| The Trusted Adviser | January 2010 | Volume 3 · Number 1 |
CasenotesIndiana
Title Insurance
US Bank, NA v Integrity Land Title Corp, 907 NE2d 616 (Ind Ct App, 2009).
Facts: In January 2006, Michael Davidson agreed to buy real property from Brenda Daley. Davidson arranged for a $123,000 mortgage loan from Texcorp Mortgage Bankers (Texcorp). Texcorp arranged title insurance through Integrity Title Insurance Company (Integrity). Based on a title search by Rainbow Title Search, Integrity contracted with Texcorp to issue a policy insuring its "first and superior mortgage lien," which was underwritten by Southern National Title Insurance Corporatio (Southern Title).
Absent from the title search was a 1998 foreclosure judgment on the property from LPP Mortgage LTD. In August 2006, LPP Mortgage filed suit against Davidson and Texcorp to enforce the preexisting judgment. Subsequently, U.S. Bank succeeded Texcorp's interests and filed a third-party claim against Integrity and Southern Title, asserting the following: (1) breach of contract; and (2) the tort of "negligent real estate closing." Integrity cross-filed for summary judgment claiming it was only a middle man and not responsible for the faulty title search.
The trial court granted Integrity's motion, stating it did not breach contract because it was not a part of the policy, and it was not negligent because it owed no duty to U.S. Bank. U.S. Bank moved to correct error and for relief from judgment, offering an affidavit as evidence of the exact relationship Integrity had to the original transaction. The trial court denied the motions and U.S. Bank appealed.
Holding: Affirmed in part, reversed in part, and remanded. The trial court held that the affidavit drew inadmissible legal conclusions while failing to raise a triable issue of fact. On the contract issue, the appeals court reversed, stating that few specific facts are necessary to assert the existence of a basic contract. A contract was sufficiently implied in the assertion that Texcorp and Integrity "contracted" for a title commitment, mortgage closing, and "an insured first and superior mortgage lien against the subject real property" upon which Texcorp relied in issuing the mortgage. Because the affidavit submitted by U.S. Bank contradicted one relied upon by Integrity, a triable issue of fact existed.
However, under Indiana law, U.S. Bank had no tort cause of action against Integrity. U.S. Bank has only an opportunity to recover for breach of contract, because there is no independent tort cause of action for a mortgage company against a title company that issues an incorrect title insurance commitment.
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