Chicago Title Insurance, V State Revenue

CourtCourt of Appeals of Washington
DecidedMarch 3, 2026
Docket59809-4
StatusPublished

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Bluebook
Chicago Title Insurance, V State Revenue, (Wash. Ct. App. 2026).

Opinion

Filed Washington State Court of Appeals Division Two

March 3, 2026

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II

CHICAGO TITLE INSURANCE COMPANY, No. 59809-4-II

Respondent,

v. PUBLISHED OPINION STATE OF WASHINGTON, DEPARTMENT OF REVENUE,

Appellant.

VELJACIC, A.C.J. — The Washington State Department of Revenue (Department) appeals

the trial court’s entry of summary judgment in favor of Chicago Title Insurance Company

(Chicago Title). The Department argues that the trial court erroneously concluded that Chicago

Title’s remote title insurance and escrow services were sourced to its out-of-state branch offices

under RCW 82.32.730(1)(a). Because the plain language of the statute unambiguously supports

that the sales should have been sourced to Washington under RCW 82.32.730(1)(b), we reverse

and remand with instructions to enter summary judgment in the Department’s favor.

FACTS

I. BACKGROUND

The parties do not dispute the underlying facts for this case. Chicago Title operates “a

national title insurance [and escrow service] company that provides title insurance, abstract, and

escrow services in connection [with] the sale or refinancing of real property.” Clerk’s Papers (CP) 59809-4-II

at 53. Title insurance is a form of insurance that “insures against the risk . . . [of] defects in the

title to real property or in the lien priority of a mortgage on real property.” CP at 53. Abstract

services entail a “review of title records impacting the subject property,” which culminates in a

report “guaranteed by the title insurance policy.” CP at 53. And escrow services focus on the

collection and disbursement of “funds and transaction documents for a real property sale or

financing in accordance with escrow instructions.” CP at 54.

Historically, Chicago Title operated out of local branch offices throughout the United

States, including Washington. Chicago Title provided its services in person. This was attributable

to the fact that many of the property records relevant to these services were “kept at the county

level” where the real property was located. CP at 386.

But Chicago Title’s practices, along with the rest of the title insurance industry, changed

with the advancement of technology. Rather than relying on county offices to retrieve relevant

documents, companies like Chicago Title could utilize electronic databases, meaning they could

provide services at remote, out-of-state locations.

With the ability to provide services remotely, Chicago Title now conducts its business

through “Direct” and “Agency” (or indirect) operations. CP at 54. When Chicago Title conducts

its business through “Direct Operations,” Chicago Title itself “performs the abstract services and

directly issues the title insurance policy.” CP at 54. Chicago Title will usually provide the escrow

services through its “Direct Operations.” CP at 54. Chicago Title generates its income through

insurance premiums, “which covers both the abstract service/title report and the insurance

guaranty,” as well as a separate fee for escrow services. CP at 54.

But through its “Agency Operations,” or “indirect” business, Chicago Title provides

services through its affiliated agencies. CP at 56. These affiliated agencies include ServiceLink,

2 59809-4-II

located in Pennsylvania, and Fidelity National Agency Solutions (FNAS), “headquartered in Texas

with offices [in] California and New Jersey.” CP at 55. Both ServiceLink and FNAS perform

“the abstract service with [Chicago Title] only underwriting the title policy issued by the agent.”

CP at 56. As such, ServiceLink and FNAS remit “a portion of the premium” charged for the

services, “generally 10% to 15%[,] . . . to compensate [Chicago Title] for underwriting the policy.”

CP at 56.

“Neither ServiceLink nor FNAS have any offices in Washington,” meaning that services

handled by these entities occur “outside [of] Washington, regardless of where the property

involved [is] located.” CP at 55. Purchasers of ServiceLink’s or FNAS’s services never went to

a branch office outside of Washington to meet in person; they solely interacted with the service

remotely.

II. CHICAGO TITLE’S AUDIT

In 2010, Chicago Title “began transitioning its non-commercial Direct Operations into

affiliated agencies.” CP at 55. For Washington, the “transition was substantially completed in

July 2011.” CP at 55. Because Chicago Title transferred most of its business to Agency

Operations, it reported less gross income the following years, ultimately decreasing to $0 in 2012.1

The vice president and “Regional Controller for Pacific Northwest Accounting Operations for

Chicago Title” later explained in a deposition that Chicago Title “chose not to collect and remit

sales tax on its sales of title insurance and escrow services to Washington property owners” during

the Audit Period because “[n]one of the work was being prepared in Washington.” CP at 53, 770.

1 During the Audit Period, “Chicago Title reported Washington sales tax and retailing [business and occupation (B&O)] tax on Direct Operations based on the closing location,” which was allegedly “consistent with the Department’s own, longstanding interpretation of RCW 82.32.730.” CP at 54.

3 59809-4-II

And the representative for Chicago Title also acknowledged that all of the disputed income related

“to title insurance [services] . . . for Washington real property.” CP at 764.

In 2015, the Department audited Chicago Title for the period January 1, 2009, through

December 31, 2012 (Audit Period). During the Audit Period, Chicago Title generated

$104,498,075 in gross income for its “Direct Operations business” in Washington. CP at 55. And

Chicago Title also made $19,454,201 in gross income through the “share of premiums from

Agency Operations.” CP at 56. The Department ultimately assessed $8,310,134 against Chicago

Title for unpaid retail, business and occupation (B&O), and use taxes.

III. PROCEDURAL HISTORY

Chicago Title appealed the Department’s assessment to the Department’s Administrative

Review and Hearings Division (ARHD). The ARHD affirmed Chicago Title’s petition in part,

reducing the Department’s assessment by $45,814. Chicago Title sought reconsideration, but the

ARHD denied the petition.

In December 2018, Chicago Title remitted the amount assessed by the Department and

filed an appeal with the Thurston County Superior Court. Following discovery, both parties moved

for summary judgment.

At the hearing to consider the parties’ motions for summary judgment, the trial court orally

ruled in Chicago Title’s favor. The court concluded that “Chicago Title’s insurance premium and

escrow fee income” were properly sourced to the remote, out-of-state office locations under RCW

82.32.730(1)(a). 1 Rep. of Proc.(RP) at 30.

In July 2024, the trial court entered a final judgment for Chicago Title, ordering the

Department to refund Chicago Title $10,909,764.10.

The Department appeals.

4 59809-4-II

ANALYSIS

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