Executive Management, Ltd. v. Ticor Title Ins. Co.
| Decision Date | 01 September 1998 |
| Docket Number | No. 27991,27991 |
| Citation | 963 P.2d 465,114 Nev. 823 |
| Parties | EXECUTIVE MANAGEMENT, LTD., a California Corporation, Appellant, v. TICOR TITLE INSURANCE COMPANY, a Foreign Corporation; Barbara Marks, an Individual; The Manley Marks and Barbara Marks 1988 Trust, Barbara Marks, Trustee; Marks Plaza, a Nevada Corporation; Palmall Properties, a Nevada Corporation; and Arthur Shipkey, an Individual, Respondents. |
| Court | Nevada Supreme Court |
Respondent Palmall Properties, Inc. (Palmall) sold several contiguous parcels of land to two different buyers in two separate transactions. Lot 1 was sold to respondents Barbara and Manley Marks (the Markses), and lots 2 and 3 were sold to appellant Executive Management, Ltd. (Executive). Respondent Ticor Title Insurance Co. (Ticor) served as escrow agent in both transactions. When the Markses' deed was first recorded, it erroneously contained a description of lots 1 and 2. The Executive deed was subsequently recorded describing lots 2 and 3. Shortly after both deeds were recorded, Ticor re-recorded the Markses' deed so as to remove lot 2 from that deed. Three years later, the Markses sued Executive to quiet title to lot 2 in their favor and sued Ticor and Palmall for, inter alia, negligence, breach of contract, and fraud in conveying lot 2 to both Executive and the Markses.
Executive then sued the Markses, Ticor, and Palmall, asserting various causes of action, also arising out of the sale of lots 1, 2, and 3. Executive's suit was eventually dismissed as being barred by the doctrine of res judicata with relation to the case first filed by the Markses. Executive appeals the judgment dismissing its complaint.
This matter arises out of two 1985 real estate transactions that culminated in a thirteen-day trial (hereinafter referred to as "case I"), which commenced on January 22, 1991, before District Judge J. Charles Thompson. The district court issued its findings of fact and conclusions of law on July 26, 1991, followed by a judgment on October 23, 1991. The judgment was subsequently appealed, cross-appealed, and argued before this court. We dismissed both the appeal and cross-appeal. Marks v. Executive Management, Ltd., Docket No. 22935 (Order Dismissing Appeal, March 25, 1993).
During the pendency of the case I trial, one of the defendants filed suit (hereinafter referred to as "case II") against the plaintiffs, and eventually added in most of its codefendants from case I. On September 11, 1995, District Court Judge Donald M. Mosley dismissed case II as being barred by the doctrine of res judicata in relation to case I. The plaintiffs in case II now appeal that dismissal.
The primary parties in both cases I and II are: Palmall, Palmall's president and majority shareholder, Arthur H. Shipkey (Shipkey), Ticor, Executive, and the Markses. 1 Both cases arise out of the following facts, as documented by the parties and Judge Thompson in case I: Palmall owned several contiguous parcels (lots 1, 2, and 3) of undeveloped real estate off of Casino Drive in Laughlin, Nevada. In May of 1985, Palmall (through Shipkey) agreed to sell lots 2 and 3 to Executive for $1,200,000. Shipkey reserved an easement for ingress and egress over lot 2 for the benefit of lot 1. At approximately the same time, Palmall agreed to sell lot 1 to the Markses for $275,000.
In 1983, Shipkey had begun proceedings to subdivide the original lot 1 (300' X 120') into lots 1 (220' X 120') and 2 (80' X 120'); however, the parcelization map showing the subdivision of lot 1 was not recorded until October 25, 1985. In January of 1986, Palmall and the Markses closed escrow; however, the recorded deed contained a defective legal description, describing lot 1 as 300' X 120', rather than the post-subdivision description of 220' X 120'. Later that month, Palmall and Executive closed escrow, and that recorded deed contained the correct descriptions of lots 2 (80' X 120') and 3. Thus, by the end of January 1986, the records showed that both Executive and the Markses owned the same 80' X 120' parcel of land fronting Casino Drive.
Ticor served as escrow agent for both the Palmall/Marks and Palmall/Executive transactions. Ticor's title search prior to the close of the Markses' escrow did not uncover the subdivision map. Judge Thompson found that when the legal description of lot 1 was first submitted to Ticor, the description was 300' X 120'. The district court further found that Shipkey knew that this description was inaccurate, but he planned to provide a corrected legal description prior to the close of the Palmall/Marks escrow. Shipkey subsequently provided proper legal descriptions for lots 1 (220' X 120') and 2 (80' X 120') to a Ticor employee following recordation of the subdivision map, and prior to the close of the Palmall/Marks escrow. Shipkey delivered the corrected legal description to a Ticor employee on January 13, 1986, at the same time he delivered a quitclaim deed relating to the Palmall/Executive escrow. Judge Thompson noted that Shipkey had failed to "mark the documents or identify the escrows to which the property descriptions applied." The Ticor employee failed to place a copy of the subdivision map in Ticor's escrow file for the Palmall/Marks transaction.
The Markses' deed describing lots 1 and 2 was recorded on January 17, 1986. Executive's deed describing lots 2 and 3 was not recorded until January 28, 1986. In February of 1986, Palmall informed Ticor that the legal description in the Markses' deed erroneously included the perimeters of lot 2. Without prior notice to Executive or the Markses, Ticor re-recorded the Palmall/Marks deed so as to describe the boundaries of the Markses' land--lot 1--as 220' X 120'.
Three years later, on January 4, 1989, the Markses filed suit (case I) against Executive, Palmall, Shipkey, and Ticor, alleging ownership of the 80' X 120' lot 2 included in the first recording of their deed. On March 15, 1989, the Markses filed a lis pendens against Executive's entire property (lots 2 and 3). The Markses' complaint against Executive sought to quiet title to lot 2 in their favor. The gravamen of the case I complaint was that Ticor had negligently or intentionally recorded conflicting documents and was, therefore, liable to the Markses under theories of negligence and breach of the escrow contract.
The case I complaint further alleged that Ticor had slandered the Markses' title and asserted that Ticor had conspired with Palmall/Shipkey to "intentionally and fraudulently convey[ ] the same property" to the Markses and Executive. The Markses also claimed that Ticor had breached its title insurance contract with them, breached its fiduciary duty, acted in bad faith, and violated its statutory obligations by failing to defend them in their attempt to acquire clear title to lot 2. The Markses' complaint also sought an injunction against a party attempting to foreclose on lot 2 by way of a deed of trust issued by Executive.
Upon being served in case I, Executive contacted a law firm, which in turn contacted Ticor. Ticor informed Executive that separate counsel would not be necessary, and agreed to defend Executive's title against the Markses without reservation of rights. Case I proceeded to trial with Ticor and Executive sharing the counsel of R. Gardner Jolley (Jolley). On the fourth day of the case I trial, February 21, 1991, Judge Thompson responded in chambers to a concern raised by Executive's president about a possible conflict of interest with Jolley's dual representation of Ticor and Executive; Judge Thompson offered to declare a mistrial to allow Executive to seek independent counsel.
During this in-chambers discussion, Judge Thompson noted: Executive chose to proceed with the trial of case I, but the day after this in-chambers discussion sent the following letter to Jolley, stating in pertinent part:
Executive Management is fully aware that if Executive Management is not the prevailing party relating to the property which is the subject matter of [case I], Executive Management may have potential claims against Ticor Title, along with the other defendants in the lawsuit. Additionally, the issue of a potential conflict in your office representing both Ticor Title and Executive Management has previously been discussed regarding the fact that there may be future potential litigation involving Ticor Title.
This letter is to confirm the telephone conversation ... whereby Executive Management agreed to waive any potential conflict as it relates to your office representing both Executive Management as our attorneys and also Ticor Title in [case I], but solely on the condition that allowing your office to continue in [case I] shall not be considered a waiver of any rights that Executive Management may have under its title insurance policy against Ticor or other claims Executive Management may have against any other defendants in the action....
That same day, Executive filed suit (case II) against the Markses to quiet title to lot 2 in its favor and for slandering its title to lot 2. Executive claimed that the Markses had knowingly misrepresented to others that they owned lot 2 and had maliciously filed a lis pendens against Executive's lots 2 and 3, thereby "impair[ing] the vendibility" of that property. Executive alleged damages in that the lis pendens filed against lots 2 and 3 had interfered with a multi-million dollar sale of that real estate to...
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