Pearman v. Stewart Title Guaranty Co., Court of Appeals Case No. 73A05-1708-PL-2040

• Decision Date: 27 June 2018
• Docket Number: Court of Appeals Case No. 73A05-1708-PL-2040
• Citation: 108 N.E.3d 342
• Parties: Curtis PEARMAN, Appellant-Plaintiff, v. STEWART TITLE GUARANTY COMPANY, Appellee-Defendant.
• Court: Indiana Appellate Court

108 N.E.3d 342

Curtis PEARMAN, Appellant-Plaintiff,

v.STEWART TITLE GUARANTY COMPANY, Appellee-Defendant.

Court of Appeals Case No. 73A05-1708-PL-2040

Court of Appeals of Indiana.

Filed June 27, 2018

Rehearing denied September 11, 2018

Appellant Pro Se: Curtis Pearman, Naples, Florida

Attorney for Appellee: Scott J. Fandre, Krieg DeVault, LLP, Mishawaka, Indiana

Mathias, Judge.

[1] Curtis Pearman ("Pearman") appeals the order of the Shelby Circuit Court granting summary judgment in favor of Stewart Title Guaranty Company ("STGC") in Pearman's claim for extra-contractual damages arising out of a title insurance policy issued by STGC to Pearman. On appeal, Pearman presents eleven issues, which we consolidate and restate as the following four:

I. Whether the trial court erred in granting summary judgment against Pearman on his claim of negligent misrepresentation against STGC;

II. Whether the trial court erred in granting summary judgment against Pearman on his claim of insurer bad faith against STGC;

III. Whether the trial court erred by failing to grant attorney fees to Pearman; and

IV. Whether the trial court erred by failing to grant punitive damages to Pearman.

[2] We affirm.

Facts and Procedural History

[3] This case involves Pearman's attempt to purchase certain real estate in Shelbyville, Indiana, known as the Tippecanoe Press Building complex. Originally, the Wickizer Family Trust owned the real estate, which consisted of four separate parcels. Shelby County Bank subsequently obtained title to three of these parcels. The first parcel was a thirty-thousand-square-foot commercial complex; the second parcel was a private alley; and the third parcel ("Parcel 3"), which is at issue here, contained a garage and parking spaces. Shelby County Bank was later placed in receivership, with the Federal Deposit Insurance Corporation ("FDIC") acting as receiver.

[4] In 2013, Pearman sought to purchase the three parcels owned by FDIC.¹ On August 28, 2013, Hale Abstract Company, Inc. ("Hale") procured a title commitment² from STGC regarding the three parcels. However, Parcel 3 had been sold to a nearby church by Shelby County Bank prior to its being placed in receivership. Pearman eventually paid FDIC $5,000 for a quitclaim deed to what he believed contained all three parcels. And STGC issued a title policy on October 16, 2013, for all three parcels.

[5] When Pearman learned that he did not have title to Parcel 3, he submitted a claim under the policy for Parcel 3 to STGC on January 10, 2014. On January 14, 2014, STGC sent Pearman notice that it had appointed a claims counsel to review his claim. On June 24, 2014, STGC's claims counsel offered to settle the matter for $8,000 in exchange for a release from liability regarding Parcel 3.

[6] Pearman did not accept the offer but filed a complaint against Hale and STGC on June 27, 2014. The complaint sought a declaratory judgment that STGC had a duty to indemnify Pearman under the Policy and that STGC negligently misrepresented the status of the title to Parcel 3. The complaint also included a claim for breach of contract based on the Policy, a claim of damages as a result of the defendants' negligent misrepresentation, and a claim for attorney fees.

[7] STGC and Hale obtained an appraisal of Parcel 3, which determined that the value of the other parcels without Parcel 3 was diminished by $30,000. The defendants then offered to settle the case for this amount, but Pearman again declined the offer. Eventually, STGC made a litigation decision to file a counterclaim for a declaratory judgment, asking the trial court to approve the tender of the $70,000 policy limits to Pearman and end any further litigation, effectively interpleading the policy limits.

[8] On December 19, 2016, Pearman filed a motion for summary judgment, and on January 17, 2017, STGC filed a response and a cross-motion for summary judgment. The trial court held a hearing on both motions on January 18, 2017. On March 22, 2017, the trial court entered findings of fact and conclusions of law granting STGC's motion for summary judgment, thereby entering an award of the $70,000 policy limits to Pearman. The court's summary judgment order otherwise denied Pearman's motion for summary judgment as to its claims against STGC.³

[9] On April 20, 2017, Pearman filed a motion to correct error. Five days later, the court set the matter for a hearing to be held on May 31, 2017. STGC filed a response to Pearman's motion on May 8, 2017. On May 31, 2017, the trial court held a hearing on Pearman's motion to correct error. On June 29, 2017, the trial court entered an order on its chronological case summary ("CCS") stating that it was, pursuant to its authority under Indiana Trial Rule 53.3, extending the deadline for its ruling on the motion to correct error to July 31, 2017. The trial court then entered its order denying Pearman's motion to correct error on that date. Pearman filed his notice of appeal on August 24, 2017, and this appeal ensued.⁴

Standard of Review

[10] Our standard for reviewing a trial court's order granting a motion for summary judgment is well settled. A trial court should grant a motion for summary judgment only when the evidence shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Altevogt v. Brand , 963 N.E.2d 1146, 1150 (Ind. Ct. App. 2012) (citing Ind. Trial Rule 56(C) ). The trial court's grant of a motion for summary judgment comes to us cloaked with a presumption of validity. Id. " ‘An appellate court reviewing a trial court summary judgment ruling likewise construes all facts and reasonable inferences in favor of the non-moving party and determines whether the moving party has shown from the designated evidentiary matter that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law.’ " Id. (quoting Dugan v. Mittal Steel USA Inc. , 929 N.E.2d 184, 186 (Ind. 2010) ). However, a de novo standard of review applies where the dispute is one of law rather than fact. Id. On appeal, we examine only those materials designated to the trial court on the motion for summary judgment, and we must affirm the trial court's entry of summary judgment if it can be sustained on any theory or basis in the record. Id.

I. Negligent Misrepresentation

[11] Pearman first argues that the trial court erred as a matter of law for not finding STGC liable for negligent misrepresentation in its title commitment. Pearman notes that the trial court found Hale liable for negligent misrepresentation, but failed to make a similar determination of liability with regard to STGC.

[12] The tort of negligent misrepresentation has been described as follows:

One who, in the course of his business, profession, or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

U.S. Bank, N.A. v. Integrity Land Title Corp. , 929 N.E.2d 742, 747 (Ind. 2010) (quoting Restatement (Second) of Torts § 552 (1977) ).

[13] In U.S. Bank , our supreme court considered the issue of whether a title insurer could be liable under a theory of negligent misrepresentation, separate and apart from the contractual obligations of the title policy itself. In addressing this question, the court first noted that:

We agree with the authorities which hold that there may be tort liability for misrepresentations made in preliminary commitments for title insurance. In our view, such commitments provide an essential service to prospective buyers and lenders. They are told what transactions must take place before they can receive clear title or an effective security.

U.S. Bank , 929 N.E.2d at 749 (quoting Bank of California, N.A. v. First Am. Title Ins. Co. , 826 P.2d 1126, 1129 (Alaska 1992) ).

[14] The U.S. Bank court also observed that insureds, escrow agents, and lenders typically rely on preliminary title reports. 929 N.E.2d at 749. Title insurance companies not only have full knowledge of this reliance but also encourage such reliance. Id. "Title searches are frequently required in situations involving transactions in which the state of the title must be known accurately or the customer foreseeably will suffer harm that is both certain and direct." Izynski v. Chicago Title Ins. Co. , 963 N.E.2d 592, 597 (Ind. Ct. App. 2012) (citing U.S. Bank , 929 N.E.2d at 749 ), trans. denied . "Title insurers give a preliminary commitment to property purchasers or lenders before the closing of the real estate transaction. The buyer or lender then may negotiate with the seller or borrower for the removal of any listed title defects, bargain to pay a lower amount to take subject to those risks, or rescind the transaction." Id. (citing U.S. Bank , 929 N.E.2d at 749 ). Thus, a buyer or lender who receives a clear preliminary commitment at this stage of the transaction perceives it to be a representation that the seller or borrower has a clear title and may close the transaction in reliance upon it. Id. (citing U.S. Bank , 929 N.E.2d at 749 ). All of this would, at first blush, seem to support Pearman's claim.

[15] Importantly, however, the U.S. Bank court held that a title insurance company could be held liable to a lender under the theory of negligent misrepresentation "if the title company and the lender did not have a contractual relationship." Id. (emphasis added) (citing U.S. Bank , 929 N.E.2d at 745 ). In U.S. Bank , the lender, Integrity, argued that it was not in contractual privity with U.S. Bank. 929 N.E.2d at 745. "This," our supreme court held, was "a critical point." Id. The court held that, "[w]ere there to be a contract between Integrity and U.S. Bank, the...