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

*1094A 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 *563before the assignment was made. SMS sued the borrower, the principals and the title company. The sole issue on…