2012

The Superior Court of Suffolk County, Mass., handed down a judgment in an unauthorized practice of law (UPL) suit against a national closing company doing business in the state. Much like the case the Real Estate Bar Association for Massachusetts Inc. (REBA) brought against National Real Estate Information Services Inc. (NREIS), the company, National Loan Closers Inc., had hired Massachusetts attorneys to close real estate transactions it had worked on for companies doing business in the state.

First American Title Insurance Co. filed an answer to the FDIC’s allegations that it failed to address claims on closing protection letters the insurer issued to Washington Mutual Bank.

Stewart Title Guaranty Co. responded to allegations from the Federal Deposit Insurance Co. by filing a motion for a more definite statement. The FDIC, acting as receiver for Washington Mutual Bank had been seeking to recover funds from underwriters after discovering their title agents had allegedly defrauded the bank.

The 8th U.S. Circuit Court of Appeals partially reversed a lower-court decision to dismiss quiet title claims in a suit against MERS and the loan servicer who handled the foreclosures on several Minnesota properties while affirming the dismissal of the remaining counts against the defendants.

Attorneys’ Title Insurance Fund filed its response to the Federal Deposit Insurance Corp.’s closing protection letter suit by filing a motion for a more definite statement. It alleges that the allegations cannot be lumped into two claims.

After a circuit court in Kentucky certified two classes of consumers in a reissue rate suit against Stewart Title Guaranty Co., the insurer appealed to the Court of Appeals of Kentucky. The appeal revolved around a subgroup certification the court had made.

The Massachusetts Supreme Judicial Court rejected a significant challenge to Massachusetts foreclosure procedures. Now it will be harder to challenge foreclosures in the state.

The U.S. District Court for the Western District of Texas granted Mortgage Electronic Registration Systems Inc.’s motion to dismiss a case against it that alleged improper foreclosure using “robo-signed” documents. Read on for the court’s reasoning.

The Federal Deposit Insurance Corp., acting as receiver for Washington Mutual Bank, sued Attorneys’ Title Insurance Fund Inc., seeking to enforce closing protection letters Attorneys’ Title issued to WaMu.

A managing member of an Illinois title agency and another company employee sought dismissal of the claims brought against them as part of a suit against the agency. Two former customers alleged in the suit that they were the victims of a mortgage fraud scheme involving the misappropriation of funds they deposited into escrow accounts with the company. The employees’ motion went before the U.S. District Court of the Northern District of Illinois.

A U.S. District Court in Pennsylvania rejected Mortgage Electronic Registration Systems Inc.’s arguments that it was not required to record an assignment of mortgage every time a mortgage for which it was nominee was bought and sold on the secondary market.

After reaching a settlement with the current owners of property in Wisconsin, former owners counter-sued the current owners’ title insurer for breach of bad faith and breach of contract for not covering an easement dispute. The case eventually went before the Court of Appeals of Wisconsin.

The FDIC brought a complaint against First American, alleging the insurer did not honor its commitments under several closing protection letters.

The FDIC brought a complaint against Stewart Title, alleging the insurer did not honor its commitments under several closing protection letters.

A Texas woman sued Mortgage Electronic Registration Systems Inc. and others, alleging statutory fraud, fraudulent foreclosure and negligent misrepresentation.

The Federal Deposit Insurance Corp., acting as receiver for Washington Mutual Bank, sued Attorneys’ Title Insurance Fund Inc., seeking to enforced closing protection letters Attorneys’ Title issued to WaMu.

A bank that got caught in a dispute between a developer and general contractor sought the defense of its title insurer in handling the dispute. When the title insurer refused, the bank sued for breach of contract. The trial court ruled in favor of the title insurer, but the bank appealed.

The U.S. District Court for the District of New Jersey approved a motion for reconsideration regarding its decision to deny motions for summary judgment by both a warehouse lender and its title insurers stemming from a fraudulent scheme involving 220 mortgages the lender funded.

After the wrong mortgage was paid off, causing a homeowner to accrue fees and charges, she sued the mortgage servicer and title company who helped with the refinance. They, in turn, sued the refinance loan originator for providing them with the wrong loan number, causing the suit. The question that came before the U.S. District Court for the Eastern District of Louisiana is, “Can the servicer and title company sue the originator when the original suit is still in progress?”

After being sued by a warehouse lender for breaching its duties as a bailee, a national underwriter sought a third-party complaint against the person who misappropriated the lender’s funds. The lender moved to strike the third-party complaint. The U.S. District Court for the Western District of Kentucky granted the motion, finding that the insurer was not entitled to an apportionment instruction.

While a district court ruled that a title insurer was liable under the policy for an unremovable defect, it left it up to the South Carolina Supreme Court to determine how to calculate the damages. Read

After it was discovered that a title agent and straw buyer defrauded a lender, the lender went to its title insurer for coverage. The underwriter denied the claim. In the suit that followed, the underwriter argued that it was not required to indemnify the lender because if the lender had better underwriting practices, it would have discovered the scam. The case eventually went before the 6th U.S. Circuit Court of Appeals.

After discovering they were victims of a real estate investment scheme, two investors sued the escrow company that conducted the scam, as well as the company’s title insurer. The title insurer argued that it should not be party to the suit because the escrow company wasn’t its agent for escrow purposes. Its motion to dismiss the claims against it went before the U.S. District Court for the Northern District of Illinois.

In the latest news on county recorders’ efforts to recover funds from secondary market entities, a U.S. District Court judge in Iowa dismissed a claim against Mortgage Electronic Registration Systems Inc. and its partners brought by the Plymouth County recorder of deeds. Read on for the court’s reasoning.

The Pennsylvania Supreme Court found that, though a homeowner had to exhaust administrative remedies before bringing a claim for unjust enrichment and money had and received against a title insurer she claims overcharged her for title insurance, she could proceed against the title company on her claim for a violation of the state’s Unfair Trade Practices and Consumer Protection Law.

After selling a second parcel of land to a company in Kansas, the sellers discovered they had already conveyed more property than they had planned during the first sale. The deed had been recorded with the wrong acreage. The couple attempted to remedy the problem with the buyer, but ended up suing the company and the title insurer who conducted the transaction.

A title company refused to give a claims report to the successor in interest to a loan policy it issued. The policy holder moved to compel the information. The case went before the U.S. District Court for the Eastern District of Missouri.

A home owner in Connecticut brought a suit against her title insurer, alleging the insurer overcharged her, as well as others, for title insurance when they were refinancing the mortgages on their property. The insurer attempted to have the case dismissed in a judgment on the pleadings, but was unsuccessful.

After having to make several payoffs that should have been made through an attorney’s escrow account, a national title insurer sued the attorney, his family and their other businesses. However, the underwriter also sued the bank where the attorney held his escrow accounts. The attorney filed a counterclaim against the bank as well, arguing that the bank should have notified him directly and returned insufficient checks rather than allowing the account to go into overdraft.

Following its reversal in Benavides v. Chicago Title based on similar issues, the 5th U.S. Circuit Court of Appeals reversed a Texas district court’s grant of class certification in a reissue rate case against another national underwriter.

After receiving answers to certified questions by the Virginia Supreme Court, the 4th U.S. Circuit Court of Appeal determined that a title insurer was covered as subrogee for a lender under a required surety bond.

A national title insurer sought reimbursement from its agent after indemnifying an insured in a series of court actions stemming in part from the agent’s negligent acts. The agent refused and sought to dismiss the suit that followed.

A federal court granted a fidelity bond claimant partial summary judgment against the insurer, after the claimant’s escrow funds were embezzled by the escrow officer. The insurer had denied the claim for a host of reasons, including that the bond had been cancelled 10 days before the claimant had deposited funds with the escrow company.

The U.S. District Court for the District of Massachusetts found a national title insurer liable for a negligent title search that was done by its agent. The insured sued the title insurer after discovering he had been sold fictitious condominiums as part of a Ponzi scheme.

The U.S. District Court for the District of Minnesota broke down the parties’ arguments in determining what duties a title insurer had to a lender who had discovered it was a victim of a real estate investment scam. The buyer had made the loan unknowingly, thinking it was part of a group of real estate investors. The lender and buyer reached a settlement on the amount owed before the lender sued the title company for breach of contract.

A Texas appellate court affirmed a judgment against homebuilders in favor of a title company who had paid off mechanic’s liens on behalf of the new homeowners. The homebuilders had signed affidavits allegedly claiming all contractors had been paid. The court also affirmed a judgment on behalf of the flooring company who filed the mechanic’s liens, noting that the homebuilders had provided personal guaranties in their individual capacities to obtain a line of credit with the flooring company.

In a second attempt to certify a class of Washington state homeowners who had allegedly been overcharged for title insurance during a refinance transaction, a couple once again fell short of providing the needed information to prove to the court that they can efficiently and reliably identify class members.

National underwriter Stewart Title Guaranty Co. went after the co-conspirator of one of its agents, seeking the money the conspirator received from the agent’s escrow account. The magistrate judge assigned to the case was asked to make a recommendation as to Stewart’s motion for default judgment as to the co-conspirator.

When refinancing her property, a homeowner in New York found that Home Heating Oil Corp. had obtained a UCC-1 fixture filing against her property to cover debt owed by the previous owner. After the title insurer denied coverage because the fixture was not part of the property, a trial court in New York had to determine whether such a lien was actually covered.

A purchaser and seller hammered out an unrecorded purchase agreement, unaware of a judgment lien placed on the property. The title company who insured the transaction didn’t identify the lien, but paid off the most senior lien, a construction loan. When the issue of who had priority came before a trial court in Illinois, the trial court sided with the judgment lien holder, saying the title company should be the real party in interest because it was providing the defense because of its mistake in not identifying the judgment lien. The purchaser appealed the decision to the Fourth District Appellate Court of Illinois.

A California homeowner who had resolved issues surrounding a sewer line that ran through his property by reaching a settlement with his title insurer tried to get the insurer to indemnify him against a suit his neighbor brought against him regarding the sewer line. One condition of the settlement was that the homeowner would not bring any related claims to the insurer in the future.

Finding the plaintiffs had not alleged factual content to support their claim that title insurers in New York paid kickbacks to their title agents for business referrals, the 2nd U.S. Court of Appeals affirmed a lower court decision dismissing the case.

After months of anticipation and concern on the part of consumer advocates and members of all aspects of the mortgage industry, the Massachusetts Supreme Judicial Court (SJC) handed down a decision in Henrietta Eaton v. Federal National Mortgage Association (No. SJC-11041), and the answer they gave provided something for both sides to cheer about.

Sometime after the sale of property in Utah, the purchasers discovered an oil and gas company was going to drill on their property, making part of the property unusable. They sued the sellers and the escrow company, who they felt breached the title policy and engaged in negligent misrepresentation by not informing them of the lease. Read on to find out what the U.S. District Court for the District of Utah had to say when the escrow company filed a motion for summary judgment against the buyer.

Wilmington Plantation LLC, the purchaser of property to be used to build condominium units, sued its title insurer, Fidelity National Title Insurance Co., for breach of contract after discovering that the use of the property was restricted by agreements the seller made to condominium unit purchasers before the sale. The developer alleged it had no knowledge of the defect and that Fidelity broke the agreement by not providing title in fee simple. The U.S. District Court for the Middle District of Tennessee had to determine whether Wilmington had, or should have had, knowledge of the defect when ruling on Fidelity’s motion for summary judgment.

An escrow company and a mortgage lender in Ohio challenged the certification of a class in a suit against it in which the class representative alleges the companies have overcharged sellers and buyers since 1987.

An Arizona homeowner failed to persuade the Arizona Supreme Court that a trustee must hold the promissory note before foreclosing on a deed of trust. The court affirmed the decision of both the trial court and the appellate court in making its decision on this case of first impression in the state.

As part of a case in which the insured was seeking coverage after discovering she did not receive title to a portion of the property she purchase, the U.S. District Court for the Middle District of Pennsylvania had to determine when it was appropriate to grant abstention. The insured had filed suit in state court and federal court alleging claims of bad faith in handling her claim.

After spending several months building on property he thought he purchased, a man in Oregon found that he had actually purchased an adjacent lot in the same development. As part of a series of court proceedings, he sued the title company for changing the lot number in the title commitment and deed without informing him or the seller of the property.

A division of First Tennessee Bank loaned money to an individual under the assumption the company was secured by a second mortgage. First Tennessee soon realized, however, that Countrywide Home Loans had obtained a superior lien, making First Tennessee a third mortgage. Countrywide Home Loans began a foreclosure proceeding, causing First Tennessee Bank to fight for indemnification.

An insured tried to SLAPP down a lawsuit filed against it by an underwriter trying to regain money it spent to clear a judgment lien. The company argued the insured misrepresented the status of the property and the judgment lien. Read on to find out what happened when the case went before the Court of Appeal, Fifth District, California.

After an alleged swindle, Michelle Dyer attempted to recover monetary damages she lost. Her payments, held in the defendant’s Title Connection escrow, were disclosed to two individuals working for Harbor Funding without an established loan commitment or a loan closing schedule. Dyer files suit for securities fraud, breach of contract and professional negligence.

After it was discovered that a closing agent failed to pay off prior mortgages when conducting several refinance transactions, the lender went to the underwriter to make it whole. When the underwriter denied the claim, the lender sued for breach of contract, among other things.

The Supreme Court of Hawaii recently decided whether a title company had a duty to defend an insured homeowner in a dispute with the state over the state’s claims on the property. The insurer argued that it was not required to defend the insured because no actual claims to the title were being made. The insured disagreed, saying that the potential for a claim was cause for the insurer to step in.

A dispute over allegedly improper closing costs caused a U.S. District Court judge in Washington to examine the role of the escrow agent. Read on to find out what he had to say about the escrow agent’s responsibilities.

After an escrow company was sued for failing to disburse escrow funds to satisfy buyers’ obligations, it turned to its liability insurer to defend it in court. When the liability insurer denied coverage, the escrow company filed suit against it.

After two underwriters successfully convinced a Maryland court that homeowners must first seek an administrative remedy before suing the insurers in a reissue rate dispute, they were awarded costs. The homeowners sought reconsideration, claiming that the insurers were not prevailing parties under the law. The motion was brought before the U.S. District Court for the District of Maryland.

After a liability insurer sued a title agent it insured, the agent’s underwriter tried to step in. Both parties to the suit opposed intervention when the motion came before the U.S. District Court for the District of Utah.

After a mistake on a deed provided the buyer more land than agreed upon, the seller sued the purchaser to fix the deed. Fighting the suit against it, the purchaser tendered defense of the suit to its title company. The title company then filed suit against the purchaser, seeking declaratory judgment finding it did not have to defend the initial suit. Read on to find out what the U.S. District Court for the District of Delaware had to say about the case.

After being sued by the county for placing improvements on their property based on an incorrect survey provided at closing, homeowners in Texas sued their title company. They made claims for negligent misrepresentation and deceptive trade practices because the title company gave them the survey at closing. Read on to find out what the Court of Appeals of Texas had to say on the matter.

A Connecticut property owner sued the attorney who conducted the title search and closing on the property after the city of Hartford bulldozed the building for violations of city code and emergency repair, notifications of which were in the property records before she purchased the property. The trial court granted summary judgment in favor of the attorney and the case went to the Connecticut Appellate Court.

A national underwriter’s attorney title agent program in Illinois was called into question by homeowners who felt the program violated RESPA Section 8, as well as state laws. The plaintiffs tried to get class certification, but were denied twice by the district court. Read on to find out how the 7th U.S. Court of Appeals ruled on the matter.

After an order of sale in a foreclosure action had already been entered, and without either party objecting to the procedure, a trial court in Ohio brought into question a law governing foreclosures in the state. The Ohio Attorney General stepped in and asked for an appeal of the court’s decision.

The Virginia Supreme Court ruled that title insurance companies operating in the state can sue under a surety bond issued as required under the Virginia Consumer Real Estate Settlement Protection Act, a question that had been plaguing the state’s trial courts.

In a win for industry members seeking access to property records at a reasonable cost, the Ohio Supreme Court ruled in favor of two title search companies who sought a writ of mandamus ordering the Cuyahoga County Fiscal Officer to provide electronic copies of real estate title documents at the actual cost of copying the digital images of the requested documents. Read on to find out the court’s reasoning.

Chicago Title Insurance Co. recently sought reversal of a Washington State Office of the Insurance Commissioner ruling, arguing that the ruling erroneously imposed vicarious liability on the title insurer for the regulatory violations of its agent, merely because the insurer underwrites the agent’s insurance policies. Read on to find out what the Court of Appeals of Washington had to say when it ruled in the case.

The U.S. District Court for the District of Massachusetts is asking the state’s Supreme Judicial Court to answer certified questions regarding whether a title insurer was obligated to defend a lender against all related claims after curing a title defect through litigation. This is a case of first impression in the state.

A California appellate court upheld a lower court’s dismissal of the title insurance defendants from a negligence case for failure to state a cause of action, noting that the plaintiff failed to allege facts to show the companies owed it any duty of care and opining that no amendment could cure the defects.

The Supreme Court of Georgia recently heard a case involving title to a house in Forsyth County, Ga., in which title to the property was clouded when a man transferred property via quitclaim deed to his wife and children and later purportedly transferred the property back to himself. The property was later foreclosed upon, purchased by another lender and re-sold to third-party buyers.

A district court denied a title insurance company’s motion to dismiss in an equity skimming case, saying the caselaw was unclear as to whether the plaintiffs could properly plead a violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law under the circumstances. The court also refused to dismiss a civil conspiracy claim, saying at this stage of the proceedings, the exact relationship of the parties cannot be ascertained for the purposes of determining the relevance of the intracorporate conspiracy doctrine.

The New York Supreme Court, Appellate Division, held that prospective purchaser sufficiently alleged a cause of action against escrow agent for breach of fiduciary duty, overturning the lower courts granting of the escrow agent’s motion to dismiss, and returning the case to trial. The court said the defendant had failed to “utterly refute the allegations” in the plaintiffs’ complaint.

A federal district court ordered a plaintiff to join additional parties to a lien dispute case, saying the title insurer could not establish liability for loss or damage until there was a final determination of ownership and/or lien priority. Read on for details about the complicated land transaction that led to the dispute.

A California appellate court determined that a title company was not liable for damages where the agent recorded the deeds provided by the client and issued the insurance policy. In its role as escrow holder, the court said, the company had no duty to determine whether the property description was accurate. The owner of the property contended that had asked for two sections of a property to be transferred and insured, while the legal description on the deeds referred to only one section.

The purchaser of property in Hawaii who had to fight to gain possession of his property after discovering a couple occupying the house sought reimbursement of the cost to defend the suit from the title company, which refused to defend the owner in the matter.

The Fifth District Court of Appeal of Florida reversed a circuit court judgment, finding that an assignment endorsed in blank of a promissory note and an allegation that it was the owner and holder of the note at the time of a foreclosure filing was enough to establish standing.

Last year the U.S. Supreme Court decided that the Federal Arbitration Act preempted a California law regarding the unconscionability of arbitration waivers. Until that point, a class action suit against several title insurers alleging their settlement agents violated individual closing protection letters did not address the letters’ arbitration clause. Once the decision was rendered, however, the title insurers indicated their intent to arbitrate and asked the U.S. District Court for the District of New Jersey to compel arbitration.

A borrower who feels he was wrongfully foreclosed upon sued numerous entitles involved in the origination and servicing of his loan, including the title company that handled his closing. Read on to find out what the U.S. District Court for the Eastern District of California had to say when the defendants filed a motion to dismiss several of his claims.

To fulfill a capital contribution requirement with his investment company, the owner of property in Scottsdale, Ariz., delivered the property to the company by quitclaim deed. When it was discovered that there was a mortgage on the property and it was being sold at trustee’s sale, the owner sued his title company to enforce the policy.

After purchasing property with what it thought was clear title at a foreclosure sale, an insured purchaser was drawn into a lien dispute. Though the title company defended the owner and cleared title to the property, the owner sued its title agent and underwriter for not clearing title sooner.