Real Property, Financial Services & Title Insurance Case Law Update: Weeks Ending August 30 & September 6, 2013

I. FLORIDA STATE CASES - ILAN NIEUCHOWICZ & SASHA FUNK GRANAI

Hearsay/Business Records Exception: court erred in considering testimony given by Association’s new management company concerning amounts owed to Association where new management company relied on previous management company’s records but was not familiar with its procedures and accounting practices and, therefore, could not verify accuracy of records – Yang v. Sebastian Lakes Condominium Ass’n, No. 4D12-3363 & 4D12-3364 (Fla. 4th DCA Aug. 28, 2013) (final judgment of foreclosure reversed)

Deed Restrictions: where deed restrictions failed to define relevant terms, issue of material fact existed as to intended use of a proposed structure on residential property – Heleski v. Harrell, No. 2D12-4136 (Fla. 2d DCA Aug. 30, 2013) (summary judgment reversed and remanded)

Contract Interpretation: summary judgment on liability should not have been granted where neither party presented undisputed evidence supporting its interpretation of phrase “lying within the lake” in connection with dredging rights, though court did not abuse its discretion in granting new trial on damages only – Florida Power & Light Co. v. Hayes, No. 4D11-3802 (Fla. 4th DCA Sept. 4, 2013) (summary judgment affirmed in part, reversed in part, and remanded)

Warranties: manufacturers may fall within meaning of “supplier” under Fla. Stat. § 718.203(2) for claims of breach of implied warranty of fitness and merchantability, and trial court erred in denying plaintiff leave to amend - Port Marina Condominium Ass’n, Inc. v. Roof Services, Inc., No. 4D12-3693 (Fla. 4th DCA Sept. 4, 2013) (dismissal reversed and remanded)

II. 11TH CIRCUIT CASES - JIN LIU

Fiduciary Duties: long-standing lending relationship, without more, did not transform lender-borrower relationship into a fiduciary one -- Synovus Bank v. Sims, No. 13-10137 (11th Cir. Aug. 30, 2013) (affirming summary judgment and dismissal of counterclaims)

III. TITLE INSURANCE CASES - CHRIS SMART

Recoupment: title insurer who relies on a spouse’s forged signature on a deed in issuing title insurance policy is the real party in interest in action against the spouse who forged the signature – In re Welch, No. 12-00253 (E.D.N.C. Bankr. July 2, 2013) (order denying motion to dismiss)

Class Action: title insurer and its independent agents deemed an “enterprise” separate and distinct from title insurer for purposes of alleging a “person” distinct from the “enterprise” under RICO – Levine v. First American Title Ins. Co., Case No. 09-842 (E.D. Pa. Aug. 30, 2013)(order denying motion to dismiss), Schwartz v. Lawyers Title Ins. Co., Case No. 09-841 (E.D. Pa. Aug. 30, 2013) (order denying motion to dismiss), and Coleman v. Commonwealth Land Title Ins. Co., No. 09-679 (E.D. Pa. Aug. 30, 2013) (order denying motion to dismiss)

Rescission: title insurer is not entitled to rely on lender’s appraisal as a material representation in the issuance of title insurance – Stewart Title Insurance Co. v. Credit Suisse, No. 1:11-cv-227 (D. Idaho Aug. 29, 2013) (order granting partial summary judgment and leave to amend to add punitive damages)

Rescission: title insurer cannot rescind policy for lender’s failure to disclose facts of which it was aware at the time the policy was issued ??? Stewart Title Insurance Co. v. Credit Suisse, No. 1:11-cv-227 (D. Idaho Aug. 29, 2013) (order granting partial summary judgment and leave to amend to add punitive damages)

Exclusion 3: lender’s knowledge of facts that gave rise to claims of lien does not necessarily mean that lender played any part in creating the mechanic’s liens and will not serve to exclude a claim for those liens under 3(a) or 3(b) – Stewart Title Insurance Co. v. Credit Suisse, No. 1:11-cv-227 (D. Idaho Aug. 29, 2013) (order granting partial summary judgment and leave to amend to add punitive damages)

Exceptions: deed restrictions precluding use of property for certain business activities that are excepted from coverage do not give rise to coverage under a policy – First American Title Ins. Co. v. Hegedus, No. 10-99 (D. Del. Aug. 1, 2013) (order granting motion for summary judgment)