Legal Question in Real Estate Law in California

It's actually called an impound account, not an escrow account. The law regarding impound accounts, and when they are proper and improper, is contained in Civil Code sections 2954, 2954.1, and 2954.2. You can start reading those here: http://law.onecle.com/california/civil/2954.html

You don't provide much detail into the nature of your transaction, such as who the lender is, or whether you had previously defaulted on taxes, etc.

You will find your loan documents also provide that they can pay your taxes and insurance if you don't and then create impound accounts and increase your payments to cover it. So unless they did so when you were 100% current on your taxes and insurance, they had every right to do it.