Columbia Town Ctr. Title Co. v. 100 Inv. Ltd. P'ship

• Decision Date: 02 February 2012
• Docket Number: Sept. Term,No. 0915,2009.,0915
• Citation: 203 Md.App. 61,36 A.3d 985
• Parties: COLUMBIA TOWN CENTER TITLE COMPANY, et al. v. 100 INVESTMENT LIMITED PARTNERSHIP, et al.
• Court: Court of Special Appeals of Maryland

203 Md.App. 61

36 A.3d 985

COLUMBIA TOWN CENTER TITLE COMPANY, et al.

v.100 INVESTMENT LIMITED PARTNERSHIP, et al.

No. 0915

Sept. Term

2009.

Court of Special Appeals of Maryland.

Feb. 2, 2012.

Richard Hagerty, McLean, VA (Tameka M. Collier, Washington, DC, Troutman Sanders, LLP, on the brief), for Appellant.

James Carbine, Baltimore, MD, for Appellee.

Panel: MEREDITH, ZARNOCH and JAMES A. KENNEY, III (Retired, Specially Assigned), JJ.

KENNEY, J.

This appeal has its genesis in the conveyance of a 1.145–acre parcel of land (the “Parcel”) to two different purchasers, the second of which is appellee, 100 Investment Limited Partnership (the “Partnership”). Cambridge Title Company (“Cambridge”) and, later, Columbia Town Center Title Company (“Columbia”) were engaged by the Partnership in connection with two separate purchase transactions involving the Parcel. Neither Cambridge nor Columbia (collectively the “Title Companies”) discovered and reported the prior conveyance to the Partnership. Both title companies, as agents of different title insurance companies, issued policies of title insurance insuring title to the Parcel. Years later, after having purportedly conveyed the Parcel to others, the Partnership learned of the prior conveyance, and purchased the Parcel at its then fair market value to cure the title defect in its prior conveyances and thereby confirm title in its grantees.

The Partnership brought a negligence suit in the Circuit Court for Howard County against Cambridge, Columbia and Chicago Title Insurance Company (“Chicago Title”) for damages incurred in purchasing the Parcel. The circuit court found that Cambridge and Columbia had negligently performed the title searches and that Chicago Title was vicariously liable for their negligence.

Appellants, Cambridge, Columbia and Chicago Title, present the following questions, which we have slightly reworded:

1. Did the circuit court err in finding that the Partnership had a cognizable negligence claim for breach of duties owed to it by Cambridge and Columbia?

2. Did the circuit court err in finding that the Partnership satisfied its burden of proof for the elements of a negligence claim?

3. Did the circuit court err in finding that Chicago Title was vicariously liable for the negligently performed title searches of Cambridge and Columbia?

For the following reasons, we shall reverse the judgment of the circuit court.

FACTS AND PROCEEDINGS

On August 24, 1982, Frances and Mildred Miller (the “Millers”) conveyed the Parcel to Ashan Khan, M.D., P.A., Profit Sharing Plan (“Dr. Khan”). That conveyance was properly recorded in the land records of Howard County. On October 14, 1986, the Parcel was included in a conveyance to the Partnership as part of a 49.845–acre parcel (the “Miller Tract”). In conjunction with that purchase, Cambridge issued a policy to the Partnership, underwritten by Chicago Title, pursuant to an agency agreement between Cambridge and Chicago Title, that did not reflect the prior conveyance to Dr. Khan. Cambridge later went out of business.

Shortly thereafter, in conjunction with a transfer of ownership interests in the Partnership, Columbia, at the request of the Partnership, issued a policy of title insurance for all land purportedly owned by the Partnership including the Parcel. That policy, which was underwritten by Safeco Title Insurance Corporation (“Safeco”), was issued on December 18, 1986, pursuant to an agency agreement between Columbia and Safeco. It took no exception for the prior conveyance to Dr. Khan. When Safeco subsequently merged with Chicago Title, Chicago Title became responsible for the Safeco title insurance policy.

In 1994, the Partnership subdivided the Miller Tract—including the Parcel—for residential development. Howard County approved the subdivision plan, and on March 1, 1995, the Partnership executed and recorded a Declaration of Covenants, Easements, Charges and Liens in connection with the development. During the subdivision process, the Partnership dedicated a portion of the Parcel as a public utility easement.

On July 7, 1995, the Partnership conveyed part of the Parcel to NVR Homes, Inc. (“NVR”), as part of five townhouse lots, which NVR later improved and conveyed to individual homeowners. The Partnership conveyed the remainder of the Parcel to Lynwood Association, Inc. (“Lynwood”) on August 30, 1995. As a result of these conveyances, the Partnership no longer had any interest in the Parcel.

On July 26, 2001, the Partnership learned of the prior conveyance of the Parcel when Dr. Khan agreed to sell land, including the Parcel, to 100–103 Center, LLC, and Courtyards at Timbers, LLC (collectively “Timbers”). In connection with that sale, Timbers engaged a surveyor who discovered townhouses located on a portion of the land that Dr. Khan was selling. Timbers contacted the Partnership and informed it of the impending sale.

To cure any title defect in its prior conveyances, the Partnership negotiated with Timbers to purchase the Parcel from Timbers after Timbers' purchase from Dr. Khan was complete. The Partnership bought the Parcel from Timbers for $175,348.56.¹ The Partnership also incurred $16,162.32 in associated expenses, including costs and attorney fees, for a total cost of $191,510.88. Litigation ensued.

On March 15, 2002, Dr. Khan filed a complaint for trespass against the Partnership in the District Court for Howard County (“Khan Litigation”). Khan v. 100 Inv. Ltd. P'ship, No. 1001000013442002 (D. Ct. Howard Cnty.). The District Court entered judgment for Dr. Khan, awarding nominal damages of one dollar ($1.00). Id.

On April 5, 2002, Chicago Title filed a suit for declaratory judgment in the United States District Court for the District of Maryland, naming the Partnership as defendant, and asking the court to determine Chicago Title's responsibilities under the title insurance policy issued on December 18, 1986. ² The federal district court granted summary judgment for the Partnership, awarding $201,744.37 in damages for the cost of purchasing the Parcel and for costs associated with the Khan Litigation. Chicago Title Ins. Co. v. 100 Inv. Ltd. P'ship, No. JFM–02–CV1138 (D.Md.).

Chicago Title appealed to the United States Court of Appeals for the Fourth Circuit, which reversed in part and affirmed in part. Chicago Title Ins. Co. v. 100 Inv. Ltd. P'ship, 355 F.3d 759, 766 (4th Cir.2004). The federal appellate court determined that, under the terms of the policy, Chicago Title was under no obligation to compensate the Partnership for the cost of purchasing the Parcel. Id. The court reasoned that the instruments of conveyance by the Partnership contained, at most, a special warranty “promising only that [the Partnership] had not itself created any defect in title,” id. at 764, and that Chicago Title's duty to defend was limited to claims made against the Partnership for loss or damage occurring prior to the time it conveyed its interest in the Parcel. Id. at 762. Therefore, Chicago Title was only liable for the costs associated with the Khan Litigation based on the trespass that occurred while the Partnership had title insurance coverage for the Parcel. Id. at 766. Accordingly, Chicago Title indemnified the Partnership for its legal fees and expenses incurred in defending the suit brought by Dr. Khan and the nominal damages awarded. Chicago Title also defended the Partnership in a suit brought by NVR, which was ultimately dismissed in favor of the Partnership.

On April 7, 2004, the Partnership filed a complaint in the Circuit Court for Howard County against Dewberry & Davis, LLC (“Dewberry”), Cambridge, Columbia, and Chicago Title alleging negligence claims against Dewberry arising from its survey; against Columbia and Cambridge for their failure to discover and report the Khan Deed; and against Chicago Title based on vicarious liability for the negligence of the Title Companies. It later amended the complaint to include a breach of contract claim against Columbia. On March 10, 2005, the circuit court granted summary judgment in favor of Dewberry, Cambridge, Columbia, and Chicago Title, finding that, as a matter of law, the doctrine of collateral estoppel barred the action because the same factual issues had been decided in the Fourth Circuit decision and the Partnership had not stated a cause of action for negligence because any act of negligence by the Title Companies was not the proximate cause of the Partnership's damages.

The Partnership appealed only the judgments in favor of the Title Companies and Chicago Title to this Court, presenting the following questions:

1. Did the trial court err by holding that the decision of the United States Court of Appeals for the Fourth Circuit in Chicago Title Insurance Company v. 100 Investment Limited Partnership, 355 F.3d 759 (4th Cir.2004) barred Appellants' claims under the doctrine of collateral estoppel?

2. Did the trial court err by holding that Appellee's negligence, as a matter of law, was not the proximate cause of Appellants' damages?

100 Investment L.P. v. Columbia Town Center Title Co., No. 2214, slip. op. at 1 (Md.Ct.Spec.App. March 8, 2007).

In an unreported opinion, we determined that the declaratory judgment action in the federal court did not bar the suit because that action only concerned the contractual rights of the parties under the Safeco policy and the state suit was founded in tort, id. at 9–12, and, if the Title Companies were found negligent, whether that negligence was the proximate cause of the Partnership's damages was a question of fact for the jury. Id. at 19–20. We reversed the circuit court's grant of summary judgment as to the Title Companies and Chicago Title and remanded the case.

A bench trial was held on September 8 and 9, 2008. The court found the Partnership's “economic injury was proximately caused by the Title Companies' breach of the duty of care they owed to the Partnership,” and that “Chicago Title is...