Marcantel v. Stewart Title Guaranty Company et al
Filing
87
MEMORANDUM DECISION AND ORDER granting 66 Motion for Summary Judgment. Signed by Magistrate Judge Dustin B. Pead on 3/30/2018. (las)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
CURT A. MARCANTEL, an individual,
Plaintiff,
MEMORANDUM DECISION GRANTING
COALITION TITLE COMPANY’S
MOTION FOR SUMMARY JUDGMENT
v.
STEWART TITLE GUARANTY
COMPANY, a Texas corporation,
COALITION TITLE AGENCY, INC., a Utah
corporation, MICHAEL AND SONJA
SALTMAN FAMILY TRUST, an entity
MICHAEL A. SALTMAN, an individual, and
SONJA SALTMAN, an individual,
Case No. 2:16-cv-00250-DBP
Magistrate Judge Dustin B. Pead
Defendants.
INTRODUCTION
The parties consented to this court’s jurisdiction under 28 U.S.C. § 636(c). (ECF No. 20).
The case is before the court on Defendant Coalition Title Company’s (“Coalition”) Motion for
Summary Judgment. (ECF No. 66). The Motion is fully briefed, including Plaintiff Curt A.
Marcantel’s (“Marcantel”) response to Coalition’s evidentiary objection, and Coalition’s
response to Marcantel’s evidentiary objection. See (ECF Nos. 67–70, 72). The court did not hear
oral argument.
STANDARD OF REVIEW
A “court shall grant summary judgment if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). “A party asserting that a fact . . . is genuinely disputed must support the assertion by . . .
citing to particular parts of materials in the record.” Id. 56(c)(1)(A). “A dispute is genuine when
a reasonable jury could find in favor of the nonmoving party on the issue.” Macon v. United
Parcel Serv., Inc., 743 F.3d 708, 712 (10th Cir. 2014). In conducting its review, the court must
view the evidence and draw reasonable inferences from that evidence in the light most favorable
to the non-moving party. Id.
FACTS
In February 2015 Coalition assisted Defendant Stewart Title Guaranty Company (“Stewart
Title”) to issue a commitment for title insurance related to a parcel of real property Marcantel
purchased. (ECF No. 67 at 2, 4–5). Coalition acted in two roles during the transaction: first, as an
escrow agent for the real estate purchase and second, as an agent of Stewart Title who issued the
title-insurance commitment, updated commitment, and policy. (Id. at 7). The title-insurance
commitment and updated commitment contain disclaimers indicating those documents are not
abstracts of title. (Id. at 9, 10). Marcantel did not ask Coalition to prepare an abstract of title. (Id.
at 8). Coalition did not prepare, or agree to prepare, an abstract of title. (Id. at 8, 11).
The escrow-closing instructions contain the only evidence of a written agreement between
Marcantel and Coalition. (Id. at 8). Coalition did not assume the role of title abstractor under the
terms these instructions. (Id.) Marctantel does not suggest Coalition failed to comply with any
escrow instruction.
Marcantel contends he and Coalition had conversations that gave rise to additional duties
beyond escrow agent and agent of Stewart Title. 1 The parties agree that Coalition initially
1
Coalition objected to Marcantel’s declaration and Ms. Tisha Digman’s declaration on hearsay
grounds. The court overrules the objections because Coalition must show the evidence cannot be
presented in admissible form. See Fed. R. Civ. P. 56(c)(2). It has failed to do so.
2
identified an encumbrance resulting from a sanitary sewer easement recorded in January 2001.
Coalition excluded that encumbrance from coverage in the initial title-insurance commitment.
(ECF No. 67 at 5; ECF No. 35 at 10). Marcantel called Coalition to discuss the exclusion from
the title policy related to the January 2001 sewer easement. (ECF No. 67 at 5; ECF No. 35 at 10).
He also claims he told Coalition he did not want to purchase the property if it was burdened by a
sewer easement. 2 Subsequently, Coalition and Stewart Title discovered the January 2001 sewer
easement did not burden the property Marcantel purchased, but instead burdened a different
property. (ECF No. 67 at 5–6; ECF No. 35 at 10). Accordingly, the exclusion for the 2001 sewer
easement was removed and an updated commitment for title insurance issued. (ECF No. 67 at 9–
10); (ECF No. 35 at 10). Marcantel asserts that while he was discussing the sewer easement issue
with Coalition, an agent of Coalition told Marcantel “there were no sewer easements burdening
the Property.” (ECF No. 68, Ex. 1). Coalition disputes this statement (ECF No. 69, Ex. 2), but
the court will treat accept it as true for purposes of this motion. While the 2001 sewer easement
apparently did not encumber the property Marcantel purchased, another rogue sewer easement
did burden the property; but that second easement was not discovered until after Marcantel
purchased the property. See (ECF No. 69 at 5); (ECF No. 35 at 10–13).
ANALYSIS
Coalition contends it is entitled to summary judgment because it acted only as a title insurer
and Utah law excuses title insurers from tort liability even if their title research contains errors.
(ECF No. 66 at 11–14). Coalition contends it cannot be held liable for errors stemming from its
2
Coalition attempts to dispute the details of discussions with Marcantel with a declaration. (ECF
No. 69, Ex. 2). This is somewhat odd because a disputed material fact could defeat Coalition’s
motion. Thus, the court accepts Marcantel’s declaration as true for purposes of this motion.
3
title research because its research was undertaken in the course of assisting Stewart Title to issue
title insurance and Utah law precludes tort claims against title insurers for their title research and
statements made regarding title. (Id. at 11). Coalition further argues that it did not agree to accept
the role of title abstractor while preparing and issuing the commitment for title insurance. (Id. at
12–13). This distinction is material because title abstractors may be held liable for errors related
to defective title research, but title insurers may not be held liable for such errors. (Id.)
Marcantel contends the court cannot answer the fact-intensive question of whether Coalition
owed a duty at the summary-judgment stage. (ECF No. 67 at 16–22). Next, Marcantel concedes
Utah tort law does not impose tort liability on a title insurer for omitting an encumbrance from a
title insurance commitment or policy. Nonetheless, he contends Coalition undertook additional
duties when it discussed the 2001 sewer easement with Marcantel and told him “there were no
sewer easements burdening the Property.” (ECF No. 68, Ex. 1); see (ECF No. 67 at 23).
I.
Coalition is entitled to summary judgment because title insurers may not be
held liable as abstractors
In 1990, Utah adopted what was then the “prevailing view . . . not to impose liability in tort
on a title company.” Culp Const. Co. v. Buildmart Mall, 795 P.2d 650, 653 (Utah 1990). Unlike
an abstractor who may be liable in tort, “title insurers generally are liable only under the terms of
the insurance contract.” Walker v. Anderson-Oliver Title Ins. Agency, Inc., 309 P.3d 267, 270
(Utah Ct. App. 2013). In Walker, the Utah Court of Appeals concluded two title insurance
companies did not act as abstractors when they determined certain deeds were invalid and chose
not to list them in a commitment for title insurance. Id. at 272. The court relied on its earlier
decision in Chapman v. Uintah County, in which the court found a title insurance company did
not voluntarily assume the role of abstractor when it made a legal conclusion based on public
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records and incorrectly concluded a road adjacent to the property at issue was private. 81 P.3d
761, 765–67 (Utah. Ct. App. 2003).
Here, the undisputed facts in the record demonstrate Coalition acted as a title insurer and
must be excused from tort liability under Culp and its progeny. Coalition performed title research
to determine the extent to which Stewart Title was willing to insure title for the property
Marcantel purchased. (ECF No. 67 at 4–7, 13). Marcantel never asked Coalition to prepare an
abstract of title. (Id. at 8, 11). Stewart Title issued a commitment for title insurance based on
Coalition’s research. (Id. at 7–8). The title-insurance commitment expressly states it “is a
contract to issue one or more title insurance policies and is not an abstract of title or a report of
title.” (Id. at 9). Marcantel then spoke to Coalition about an exclusion from the title policy
related to a sewer easement recorded in January 2001. (ECF No. 67 at 5; ECF No. 35 at 10).
Coalition and Stewart Title eventually discovered the January 2001 easement burdened some
other property, not the parcel Marcantel purchased. 3 (ECF No. 67 at 5–6; ECF No. 35 at 10)
Accordingly, Stewart Title issued an updated commitment for title insurance to correct the error.
(ECF No. 67 at 9–10). This updated commitment likewise states it “is not an abstract of title or a
report of the condition of title.” (Id. at 10). Coalition also acted as the escrow agent. (Id. at 7).
The escrow instructions did not require Coalition to evaluate the condition of title, or otherwise
undertake duties of an abstractor. (Id. at 8; ECF No. 66, Ex. 5). Also, Marcantel does not suggest
Coalition breached any term of the escrow instructions. Based on the foregoing, the court finds
Marcantel may not bring a tort claim against Coalition.
3
Marcantel contends that certain statements Coalition made during these conversations gave rise
to additional duties. This contention is further addressed below. See infra Part I.a.2.
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a. Marcantel’s counterarguments do not persuade the court to reach a
contrary result in this case
Marcantel acknowledges that Coalition assisted Stewart Title by performing title research
related to the property. (ECF No. 67 at 2, 4–5). Marcantel also concedes he never asked
Coalition to prepare an abstract of title. (Id. at 8, 11). Nonetheless, Marcantel asserts he had
conversations with Coalition that expose it to tort liability. (Id. at 23); (ECF No. 68, Ex. 1).
Marcantel contends there is some nebulous liability between title insurer and abstractor that the
court should impose on Coaltion for agreeing to talk to Marcantel about a coverage exclusion
included in the initial title-insurance commitment and removed when the updated commitment
issued. (ECF No. 67 at 23–29). Marcantel takes particular issue with Coalition’s purported
assurance that there was no sewer easement encumbering the property. (Id.) Despite Marcantel’s
counsel’s valiant efforts, the court declines to impose liability on Coalition for several reasons.
1. Marcantel seeks to impose abstractor liability under another name
First, while Marcantel cannot admit that he seeks to impose abstractor liability on Coalition,
the court finds his arguments betray his true goal. For example, Marcantel suggests that one
“who seeks a title-insurance commitment expects to obtain a professional title search, as well as
a professional legal opinion as to the condition of the title . . . .” (ECF No. 67 at 19) (quoting 100
Investment Ltd. Partnership v. Columbian Town Center Title Co., 60 A.3d 1 (Md. 2013)). This
argument lays bare Marcantel’s attempt to impose abstractor liability on Coalition. The argument
ignores the Utah Supreme Court’s distinction between title abstractors and title insurers. The
court will not impose abstractor liability on Coalition because Marcantel’s argument relies on
cases from jurisdictions that rejected the approach taken in Culp. See, e.g., id.; MacDonald v.
Old Republic Nat. Title Ins. Co., 882 F. Supp.2d 236 (D. Mass 2012).While other jurisdictions
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may impose tort liability on title-insurance companies, Utah elected to do otherwise. In Utah, it
is an abstractor’s duty to provide the status of title and its history. See Chapman at 271. A title
insurer’s duty, on the other hand, is to indemnify property owners for encumbrances. Id.; see
Culp, 795 P.2d at 654 (“One who hires a title insurance company does so for the purpose of
obtaining the assurance or guarantee of obtaining a certain position in the chain of title rather
than for the purpose of discovering the title status.”). While both abstractors and title insurers
perform title research, the nature of their liability differs. Marctantel’s recourse lies with the
insurance policy, not in a tort action against Coalition.
2. Marcantel’s conversation with Coalition about exclusions from
coverage did not expose Coalition to abstractor liability
Coalition’s discussion with Marcantel regarding the sewer-easement does not expose
Coalition to liability. Utah courts have repeatedly rejected attempts to impose tort liability on
title insurers without evidence the title insurer accepted a specific additional duty. See infra Part
I.a3. Also, persuasive authority, on which the Supreme Court relied in Culp, rejected a theory
that is nearly identical to Marcantel’s. When the Utah Supreme court adopted the rule against tort
liability for title insurers in Culp it relied, in part, upon Brown’s Tie & Lumber Company v.
Chicago Title Company of Idaho, 764 P.2d 423, 426 (Idaho 1988). The plaintiff in Brown’s Tie
argued the title company in that case fell outside the protections afforded to title companies
because the title company provided a verbal update of encumbrances. The title company told
plaintiff “no subsequent liens or encumbrances had been recorded;” however, a lien in the
amount of $880,000 had been recorded against the subject property. Id. at 424, 426. Nonetheless,
the Brown’s Tie court held that, unlike a title abstractor, a title insurer is not liable even if it
orally provides incorrect title information.
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Here, Marcantel attempts to succeed on the same theory that failed in Brown’s Tie. Marcantel
argues that Coalition should be held liable because Marcantel asked Coalition about a sewer
easement listed as an exclusion from coverage (later properly removed) and incorrectly informed
Marcantel “there were no sewer easements burdening the Property.” (ECF No. 68, Ex. 1). The
court rejects this argument. Finding Brown’s Tie persuasive, this court concludes Coalition’s
purported statement is insufficient to expose it to tort liability. Coalition was free to discuss the
title policy with Marcantel when he called. Their discussion about the state of title reflected in
the title-insurance commitment did not transform Coalition into an abstractor. Nor can Coalition
be exposed to liability for incorrectly representing the status of title.
3. This case is distinguishable from cases in which Utah courts found
title insurers undertook additional duties
While the court is aware that Utah courts have found title insurers may undertake additional
duties in certain circumstances, they have done so in circumstances unlike the present case. Utah
courts have rejected attempts to transform title insurers into abstractors without evidence the title
insurer undertook some specific additional duty. See, e.g., Walker v. Anderson-Oliver Title Ins.
Agency, Inc., 309 P.3d 267, 272–73, 275–77 (Utah Ct. App. 2013). Walker summarizes a number
of circumstances in which a title insurer may undertake additional duties, all of which arise from
activities beyond issuing title insurance. See 309 P.3d at 276 (discussing duties arising from (1)
“contractual obligations to draft documents” (2) “fail[ing] to bid on a piece of property as . . .
agreed” and (3) “failing to correctly record a deed”). Even Culp recognized a title company may
expose itself to liability for statements or omissions regarding title where the company acts as an
escrow agent and agrees not to disperse funds unless certain title conditions are met. See Culp,
795 P.2d at 655. While Coalition undertook the role of escrow agent here, Marcantel does not
8
suggest Coalition failed to perform any part of its obligation under the escrow agreement. This
distinguishes the present case from Culp.
Additionally, the greater context of the parties’ discussions militates against finding for
Marcantel. Marcantel does not suggest he ever asked Coalition to perform title research for any
purpose unrelated to title insurance. The conversation Marcantel purportedly had with Coalition
occurred in the course of Coalition’s title research on behalf of Stewart Title that was used to
prepare a title-insurance commitment. See (ECF No. 67 at 2, 4–5). It is evident the conversation
related to title insurance because it resulted in Stewart Title issuing an updated commitment for
title insurance that removed the challenged exclusion. The conversation did not result in
Coalition preparing an abstract of title. It never prepared an abstract. Moreover, Marcantel does
not claim he ever asked Coalition to prepare an abstract. Ending a conversation about title
insurance with a request to confirm the absence of a sewer easement does not transform a title
insurer into an abstractor. Instead, the discussions at issue related primarily to items excluded
from coverage in the updated commitment for title coverage. Any mistake regarding the status of
title is not actionable as found in Brown’s Tie.
Thus, the court finds Coalition did not undertake any additional duties that expose it to tort
liability. Abstractor liability is unwarranted where Marcantel identifies no agreement made with
Coalition to prepare an abstract of title and instead only indicates he called a title insurer to ask
about an exclusion from coverage that was later removed (correctly).
4. There is no evidence Marcantel paid a separate fee for title research
Next, the undisputed facts do not show that Marctantel paid $150 for title research. Marcantel
paid $150 to Coalition, but this fee represents one half of the settlement or closing fee of $300.
9
Marcantel paid half; the Saltmans paid the other half. See (ECF No. 68, Ex. 3). Moreover,
Marcantel’s argument on this point appears deliberately vague. Rather than suggest he paid the
$150 in exchange for Coalition to prepare an abstract, or conduct research related to a sewer
easement, Marcantel merely notes that this fee was “separate from charges for the title
insurance.” (ECF No. 67 at 28). Marcantel’s opposition never explains to the court any purpose
for this fee. Instead, Marcantel mentions the fee in the same breath he mentions the discussion
with Coalition regarding the sewer easement. While Marctantel apparently hopes the court will
make an inference in his favor, the court finds such an inference would be unreasonable,
particularly where Marcantel should know, and explain to the court, why he paid the $150 fee.
Further, any discussion of the $150 fee exists only in Marcantel’s opposition brief. Any
discussion of the $150 fee is conspicuously missing from Marcantel’s declaration. See (ECF No.
68, Ex. 1). Accordingly, Marcantel’s description of this $150 fee constitutes argument, rather
than fact that could preclude summary judgment. The only evidence before the court comes from
the settlement statement and Mr. Rodman’s declaration discussing the fee. See (ECF. Nos. 68 at
5 & 69 at 2). The evidence in the record does not indicate the $150 fee is related to special title
research as implied by Marcantel’s opposition.
5. Utah courts have rejected several of Marcantel’s arguments
Marctantel’s opposition memorandum spends a great deal of time discussing the ordinary
legal inquiry used to determine whether an individual owes a legal duty to a plaintiff. (ECF No.
67 at 16–22). The court spends little time addressing that discussion because it overlooks the
state of Utah law, which exempts title companies from tort liability. Like the Walker court, this
court finds Marcantel’s “negligence claim ‘boils down to whether the nature of [Coalition’s]
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work in this case amounted to abstracting title.”’ Walker, 309 P.3d at 275. To the extent
Marcantel intends to change state law, this court cannot provide him with the relief he seeks.
Next, Marcantel never asserts he relied on any information on Coalition’s website, though he
cites it in his declaration. See (ECF No. 68, Ex. 1 at 3). Additionally, even assuming Marctantel
relied on the website, he identifies nothing on the website that modifies the parties’ agreement.
Accordingly, the court rejects this argument for the same reasons the Walker court rejected it.
Marcantel “does not allege that the [he] saw any of this information–let alone relied on it–before
requesting the Commitment and Title Insurance Policy from the Defendants, nor does he
establish that the website statements somehow modified the Commitment . . . the Title Insurance
Policy, [or escrow agreement,] the Defendants’ only written undertakings.” Walker at 273.
Finally, Marcantel contends the Utah Insurance Code favors his position because it requires
title insurers to perform a “reasonable examination of the title.” (ECF No. 67 at 20–21) (quoting
Utah Code Ann. § 31A-20-110). In Culp, the Utah Supreme Court found this very statutory
provision did not preclude the court from adopting a rule excusing title insurers from tort
liability. 295 P.2d at 653–54 (finding that while the statute “imposes a duty of a reasonable
search and examination for the purpose of determining the insurability of title, it does not impose
a duty to abstract titles upon title insurance companies.”). In Chapman, the Utah Court of
Appeals found that this statute did not expose a title company to tort liability or create a duty “to
use reasonable care to not mislead one whom [the company] knew would justifiably rely upon
the facts as represented.” 81 P.3d at 765–66. The Court of Appeals restated this position in
Walker. See 309 P.3d at 271. Based on the authority contradicting Marcantel’s position, the court
finds the Utah Insurance Code does not subject Coalition to tort liability.
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CONCLUSION
In sum, Marcantel’s opposition fails to salvage his claims because he concedes there was no
agreement for Coalition to provide services of an abstractor. Marcantel argues at length that
Coalition undertook some other duty that subjects it to liability. Yet Marcantel’s arguments
demonstrate he seeks to impose abstractor liability on Coalition. See, e.g., (ECF No. 67 at 19)
(arguing that one “who seeks a title insurance commitment expects to obtain a professional title
search, as well as a professional legal opinion as to the condition of the title . . . .”)). Marcantel
does not suggest Coalition violated any express agreement between the parties. Instead, he asks
the court to infer some basis of liability upon Coalition that functions identically to abstractor
liability, but is called by some other name. Marcantel does so to avoid the result Utah precedent
mandates in this circumstance. The court declines to do so because Marcantel never did the one
thing that might warrant finding abstractor liability: he never asked Coalition to prepare an
abstract of title. Nor did the escrow agreement include any condition that would have required
Coalition to confirm any particular status of title. The court declines Marcantel’s invitation to
impose abstractor liability while calling it something else. The result would unjustly allow
Marcantel the benefit of an abstractor obtained by litigation when he elected not to hire one prior
to purchasing the property at issue. To the extent Marcantel intends to recover for the title defect,
he must do so under the terms of the title-insurance policy. 4
4
Marcantel also concedes there is no basis for an award of attorney fees. (ECF No. 67 at 29).
Accordingly, the court will also grant Coalition’s motion for summary judgment on Marcantel’s
claim for attorney fees.
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ORDER
Based on the foregoing, the court:
GRANTS Coalition Title Company’s Motion for Summary Judgment. (ECF No. 66).
IT IS SO ORDERED.
DATED this 30th day of March 2018.
BY THE COURT:
____________________________
DUSTIN B. PEAD
United States Magistrate Judge
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