605 A.2d 862 (Conn. 1992), 14307, Westport Bank and Trust Co. v. Corcoran, Mallin and Aresco

Docket Nº:14307.
Citation:605 A.2d 862, 221 Conn. 490
Opinion Judge:BORDEN, J.
Party Name:WESTPORT BANK AND TRUST COMPANY v. CORCORAN, MALLIN AND ARESCO, et al.
Attorney:Richard J. Diviney, Westport, for appellant (plaintiff)., Arnold J. Bai, with whom were Andrew S. Turret, Bridgeport, and, on the brief, J. Jeffrey Coughlin, Milford, for appellees (named defendant et al.). Richard J. Diviney, for the appellant (plaintiff). Arnold J. Bai, with whom were Andrew S...
Judge Panel:Before SHEA, GLASS, COVELLO, BORDEN and BERDON
Case Date:March 31, 1992
Court:Supreme Court of Connecticut
 
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Page 862

605 A.2d 862 (Conn. 1992)

221 Conn. 490

WESTPORT BANK AND TRUST COMPANY

v.

CORCORAN, MALLIN AND ARESCO, et al.

No. 14307.

Supreme Court of Connecticut.

March 31, 1992

Argued Oct. 30, 1991.

[221 Conn. 491] Richard J. Diviney, Westport, for appellant (plaintiff).

Arnold J. Bai, with whom were Andrew S. Turret, Bridgeport, and, on the brief, J. Jeffrey Coughlin, Milford, for appellees (named defendant et al.).

Before SHEA, GLASS, COVELLO, BORDEN and BERDON, JJ.

BORDEN, Justice.

The issue in this appeal is whether a lender may hold its attorney liable for a negligent title search and subsequent issuance of an erroneous title opinion letter to the lender when that attorney also represents the borrower. The plaintiff, Westport Bank and Trust Company, brought suit against the defendants, attorney John R. Mallin and the law firm of Corcoran, Mallin and Aresco, 1 alleging, in count one, breach of its attorney-client contract with the defendants 2 and, [221 Conn. 492] in count three, legal malpractice by the defendants. The trial court, Licari, J., granted the defendants' motion to strike the first and third counts of the plaintiff's amended complaint. The plaintiff appealed from the subsequent judgment, Spear, J., to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023. We now reverse.

The complaint alleged the following facts. In January, 1988, the plaintiff approved the loan application of Charles L. Munigle, individually and doing business as MKP Westport (Munigle). The plaintiff issued a commitment letter to Munigle for a

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$225,000 construction loan subject to Munigle's granting a second mortgage to the plaintiff on two adjoining parcels of land that he owned, known as lots 5 and 6 on Cross Highway in Westport. In February, 1988, after accepting the plaintiff's loan commitment, Munigle retained the defendants to provide certain legal services in connection with the loan, including searching the title of lots 5 and 6, preparing loan closing documents, and issuing to the plaintiff a title opinion and securing a title insurance policy for the plaintiff.

The complaint further alleged that the plaintiff sent an "Order For Title Search" directly to the defendants requesting them to search the title to the property and to issue a title opinion letter to the plaintiff. The defendants then conducted a title search on the lots, prepared loan closing documents, conducted the loan closing and issued a title opinion letter directly to the plaintiff, representing that the lots were unencumbered except for a preexisting first mortgage, and that the plaintiff's mortgage would be a valid second mortgage on the lots. In reliance on that letter, the plaintiff granted the [221 Conn. 493] $225,000 loan to Munigle and accepted a mortgage on the lots from Munigle.

The complaint also alleged that, in May, 1989, Munigle sold lot 5, and that the plaintiff discovered that its mortgage on lots 5 and 6 was actually a third mortgage that was subordinate to a second mortgage held by United Bank and Trust Company (UBTC). The plaintiff had not been advised of UBTC's second mortgage in the title opinion letter. The sale proceeds from lot 5 fully satisfied the first mortgage and partially satisfied UBTC's second mortgage. No portion of the sale proceeds, however, was available to satisfy any part of Munigle's $225,000 debt to the plaintiff. 3 In January, 1990, the first mortgagee foreclosed its mortgage on lot 6 and the lot was sold at a public auction. Due to the plaintiff's unintended third mortgagee position, the sale proceeds were insufficient to reduce the remaining debt owed by Munigle to the plaintiff.

The plaintiff's initial complaint alleged that the defendants were negligent in their title search and that the plaintiff was harmed...

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