Fidelity Nat. Title Ins. Co. v. Tri-Lakes Title Co., Inc., TRI-LAKES

• Decision Date: 29 April 1998
• Docket Number: TRI-LAKES,No. 21771,21771
• Parties: FIDELITY NATIONAL TITLE INSURANCE CO., Plaintiff-Respondent, v.TITLE CO., INC., Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 727

968 S.W.2d 727

FIDELITY NATIONAL TITLE INSURANCE CO., Plaintiff-Respondent, v. TRI-LAKES TITLE CO., INC., Defendant-Appellant.

No. 21771.

Missouri Court of Appeals,

Southern District,

Division Two.

April 29, 1998.

Mark Rundel, Galena, for Appellant.

James R. Fossard, Springfield, for Respondent.

BARNEY, Judge.

Fidelity National Title Insurance Company (Plaintiff) brought this action against Tri-Lakes Title Company, Inc. (Defendant) for breach of contract and negligence relative to Defendant's preparation of a title report. Following a court-tried case, judgment was entered in favor of Plaintiff for damages in the sum of $37,500.00. Defendant appeals.

This Court reviews the facts in the light most favorable to the trial court's judgment. Gibson v. Adams, 946 S.W.2d 796, 799 (Mo.App.1997).

Plaintiff operates a title insurance business in Springfield, Missouri. Defendant is a title company engaged in the business of abstracting titles, title insurance, and escrow closings. Defendant is located in Branson, Missouri. Defendant has prepared approximately 160 title reports for Plaintiff since 1993.

During October 1993, Plaintiff requested that Defendant prepare a title report concerning some real estate located in Taney County, Missouri. Defendant agreed to prepare the report. On October 7, 1993, Defendant delivered the title report to Plaintiff. Plaintiff payed Defendant $150.00 for the title report. Plaintiff also agreed to pay and did pay to Defendant an additional sum of $1,295.75 for the title report, such amount representing one-half of the insurance premium proceeds Plaintiff was to receive from the purchasers of the real estate covered by the title report.

Relying on Defendant's title report, on December 7, 1993, Plaintiff issued a title insurance policy to Clyde L. Lorance and Anise C. Brasher, which covered the real estate identified in the title report prepared by Defendant. ¹

Mr. Lorance and Ms. Brasher later discovered that, prior to their purchase of the real estate, an easement was granted to the City of Branson by the previous owners of the property for a "permanent street right-of-way" and for a "permanent slope maintenance easement." ² The easement agreement was duly recorded in the Taney County Recorder's Office on September 8, 1993. Defendant's title report failed to disclose the existence of this easement agreement, as candidly admitted by Defendant's president.

Mr. Lorance and Ms. Brasher then filed a claim on their title insurance policy issued by Plaintiff. On April 18, 1996, Plaintiff settled the claim and paid $45,000.00 to Mr. Lorance and Ms. Brasher as compensation for their property's diminished value due to the two easements in question. Plaintiff then initiated this action against Defendant in two counts, breach of contract and negligence, seeking recovery of the damages it sustained in settlement of its insured's claim.

On appeal of the trial court's judgment, Defendant assigns three points of trial court error. First, it avers that the trial court erred in failing to sustain its motion for directed verdict at the close of Plaintiff's evidence because Plaintiff failed to produce any title insurance policy establishing Plaintiff's right of subrogation. Second, Defendant maintains that the trial court erred in determining Plaintiff's damages under its breach of contract claim because the proper measure of damages is determined by the difference in the fair market value of the property before and after injury and that the trial court's determination was not supported by the evidence. Third, Defendant maintains that the trial court erred in granting judgment to Plaintiff under its negligence claim because Plaintiff failed to adduce any evidence of lack of reasonable care or the duty owed and thereby failed to prove all elements of its cause of action in negligence.

On review, we must affirm the judgment of the trial court unless there is no evidence to support the judgment, the judgment is clearly against the weight of the evidence, or the judgment erroneously declares or applies the law. Gibson, 946 S.W.2d at 800. We accept all inferences and evidence favorable to the judgment and disregard all contrary inferences. Id. Furthermore, we are bound by the trial court's factual findings if such findings are supported by substantial evidence. Id. We will give deference to the trial court in judging credibility of witnesses, and all factual issues upon which no specific findings have been made will be interpreted by this Court as having been found in accordance with the result reached by the trial court. Id.

I.

In Defendant's first assignment of error, it contends that the trial court erred in failing to sustain its motion for directed verdict because the Plaintiff failed to prove that it was entitled to subrogation under the title insurance policy it issued to Mr. Lorance and Ms. Brasher. Specifically, Defendant avers that it was necessary for Plaintiff to produce to the trial court the title insurance policy issued to Mr. Lorance and Ms. Brasher, and that by failing to produce same, Plaintiff failed to establish that it was entitled to indemnity or subrogation.

Directing a verdict is a drastic measure. Schumacher v. Barker, 948 S.W.2d 166, 168 (Mo.App.1997). When the asserted error is failure to grant a directed verdict for the defendant, this Court examines the evidence presented at trial to determine whether plaintiff submitted substantial evidence that tends to prove the facts essential to plaintiff's claim. Lasky v. Union Elec. Co., 936 S.W.2d 797, 801 (Mo. banc 1997). We review the facts and evidence in the light most favorable to the plaintiff. Id. If the facts are such that reasonable minds could draw differing conclusions, the issue becomes a question for the finder of fact and a directed verdict is improper. Id.

Here, we note that Plaintiff's petition alleged two counts against Defendant: (1) breach of contract, and (2) negligence. We also note that notwithstanding Plaintiff's reference to "subrogation" in paragraph 17 of its petition, neither of the two theories of recovery alleged in Plaintiff's petition were dependent on a right of written, contractual subrogation as in the case of an insurance policy. ³

To make a submissible case for a breach of contract claim, a plaintiff must allege and prove (1) mutual agreement between parties capable of contracting; (2) mutual obligations arising out of the agreement; (3) valid consideration; (4) part performance by one party; and (5) damages resulting from the breach of contract. Muir v. Ruder, 945 S.W.2d 33, 36 (Mo.App.1997); Howe v. ALD Services, Inc., 941 S.W.2d 645, 650 (Mo.App.1997).

The evidence shows that Plaintiff and Defendant developed a modus operandi by which one party made title searches for the other in their respective counties:

Q. Okay. Now you in the ordinary course of business with Tri-Lakes and dealing with other title companies like Fidelity, is it not typical for you sometimes to prepare title reports for other title insurance companies that are in turn going to close real estate transactions?

A. [by Defendant's president]: Sure. Absolutely.

...

Q. So it's typical in those circumstances for you to know that the closing company in another county for example is going to rely upon your report in doing whatever work they do?

A. I assume that would be the basis for whatever work they are performing.

In response to the question as to "how many times you've done work--your company's done work for Fidelity?" Defendant's president stated "I think the last check we had done 160 searches since 1993." (emphasis added). Defendant's president then acknowledged that he was requested to do the instant "title search," and that he was "[j]ust to provide information to Fidelity."

The parties' agreement, then, was not for Defendant to issue a title insurance policy to either Plaintiff or a third party, but, rather to make "searches" and make a "title report," similar in scope, for example, with that of an attorney making a title search. ⁴ Plaintiff was therefore not required to either produce the title insurance policy or otherwise prove that it had a subrogation right precedent to establishing liability and recovering damages under the theories alleged in its petition. "A duty to exercise care may be imposed by entering into a contractual relationship." Evinger v. McDaniel Title Co., 726 S.W.2d 468, 472 (Mo.App.1987).

In Slate v. Boone County Abstract Co., 432 S.W.2d 305, 307 (Mo.1968), our Supreme Court authorized a third party buyer of real estate, as third party beneficiary, to sue based upon a contract entered into between an abstract company and the seller of the property. The Court gave implicit recognition of the contractual relationship existing among the three parties, the breach of which authorized recovery of damages by buyer. Id. at 307-08.

Here, Defendant admitted to Plaintiff's allegation that Defendant agreed to prepare a title report ⁵ for Plaintiff on the particular property for which Plaintiff issued a title insurance policy. Defendant also admitted that it did prepare and deliver to Plaintiff a title report covering the particular property for which Plaintiff issued a title insurance policy. Defendant admitted that it received payment from Plaintiff for preparing the title report. Defendant admitted that it knew that Plaintiff would rely on the accuracy of the title report in issuing a title insurance policy.

In its judgment the trial court declared:

The Court finds plaintiff and defendant entered into a contract whereby defendant would provide a title report and for which defendant was paid $150.00 together with $1295.75 as one-half of the premium received from issuance of the title policy. The Court finds defendant breached the contract by failing to include the right-of-way and slope maintenance easement.

(Emphasis added).

"[I]t is for the trier of fact to determine whether...