Luan v. Advanced Title Insurance et al

Filing 66

MEMORANDUM DECISION and Order denying 51 Motion to Strike ; denying 32 Motion for Summary Judgment. Signed by Judge Dee Benson on 7/28/15. (jlw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
YIPING LUAN,

v.

MEMORANDUM DECISION AND
ORDER DENYING DEFENDANT'S
MOTION FOR PARTIAL SUMMARY
JUDGMENT AND DENYING
PLAINTIFF’S MOTION TO STRIKE

ADVANCED TITLE INSURANCE
AGENCY, L.C., MARCEL GILES; and
WESTCOR LAND TITLE INSURANCE
COMPANY, a California corporation,

Case No. 2:13-cv-983-DB

Plaintiff,

Defendants.

District Judge Dee Benson

This matter is before the court on a motion for partial summary judgment filed by
Defendant Westcor Land Title Insurance Company (“Westcor”). (Dkt. No. 32.) Defendant’s
motion seeks summary judgment on the ground that Advanced Title Insurance Agency, L.C.
(“Advanced”) and Marcel Giles were not acting as Westcor’s agents with respect to any of the
matters that form the basis for Plaintiff’s claims, and that the necessary prerequisites do not exist
for liability of Westcor under Utah Code Ann. § 341A-23a-407. The court held a hearing on the
motion on June 30, 2015. At the hearing, Plaintiff was represented by Lester A. Perry. Defendant
was represented by Bryce D. Panzer. At the conclusion of the hearing, the court took the motion
under advisement. Now being fully advised, the court renders the following Memorandum
Decision and Order.
Background
Yiping Luan is a citizen of China who was planning to immigrate to the United States
and purchase a home in Utah. (Def. Mot. at 2.) Ms. Luan asked her sister, Peggy Luan, who lived

in Utah, to help her find a home and assist with its purchase. (Id.; Pl. Resp. at 2.) Yiping Luan
acquired $200,000 from her extended family in China for the purchase of the home. (Pl. Resp. at
2.) Peggy Luan contacted Marcel Giles of Advanced about closing the purchase of the home for
her sister. (Id.) The Luans found a suitable home in Pleasant Grove, Utah, for a price of $205,000
and agreed to purchase it by a Real Estate Purchase Contract dated June 18, 2013. (Def. Mot. at
2.)
Due to restrictions imposed by the Chinese government, Yiping Luan had to wire the
money for the purchase of the home in four $50,000 increments over a period of weeks, from
May 21, 2013 to June 20, 2013, to Advanced’s trust account. (Id.; Pl. Resp. at 2.) Unbeknownst
to the Luans, only minutes after Mr. Giles was notified by Peggy Luan of each $50,000 transfer,
unknown hackers impersonating Ms. Yiping Luan emailed Mr. Giles to immediately wire the
money back to China. (Id.) Based on these email instructions, $150,000 of the funds were wired
from Advanced’s trust account back to China. (Def. Mot. at 2.) Ms. Yiping Luan claims that the
wire transfers went to persons or entities other than her, resulting in the loss of the funds. (Id.)
On October 29, 2013, Yiping Luan filed suit against Advanced and Mr. Giles. (Dkt. No.
2.) On July 30, 2014, Ms. Luan was granted leave to amend her complaint, (Dkt. No. 18), to
assert claims against Westcor, a title insurance company with which Advanced had an agency
contract allowing Advanced, as an agent, to issue title insurance policies. (Def. Mot. at 3.) Ms.
Luan’s Amended Complaint asserts six causes of action against Westcor: (1) liability under Utah
Code Ann. § 31A-23a-407; (2) vicarious liability for Advanced’s alleged breach of fiduciary
duty; (3) vicarious liability for Advanced’s alleged breach of contract; (4) vicarious liability for
Advanced’s alleged negligence; (5) vicarious liability for Advanced’s actions which are alleged

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to constitute negligence per se; and (6) vicarious liability for Advanced’s alleged violation of the
Utah Consumer Sales Practices Act, Utah Code Ann. §13-11-1, et. seq. (Dkt. No. 19.)
Discussion
Agency Relationship and Vicarious Liability
Westcor argues that it is not liable for the acts of Advanced or Mr. Giles because the acts
or omissions upon which liability is allegedly based were outside the scope of Advanced’s
authority as Westcor’s agent. (Def. Mot. at 4.) The parties agree that the agency relationship
between Advanced and Westcor is governed by an Issuing Agency Agreement, dated August 26,
2009 (the “Agency Agreement”). (Id., Pl. Resp. at 4.) The Agency Agreement describes the
scope of Advanced’s express authority to act as Westcor’s agent.
Section 2 of the Agency Agreement, entitled “Obligations of Issuing Agent” delineates
Westcor’s requirements of Advanced with respect to escrow and closing transactions. Subsection
(e) obligates Advanced to “keep all funds received by [Advanced] from any source in connection
with transactions in which Policies of [Westcor] are to be issued, in a federally insured financial
institution…designated as an ‘escrow’ or ‘settlement funds’ account…and disburse such funds
only for the purposes for which the same were entrusted.” Subsection (i) further provides that
Advanced shall, “[w]here appropriate, conduct or participate in any settlements and closing of
escrow transactions in which Policies of [Westcor] are to be issued in accordance with prudent
practice, requirements established by [Westcor], [and] the instructions of the parties and the laws
and governmental regulations applicable thereto…[.]”
Subsection (i) of Section 2 continues, however, to state that Advanced “shall not
represent to the public that it is the agent of [Westcor] for the purpose of establishing and closing

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any such escrow[.]” Further, Section 8(d) of the Agreement, entitled “Limitation of Issuing
Agent’s Authority”, expressly states that Advanced is not authorized to “[r]eceive in the name of
[Westcor] any funds, including escrow and settlement funds.” Westcor argues that these limiting
provisions make clear that Advanced is not Westcor’s agent for purposes of escrow or related
transactions. The court disagrees.
“Express authority exists whenever the principal directly states that its agent has the
authority to perform a particular act on the principal’s behalf.” Zions First Nat’l Bank v. Clark
Clinic Corp., 762 P.2d 1090, 1094 (Utah 1988). Section 2(i) of the Agency Agreement expressly
requires Advanced to conduct or participate in escrow transactions in which policies of Westcor
are to be issued in accordance with requirements established by Westcor. Moreover, the
Agreement provides specific instructions to Advanced from Westcor about how escrow funds
must be maintained and managed. The subsequent language that prohibits Advanced from
representing to the public that it is Westcor’s agent for escrow transactions, or from receiving
funds in Westcor’s name, is insufficient to disavow an agency relationship with respect to
escrow transactions following Westcor’s express instruction to Advanced that it must engage in
escrow transactions in a specific manner set forth by Westcor. The Agency Agreement of the
parties establishes that Advanced had express authority to act as Westcor’s agent with respect to
settlements and closing of escrow transactions in which policies of Westcor were to be issued.
Because the court has found that Advanced had express authority to act as Westcor’s
agent, it is unnecessary to determine whether Advanced had implied or apparent authority to act
on Westcor’s behalf with respect to escrow transactions.

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Liability under Utah Code Ann. § 31A-23a-407
Westcor also argues that it cannot be liable pursuant to Utah Code Ann. §31A-23a-407
because the statutory prerequisites for liability have not been established. Utah Code Ann. §31A23a-407 provides that a title insurer (like Westcor) is “directly and primarily liable to others
dealing with” its title insurance producers (like Advanced) “for the receipt and disbursement of
funds deposited in escrows” with the producers “in all those transactions where a commitment or
binder for or policy or contract of title insurance of that title insurer has been ordered, or a
preliminary report of the title insurer has been issued or delivered.”
Westcor argues that an order of commitment, binder, policy, or contract of title insurance
was never personally ordered by Ms. Luan from Westcor and, as such, no liability arose pursuant
to Utah Code Ann. §31A-23a-407. However, Ms. Luan provided as an exhibit to her amended
complaint a document entitled “Commitment for Title Insurance Issued by Westcor Land Title
Insurance Company,” which is signed by the President and Secretary of Westcor and dated June
5, 2013. (Dkt. No. 19, Ex. XX.) The document provides that “[t]his Commitment shall be
effective only when the identity of the Proposed Insured and the amount of the policy or policies
committed for have been inserted in Schedule A by the Company.” (Id.) Schedule A of the
document is completed and specifically names “Yiping Luan” as the Proposed Insured and lists
“$205,000.00” as the committed amount of the policy. (Id.)
Westcor argues that the commitment was not sent or provided to Ms. Luan until it was
produced in discovery for this case and that she did not order it from Westcor personally and
directly, as required by §31A-23a-407. However, a personal and specific request by the insured
from the title insurer is not contemplated by the plain language of the statute. The text of the

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statute is drafted in passive voice and merely requires that “a commitment or binder for or policy
or contract of title insurance of that title insurer [e.g. Westcor] has been ordered, or a preliminary
report of the title insurer has been issued or distributed.” The plain language of the statute does
not require Ms. Luan to personally and specifically request a Westcor title insurance policy in
order to receive the protection provided by §31A-23a-407. Ms. Luan has provided sufficient
evidence to establish that a valid commitment was ordered and issued, as her specific
information is included in a document entitled “Commitment” signed by Westcor representatives
and dated June 5, 2013. Furthermore, even if a personal and specific request were required by
§31A-23a-407, genuine issues of fact exist as to whether Ms. Luan ordered a title commitment,
either personally or through Mr. Giles as her agent, directly from Westcor.
Conclusion
For the foregoing reasons, Defendant Westcor’s motion for partial summary judgment is
DENIED. Plaintiff’s motion to strike portions of Defendant’s reply is also DENIED, as the reply
memorandum was appropriately “limited to rebuttal of matters raised in the memorandum
opposing the motion.” Rule 7-1(b)(2)(A).
DATED this 28th day of July, 2015.
BY THE COURT:

Dee Benson
United States District Judge

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