Real Property, Financial Services & Title Insurance Case Law Update: May 2014 #1

by Carlton Fields
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I. FLORIDA STATE CASES - SARA WITMEYER

  • Jurisdiction: where court never entered order authorizing individual to intervene and individual never became party to litigation, court had no personal jurisdiction to adjudicate individual’s claims to properties at issue; thus, court’s rulings about ownership of or title to properties were not binding on individual – Billewicz v. MacRae, Nos. 2D12-5933 & 2D13-786 (Fla. 2d DCA May 9, 2014) (affirming circuit court’s orders)
  • Contract: real estate contract was unambiguous that deposits transferred to seller as “payment” or “consideration” for extensions of closing date were not intended to serve as credits at closing; thus, seller was entitled to summary judgment in its favor in buyer’s breach of contract action based on seller’s failure to credit deposits – Dirico v. Redland Estates, Inc., No. 3D12-3132 (Fla. 3d DCA May 7, 2014) (reversing and remanding for judgment in seller’s favor)
  • Foreclosure/Standing: substituted plaintiff who had acquired note and mortgage from prior holder also acquired standing of prior holder who was original plaintiff in foreclosure, where note attached to complaint contained allonge dated before filing of foreclosure and assigning note to prior holder – Brandenburg v. Residential Credit Solutions, Inc., No. 4D12-3404 (Fla. 4th DCA May 7, 2014) (affirming final summary judgment of foreclosure)
  • Landlord/Tenant: once court dismissed landlord’s eviction action with prejudice, tenant was entitled to return of funds deposited into court registry, and court lost jurisdiction to adjudicate parties’ dispute over amount of rent owed – Noimbie v. Harvey, No. 4D13-2843 (Fla. 4th DCA May 7, 2014) (granting petition for writ of certiorari)

II. 11TH CIRCUIT CASES - JIN LIU

  • Declaratory Relief: declaratory relief denied where only possibility of legal injury as opposed to actual controversy since plaintiff failed to allege defendant brought action to foreclose loan – Dorleus v. Bank of New York, No. 14–80124–Civ (S.D. Fla. Apr. 23, 2014) (dismissing complaint without prejudice)

III. TITLE INSURANCE CASES - CHRIS SMART

  • Escrow Agent: escrow agent does not owe a general fiduciary duty to lender and its agency is limited to the scope of the escrow agreement – Edelman v. Belco Title & Escrow, LLC, No. 13-2363 (7th Cir. April 25, 2014) (order affirming summary judgment)
  • Escrow Agent: where lender delivers funds directly to borrower and those funds are not escrowed and escrow agent complies with written escrow instructions, escrow agent is not liable for breach of fiduciary duty on lender’s allegation that escrow agent owed a duty to lender to advise that the mortgage it was getting was not a first mortgage – Edelman v. Belco Title & Escrow, LLC, No. 13-2363 (7th Cir. April 25, 2014) (order affirming summary judgment)
  • Escrow Agent: escrow agent does not owe a duty to ask lender or other parties for additional escrow or closing instructions where they are not provided by the lender or other parties – Edelman v. Belco Title & Escrow, LLC, No. 13-2363 (7th Cir. April 25, 2014) (order affirming summary judgment)
  • Equitable Subrogation: lender who paid off original mortgage on parcels A and B, but whose new mortgage fails to secure B, is not entitled to equitable subrogation even if it did pay off the original mortgage where, knowing of the defect, allows subsequent creditors to take liens against B – Ocwen Loan Servicing LLC v. Summit Bank, No. 13-1615 (8th Cir. April 25, 2014) (affirming order denying equitable relief of subrogation)
  • Agency: a title insurer who is hired to perform a title search and issue a title insurance policy, is not necessarily an agent for purposes of the closing – J.S. Evangelista Dev., LLC v. Foundation Capital Resources, Inc., No. 311563 (Mich. App. April 24, 2014) (affirming order granting summary judgment)
  • Tort: issuing title insurance, and thereby entering into a contractual relationship with the insured, does not create a fiduciary duty beyond the terms of the title insurance policy, which by its terms limits suits against insurer to the policy – Fogg v. Fidelity National Title Ins. Co., No. 13-CV-0216 (D.C. App. April 24, 2014) (affirming order of summary judgment).
  • Title Examination: a title examination is solely for the benefit of the insurer and not for the insured’s benefit, and, consequently, the insured cannot use that title examination as the factual predicate for a breach of fiduciary duty claim – Fogg v. Fidelity National Title Ins. Co., No. 13-CV-0216 (D.C. App. April 24, 2014) (affirming order of summary judgment).
  • Eight Corners Rule: declining to adopt a factual exception test based on what insurer knows in order to modify the eight corners rule because it would cause uncertainty for insurers who would be less clear as to what, if any, investigation they have to make in responding to, and denying, a demand to defend – Fogg v. Fidelity National Title Ins. Co., No. 13-CV-0216 (D.C. App. April 24, 2014) (affirming order of summary judgment.
  • Right of Access: where title insurer obtains a revocable 30 year right of access for benefit of its insured, the insured has no current claim for lack of access or marketability, even though such a claim may become ripe in the future – Fidelity National Title Insurance Company v. Woody Creek Ventures, LLC, No. 13-cv-01289 (D. Colo. May 5, 2014) (order granting summary judgment)
  • Coverage: title insurance policy does not cover losses due to mortgage broker’s theft of insured lender’s loan proceeds necessary to pay prior liens – Flagstar Bank, FSB v. Lawyers Title Co., No. BC437313 (Ca. App. May 2, 2014) (affirming summary judgment)
  • FDCPA: allegations that title insurer and bank who sends letter stating that it “may” be a debt collector are insufficient to support a plausible inference that those entities are debt collectors within the meaning of the act – Kalnoki v. First American LoanStar Trustee Services LLC, No. 2:11-cv-02816 (E.D. Cal. April 28, 2014) (order granting motion to dismiss)
  • Coverage: actual loss is an essential element of claim for breach of policy and where insured fails to show loss, insured cannot maintain loss based on fear of loss in the future – Ten Ky v. GOB Const., Inc., No. 13-1042 (La. App. April 30, 2014) (affirming summary judgment)
  • Title Defect: a dedication recorded against a property that requires its owner to move a historic building prior to commencing construction is not an encumbrance or defect and does not otherwise impact insured’s fee simple ownership of title to the property –  McGonagle v. Stewart Title Guar. Co., No. 05-13-00036 (Tex. App. May 1, 2014) (affirming summary judgment)
  • Exclusion 3(a): insured who signs purchase and sale agreement that expressly references a recorded dedication requiring the owner to move a historic building prior to commencing construction assumes and agrees to that dedication – McGonagle v. Stewart Title Guar. Co., Cae No. 05-13-00036 (Tex. App. May 1, 2014) (affirming summary judgment)
  • Misrepresentation: title insurer who writes “deleted” on a policy exception for restrictive covenants merely refers to the deletion of the exception and is not a representation that a particular dedication is no longer attached to the property or that there is affirmative coverage for that dedication – McGonagle v. Stewart Title Guar. Co., No. 05-13-00036 (Tex. App. May 1, 2014) (affirming summary judgment)
  • Insurer’s Duty: insurer’s only duty is to indemnify pursuant to terms of policy and it has no duty to point out any outstanding encumbrances –  McGonagle v. Stewart Title Guar. Co., No. 05-13-00036 (Tex. App. May 1, 2014) (affirming summary judgment)

 

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