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Plaintiff alleges negligence against Escrow Holder in business sale dispute

NORTHERN CALIFORNIA RECORD

Sunday, November 24, 2024

Plaintiff alleges negligence against Escrow Holder in business sale dispute

State Court
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In a legal battle that underscores the complexities of business transactions and escrow agreements, Chahal Services, LLC has filed a lawsuit against Fidelity National Title Company. The complaint was lodged on October 9, 2024, in the Superior Court of California, County of Santa Clara. The plaintiff accuses Fidelity National Title Company of negligence, breach of fiduciary duty, and violations under the Business and Professions Code.

The case revolves around a failed business transaction involving Chahal Services' attempt to sell its business, Water World, to Vanams Corporation. Negotiations began in November 2022 between Manraj Chahal, managing member of Chahal Services, and Vandana Gariney, sole shareholder of Vanams Corporation. An agreement was reached with a sales price set at $525,000. However, complications arose when Gariney deposited only $100,000 into escrow instead of the agreed $182,500.

Chahal Services claims that Fidelity National Title Company mishandled the escrow funds by releasing them to Gariney without proper authorization or notification to Chahal Services. According to the complaint, this action violated the terms set out in their Sales Agreement which stated that the deposit was non-refundable unless both parties signed a cancellation agreement. Despite ongoing litigation between Chahal Services and Vanams Corporation regarding this transaction, Fidelity allegedly released the funds after being contacted by Gariney's attorney without informing Chahal Services.

The plaintiff is seeking several forms of relief from the court including general damages according to proof, special damages amounting to $100,000 for the misdelivered escrow funds, punitive damages for what they describe as reckless conduct by Fidelity National Title Company’s employee Ray Hughes during his employment scope with them. They also seek interest at legal rates along with coverage for costs incurred due to this suit.

Representing Chahal Services is attorney David S. Henshaw from Henshaw Law Office while details about attorneys representing Fidelity National Title Company remain undisclosed within this document. The case is being heard under Case No. 24CV449151 in front of Judge M. Arechiga.

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