ANTONIO RUSSO VS. PPN TITLE AGENCY, LLC VS. JOHN LUCIANO, ETC. (L-3475-14, PASSAIC COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: July 20, 2017
• Docket: A-2297-15T4
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2297-15T4

ANTONIO RUSSO,

Plaintiff-Appellant/ Cross-Respondent,

v.

PPN TITLE AGENCY, LLC,

Defendant/Third-Party Plaintiff- Respondent/Cross-Appellant,

JOHN LUCIANO, d/b/a RYAN EXPRESS ABSTRACTS,

Third-Party Defendant. ____________________________

Argued May 24, 2017 – Decided July 20, 2017

Before Judges Simonelli, Gooden Brown and Farrington.

On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-3475-14.

David J. Zwerling argued the cause for appellant/cross-respondent (Zwerling Law Group L.L.C., attorneys; Mr. Zwerling, on the briefs). Russell M. Finestein argued the cause for respondent/cross-appellant (Finestein & Malloy, L.L.C., attorneys; Mr. Finestein and Corrine LaCroix Tighe, on the brief).

Michael J. Fasano argued the cause for amicus curiae New Jersey Land Title Association (Davison, Eastman & Muñoz, P.A., attorneys; Mr. Fasano, on the brief).

PER CURIAM

Plaintiff Antonio Russo appeals from the January 11, 2016 Law

Division order, which granted summary judgment to defendant PPN

Title Agency, LLC (PPN) and denied his cross-motion for summary

judgment. PPN cross-appeals from the September 8, 2015 order,

which denied its motion to dismiss for failure to serve an

affidavit of merit in compliance with the Affidavit of Merit (AOM)

statute, N.J.S.A. 2A:53A-27. Because we conclude that summary

judgment was properly granted to PPN, we do not address PPN's

cross-appeal.

I.

We derive the following facts from evidence submitted by the

parties in support of, and in opposition to, the summary judgment

motion, viewed in the light most favorable to the non-moving party.

Angland v. Mountain Creek Resort, Inc., 213 N.J. 573, 577 (2013)

(citing Brill v. Guardian Life Ins. Co., 142 N.J. 520, 523 (1995)).

Chicago Title Insurance Company (Chicago Title) entered into

an agency contract with PPN, which permitted PPN to validate,

2 A-2297-15T4 countersign, issue, and deliver title commitments, title insurance

policies, and endorsements on behalf of Chicago Title.

Plaintiff contracted to purchase property in Hawthorne from

Joseph Putz, III for $275,000. In connection with the transaction,

plaintiff's attorney ordered a title binder/commitment1 from PPN.

Other than the title commitment, plaintiff did not order, and PPN

did not issue or deliver, a title search or title abstract to

plaintiff or his attorney.

In conjunction with its obligation to issue the title

commitment and title insurance policy, PPN contracted with an

independent contractor, John Luciano, d/b/a Ryan Express

Abstracts, to conduct a title search, including a search for

outstanding mortgages. Luciano performed a title search and

prepared a title report, which indicated there were no mortgages

on the property. PPN used the results of Luciano's search to

prepare a title insurance commitment. PPN, as agent for Chicago

Title, issued a title commitment to plaintiff. The closing

occurred on December 17, 2012. At the closing, Putz provided a

notarized affidavit of title, stating there were no open mortgages

encumbering the property.

1 A title binder is the same as a title commitment. Palomar, Title Insurance Law, Vol. I, § 5.29 (2015).

3 A-2297-15T4 PPN, as agent for Chicago Title, issued a title insurance

policy insuring title to the property for $275,000. The policy

insured "against loss or damage, not exceeding the [a]mount of

insurance, sustained . . . by reason of . . . [a]ny defect in lien

or encumbrance on the [t]itle." The policy contained the following

limits on liability provisions:

8. DETERMINATION AND EXTENT OF LIABILITY

This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the Insured Claimant who has suffered loss or damage by reason of matters insured against by this policy.

(a) The extent of liability of the Company for loss or damage under this policy shall not exceed the lesser of

(i) the Amount of Insurance; or

(ii) the difference between the value of the Title as insured and the value of the Title subject to the risk insured against by this policy.

. . . .

15. LIABILITY LIMITED TO THIS POLICY; POLICY ENTIRE CONTRACT

(a) This policy together with all endorsements, if any, attached to it by the Company is the entire policy and contract between [the parties]. In interpreting any provision of this policy, this policy shall be construed as a whole.

(b) Any claim of loss or damage that arises out of the status of the [t]itle or by

4 A-2297-15T4 any action asserting such claim shall be restricted to this policy.

Plaintiff renovated the property, and in 2013, contracted to

sell it for $534,900. A title search obtained by the purchaser

revealed the property was encumbered by a mortgage executed by

Putz on August 23, 2006, and recorded in the Passaic County Clerk's

Office on September 26, 2006, and a lis pendens. The mortgage had

an outstanding balance of $341,017.76 as of the date of the closing

in this transaction. Plaintiff made a claim to Chicago Title,

which paid him the full title insurance policy amount of $275,000,

leaving him liable for $66,017.76 to pay off the open mortgage.

Plaintiff filed a complaint against PPN, alleging negligence

in performing the title search and preparing and delivering an

abstract of title, and breach of contract. PPN filed a motion to

dismiss the complaint with prejudice for failure to serve an AOM,

which the motion judge denied.

The parties subsequently filed motions for summary judgment.

The motion judge granted PPN's motion, finding that PPN acted

solely as an agent for Chicago Title and conducted and issued a

title insurance commitment and title insurance policy, not a title

search or title abstract. Citing Walker Rogge, Inc. v. Chelsea

Title & Guaranty Co., 116 N.J. 517 (1989), the judge concluded

that the title insurance policy limited the liability of Chicago

5 A-2297-15T4 Title and its agent, PPN, to $275,000, and plaintiff could not

circumvent the limitations by suing in negligence or suing the

insurance company's agent for damages that exceed the policy

limits. This appeal and cross-appeal followed.

II.

"[A] title company's liability is limited to the policy and

that company is not liable in tort for negligence in searching

records." Id. at 535. "If, however, the title company agrees to

conduct a search and provide the insured with an abstract of title

in addition to the policy, it may expose itself to liability for

negligence as a title searcher in addition to its liability under

the policy." Id. at 535 (citations omitted).

Plaintiff contends that PPN is liable in negligence for

damages exceeding the policy limits because it conducted a title

search and provided an abstract of title. PPN counters that

plaintiff never ordered, and PPN never provided, a title search

or abstract of title. Rather, plaintiff ordered a title

commitment, and PPN conducted the title search for its own benefit

in conjunction with its obligation to issue the title commitment

and title insurance policy. Amicus, New Jersey Land Title

Association (NJLTA), adds that the Walker Rogge exception does not

apply here because plaintiff ordered and received a title

commitment, which is not an abstract of title, and a negligent

6 A-2297-15T4 title search cannot be the basis of suit to recover damages beyond

the policy limits.

We review a ruling on a motion for summary judgment de novo,

applying the same standard governing the trial court. Templo

Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189,

199 (2016) (citation omitted). Thus, we consider, as the motion

judge did, "whether the competent evidential materials presented,

when viewed in the light most favorable to the non-moving party,

are sufficient to permit a rational factfinder to resolve the

alleged disputed issue in favor of the non-moving party." Davis

v. Brickman Landscaping, Ltd., 219 N.J. 395, 406 (2014) (citation

omitted). If there is no genuine issue of material fact, we must

then "decide whether the trial court correctly interpreted the

law." DepoLink Court Reporting & Litig. Support Servs. v. Rochman,

430 N.J. Super. 325, 333 (App. Div. 2013) (citation omitted). We

review issues of law de novo and accord no deference to the trial

judge's legal conclusions. Nicholas v. Mynster, 213 N.J. 463, 478

(2013). For mixed questions of law and fact, we give deference

to the supported factual findings of the trial court, but review

de novo the court's application of any legal rules to such factual

findings. State v. Pierre, 223 N.J. 560, 576-77 (2015) (citations

omitted). Applying the above standards, we conclude that summary

judgment was properly granted to PPN.

7 A-2297-15T4 An abstract of title is not the same as a title commitment.

See Walker Rogge, supra, 116 N.J. at 535. An abstract of title

traces the chain of title back at least 60 years, where

the searcher may discover that the ancestor at the beginning of the 60 year period held the property, not by a deed, but under a will. The practice in such cases is to trace the title back further, until a conveyance by deed into the ancestor is found. This may necessitate searching back to the original proprietors. The same practice is followed when at the start of the 60 year period a conveyance by a sheriff's deed under a court order is found to be the basis of the ancestor's title. The search is continued until a conveyance by deed is found.

[Lieberman, New Jersey Practice, Abstracts and Titles, Vol. 13A, § 1642 (1963).]

Additionally, the sixty-year or more title history must be outlined

in a narrative report so as to enable the reviewer to determine

how title had actually passed with commentaries on the significant

events in the chain of title. Id. at § 1647. The abstract of

title must also contain a narrative history of prior liens and

deeds, and must contain the dates upon which those liens were

extinguished. Ibid.

Individuals, usually attorneys, examined recorded documents,

prepared abstract of title histories relating to a property, and

gave an opinion about the quality of title. Hopper v. Gurtman,

17 N.J. Misc. 289, 291 (Sup. Ct. 1939), aff'd, 126 N.J.L. 263 (E.

8 A-2297-15T4 & A. 1941). If the attorney made a mistake in preparing the

abstract or in the opinion on title, he or she could be held liable

if found negligent. Jacobsen v. Peterson, 91 N.J.L. 404, 405

(Sup. Ct.), aff'd o.b., 92 N.J.L. 631 (E. & A. 1918) (citation

omitted).

Unlike an abstract of title, a title commitment is a

contractual offer made to a potential real estate purchaser that

sets forth "all the title insurer's requirements for issuing a

[title insurance] policy and the terms of coverage the title

insurer is offering, including all known special exceptions,

standard exclusions and conditions to coverage." Palomar, Title

Insurance Law, Vol. I, § 5.29. The title commitment "binds" or

"commits" the insurer to issue a title insurance policy if certain

conditions are met. Ibid.

In issuing a title commitment, title insurers are obligated

to conduct "a reasonable examination of the title" so as to make

"a determination of insurability of title in accordance with sound

underwriting practices for title insurance companies." N.J.S.A.

17:46B-9. Although "an insured expects that a title company will

conduct a reasonable title examination, the relationship between

the company and the insured is essentially contractual. The end

result of the relationship between the title company and the

insured is the issuance of the [title insurance] policy." Walker

9 A-2297-15T4 Rogge, supra, 116 N.J. at 540 (citation omitted). "The expectation

of the insured that the insurer will conduct a reasonable search

does not necessarily mean that the insurer may not limit its

liability in the title commitment and policy." Id. at 541.

The document PPN provided to plaintiff was not, and cannot

be construed as, an abstract of title. The document made no

mention of and bore no resemblance whatsoever to an abstract of

title. The document clearly was a title commitment that set forth

the type of title insurance policy that would be issued, the

requirements for issuing the policy, the special exceptions to the

proposed policy, and the terms of coverage. Because PPN did not

provide an abstract of title, it cannot be held liable in tort for

negligence for the defective title search. Id. at 535.

Furthermore, plaintiff did not request, and PPN did not

provide, a title search or abstract of title. PPN conducted the

title search for its own benefit in conjunction with its obligation

to issue the title commitment and policy. Id. at 536. Even though

plaintiff was billed for a title search, his remedy against PPN

lay in contract, not in negligence. Ibid. No matter how much

plaintiff tries to obfuscate the issue and conflate all of the

terminology, he was not provided a title search or abstract of

title that would confer liability upon PPN for negligence. Ibid.

10 A-2297-15T4 III.

Plaintiff contends that the motion judge erred in concluding

that PPN stands in the same legal relationship to him as Chicago

Title.2 This contention lacks merit.

As a general matter, "[a] corporation acts only through its

agents." African Bio-Botanica, Inc. v. Leiner, 264 N.J. Super.

359, 363 (App. Div.), certif. denied, 134 N.J. 480 (1993). Thus,

liability is precluded because "an agent who contracts on behalf

of a fully disclosed principal is not personally liable on the

contract." Id. at 363-64 (citations omitted). This is the case

here. PPN acted as Chicago Title's agent in the transaction, and

the title commitment and policy were issued in the name of the

principal, Chicago Title, not the agent, PPN. Accordingly, as a

matter of law, no breach of contract action can be brought against

PPN.

In addition, an action in tort cannot be brought against a

principal's agent. Saltiel v. GSI Consultants, Inc., 170 N.J.

297, 315 (2002) "Notwithstanding the language of the [plaintiff's]

complaint sounding in tort, the complaint essentially arises in

2 Plaintiff cites no binding authority and merely cites to an unpublished opinion to support this argument. However, unpublished opinions do not constitute precedent and are not binding on us. Trinity Cemetery Ass'n v. Twp. of Wall, 170 N.J. 39, 48 (2001).

11 A-2297-15T4 contract rather than tort and is governed by the contract." Id.

at 309 (citing Walker Rogge, supra, 116 N.J. at 540 (holding that

negligent performance allegations were merely a form of breach of

contract action)). "Under New Jersey law, a tort remedy [against

an agent] does not arise from a contractual relationship unless

the breaching [agent] owes an independent duty imposed by law."

Ibid. (citations omitted).

PPN did not breach any duty to plaintiff that was independent

of the title insurance policy. The policy gave rise to the duty

of title searching and insured "against loss or damage, not

exceeding the [a]mount of [i]nsurance, sustained by reasons of

. . . any defect in or lien encumbrance on the [t]itle." Thus,

the policy specifically insured against the possibility that a

negligent search might give rise to an insurable loss. Plaintiff

cannot sue PPN in tort for the very acts covered by the policy.

Plaintiff has no cause of action against PPN in tort because PPN's

duties, and alleged breach thereof, were specifically resolved by

the terms of the policy. The remedy available to plaintiff was

for breach of contract. Plaintiff received the full proceeds of

the policy to compensate him for the negligent title search. He

is entitled to nothing more.

Having concluded that the grant of summary judgment to PPN

was proper, we need not address PPN's cross-appeal.

12 A-2297-15T4 Affirmed.

13 A-2297-15T4