100 Inv. Ltd. v. Columbia Town Ctr. Title Co.

• Decision Date: 29 January 2013
• Docket Number: Sept. Term, 2012.,No. 19,19
• Citation: 430 Md. 197,60 A.3d 1
• Parties: 100 INVESTMENT LIMITED PARTNERSHIP, et al. v. COLUMBIA TOWN CENTER TITLE COMPANY, et al.
• Court: Maryland Court of Appeals

430 Md. 197

60 A.3d 1

100 INVESTMENT LIMITED PARTNERSHIP, et al.

v.COLUMBIA TOWN CENTER TITLE COMPANY, et al.

No. 19, Sept. Term, 2012.

Court of Appeals of Maryland.

Jan. 29, 2013.

James E. Carbine (James E. Carbine, PC, Baltimore, MD), on brief, for petitioners.

Richard E. Hagerty (Troutman Sanders LLP, McLean, Virginia), on brief, for respondents.

David H. Cox, Christopher A. Glaser, Jackson & Campbell, P.C., Washington, DC, for amicus curiae brief of Maryland Land Title Association, in support of appellee.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, BARBERA, McDONALD and DALE R. CATHELL (Retired, Specially Assigned), JJ.

GREENE, J.

This case has its roots in a real estate transaction that occurred over twenty-five years ago. In 1982, two elderly widows (“the Millers”) sold a tract of land in Howard County to one party, and then, four years later, purported to sell the same tract of land to Petitioner (100 Investment Limited Partnership, or, “the Partnership”). The Partnership engaged two title companies, Cambridge Title Company (“Cambridge”) and Columbia Town Center Title Company (“Columbia”) (collectively, “the Title Companies,” or “Respondent”) to complete the title work. The Title Companies, however, failed to locate and report the Millers' first land sale. Chicago Title Insurance Company (“Chicago Title,” or “Respondent”) underwrote the insurance policies on the tract of land at issue. These transactions have spawned a complex line of facts and numerous lawsuits that will be detailed infra.

We are asked to determine whether a title company owes a duty of care, in tort, when conducting a title search. As an extension of this question, we are also asked whether a title insurance company may be held vicariously liable as a result of the Title Companies' negligent title search. In this case, we do not review a title company's or a title insurance company's contractual obligations.

We shall hold that the Title Companies owed a duty of care to their customer, the Partnership, in conducting the title search and issuing the title commitment. Additionally, we conclude that, under the circumstances, Chicago Title may not be held vicariously liable for the Title Companies' negligence.

I.

On August 24, 1982, Francis L. Miller and Mildred C. Miller (“the Millers”) conveyed a 1.144–acre tract of land in Howard County to Ahsan S. Khan, as Trustee for Ahsan S. Khan, M.D., P.A., Profit Sharing Plan (“Dr. Khan”). The deed was properly recorded among the land records for Howard County.

On October 14, 1986, however, the Millers purported to sell the same 1.144–acres of land (“the disputed tract”) to the Partnership. The sale included the disputed tract as part of a larger sale of a 49.845–acre tract of land. Cambridge Title Company ¹ “was engaged to do the title work” ² for this transaction. The Partnership also hired Dewberry & Davis, LLC (“Dewberry”) to survey the land for the potential sale. There does not appear to be any genuine dispute that Cambridge issued a title commitment ³ and later an insurance policy ⁴ to the Partnership underwritten by Chicago Title,⁵ pursuant to an agency agreement between Cambridge and Chicago Title.⁶ The commitment did not report the previous sale to Dr. Khan. Cambridge has since gone out of business.

On December 18, 1986, there was a transfer of ownership interests in the Partnership. The original owners transferred their ownership interest in the Partnership to Petitioners Coscan/Adler Limited Partnership (formerly “Costain/Adler Limited Partnership”) and Brit–Am II Limited Partnership. Columbia “was engaged to do the title work” for the December transaction. Columbia issued a title commitment to the Partnership and later issued an insurance policy underwritten by Safeco Title Insurance Corporation (“Safeco”). Columbia failed to report the earlier sale to Dr. Khan in the commitment or the policy. After that transaction, Chicago Title acquired Safeco. As such, Chicago Title assumed Safeco's liabilities and is, therefore, responsible for Safeco title insurance policies.

In 1994, for the purpose of residential development, the Partnership subdivided the land it had purchased from the Millers, including the disputed tract. The Partnership subsequently executed and recorded a Declaration of Covenants, Easements, Charges, and Liens in connection with the residential development in Howard County. The Partnership purportedly dedicated a portion of the disputed tract as a public utility easement.

Thereafter, the Partnership purportedly conveyed to N.V.R. Homes, Inc. (“NVR”) a portion of the disputed tract as part of five townhouse lots. These lots were later improved and conveyed to individual homeowners. On August 30, 1995, the Partnership purportedly conveyed the remainder of the disputed tract, as part of a larger conveyance to The Lyndwood Association, Inc., a homeowner's association, to be used for common area open space and landscaping.

It was not until July 26, 2001, that the Partnership learned of the previous sale of the disputed tract from the Millers to Dr. Khan. The Partnership only discovered this information after Dr. Khan agreed to sell a large tract of land, including the disputed tract to 100–103 Center, LLC, and Courtyards at Timbers, LLC, (collectively, “Timbers”) and Timbers hired a surveyor. The surveyor discovered townhouses located on a portion of the land that Timbers intended to purchase from Dr. Khan. Timbers contacted the Partnership and notified it of the impending sale, scheduled to take place within the week.

To cure the title defect, the Partnership offered to repurchase the disputed tract from Timbers after Timbers purchased the land from Dr. Khan. Thereafter, the Partnership repurchased the disputed tract from Timbers at the fair market value that Timbers had paid per acre to Dr. Khan, amounting to $175,348.56. The Partnership incurred additional expenses with regard to the transaction, including costs and attorneys fees bringing the total cost to $191,510.88.

On April 7, 2004, the Partnership filed a complaint in the Circuit Court for Howard County against Cambridge, Columbia, Chicago Title, Dewberry, and Francis L. Miller, the surviving grantor of the disputed tract.⁷ The Partnership alleged claims for negligence against (1) Cambridge and Columbia in performing the title search and failing to discover and report the Khan deed, (2) Dewberry for its negligent performance of the land survey, and (3) Chicago Title under a theory of vicarious liability for the Title Companies' negligent title search.⁸ The Title Companies and Chicago Title responded to the complaint and filed a motion for summary judgment. They alleged collateral estoppel, claiming that the action was barred because the factual issues had been resolved in the Fourth Circuit, and that the Partnership could not prove that its damages were proximately caused by the Title Companies' negligent title search. The trial court granted summary judgment in favor of the Title Companies and Chicago Title,⁹ concluding that collateral estoppel barred the action and that the Partnership could not show that its damages were proximately caused by the Title Companies' search.

The Partnership appealed to the Court of Special Appeals. The intermediate appellate court, in an unreported opinion, reversed the trial court's determinations and remanded the case to the trial court to determine factually whether any negligence by the Title Companies was the proximate cause of the Partnership's damages. The intermediate appellate court held that the action was not barred by collateral estoppel because the federal litigation sounded in contract and dealt with the title policy and the extent of its coverage, whereas the present complaint sounded in tort.

After remand, a bench trial was held in the Circuit Court for Howard County, and on May 11, 2009, the court issued a memorandum opinion, ruling in favor of the Partnership. The court determined that the Title Companies were engaged “to perform all the duties expected of a title company in connection with the purchase of land in a commercial real estate transaction.” This undertaking required that the title examiner use “a reasonable degree of skill and diligence [in examining title].” Corcoran v. Abstract & Title Co. of Md., Inc., 217 Md. 633, 637, 143 A.2d 808, 810 (1958). Based on the evidence adduced at trial, the court found that the Title Companies breached this duty. Furthermore, the court maintained that the Title Companies “would have known” that the Partnership would rely on their title search. According to the trial judge, the negligent title search was a proximate cause of the Partnership's losses. As such, the court determined that the Title Companies were liable in tort to the Partnership. Additionally, the court held that Chicago Title was vicariously liable for the Title Companies' negligence under the doctrine of respondeat superior because Chicago Title “ exerted a lot of control over its local agents,” as gleaned from the parties' contracts and testimony in the trial court proceedings. The trial court awarded the Partnership $191,510.88.

The Title Companies and Chicago Title appealed to the Court of Special Appeals. The intermediate appellate court held that the Title Companies owed no duty in tort to the Partnership on the basis of the title search. Columbia Town Ctr. Title Co. v. 100 Inv. Ltd. P'ship, 203 Md.App. 61, 82, 36 A.3d 985, 997 (2012). In reaching this result, the court emphasized that the General Assembly has neither imposed nor given any indication of an intent to impose a tort duty on title companies. Columbia Town Ctr. Title Co., 203 Md.App. at 83–86, 36 A.3d at 998–1000. The court also distinguished the role of a title searcher from other professionals, such as attorneys, who have been found to owe a duty in tort, concluding that title searchers' licensing requirements do not focus on “ensuring proficiency in the...