Midwest Bankcentre v. Old Republic Title

Citation247 S.W.3d 116
Decision Date11 March 2008
Docket NumberNo. ED 89263.,ED 89263.
PartiesMIDWEST BANKCENTRE, Respondent, v. OLD REPUBLIC TITLE COMPANY OF ST. LOUIS, Appellant, and Rising Phoenix Development, LLC, and William Schierholz, III, Respondents.
CourtCourt of Appeal of Missouri (US)

Gregory F. Herkert, Saint Louis, MO, for Respondent Midwest BankCentre.

Douglas P. Roller, Nicholas P. Van Deven, Saint Louis, MO, for Appellant Old Republic Title Co. of St. Louis, Inc.

William Schierholz, III, Chesterfield, MO, for Respondent Acting Pro Se.

OPINION

GLENN A. NORTON, Judge.

Old Republic Title Company of St. Louis appeals the judgment in favor of Midwest Bankcentre on Midwest Bank's negligence claim, and in favor of William Schierholz, III ("Son") and Rising Phoenix Development, L.L.C.1 on Old Republic's cross-claims for breach of contract, fraudulent misrepresentation, and negligent misrepresentation. We affirm.

I. BACKGROUND

In 2001, Son and William Schierholz, Jr. ("Father") were members of the limited liability company Rising Phoenix. During this time, Son, a real estate developer and builder, sought to purchase a piece of property located at 1841 Kehrs Mill Road in Wildwood, Missouri ("Wildwood Property") on behalf of Rising Phoenix. Rising Phoenix sought financing for this purchase from Midwest Bank. Midwest Bank approved a loan to Rising Phoenix in the amount of $950,000.00 ($800,000.00 for the purchase price of the Wildwood Property and $150,000.00 for renovations). In addition to pledging the Wildwood Property as collateral for the loan, Rising Phoenix also pledged a piece of property located in Lake St. Louis, Missouri ("Lake St. Louis Property") as collateral.

Gerard Geen, a loan officer at Midwest Bank, handled Rising Phoenix's purchase of the Wildwood Property. Geen's assistant, Melissa Hartsell, prepared and documented Midwest Bank's loan to Rising Phoenix. Prior to closing on the loan, Hartsell created a promissory note, a deed of trust in connection with the Wildwood Property ("Wildwood Deed of Trust"), and a deed of trust for the Lake St. Louis Property ("Lake St. Louis Deed of Trust").2 The upper left-hand corner of the first page of both deeds of trust contained the following language:

RECORDATION REQUESTED BY:

[Midwest Bank]

[Midwest Bank's address]

WHEN RECORDED MAIL TO:

[Midwest Bank]

[Midwest Bank's address]

Old Republic was the title company retained to handle the closing on the Wildwood Property. Prior to closing, Midwest Bank sent Old Republic closing instructions and an application for title insurance for the Lake St. Louis Property. The closing instructions: (1) referenced Midwest Bank's $950,000.00 loan to Rising Phoenix; (2) referenced two properties: "1841 Kehrs Mill Road & a tract of land in Lak [sic];" and (3) stated "[w]e have 2 deeds of trust one is 8 pages and the other is 9 pages." The application for title insurance for the Lake St. Louis Property was for coverage in the amount of $190,000.00.

Old Republic issued a title commitment for the Lake St. Louis Property prior to the closing on the Wildwood Property. Additionally, Old Republic prepared a settlement statement,3 which was later reviewed and approved by Geen on behalf of Midwest Bank. The settlement statement identifies the "property location" as "1841 Kehrs Mill Road" in "Wildwood, MO." It also identifies a title insurance charge of $1395.50, which included lender's coverage in the amount of $950,000.00 (the full amount of the loan) and owner's coverage in the amount of $800,000.00 (the purchase price of the Wildwood Property). The settlement statement also included a recording fee for a deed ($24.00), a recording fee for a "mortgage" ($48.00), and a recording fee for a UCC statement ($29.00).

The closing took place on September 13, 2001, at Old Republic's offices. Geen was present as the loan officer for Midwest Bank, Paula Warmoth was present as the closing agent for Old Republic, and Son was present on behalf of the borrower Rising Phoenix. Son, as "managing member" of Rising Phoenix, executed a promissory note in favor of Midwest Bank. The Wildwood Deed of Trust and the Lake St. Louis Deed of Trust both were executed by Son in favor of Midwest Bank and were notarized by Warmoth. Son and Warmoth also signed the settlement statement.

Following closing, Old Republic recorded the Wildwood Deed of Trust with the recorder of deeds of St. Louis County. The Lake St. Louis Deed of Trust was never recorded. Additionally, a title insurance policy was never issued on the Lake St. Louis Property.

In July 2002, Rising Phoenix sold the Wildwood Property. Midwest Bank received $827,899.08 from the closing, but this amount was less than that still owed on the loan.

On December 13, 2002, Rising Phoenix sold the Lake St. Louis Property. Old Republic was the title company retained to handle the closing on the Lake St. Louis Property. Midwest Bank did not receive any of the proceeds from the closing of the sale of the Lake St. Louis Property. Son signed a settlement statement, a general warranty deed, and a final affidavit for this sale. The final affidavit was "made for the purpose of aiding Old Republic Title Company of St. Louis, Inc. in determining the marketability and insurability of title to the property, and to induce the Company to issue its policies of title insurance. . . ." The final affidavit contained the following representation: "There are no unrecorded claims against the property, nor any set of facts by reason of which title to the property might be disputed or questioned. . . ." The final affidavit subsequently stated: "the affiant states that the foregoing statements are true and correct to the best of affiant's knowledge and belief."

Between September 13, 2002, and June 10, 2004, several renewals of the September 13, 2001 loan took place. Son signed each of the renewals, some of which listed the Wildwood Deed of Trust and Lake St. Louis Deed of Trust as collateral even after those properties were sold.

Sometime around June 2004, Timothy Reeves, the chief credit officer for Midwest Bank, was advised that the Lake St. Louis Property had been sold. By September 2004, Reeves was advised that the Lake St. Louis Deed of Trust had not been recorded. The original Lake St. Louis Deed of Trust was never located.

Thereafter, Midwest Bank filed claims against Old Republic for, inter alia, negligence, breach of contract, and breach of fiduciary duty, alleging that it suffered damages because Old Republic failed to record the Lake St. Louis Deed of Trust.4 In its answer, Old Republic pled the affirmative defense of contributory negligence. Thereafter, Old Republic filed cross-claims against Son, Father, and Rising Phoenix for breach of contract, fraudulent misrepresentation, and negligent misrepresentation, alleging that it suffered damages as a result of misrepresentations in connection with the December 13, 2002 closing of the Lake St. Louis Property.

In October 2006, the trial court held a bench trial on Midwest Bank's claims and on Old Republic's cross-claims. Old Republic conceded in its post-trial brief that it did not prove Father's liability on its cross-claims. Although neither party requested findings of fact or conclusions of law, the trial court made some findings of fact and conclusions in its amended judgment. Specifically, the trial court ruled: (1) in favor of Midwest Bank and against Old Republic on Midwest Bank's negligence claim because "Old Republic owed a duty to [Midwest Bank] and it is more likely than not [that] Old Republic breached that duty by failing to record the Lake St. Louis Deed of Trust . . . and such negligence caused damage to [Midwest Bank];" (2) in favor of Old Republic on Midwest Bank's claims for breach of contract and breach of fiduciary duty;5 (3) in favor of Son on Old Republic's cross-claims because Old Republic "acknowledges in its post trial brief [that] it has no evidence on its claim against Defendant Son";6 (4) in favor of Father on Old Republic's cross-claims (i) because "Old Republic knew or should have known of the Lake St. Louis Deed of Trust, and could not have reasonably relied on any representations of Father, who was in a much inferior position to know if the Lake St. Louis Deed of Trust had been recorded," and (ii) because the court previously found that Old Republic had a duty to record the Lake St. Louis Deed of Trust, Old Republic's "own negligence was the cause of that Deed of Trust not being satisfied from the sale proceeds of the property;" and (5) in favor of Rising Phoenix on Old Republic's cross-claims "[b]ased upon a preponderance of the evidence." Old Republic appeals.

II. DISCUSSION
A. Standard of Review

Our review of a court-tried case is governed by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We will affirm the trial court's judgment unless it is not supported by substantial evidence, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. Id. We view the evidence and all reasonable inferences therefrom in the light most favorable to the trial court's judgment, and we disregard all evidence and inferences to the contrary. Sheppard v. East, 192 S.W.3d 518, 522 (Mo.App. E.D.2006).

Because of the trial court's superior ability to assess the credibility of witnesses, we defer to any of the trial court's findings of fact. Id. When neither party requests findings of fact or conclusions of law, "[a]ll fact issues upon which no specific findings are made shall be considered as having been found in accordance with the result reached." Rule 73.01(c).7 Our review of questions of law is de novo. Sheppard, 192 S.W.3d at 522.

Our primary concern is the correctness of the trial court's result rather than the route taken by the trial court to reach that result. Business Men's Assurance Co. of America v. Graham, 984 S.W.2d 501, 506 (Mo. banc 1999). Accordingly, we will affirm the trial court...

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