Title Agent’s Mistake
Does Not Amount to Fraud
The Agent determined that access to the insured parcel was over a particular Right of Way. After closing, questions arose concerning the access rights. The Agent reviewed the issue, decided that its original position was sound and reaffirmed it to the Insured’s attorney. Eventually, the courts determined that the parcel was not benefited by the Right of Way. The Insured sued the underwriter for fraud, claiming that the Agent’s continued representation was made with knowledge of its falsity for the purpose of inducing plaintiff to refrain from filing a claim under the policy.
The Third Department held that the evidence would not support “a reasonable inference either that [the Agent’s] employees knew that their representations regarding the ROW were false or that plaintiff relied on them.” McColgan v Brewer, 2013 NY Slip Op 08492, (App. Div., 3rd Dept., December 19, 2013).
(Kudos to Constructive Notice subscriber Edward M. Tobin, Esq. and his team at Fidelity National Law Group on their impressive win.)
The evidence showed that two Agency employees undertook several investigations of the problem and independently reached the same sincere (albeit, incorrect) conclusion. In addition, the Insured’s counsel undertook his own independent investigation and arrived at the same conclusion! Ultimately, the Insured relied on his own counsel’s opinion in delaying to file suit.