Lombardo v. Pierson
| Decision Date | 03 June 1993 |
| Docket Number | No. 59428-7,59428-7 |
| Citation | 852 P.2d 308,121 Wn.2d 577 |
| Court | Washington Supreme Court |
| Parties | Shirley Y. LOMBARDO, a single person, Appellant, v. Harlan PIERSON, Karen (Hill) Pierson, husband and wife; Ticor Title Insurance Company; William L. Hames and Pamela Hames, husband and wife; and Timmons, Hames & Hollenbeck, a partnership, Respondents. En Banc |
Horton, Wilkins, Faurholt & Connor, Harvey Faurholt, Kennewick, for appellant.
Sirianni & Youtz, Stephen J. Sirianni, Seattle, for respondents.
Appellant Shirley Lombardo brought this action against respondent Ticor Title Insurance Company (Ticor) and various other parties for failing to disclose a document uncovered during a title search conducted prior to the purchase of her farm. The document, entitled "Agreement to Retain Land in Irrigable Status", alluded to potential seepage problems and purported to be a covenant running with the land. The trial court granted Ticor's CR 12(b)(6) motion dismissing the title company because the document did not affect title, or otherwise encumber the property. We affirm.
The parties are in general agreement as to the facts. In April 1985, appellant Shirley Lombardo purchased a farm, consisting of approximately 100 acres, in Franklin County, Washington from Harlan and Karen (Hill) Pierson. The land was located within the Columbia Basin Project. A title insurance policy was issued by Ticor with Lombardo being the named insured.
Lombardo filed a complaint against Ticor and other various parties on December 18, 1989. The complaint alleged that the property had become unsuitable for farming due to seepage conditions. According to Lombardo, Ticor intentionally or negligently omitted a document from the title insurance policy's exceptions list which was designated "Agreement to Retain Land in Irrigable Status" (hereinafter Agreement to Retain Land). This document was executed in June 1982 between Vaughn and Linda Morgan (the owners of the farm at that time), the United States Department of the Interior Federal Bureau of Reclamation, and the South Columbia Basin Irrigation District. Although the record is unclear as to the exact function of this document, it appears to have been precipitated by an alteration to the Columbia Basin Project.
One result of this alteration was to raise the water table for the Lombardo farm, thereby causing the seepage problem. The owners of the farm in 1982, the Morgans, agreed to accept "lieu lands" from the federal government as compensation for the seepage problem. They received the lieu land, which was located in Grant County, and retained ownership of the farm currently owned by Lombardo. According to the complaint, Lombardo became aware of the Agreement to Retain Land only after seepage began to affect her farm.
The Agreement to Retain Land refers to potential seepage problems on the Lombardo farm, but notes that the landowner wishes to maintain the property's irrigable classification. As such, the document provides that the federal government shall maintain the irrigable status of the land, and in return, the landowner will pay irrigation assessments regardless of "whether ... the said land continues to be suitable for irrigation development." Exhibit 1 (deposition of Warren). The document further states that the landowner acknowledges the federal government's determination that construction of drainage works is not currently feasible, and that a drainage system might be constructed in the future if federal criteria are altered. The document purports to be a covenant running with the land, and "shall be binding on the heirs, divisees, successors, and assigns of the landowner". Exhibit 1 (deposition of Warren).
A highlighted map of the farm which was appended to the Agreement to Retain Land reveals that almost half the acreage (49.2 acres) is "forecast to become wet and [has] been determined infeasible to drain under present project criteria." Clerk's Papers (CP), at 160. Another 2.7 acres are "[f]ormerly irrigable lands ... which have no water allotment because they were determined infeasible to drain." CP, at 160. The entire Agreement to Retain Land, including the map, was properly filed with the Franklin County Auditor's Office.
Ticor admits that they discovered this document during the title search. According to the deposition of the title examiner, Sharon Warren, she reviewed the Agreement to Retain Land document. The document was not included in the preliminary title commitment or the final policy because it was either covered by existing exceptions or a document not affecting title. William L. Hames, the attorney who closed the sale for Lombardo, did not perform any independent title search. Instead, he relied upon the search reported by Ticor. In an affidavit, Hames testified that reliance on the title company search is the standard of care for attorneys closing real estate deals. In her deposition, Warren stated that attorneys can rely upon the title report for anything that "affects the title". Deposition of Warren, at 7. Warren also testified that she did not expect attorneys to perform independent title searches.
Following the Warren deposition, Lombardo filed a motion for summary judgment against Ticor, arguing that the insurance company failed in its duty to schedule the Agreement to Retain Land as an exception to the policy. Soon after, Ticor filed the CR 12(b)(6) motion which is the subject of this appeal. The motion averred that Ticor had no duty to disclose documents produced through a title search which do not affect title.
In a memorandum decision, Judge Dennis D. Yule of the Franklin County Superior Court denied Lombardo's motion for summary judgment and granted Ticor's CR 12(b)(6) motion. The trial court acknowledged that the question of whether a title insurer has a duty to disclose documents affecting title is still an open one in this state. Nonetheless, such a duty was not implicated in this case because "[t]he agreement does not constitute an encumbrance on the title to the property within the coverage provisions of the policy." CP, at 189-90. The trial court stated that "[w]hile [the seepage] condition may well affect the property's use and, therefore, its value, it does not affect its title and is beyond the responsibility undertaken by the title company." CP, at 190. The only true burden contained in the Agreement to Retain Land, the provision for continuing irrigation assessments, was already covered by the first exception to the Ticor policy. 1 With the approval of the trial court, Lombardo immediately appealed the CR 12(b)(6) ruling dismissing Ticor from the suit. The Court of Appeals certified the case to this court pursuant to RCW 2.06.030(d), and we accepted certification. 2
Whether a title insurance company has a duty to disclose documents affecting title which were discovered in a title search is an issue that has been presented to this court on three separate occasions. Klickman v. Title Guar. Co., 105 Wash.2d 526, 716 P.2d 840 (1986); Transamerica Title Ins. Co. v. Johnson, 103 Wash.2d 409, 693 P.2d 697 (1985); Shotwell v. Transamerica Title Ins. Co., 91 Wash.2d 161, 588 P.2d 208 (1978). We have never answered this question, however, because each of the above cases was properly decided on alternate grounds. Similarly, because the document relied upon in the current case does not affect title, we must "once again reserve the broad question of the title insurance company's duty to search and disclose [documents affecting title] if reliance is shown." Johnson, 103 Wash.2d at 415, 693 P.2d 697.
No matter how one reads the Agreement to Retain Land, it cannot be said to create (or even mention) any covenant or easement relating to the seepage condition. The only legal consequence of the document is a continuing obligation to pay irrigation assessments. This assessment covenant falls squarely within the first exception listed on the Ticor title insurance policy. Moreover, the general references within the document that the land might be subject to future seepage are not relevant to the question of title. Although seepage lowers the value of the farm and limits its beneficial uses, there is nothing in the document suggesting that this problem is other than a natural condition like rocky soil or a steep slope. In short, other than the excepted irrigation assessments, the Agreement to Retain Land does not affect title to the Lombardo farm. 3
Nonetheless, Lombardo argues that the duty to search and disclose should not apply only to documents affecting title, but to "all matters affecting the property that are of 'public record'." Brief of Appellant, at 27. In this case, Ticor found a document "of critical importance" to Lombardo's decision on whether to purchase the land and failed to disclose it. Brief of Appellant, at 19. According to Lombardo, had Ticor simply chosen to photocopy the five pages of the Agreement to Retain Land in Irrigable Status, she would have been spared the financial disaster of purchasing the farm.
Lombardo fails to cite any cases adopting the proposed broad rule that a title company must disclose all recorded documents, regardless of whether they implicate title. In fact, in Klickman v. Title Guaranty Co., we decided this issue to the contrary. In that case, the vendor of property sought to recover from his title insurer for failing to disclose a document requiring him to share the proceeds of a sale with a third party. We did not reach the duty to disclose question because:
Put simply, the agreement here is not a title defect because it does not affect title. The agreement merely gives Herman Klickman a lien on one-third of the proceeds derived from a sale of the property in question. It does not give Herman Klickman any interest in the property, nor does it give him the right to disturb the buyers in their possession of the property. In short, the buyers could not possibly be...
To continue reading
Request your trial
-
Ninth Circuit in Centurion Props. III, LLC v. Chi. Title Ins. Co.
...Guar. Co. of Lewis County , 105 Wash.2d 526, 528, 716 P.2d 840 (1986) (no liability because no title defect); Lombardo v. Pierson , 121 Wash.2d 577, 581–83, 852 P.2d 308 (1993) (same). These cases strongly suggest that title insurers do not owe a duty of care to third parties when merely re......
-
Seeley v. Roden
...to dismiss, its `decision should be reviewed as though it were a motion for summary judgment under CR 56.' Lombardo v. Pierson, 121 Wn.2d 577, 581 n.2, 852 P. 2d 308 (1993). Because the trial court properly granted Wardle summary judgment, the validity of the trial court's order granting Wa......
-
Kitsap County v. Allstate Ins. Co.
...should extend only to matters of the same general class or nature as the terms specifically enumerated. See Lombardo v. Pierson, 121 Wash.2d 577, 583, 852 P.2d 308 (1993) ("the term 'other matters' is given a meaning similar to the specific items We are not persuaded that the doctrine is ap......
-
Barstad v. Stewart Title Guar. Co., Inc.
...716 P.2d 840 (1986) (holding lien on proceeds from sale of property does not affect title and is not encumbrance); Lombardo v. Pierson, 121 Wash.2d 577, 852 P.2d 308 (1993) (holding document disclosing continuing obligation to pay irrigation assessments was not expressly excepted from title......
-
Table of Cases
...denied, 117 Wn.2d 1016 (1991): 3.2(4) Logan v. Time Oil Co., 73 Wn.2d 161, 437 P.2d 192 (1968): 17.3(3)(d)(iv) Lombardo v. Pierson, 121 Wn.2d 577, 852 P.2d 308 (1993): 14.7 London & S.F. Bank v. Curtis, 27 Wash. 656, 68 P. 329 (1902): 17.3(3)(b)(ii) Long v. Leonard, 191 Wash. 284, 71 P.2d 1......
-
§14.7 - The Insuring Process
...Supreme Court on four separate prior occasions, and each time the court declined to address the question. See Lombardo v. Pierson, 121 Wn.2d 577, 852 P.2d 308 (1993); Klickman v. Title Guar. Co. of Lewis County, 105 Wn.2d 526, 716 P.2d 840 (1986); Transamerica Title Ins. Co. v. Johnson, 103......