Stinespring v. Fidelity National Financial (IL)

Summary: Title company was not liable for acts of its agent because the pleadings did not show the agent was authorized and acting within the scope of that agency relationship.


Stinespring v. Fidelity National Financial, Inc., 2013 WL 1626203 (N.D.Ill. 2013).


Facts: Plaintiffs, Harry and Janice Stinespring (Stinesprings) brought suit against Fidelity National f/k/a Chicago Title (CT) under a liability theory based upon their principal-agent relationship with Manfred Pino Sbravatti (Pino), and in the alternative for negligent hiring and retention of Pino by CT.

In 2005, the Stinesprings entered into a 50/50 partnership agreement with Pino, the CEO of Latinamerica Title Company (LATCO), with the purpose of investing in real estate in Costa Rica. In 2006, Pino negotiated and purchased on behalf of the partnership the Tambor and Tamarindo farms in Costa Rica. Despite the split agreement, the Stinesprings paid more than their share of the purchase price, not including the fees paid to Pino. Then during the duration of the partnership, Pino provided Stinesprings with multiple contracts for the sale of the subject farms, but each contract ultimately fell through for reasons not fully articulated.

In 2007 and 2010, Pino mortgaged the Tambor and Tamarindo farms without telling the Stinesprings. Pino also fraudulently took out a mortgage in 2010 on a condominium owned exclusively by the Stinesprings. That same year, Pino fraudulently transferred the farms from the partnership to an entity that he alone controlled, without the knowledge or consent of the Stinesprings.

In 2009, the “international officers” of CT, which has an exclusive agency agreement with LATCO, reassured the Stinesprings that “Pino was the star of the CT international agents and was a man of unquestioned integrity and skill.” The Stinesprings, attempting to get some assurance of their real estate investments, requested from Pino a title commitment on at least one of the properties. Pino provided them with a fraudulent CT title commitment for the Tamarindo property. The commitment was not countersigned by an authorized signatory at CT, a requirement for it to be valid. No premium was paid for a policy.


Summary: Motion Granted. This opinion is in response to CT's 12(b)(6) motion to dismiss for failure to state a claim. The court began its analysis by looking at the scope of the alleged agency between CT and Pino. The Stinesprings claimed that CT should be liable under the principle-agent theory for damages resulting from their agent Pino's actions. The court categorized Pino's actions as: 1) the unauthorized mortgaging and transferring of the properties, and 2) the fake title commitment. Viewing the complaint in a light most favorable to the Stinesprings, liability was based on Pino’s fraudulent actions of misrepresentation. Although the complaint repeatedly mentioned that LATCO was “the exclusive agent of CT” there were no allegations about the nature of the agency, or the duties that the agent was authorized to perform, which was crucial to see if those misrepresentations were within the scope of that agency. An agent’s authority from its principal may be either actual or apparent, and actual authority may be either express or implied.

The court found that Pino had no actual authority to issue the title commitment. The insurance amount was above his authority limit and it involved property in which Pino had an interest. Both required CT's written approval, which was not given. Thus, Pino was not authorized within the scope of his agency to produce the commitment in question as an agent of CT. Additionally, the Stinesprings did not plead that Pino was actually authorized to place liens or transfer property; therefore, three of the four actions which liability is alleged to be stemming from involving liens or transfers did not warrant consideration.

The court also found that Pino had no apparent authority. Despite statements by CT officers about Pino, those statements could only have led the Stinesprings to reasonably conclude that Pino was an agent of CT who was authorized to act on behalf of CT. However, it was not reasonable for the Stinesprings to construe the statements as "a reasonable assurance of Pino's real estate dealings." Moreover, three of the four actions that the Stinesprings claimed CT was liable for occurred without the Stinesprings' knowledge. Therefore it was impossible for them to have relied on the apparent agency of Pino to their detriment. Furthermore, it was unreasonable for the Stinesprings to continue to rely on Pino based on his past misfeasance and they "should have already been wary of Pino after 2005."

The Stinespring's negligent hiring and retention claim failed because the court has repeatedly held that there can be no duty where the customer is not in contract with the defendant. Here Stinespring was not a customer of CT, but of LATCO.


Opinion Year: 
By: ATG Underwriting Department | Posted on: Mon, 03/31/2014 - 11:00am