OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY v. STUDSTILL & PERRY LLP

Filing 19

ORDER denying 4 Motion to Dismiss for Failure to State a Claim; stay is lifted and deadlines include: discovery deadline of 10/15/2013 and dispositive motions deadline of 11/29/2013. Ordered by Judge Hugh Lawson on 4/15/2013. (nbp)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
VALDOSTA DIVISION

OLD REPUBLIC NATIONAL TITLE
INSURANCE COMPANY,
Plaintiff,
Civil Action 7:12-cv-83 (HL)
v.
STUDSTILL & PERRY, LLP,
Defendant.

ORDER
Before the Court is Defendant Studstill & Perry, LLP’s Motion to Dismiss
(Doc. 4). For the reasons stated below, the Motion is denied.
I.

BACKGROUND
Defendant Studstill & Perry is a law firm in Nashville, Georgia that entered

into an agency agreement (the “Agreement”) with Plaintiff Old Republic National
Title Insurance Company in 1993. Pursuant to the Agreement, Defendant was
authorized to issue title insurance policies on behalf of Plaintiff. (Doc. 1-1.) Under
the Agreement, Defendant was charged with “receiving and processing
applications for title insurance” and “issuing policies in a timely, prudent, and
ethical manner….” (Doc. 1-1, p. 5.) The Agreement also contained a clause that
stated that Defendant would “show as exceptions to coverage all matters such as
taxes, encumbrances, liens, restrictions, easements and any other matters which

constitute a defect or question as to the validity and/or marketability of the title
being insured.” (Doc. 1-1, p. 7.)
On December 31, 1998, based on its agency power under the Agreement,
Defendant issued a policy of title insurance (“the Policy”) to Rinker Materials
Corporation (“Rinker” or “the Insured”). (See Doc. 1-3.) The Policy provided that
title to a certain leasehold estate to real property in Long County, Georgia was
vested in Rinker. The leasehold estate covered under the Policy was a mining
lease executed between Rinker, the lessee, and GHM Real Estate of Florida, Inc.
and GHM Rock & Sand, Inc., the lessors (collectively, “GHM”). (See Doc. Doc. 12, “Rinker Lease”.)
In Defendant’s possession at the time the Policy was issued was a certain
deed from the Altamaha Land Company (hereinafter, the “Altamaha Deed”). The
Altamaha Deed conveyed an undivided ½ interest in the minerals on the land to
several named parties.1 In 2007, the parties to the Altamaha Deed approached
Simex Construction Materials of Florida, LLC (“Simex”), the successor-in-interest
to the Rinker Lease. The parties to the Altamaha Deed claimed an interest in the
land based on the Deed. Extensive litigation over rights to the land followed. The
underlying lawsuit was eventually settled, and Plaintiff, on behalf of its Insured,
agreed to pay the parties to the Altamaha Deed the amount of $1 million. Plaintiff

1

The parties to the Altamaha Deed were: James E. Stewart, Jr., Robert B.
Zachry, Jr., Earl A. Spence, Sr., William H. Cox, Jack Williams, Jr., William H.
Hopkins, Jr., C. E. Layton, Jr., John H. King, III, Hebert Bradshaw, Jr., William F.
Versen, and John Hodges. The Altamaha Deed was dated October 31, 1967 and
was recorded in Deed Book 35, page 294, Long County, Georgia deed records.
2

made demand upon Defendant to assume responsibility for the losses, but
Defendant rejected each demand for indemnity. Plaintiff now seeks to recover
damages based on Defendant’s failure to set out the Altamaha Deed as an
exception under the Policy and Defendant’s failure to take responsibility for this
error.
In the Complaint, Plaintiff asserts claims for indemnification and breach of
contract. (Doc. 1.) However, in the present pending Motion to Dismiss, Defendant
asserts that the claims brought by Plaintiff are best characterized as professional
malpractice and negligence claims. Malpractice and negligence claims are
subject to shorter statute of limitation periods than indemnification and breach of
contract claims and, if Defendant’s characterization is correct, Plaintiff’s claims
should be dismissed as untimely. This issue is examined more fully below.
II.

DISCUSSION
Defendant argues that Plaintiff’s claims should be characterized as

malpractice and negligence claims for two reasons. First, Defendant argues that
malpractice and negligence are the most appropriate claims because Defendant
is a law firm that performs professional, legal work, and title work is a
professional, legal service. Thus, Defendant asserts that Plaintiff’s claims are
most appropriately construed as malpractice and negligence claims. Second,
Defendant argues that this case cannot stand as an indemnity case because the
Agreement does not contain an explicit indemnification clause.

3

The Court does not find either of Defendant’s arguments convincing. First,
simply because Plaintiff is a law firm does not mean that any claim against it
should be construed as a professional malpractice claim. A case sounding in
contract law does not magically morph into a malpractice case simply because
on the identity of the defendant.
Second, while it is true that the word “indemnity” is not used in the
Agreement, the intent of the parties is clear that indemnification should be
included as part of the contract. “Indemnity is defined as ‘the obligation or duty
resting on one person to make good any loss or damage another has incurred or
may incur by acting at his request or for his benefit.’” George R. Hall, Inc. v.
Superior Trucking Co., Inc., 532 F. Supp. 985, 993 (D.C. Ga. 1982) (quoting
Cash v. Street & Trail, Inc., 126 Ga. App. 462, 465, 221 S.E.2d 640, 642 (Ga.
App. 1975)). Contracting parties can agree that one party will indemnify the
other, so long as the intent of the parties is clear. Id. No “particular words or
talismanic language” is necessary to invoke an intent to indemnify. Id. Instead, it
is the court’s responsibility to review contractual language and the situation of the
parties to determine if indemnification is a part of the contract. Id.
In this case, the Court finds that the parties did intend to include
indemnification as part of the contract. Specifically, certain language in the
Agreement under the heading “Responsibility for Loss” demonstrates an intent to
include indemnification. The Agreement provides that:

4

As between Insurer [Plaintiff] and Agent [Defendant], responsibility
for loss (which term shall include payments to insured and third
party claimants, attorney’s fees and all other costs incurred in
investigation of claims, negotiation of settlements and litigation)
arising from this title insurance business conducted pursuant to
this agreement, shall be as follows:
1. Agent is responsible for the following losses:
…
B. Intentional or negligent failure of Agent to comply with the
terms and requirements of this Agreement or of the rules,
regulations, or instructions given to Agent by Insurer;
…
E. Negligent errors or omissions in the search, or examination of
title, in the preparation of title insurance forms or in other
procedures involved in processing an application for title
insurance.
(Doc. 1-1, p. 6.) Despite the fact that this passage does not include the word
“indemnification,” the Court is convinced that this provision in the Agreement is
sufficient to demonstrate an intent to include indemnification as part of the
contract. The Agreement clearly states that the Agent is responsible for losses
associated with the failure to properly process applications and issue policies for
title insurance. The Agent’s contractual responsibility for these types of losses
proves that there was an intent that the Agent, Defendant Studstill & Perry, would
indemnify the Insurer, Plaintiff Old Republic, if any of the defined losses were to
occur.
Finding that an indemnification claim is appropriate in this case based on
the language in the “Responsibility for Loss” section of the contract, the Court
5

next addresses the issue of the statute of limitations. In Georgia, a breach of
contract claim is subject to a six-year statute of limitations period. See O.C.G.A.
§ 9-3-24. The claim accrues at the time the contract becomes “due and payable.”
Id. However, for breach of contract claims that involve indemnity provisions, “the
six-year statute of limitation … does not begin to run until ‘the party owing the
duty [to indemnify] refuses to indemnify the other party for amounts that the latter
has paid to settle the claim of another or satisfy the judgment of another.’” Old
Republic National Title Insurance Co. v. Panella, LLC, 319 Ga. App. 274, 276,
734 S.E.2d 523, 525-26 (Ga. App. 2012).
In this case, the record does not reflect an exact date that Defendant
refused to indemnify Plaintiff after the settlement with the parties to the Altamaha
Deed in the underlying litigation. However, using deductive reasoning, it is
possible to determine whether the filing of this lawsuit occurred within six years of
Plaintiff’s demand for indemnification. The record reveals that the underlying
lawsuit was filed in 2007. Thus, the settlement and subsequent demand for
indemnification must have occurred sometime after the filing of that suit. The
present lawsuit was filed in June 2012, which is approximately five years after the
filing of the underlying lawsuit. Based on this information, the Court finds that the
settlement and demand for indemnification fall within the six-year statute of
limitations allowed by the Georgia Code, and thus, the present action was timely
filed.

6

For the reasons stated above, the Motion to Dismiss is denied. Plaintiff’s
claims for breach of contract and indemnification were properly filed within the
statute of limitations, and the case shall proceed.
The stay in this case is lifted. The following deadlines shall apply moving
forward:
-

Plaintiff’s expert witnesses must be disclosed by July 15, 2013, which
is 90 days from the date of this Order. Defendant has until August 13,
2013 to disclose any expert witnesses. If Defendant designates an
expert where Plaintiff has not previously designated an expert, Plaintiff
has 30 days from the designation of Defendant’s expert to designate a
rebuttal witness. Any supplemental expert reports are due on or before
September 23, 2013.

-

Any motion to add parties or amend the complaint must be made on or
before September 16, 2013, which is 30 days before the expiration of
discovery.

-

Discovery shall close on October 15, 2013.

-

All Daubert motions must be filed on or before November 14, 2013,
that being no more than 30 days after the expiration of discovery in this
case.

-

All dispositive motions shall be filed on or before November 29, 2013,
which is 45 days after the expiration of discovery in this case.

These deadlines shall not be extended in the absence of extenuating
circumstances.
SO ORDERED, this 15th day of April, 2013.

s/ Hugh Lawson
HUGH LAWSON, SENIOR JUDGE

ebr  
7