: “Plaintiff is deemed to have waived their
rights to a jury trial for failure to timely post jury deposit as specified by CCP

631.12 Cardenas . . . informs the Court they may decide at a later date to
waive.
The trial setting order also addressed the issue of a right to a jury trial.
It said:

11 Meaning the present action without the inclusion of the unlawful
detainer actions that were subsequently consolidated into it.
12 Section 631, subdivision (c) of the Code of Civil Procedure, discussed
post, says jury fees “shall be due on or before the date scheduled for the initial
case management conference in the action.”

12
“The trial is set to commence on 12/3/2021. [¶ . . . ¶] By
failing to deposit jury fees within the times specified by
Code of Civil Procedure section 631, the right to a jury trial
has been forfeited by . . . plaintiff(s) . . . [¶] Any request for
relief from a forfeiture of the right to a jury trial must be
brought in the form of a noticed motion to be heard no later
than 21 days before the date first set for trial [i.e.,
December 3, 2021].”
In a declaration Cardenas filed some 21 months later in support of a motion
to bifurcate (see ante), its counsel described the May 13, 2021, trial status
conference as follows:
“There was a lengthy discussion . . . about Plaintiffs’ failure
to timely post jury fees. The Court inquired as to whether
Cardenas intended to waive jury trial. I advised the Court
at that time that Cardenas had demanded jury out of an
abundance of caution at the outset of the case, as was its’
[sic] right, but that it was likely that my client would later
waive jury.”
November 12, 2021—the date 21 days before the December 3, 2021,
date first set for trial—came and went, and plaintiffs still had not paid jury
fees. Thereafter, the December 3, 2021, trial date was continued.
The following year (2022), the trial court consolidated the main action
and the unlawful detainer actions, and Cardenas filed the second amended
cross-complaint. Then, in December of that year, Cardenas filed its motion to
bifurcate trial of the unlawful detainer causes of action from the other causes
of action. In the papers it filed in support of this motion, Cardenas revealed
it had decided to waive its right to a jury trial, except as to the unlawful
detainer causes of action.
Two months later, in February 2023, plaintiffs filed a motion for relief
from waiver of jury trial. In their motion papers, they asked the trial court to

13
“exercise its discretion under Section 631(g)13 to relieve Plaintiffs from any
waiver of jury trial as was previously requested to Judge Chapman in May
2021.” In support of this motion, they argued that “preserving the right to
trial by jury is among the strongest judicial policies,” that “all parties have
repeatedly advised the court the action was a jury trial and it is currently set
for a jury trial, so no defendant can show prejudice,” that “[t]he law requires
relief from waiver of the right to a jury trial upon request,” and that:
“[Judge Chapman’s] decision . . . to not grant relief from
waiver upon request at the trial setting conference where
the fees had long since been paid, and the case was being
set for jury trial anyway, appears inexplicable and to be an
abuse of discretion, as it needlessly required Plaintiffs to
incur the time and expense of filing this motion for relief,
which under the law would have to be granted, including as
provided in Section 631(g) of the Code of Civil Procedure.”
As noted ante, each of the two motions was opposed. In its opposition
to the motion for relief from waiver of jury trial, Cardenas argued that it had
an inviolable right to waive jury trial at any time, that plaintiffs had long
been on notice of the likelihood that it would exercise this right, that
plaintiffs were not entitled to rely on Cardenas’s invocation of the right to a
jury trial, that they had waived their right to a jury trial, that they had long
been on notice of the court-ordered deadline for seeking relief from that
waiver, that the deadline had passed, and that Cardenas “would be highly
prejudiced by a jury trial.”
In support of its prejudice argument, Cardenas argued that “[p]laintiffs’
case [was] almost entirely focused on ‘unwinding’ the Cardenas foreclosures

13 Code of Civil Procedure section 631, subdivision (g), discussed post,
says: “The court may, in its discretion upon just terms, allow a trial by jury
although there may have been a waiver of a trial by jury.”

14
and regaining the three Palm Springs [p]roperties,” that “[t]hese causes of
action, as well as Cardenas’ defenses thereto, are entirely equitable in nature
and not triable by jury,” and that:
“[I]t is clear . . . that [p]laintiffs’ intent is to seek a full jury
for the entire case, which will result in a trial far longer
than the parties originally estimated and will no doubt
result in confusing and conflicting arguments about which
facts and issues should be decided by the Court and which
should be decided (or ‘assisted’) by jury. Plaintiffs’
apparent strategy in this regard is to have the jury hear
extensive evidence that is irrelevant to the equitable issues,
and then convince the Court that it should decide the
outcome of the equitable issues based upon the jury’s
determination of the facts. [T]hey intend to argue facts and
issues to the jury that are properly only considered by the
Court in equity.”
On March 8, 2023, two days before trial call, the trial judge heard the
motion for relief from waiver of jury trial. In his tentative ruling on this
motion, he wrote:
“It is undisputed that Plaintiffs failed to timely post their
jury fees prior to the initial case management conference on
March 16, 2020. Judge Chapman expressly stated the
same in his Trial Setting Order of May 13, 2021. That
same trial setting order required any relief from waiver of
jury trial shall be brought ‘no later than 21 days before the
first date set for trial.’ Plaintiffs seemingly acknowledge
Judge Chapman’s Order, but simply conclude it was wrong
and provide no reason as to why they waited until the week
before trial to attempt to seek relief. Courts have denied as
untimely requests for relief made on or near the day of
trial. [Citations.] Plaintiffs have provided no reasonable
excuse for their failure to wait until the eve of trial to seek
relief.”
At the hearing, The judge added:
“What the court finds [most] persuasive . . . is the timing of
this request for waiver. [¶] . . . [T]hat request for waiver
really should have been done quite some time ago. [¶]

15
Because . . . if all the parties are doing their good faith
parts to comply with the local rule regarding the joint
preparation of the trial documents, it’s important to know
whether this is going to proceed by way of bench trial or a
jury trial. [¶] For example, you may not need to discuss
jury instructions on certain causes of action because those
will proceed by way of bench trial. [¶] You may not need
verdict forms because, again, those may proceed by way of
bench trial. [¶] But the fact that this has been left up in
the air two days prior, when really this -- this information
really should already be in your binders just waiting to be
delivered to the court in two days, it’s this eleventh-hour
request that the court really finds most persuasive and its
reason for denying it.”
At the conclusion of the hearing, the judge confirmed his tentative
ruling and denied the motion.
b. Analysis
In support of their contention that the trial court erred in denying them
a jury trial, plaintiffs argue: (1) that they did not waive the right to a jury
trial; (2) that, even if they did waive that right, the trial court abused its

discretion by denying them relief from the waiver;14 and (3) that they were
prejudiced as a result. In addressing these arguments, we turn to

subdivisions (b), (c), (f), and (g) of Code of Civil Procedure section 631.15
i. Waiver
Subdivision (b) of section 631 says that: “At least one party demanding
a jury on each side of a civil case shall pay a nonrefundable fee of one
hundred fifty dollars ($150), unless the fee has been paid by another party on

14 Plaintiffs also present arguments as to which specific causes of action
they contend entitled them to a jury trial. However, our resolution of their
other arguments renders it unnecessary for us to address these arguments.
15 Subsequent undesignated statutory references are to the Code of Civil
Procedure.

16
the same side of the case.” Subdivision (c) says that (except in circumstances
not present here) “[t]he fee described in subdivision (b) shall be due on or
before the date scheduled for the initial case management conference in the
action.”
As discussed ante, the initial case management conference in this
action occurred on March 16, 2020. Thus, by operation of subdivisions (b)
and (c), the deadline to pay jury fees was March 16, 2020. None of the
plaintiffs paid jury fees until February 2, 2021 (see ante), some 11 months
after the March 16, 2020, deadline to do so had passed. Hence plaintiffs
failed to timely pay jury fees.

17
Subdivision (f)(5) of section 631 spells out the consequences of a failure

to timely pay jury fees: “A party waives16 trial by jury . . . [b]y failing to
timely pay the fee described in subdivision (b), unless another party on the
same side of the case has paid that fee.” Thus, pursuant to subdivision (f)(5),
plaintiffs waived the right to a jury trial as of March 16, 2020.
ii. Relief from Waiver
We are not aware of any principle or provision, nor have the parties
cited us to one, that would entitle a party to reverse a waiver of the right to a
jury trial merely by paying jury fees after the right to a jury trial has been
waived. Nonetheless, a party’s waiver of the right to a jury trial does not

16 The terms “waive,” “waives,” and “waiver” as used in section 631 are
somewhat of a misnomer inasmuch as the loss of a jury trial right pursuant
to section 631 will in many instances be the result of what the law
customarily recognizes as a forfeiture rather than a waiver. (Applera Corp.
v. MP Biomedicals, LLC (2009) 173 Cal.App.4th 769, 791 [“ ‘Over the years,
cases have used the word [waiver] loosely to describe two related, but
distinct, concepts: (1) losing a right by failing to assert it, more precisely
called forfeiture; and (2) intentionally relinquishing a known right. “[T]he
terms ‘waiver’ and ‘forfeiture’ have long been used interchangeably. The
United States Supreme Court recently observed, however: ‘Waiver is
different from forfeiture. Whereas forfeiture is the failure to make the timely
assertion of a right, waiver is the “intentional relinquishment or
abandonment of a known right.” ’ ” ’ ”]; K.R. v. Superior Court of Napa County
(2022) 80 Cal.App.5th 133, 142 [“The distinction is a critical one, as ‘forfeiture
results from the failure to invoke a right, while waiver denotes an express
relinquishment of a known right; the two are not the same.’ ”]; TriCoast
Builders, Inc. v. Fonnegra (2024) 15 Cal.5th 766, 782-783 (TriCoast) [“Over
the course of the last century, . . . the statutory bases for finding jury waiver
have expanded well beyond what we would ordinarily term ‘waiver’ of a
constitutional right, to encompass noncompliance with various procedural
requirements for making jury demands, including requirements to post jury
fees at the correct time or in the correct amount.”].) In keeping with the
phraseology of section 631, we use the term “waiver” in this opinion to refer
to a waiver or a forfeiture.

18
altogether foreclose the availability of a jury trial, as subdivision (g) of section
631 furnishes a mechanism for potentially obtaining relief from the waiver.
This subdivision says that: “The court may, in its discretion upon just terms,
allow a trial by jury although there may have been a waiver of a trial by
jury.” (See TriCoast, supra, 15 Cal.5th at p. 782 [“Section 631(g) alleviates
the harshness of [inadvertent waiver (i.e., forfeiture)] by allowing courts to
forgive a party’s technical noncompliance when the party has fulfilled the
core objective of the statute, which is to give timely notice that a jury is
demanded.”].)
In deciding whether it should exercise its discretion to grant relief to a
plaintiff who has waived his right to a jury trial, “a court properly considers a
host of essentially equitable factors” (TriCoast, supra, 15 Cal.5th at p. 784),
including, for example, “whether relief would cause hardship to other
parties . . . ; the timeliness of the request; the party’s willingness to comply
with applicable jury fee obligations; and the party’s reasons for seeking the
relief. (Id., at p. 783.) Other factors considered include “whether [the other
party’s] belated withdrawal of [its] jury demand right before trial began was
a tactical decision and, if so, whether that sort of tactical decision should be
rewarded”; and “the fact [that the party seeking relief] could have sought to
protect itself from any last-minute waiver on [the other party]’s part by
having posted its own jury fees.” (Id., at p. 784.)
When as here litigants challenge the denial of relief from jury waiver
on direct appeal from a judgment (as distinguished from a writ), they must

19
demonstrate prejudice.17 (TriCoast, supra, 15 Cal.5th at pp. 774, 788–791.)
But, to justify reversal, this prejudice cannot consist merely of the lost
opportunity to try one’s case to a jury. (Id., at p. 789, citing with approval
Glogau v. Hagan (1951) 107 Cal.App.2d 313, 318–319 [“ ‘prejudice cannot be
presumed from the fact that appellants did not try their case to a jury’;
rather, ‘it is presumed that they enjoyed the benefits of a fair and impartial
trial as contemplated by the Constitution and the statutes’ ”], Holbrook &
Tarr v. Thomson (1956) 146 Cal.App.2d 800, 803 (Holbrook) [same], Harmon
v. Hopkins (1931) 116 Cal.App. 184, 188 (Harmon) [same].) Nor may it
consist of wasted effort in preparing for a jury trial. (TriCoast, at pp. 790–
791.)
Applying these principles to the record on appeal in the present case,
we have little difficulty concluding that the trial court did not abuse its

17 Notably, “the denial of relief from jury waiver is not the same thing as
deprivation of the constitutional right of jury trial.” (TriCoast, supra, 15
Cal.5th at p. 788.) Whereas the latter is considered a “structural defect or
error” (id., at p. 786) warranting “automatic reversal” (id., at p. 787), the
former is not. In the words of our Supreme Court:
“[O]f course . . . both roads ultimately lead to the same place, which is
trial to a court rather than to a jury. Yet the fundamental constitutional
interests at stake differ. While the California Constitution recognizes trial by
jury as an ‘inviolate right,’ it also states that the right may be waived. (Cal.
Const., art. I, § 16.) Where a party has validly waived its jury right, the
question whether to grant a jury trial notwithstanding waiver raises no
question of the deprivation of a constitutionally guaranteed framework for
the conduct of trial.
“A party that has waived its right to a jury trial no longer has that
right. . . That is different from a situation where a party that has properly
invoked its jury trial right and had that right wrongly denied—where, that is,
the party has been deprived of the constitutional right it did not give up in
the first place.” (Id., at p. 788.)

20
discretion in denying plaintiffs’ motion for relief from jury waiver.18 As a
threshold matter plaintiffs did not assert, let alone demonstrate, to the trial
court any cognizable prejudice that would have resulted from a denial of their

motion; nor do they demonstrate any such prejudice on appeal.19 This
circumstance alone defeats plaintiffs’ appeal insofar as it pertains to the
denial of a jury trial. (TriCoast, supra, 15 Cal.5th at p. 774 [on a direct
appeal (as distinguished from a writ) “prejudice from the denial of section

631(g) relief will not be presumed but must be shown”].)20

18 Our conclusion that denial of the motion was not error moots plaintiffs’
prejudice argument.

19 Among the argument headings in plaintiffs’ opening brief is one that
reads: “Appellants suffered prejudice as result of the court’s failure to grant
relief from jury waiver.” But the discussion that follows this heading does
not articulate any form of prejudice. In their reply brief, plaintiffs argue that
they were prejudiced because “a jury likely would have viewed the credibility
of witnesses quite differently than the trial judge did” and might have found
in favor of plaintiffs on claims that, in the absence of a waiver, would have
been jury triable. But this is precisely the sort of prejudice that TriCoast,
Glogau, Harmon, and Holbrook, supra, all indicate are not cognizable on a
challenge to the denial of relief from a jury waiver. (See ante.)

20 Even if plaintiffs could demonstrate some cognizable form of prejudice
from the denial of their motion, that prejudice would also need to outweigh
the other pertinent factors the trial court and Cardenas cited in their
assessments of the motion. E.g., plaintiffs’ failure to either comply with the
previous judge’s order or challenge it via writ of mandate (see TriCoast,
supra, 15 Cal.5th at pp. 785–786 [“the cases recognize writ review as the
preferred method for securing an erroneously denied jury trial, because writ
review permits the issue to be settled before trial ever begins, thus avoiding
repetitive litigation and promoting judicial economy”]), their delay in
bringing the motion for relief, the logistical complications resulting from the
motion being heard so close to trial, and the prejudice cited by Cardenas.

21
Although plaintiffs cite a variety of grounds on which they contend the
denial of a jury trial was unjust, none is sufficient. By way of example:
Plaintiffs point out that they consistently requested a jury trial and that they
paid jury fees two years before the actual trial. But as discussed ante, under
Code of Civil Procedure section 631, those circumstances do not preclude or
reverse a jury trial waiver, nor do they suffice by themselves to relieve a
litigant of the consequences of such a waiver.
Plaintiffs further argue that they should be permitted to benefit from
the fact that Cardenas consistently requested a jury trial and paid jury fees.
But, as discussed ante, Cardenas had placed them on notice years before they
brought their motion for relief that it (Cardenas) might, and probably would,
waive jury. And, even if it had not placed them on notice, they still would not
have been entitled to rely on Cardenas having done for itself what they failed
to do for themselves. (TriCoast, supra, 15 Cal.5th at p. 784 [“each side must
make its own timely jury demand and pay its own fees, and there is nothing
to stop a party that has timely demanded a jury trial from dropping that
demand on the eve of trial, or even during the trial itself”]; § 631, subd. (b)
[“[p]ayment of the fee by a party on one side of the case shall not relieve
parties on the other side of the case from waiver pursuant to subdivision
(f)”].)
Plaintiffs also argue that the amended cross-complaints Cardenas filed
in 2022 injected new jury triable claims (such as Cardenas’s claim asserting
waste) two and a half years after the deadline to pay jury fees had elapsed,
one and a half years after plaintiffs had paid jury fees, and just seven months
before the trial, and that they should not be penalized, by denial of a jury
trial, for a waiver that occurred before those claims were added to the action.
Certainly, this circumstance is relevant. But, in light of such other

22
circumstances as plaintiffs’ failure to comply with the previous judge’s order
(or challenge it via writ of mandate), their delay in bringing the motion, the
logistical complications resulting from the motion being heard so close to
trial, and the prejudice cited by Cardenas, it does not support a conclusion
that the trial court’s decision to deny the motion for relief from jury waiver
was arbitrary, capricious, or patently absurd. In other words, it does not
support a conclusion that the trial court abused its discretion. (In re Caden
C. (2021) 11 Cal.5th 614, 641 [“A court abuses its discretion only when” the
decision it makes is “ ‘ “ ‘an arbitrary, capricious, or patently absurd
determination.’ ” ’ ”].)
Consequently, the trial court did not err in denying plaintiffs a jury
trial.
2. Validity and Priority of Cardenas Deeds of Trust
Plaintiffs’ next contention is that the trial court erred in concluding the
Cardenas deeds of trust were valid and entitled to priority (i.e., in concluding
Cardenas had rights in the properties that were superior to their own). In
support of this contention, they argue (1) that the buyer defendants had no
equity or title in the properties for Cardenas to encumber because the sellers’

grant deeds were never delivered to the buyer defendants;21 and (2) that
Cardenas had constructive knowledge of the seller deeds of trust and was not
a good faith encumbrancer.

21 Cardenas’s only response to the plaintiffs’ non-delivery argument is
that the argument was waived because it was not presented below. It is true
that “[a]n appellate court ordinarily will not consider arguments made for the
first time on appeal” (C9 Ventures v. SVC-West, L.P. (2012) 202 Cal.App.4th
1483, 1491 (C9 Ventures), citing Ward v. Taggart (1959) 51 Cal.2d 736, 742);
however, “[t]his rule does not apply . . . if the new argument [is one that]
raises a pure issue of law on undisputed facts.” (C9 Ventures, at p. 1492.) As
discussed ante, the plaintiffs’ non-delivery argument is such an argument.

23
Insofar as the first of these arguments is concerned, we begin with the
observation that a deed does not vest title in a grantee unless and until it has
been delivered to the grantee. (Luna v. Brownell (2010) 185 Cal.App.4th 668,
672; Civ. Code § 1054 [“A grant takes effect, so as to vest the interest
intended to be transferred, only upon its delivery by the grantor.’].) But,
importantly, the term “delivery” as used in this context does not have its
ordinary meaning.
“The term ‘delivery’ does not refer to the mere physical act
of manually transferring the instrument to the grantee. A
legal delivery refers solely to the intention of the
grantor. . . . If the grantor does not have the required
intent, there is no legal delivery even if the grantee obtains
physical possession of the instrument.
“[¶ . . . ¶]
“Because delivery is predicated on the grantor’s intent to
vest title immediately in the grantee, when the evidence
indicates that the grantor did not have the necessary
intent, the mere possession of the deed by the grantee, by
itself, is not a sufficient proof of such intent, even when
title has been conveyed to a bona fide purchaser.” (3 Miller
& Starr, Cal. Real Estate (4th ed. 2025) Deeds and
Descriptions, §§ 8:41, 8:44, fns. omitted.)

In keeping with this construction of the term “delivery,” in situations in
which “ ‘a deed is placed in . . . escrow, with an agreement between the
grantor and grantee that it shall not be delivered to the grantee until he has
complied with certain conditions, the grantee does not acquire any title to the
land, nor is he entitled to a delivery of the deed, until he has strictly complied
with the conditions.’ ” (2 Miller & Starr, Cal. Real Estate (4th ed. 2025)
Escrows, § 6:1, fn. omitted, quoting Dyson v. Bradshaw (1863) 23 Cal. 528;
accord 2 Miller & Starr, supra, Escrows, § 6:17 [“When the escrow holder
wrongfully delivers a document or money entrusted to the escrow, title does

24
not pass to the recipient.”] “If [the grantee] does not comply with the
conditions . . . , the escrow holder cannot make a valid delivery of the deed to
him.” (Promis v. Duke (1929) 208 Cal. 420, 425; see also Gould v. Wise (1893)
97 Cal. 532, 536.)
As can be seen, a deed that is recorded against the express instructions
of the grantor is an undelivered deed. (Montgomery v. Bank of America Nat.
Trust & Savings Assn. (1948) 85 Cal.App.2d 559, 564.) As such, “[a] void
instrument . . . does not convey anything[,] and cannot be made the

foundation of a good title.”22 (Ibid.; see also Powell v. Goldsmith (1984) 152
Cal.App.3d 746, 749–750; Barr v. Schroeder (1867) 32 Cal. 609, 616 [“Without
a delivery [a deed] is not voidable, but it is void—a mere nullity”]), even as
against a good faith purchaser or encumbrancer. (See Trout v. Taylor (1934)
220 Cal. 652, 656 [“Numerous authorities have established the rule that an
instrument wholly void, such as an undelivered deed, . . . cannot be made the
foundation of a good title, even under the equitable doctrine of bona fide
purchase.”]; Firato v. Tuttle (1957) 48 Cal.2d 136, 139.)
In the present case the trial court found, and no party disputes, that
Urwell and the sellers agreed the seller’s deeds of trust would record in first
priority position. In keeping with this agreement (see ante), each of the three
real estate sale contracts identified just one loan—that being the seller
financing—and in none of those contracts was there a check mark in the box
that was to be checked in the event that the transaction were to include a

22 Describing the implications of an instrument being void, our Supreme Court
said in Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 929, that:
“A void contract is without legal effect. [Citation.] ‘It binds no one and is a mere
nullity.’ [Citation.] ‘Such a contract has no existence whatever. It has no legal
entity for any purpose and neither action nor inaction of a party to it can validate
it.’ ”

25
“second loan.” As also discussed ante, in none of the three seller financing
addenda was there a check mark in the box to be checked in the event the
transaction were to include “junior financing” or “senior loans and
encumbrances.” In other words the contracts provided, not only (as the trial
court concluded, see ante) that there would be no loans or encumbrances
senior to the seller financing, but that there would be no other loans involved
in the transaction at all.
This interpretation of the purchase and sale agreements leads
ineluctably to a conclusion that, as a matter of law, the absence of any
financing apart from the seller financing was an express condition of
plaintiffs and a condition of the sale and therefore the deed was legally
undelivered. (See Estate of Jones (2022) 82 Cal.App.5th 948, 953 [“In the
absence of extrinsic evidence, . . . interpreting a contract is a matter of law
subject to de novo review”]; Osborn v. Osborn (1954) 42 Cal.2d 358, 363–364
[holding, in a case involving seller escrow instructions expressed exclusively
in writing, that, because “[d]elivery is a question of intent,” it is “ ‘a pure
question of law whether there was an absolute delivery or not’ ”].) As the
trial court found, this condition was not satisfied.
The condition having not been satisfied, delivery of the grant deeds to
the buyer defendants was a nullity and title did not vest in them. (Todd
v. Vestermark (1956) 145 Cal.App.2d 374 [“[A] delivery or recordation
by . . . the escrow holder prior to full performance of the terms of the escrow
is a nullity. No title passes.”].) As a consequence, the deeds vesting title in
Zenith were and are void; and—inasmuch as a void deed cannot be made the
foundation of good title (see ante)—they had the effect of nullifying the
Cardenas deeds of trust and rendering them void. (See WFG National Title
Ins. Co. v. Wells Fargo Bank, N.A. (2020) 51 Cal.App.5th 881, 887 [describing

26
as “well-settled law” the principle that “a void instrument infects the entire
chain of title, such that any subsequent conveyance stemming from the void
instrument is also void as a matter of law”]; see also OC Interior Services,
LLC v. Nationstar Mortgage, LLC (2017) 7 Cal.App.5th 1318, 1335 [“a void
judgment in the chain of title has the effect of nullifying a subsequent

transfer, including a transfer to a purported bona fide purchaser”].)23
This being the case, the judgment must be reversed insofar as it:
(1) adjudicates the sellers’ quiet title and cancellation of instruments claims
in favor of Cardenas and against the sellers, (2) quiets title to the properties
in Cardenas, (3) adjudicates Cardenas’s waste and ejectment claims in favor
of Cardenas and against the sellers, and (4) awards Cardenas damages on the
waste and ejectment claims. In addition, the trial court shall be instructed to
enter judgment on remand: (1) quieting title in fee simple to the properties
in the sellers as against Zenith and Cardenas, free and clear of any claimed

interests by Zenith or Cardenas, as of September 28, 2017,24 and

(2) cancelling the Cardenas deeds of trust and the trustee deeds.25

23 Our determination that the Cardenas deeds of trust were and are void
renders it unnecessary for us to address plaintiffs’ arguments that Cardenas
had constructive knowledge of the seller deeds of trust and was not a good
faith encumbrancer.

24 The fourth amended complaint identified Zenith, Cardenas, and
Mojtaba Sabahi as the parties against whom the sellers’ quiet title claim was
directed and stated that the sellers “seek . . . to quiet title in fee simple to the
[properties] against [Zenith, Cardenas, and Sabahi], free and clear of any
claimed interests by [those parties] as of September 28, 2017, the day before
the close of the three escrows.” As discussed ante, Zenith was defaulted
before trial and found at trial to have defrauded the sellers in the real
property sale transactions, and the Cardenas deeds of trust were and are
void, thus warranting a conclusion that the sellers’ rights in the properties
were superior to Zenith’s and Cardenas’s rights in the properties. As for

27
3. Aiding and Abetting, as Asserted Against Franklin
Plaintiffs’ final contention is that the trial court erred in granting a
non-suit for the claim in which they had asserted that Franklin aided and
abetted the escrow defendants’ breach of fiduciary duty. In addressing this
contention, we begin with principles governing aiding and abetting liability
in California.
“California has adopted the common law rule for subjecting a defendant
to liability for aiding and abetting a tort.” (Casey v. U.S. Bank Nat. Assn.
(2005) 127 Cal.App.4th 1138, 1144 (Casey).) Pursuant to this rule, “[l]iability
may . . . be imposed on one who aids and abets the commission of an
intentional tort if the person (a) knows the other’s conduct constitutes a
breach of duty and gives substantial assistance or encouragement to the
other to so act or (b) gives substantial assistance to the other in
accomplishing a tortious result and the person’s own conduct, separately
considered, constitutes a breach of duty to the third person.” (Saunders v.
Superior Court (1994) 27 Cal.App.4th 832, 846 (Saunders); see also American
Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1475
(American Master Lease) [California courts have consistently followed and
applied the two-part alternative test for civil aiding and abetting liability [set
forth] in Saunders and Casey; citing cases].)

Sabahi, there are indications in the record on appeal that the sellers may
have either settled their quiet title claim as against him or dismissed him as
a defendant in the action. Inasmuch as the appellate record is unclear as to
Sabahi, the trial court shall include the sellers’ quiet title claim as pleaded
against Sabahi among the matters to be considered on remand.

25 The fourth amended complaint identified the Cardenas deeds of trust
and the trustee deeds as the instruments that the plaintiffs desired the court
to cancel.

28
To these elements, some opinions also “seem to” impose, as a further
element, a requirement that “the aider and abettor had the specific intent to
facilitate the wrongful conduct.” (Schulz v. Neovi Data Corp. (2007) 152
Cal.App.4th 86, 95, citing Gerard v. Ross (1988) 204 Cal.App.3d 968, 251 and
Howard v. Superior Court (1992) 2 Cal.App.4th 745; see also Fox Paine & Co.,
LLC v. Twin City Fire Ins. Co. (2024) 104 Cal.App.5th 1034, 1059; and
American Master Lease, supra, 225 Cal.App.4th at p. 1476 [“Moreover,
knowledge alone, even specific knowledge, is not enough to state a claim for
aiding and abetting. California law ‘necessarily’ requires that for aiding and
abetting liability to attach, a defendant have made ‘ “ ‘a conscious decision to
participate in tortious activity for the purpose of assisting another in
performing a wrongful act.’ ” ’ ”].)
As noted ante, plaintiffs in the present case included in the fourth
amended complaint a claim against Franklin for aiding and abetting each of
two torts: fraud and breach of fiduciary duty. The fraud to which the aiding
and abetting claim applied was the real estate transaction fraud alleged
against both the buyer defendants and the escrow defendants. The fiduciary
duty to which the aiding and abetting claim applied was that alleged against
the escrow defendants. As noted ante, one of the defendants against whom
the aiding and abetting claim was asserted was Franklin; and, following the
conclusion of the plaintiffs’ case in chief, the trial court granted Franklin’s
motion for judgment in its favor.
During the parts of the hearing on that motion that focused on the
aiding and abetting claim, plaintiffs distinguished between the two different
aspects of their aiding and abetting claims as to Franklin (i.e., the aspect that
focused on fraud alleged against the buyer defendants and the escrow
defendants versus the aspect that focused on the breach of fiduciary duty

29
alleged only against the escrow defendants). At the conclusion of the hearing,
the trial judge expressed skepticism regarding the adequacy of plaintiffs’
proof pertaining to Franklin’s intent; and he subsequently granted the
motion.
Thereafter, in addressing the matter in his final statement of decision,
the trial judge explained his rationale as follows:
“After considering the argument of counsel for both sides,
the court found that the evidence presented by [p]laintiffs
did not establish, by a preponderance of the evidence, the
knowing and willful intent of . . . Franklin to aid and abet
buyer [d]efendants in their fraudulent scheme. The court
was not convinced either by direct or circumstantial
evidence of aiding and abetting by . . . Franklin. Absent
the requisite intent, the court concluded that the evidence
simply could not support a [p]laintiff[s’] verdict as to this
cause of action.” [Italics added.]

The language we have italicized appears to indicate that, in granting
Franklin’s motion, the trial court was focusing on the aspect of the aiding and
abetting claim that pertained to the buyer defendants’ fraud—but not on the
aspect of the aiding and abetting claim that pertained to the escrow
defendants’ breach of fiduciary duty. As a consequence, the judgment must
be reversed to the extent it adjudicates the portion of the aiding and abetting
claim that pertained to the escrow defendants’ breach of fiduciary duty, so
that on remand the trial court may consider and rule on whether Franklin

aided and abetted such breaches.26

26 We will not disturb the judgment to the extent it adjudicates the
portion of the aiding and abetting claim against Franklin that pertains to the
buyer defendants’ fraud in the real estate sale transactions (as opposed to the
portion of that claim that pertains to the escrow defendants’ breach of
fiduciary duty) because plaintiffs have not challenged that portion of the
aiding and abetting claim on appeal.

30
B. The Escrow Defendants’ Assertions of Error
The escrow defendants do not challenge the trial court’s conclusion that
they committed breaches of the sort necessary to establish claims for breach
of contract, breach of fiduciary duty, and negligence. They do, however,
contend the court erred (1) in not concluding that the buyer defendants’ fraud
was an intervening or superseding cause absolving the escrow defendants of
liability, (2) in not adjudicating the escrow defendants’ comparative-fault
and failure-to-mitigate-damages defenses, and (3) in awarding prejudgment
interest against them.
1. Causation
As noted ante, the escrow defendants contend that the buyer
defendants’ fraud constituted an intervening or superseding cause that
absolved them (the escrow defendants) of liability. In support of this
contention, they argue (1) that the findings set forth in the final statement of
decision compel a conclusion that the buyer defendants’ fraud was
unforeseeable; and (2) that this conclusion in turn compels a further
conclusion that the harm the sellers suffered should be attributed to the

buyer defendants’ fraud rather than to the escrow defendants’ breaches.27 In
addressing these arguments, we begin with a brief discussion of concepts
pertaining to causation and the foreseeability of intervening acts.

27 The escrow defendants also argue that, in the circumstance of this case,
the tort concept of an intervening or superseding cause should be applied, not
only to the breach of fiduciary duty and negligence claims asserted against
them, but also to the contract claim asserted against them because the
contract claim “sounded in tort.” (See post.) But our conclusion post that the
harm the sellers suffered was foreseeable renders it unnecessary for us to
address this argument.

31
As a general matter, “ ‘causation . . . involves two elements. “ ‘One is
cause in fact. An act is a cause in fact if it is a necessary antecedent of an
event.’ [Citation.]” [Citation.] The second element is proximate cause.
“ ‘[P]roximate cause “is ordinarily concerned, not with the fact of causation,
but with the various considerations of policy that limit an actor’s
responsibility for the consequences of his conduct.” ’ ” ’ ” (Tung v. Chicago
Title Co. (2021) 63 Cal.App.5th 734, 745 (Tung).)
“ ‘The doctrine of proximate cause limits liability; i.e., in certain
situations where the defendant's conduct is an actual cause of the harm, the
defendant will nevertheless be absolved because of the manner in which the
injury occurred. Thus, where there is an independent intervening act that is
not reasonably foreseeable, the defendant’s conduct is not deemed the “legal”
or proximate cause. Rules of legal cause, therefore, operate to relieve the
defendant whose conduct is a cause in fact of the injury, where it would be
considered unjust to hold him or her legally responsible.’ ” (Tung, supra, 63
Cal.App.5th at p. 745, quoting 6 Witkin, Summary of Cal. Law (11th ed.
2020) Torts, § 1335.)
“To determine whether an independent intervening act was reasonably
foreseeable, we look to the act and the nature of the harm suffered.
[Citation.] To qualify as a superseding cause so as to relieve the defendant
from liability for the plaintiff's injuries, both the intervening act and the
results of that act must not be foreseeable. [Citation.] Significantly, “what is
required to be foreseeable is the general character of the event or
harm . . . not its precise nature or manner of occurrence.” [Citation.]
Whether an intervening force is superseding or not generally presents a
question of fact, but becomes a matter of law where only one reasonable
conclusion may be reached.’ ” (Tung, supra, 63 Cal.App.5th at p. 745, quoting

32
6 Witkin, Summary of Cal. Law (11th ed. 2020) Torts, § 1333; accord Chanda
v. Federal Home Loans Corp. (2013) 215 Cal.App.4th 746, 755–756
(Chanda).)
Applying these principles here, we begin with the observation that the
harm the sellers suffered was the loss of the $2,580,400 in funds that they
loaned to the buyer defendants (and, related thereto, the subordination and
elimination of the liens of their deeds of trust that were intended to secure
repayment of the loans). The escrow defendants’ conduct was an actual cause
of this harm inasmuch as it is reasonable to conclude that, had they
performed their duties to the sellers by alerting them to the involvement of
another lender and the existence of conflicting escrow instructions, then the
sellers would most likely have elected to abort the real estate sale
transactions and thus would not have suffered such harm.
That persons bent on perpetrating a fraud (including, for example,
buyers of real property) could capitalize on an escrow holder’s lapses is in our
view not an eventuality so far from the contemplation of participants in an
escrow as to be unforeseeable, and thus absolve the escrow holder of liability,
as a matter of law. Indeed, even if the buyers had not been committing fraud
and even if the sellers and Cardenas had been made aware of one another’s
involvement (yet not realized there was a conflict in their expectations and
instructions as to lien priority), one of them—either the sellers or Cardenas—
would inevitably have been harmed by the escrow defendants’ failure to alert
them to the existence of conflicting escrow instructions, because one of them
(either the sellers or Cardenas) would have found themselves holding a
security interest in the property that was inferior to what they had bargained
for and insufficient to secure their loans.

33
Our conclusion in this regard is not unlike that expressed in a passage
in Tung, wherein the reviewing court opined that: “[I]n the face of alleged
tortious conduct by an escrow holder . . . , it is foreseeable that a buyer might
seek to capitalize on the escrow holder’s errors or misconduct, making it
necessary for a seller to bring legal action to resolve conflicting claims over

who has the right to possession of the property.”28 (Tung, supra, 63
Cal.App.5th at p. 747 [reversing judgment]; see also Chanda, supra,
215 Cal.App.4th at pp. 756–757 [concluding that “the submission of forged
loan documents [to escrow] was highly foreseeable” and that the
“result[ing] . . . loss of [lender’s] investment was also highly foreseeable;”
reversing judgment].) Of course, in the present case, the sellers sued to
resolve conflicting positions with regard to title, security interests, and
damages, rather than conflicting positions with respect to possession and
damages, but the principle remains the same: Mischief enabled by an escrow
holder’s breach of its duties is foreseeable.

28 In Tung, a seller of real property was defrauded by his realtors. (Tung,
supra, 63 Cal.App.5th at pp. 740–741.) The seller sued the realtors, the
buyer, and the escrow holder, asserting claims for (among other things)
rescission, quiet title, cancellation of instruments, breach of fiduciary duty,
and fraud. (Id., at p. 741.) Among his allegations against the escrow holder
was a claim that it had failed to comply with, and seek clarification
regarding, the terms of the parties’ escrow instructions. (Ibid.) The escrow
holder filed a motion in limine to exclude evidence pertaining to amounts of
lost income and attorneys’ fees that the seller attributed to title- and
possession-related disputes with the buyer pertaining to the property that
had been the subject of the sale. (Id., at pp. 742, 745.) The trial court
granted the motion, and it cited as its reason for doing so a conclusion that
such damages “were not foreseeable, having been caused by the ‘independent
acts’ ” of the buyer and seller “ ‘having nothing to do with [the escrow
holder’s] activities.” (Ibid.) As discussed ante, the court of appeal reversed.

34
Thus the trial court did not err in rejecting the escrow defendants’
arguments that the buyer defendants’ fraud constituted an intervening or
superseding cause of the sellers’ harm.
2. Affirmative Defenses
The escrow defendants’ second contention on appeal is that they “were
deprived their day in court” with respect to two of their affirmative
defenses—comparative fault and failure to mitigate damages—because the

trial court did not address these defenses in its final statement of decision.29
In addressing this contention, we begin with the comparative fault defense.
a. Comparative Fault
Under principles of comparative fault, a defendant’s negligent conduct
is assigned a percentage of fault if the conduct was a substantial factor in
causing a plaintiff’s injuries, and then responsibility for damages associated
with those injuries is apportioned to the defendant in direct proportion to its
percentage of fault. (David v. Hernandez (2014) 226 Cal.App.4th 578, 591–
592.)
But these principles do not apply to fault in the form of a breach of
contract as distinguished from a tort. (See, e.g., Fresno Air Service v. Wood
(1965) 232 Cal.App.2d 801, 807 [“contributory negligence . . . [is] not
applicable as . . . [a] defense[] to actions for . . . breach of contract.”]; Kransco
v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 413 (Mosk,
J., concurring) [“Actions in contract do not allow an affirmative defense of
comparative fault.”]; F.D.I.C. v. Varrasso (E.D. Cal., Apr. 10, 2012, No. CIV.

29 The escrow defendants also refer to a “frustration of purpose” defense;
however, we discern no such defense among the affirmative defenses pleaded
in their answer to the fourth amended complaint.

35
2:11-2628 WBS) 2012 WL 1197712, at *3 [“It is well established that
comparative fault is not a defense to a breach of contract claim.”].)
Hence, even if principles of comparative fault were to whittle down the
$2,580,400 in damages awarded against the escrow defendants in connection
with their liability for negligence and breach of fiduciary duty, they still
would be responsible for payment of 100% of the $2,580,400 amount in
connection with their liability for breach of contract.
Presumably for this reason the escrow defendants contend the breach
of contract claim against them “sounded in tort.” To support this

contention,30 they emphasize that they did not sign the escrow instructions,
and they argue that their duties to the sellers therefore were “implied or
common law duties” rather than duties rooted in contract. On these bases,
they further argue that, “even though a written instrument may be the source
of an escrow holder’s legal duty, when the breach arises from implied or
common law duties, . . . the claim sounds in negligence” and thus should be
subject to the principles of comparative fault.
But the fact that the escrow defendants’ assent to the terms of the
escrow instructions in the real estate sale contracts was not accompanied by
their signatures is irrelevant. As our Supreme Court has held in a case in
which an escrow holder accepted an escrow orally rather than in writing:
“Upon the escrow holder’s breach of an instruction that it has contracted to
perform or of an implied promise arising out of the agreement with the buyer

30 Citing Amen v. Merced County Title Co. (1962) 58 Cal.2d 528, 532, the
escrow defendants also point out in support of this argument that, “[f]or there
to be a claim against an escrow holder for breach of a written contract, the
escrow holder must ‘accept[]’ written escrow instructions and offer to perform
them, and both the buyer and seller must accept that offer.” But it is beyond
dispute that those conditions were met in this case.

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or seller, the injured party acquires a cause of action for breach of contract.”
(Amen v. Merced County Title Co. (1962) 58 Cal.2d 528, 532 [italics added];
see also Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150.)
Although it is true that “the same wrongful act may constitute both a
breach of contract and an invasion of an interest protected by the law of
torts” (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th
764, 774), this is not to say that a breach of contract claim arising from such
an act “sounds in” tort and thus implicates principles applicable to torts any
more than it is to say that a tort claim arising from such an act “sounds in”
contract and thus implicates principles applicable to the breach of a contract.
(See Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group (2006)
143 Cal.App.4th 1036, 1044 [noting that “the Supreme Court has expressly
held that the negligent breach of . . . a duty [of care arising from an implied
contract] does not give rise to tort damages” and declined to “convert[ ] a
breach of contract into a tort for some purposes but not others,” lest the
distinction between tort remedies and contract remedies be rendered
“meaningless;” citing in part Erlich v. Menezes (1999) 21 Cal.4th 543, 554 ].)
For these reasons, we conclude: (1) that principles of comparative fault
do not apply to the $2,580,400 that was awarded against the escrow
defendants for the breach of contract claim; and, as a consequence, (2) that, if
the court erred in not applying those principles to the awards against them in
the same amount for the negligence and breach of fiduciary duty claims, they
cannot have been prejudiced thereby.
b. Failure to Mitigate Damages
Turning to the argument that the escrow defendants were denied a
ruling with respect to their failure-to-mitigate-damages defense, we observe
on our review of the record that the escrow defendants requested a ruling on
this defense when they asked the trial court in their post-judgment motions

37
to rule on their comparative-fault defense, that they submitted briefs to the
court regarding both defenses, and that the court heard argument regarding
both defenses. Yet, in the order that issued following the hearing, the court
addressed only the comparative-fault defense and not the failure-to-mitigate-
damages defense. Thus we instruct the trial court on remand to consider and
rule on the escrow defendants’ post-trial motion to the extent it pertained to
the failure-to-mitigate-damages defense.
3. Award of Prejudgment Interest
The escrow defendants’ final contention is that the trial court erred in
awarding prejudgment interest against them on the sellers’ breach of
contract claim pursuant to Civil Code section 3287. In support of this
contention, they argue: (1) that plaintiffs’ request for such interest was
procedurally defective, denying them sufficient notice and an adequate
opportunity to respond in writing and be heard; and (2) that the
circumstances of this case do not satisfy the requirements of section 3287.
Civil Code section 3287, subdivision (a) says: “A person who is entitled
to recover damages certain, or capable of being made certain by calculation,
and the right to recover which is vested in the person upon a particular day,
is entitled also to recover interest thereon from that day, except when the
debtor is prevented by law, or by the act of the creditor from paying the debt.”
As can be seen in the text just quoted, section 3287 “requires both certainty
and vesting before prejudgment interest can be recovered.” (International
Currency Technologies v. ICT, Inc. (2025) 112 Cal.App.5th 639, 644
(International Currency).)
It does so to “balance[] the ‘tension’ between compensating plaintiffs for
their losses and maintaining fairness for defendants.” (International
Currency, supra, 112 Cal.App.5th at p. 646.) “ ‘From a plaintiff’s perspective,
prejudgment interest compensates for the loss of the use of the [plaintiff’s]

38
money during the period between the assertion of the claim and the rendition
of judgment.’ ” (Id., quoting Watson Bowman Acme Corp. v. RGW
Construction, Inc. (2016) 2 Cal.App.5th 279, 294.) And, “[f]rom a defendant’s
perspective, section 3287(a) ‘promotes equity’ because it provides for the
recovery of prejudgment interest only when there is certainty about the
amount owed.” (International Currency, at p. 646, quoting Watson Bowman,
at p. 293.)
In its final statement of decision, the trial court said that the amount of
contract damages it was awarding in favor of plaintiffs and against the
escrow defendants was “$2,580,400.00 in seller financing loans.” On the one
hand, inasmuch as this amount equals the sum of the three carryback loans,
one could say there was never any uncertainty about the amount owed. On
the other hand, because of the existence of the failure-to-mitigate-damages
defense, it could be said there was uncertainty as to what portion of that
amount should be the responsibility of the escrow defendants.
In all events, the contours of the escrow defendants’ assertion of the
failure-to-mitigate-damages defense (including whether and, if so, how and to
what extent the escrow defendants rely for this defense on conduct that post-
dates, pre-dates, or post-dates and pre-dates the close of escrow) are unclear.
For this reason and to address the escrow defendants’ due process concerns
(i.e., by affording them the opportunity they claim to have been denied below
to adequately brief and argue the matter of prejudgment interest to the trial
court), we instruct the trial court on remand to reconsider on a regularly
noticed motion whether and, if so, in what amount, prejudgment interest
should be awarded to the sellers for the escrow defendants’ breach of
contract.

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III. DISPOSITION
The judgment is affirmed in part, reversed in part, and remanded for
further proceedings consistent with this opinion. Specifically: We reverse
the portions of the judgment (1) adjudicating the sellers’ quiet title and
cancellation of instruments claims in favor of Cardenas and against the
sellers, (2) quieting title to the properties in Cardenas, (3) adjudicating
Cardenas’s waste and ejectment claims in favor of Cardenas and against the
sellers, (4) awarding Cardenas damages on the waste and ejectment claims,
(5) finding in favor of Franklin on the claim that it aided and abetted the
escrow defendants’ breaches of fiduciary duties, and (6) awarding
prejudgment interest to plaintiffs on their breach of contract claim against
the escrow defendants. We remand the matter to the trial court with
instructions (1) to enter judgment on remand (a) quieting title in fee simple to
the properties in the sellers as against Zenith and Cardenas, free and clear of

any claimed interests by Zenith or Cardenas, as of September 28, 2017,31
and (b) cancelling the Cardenas deeds of trust and the trustee deeds, (2) to

consider (a) the sellers’ quiet title claim as pleaded against Sabahi,32
(b) plaintiffs’ claim against Franklin for aiding and abetting the escrow
defendants’ breaches of fiduciary duties, and (c) the escrow defendants’
failure-to-mitigate-damages defense, and (3) to reconsider on a regularly
noticed motion whether and, if so, in what amount, prejudgment interest
should be awarded to the sellers for their breach of contract claim against the

31 We express no opinion as to effects that the quieting of title in the
sellers as against Zenith and Cardenas may have with respect to the right,
title, or interest of any other person in or to any of the properties.

32 See fn. 24 ante.

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escrow defendants. In all other respects, the judgment is affirmed. No party
is entitled to costs on appeal.

KELETY, J.

WE CONCUR:

O’ROURKE, Acting P. J.

RUBIN, J.

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