Orlando Millenia, LC v. United Title Services of Utah, Inc. ( 2015 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2015 UT 55
IN THE
SUPREME COURT OF THE STATE OF UTAH
———————
ORLANDO MILLENIA, LC
Appellant,
v.
UNITED TITLE SERVICES OF UTAH, INC.*
Appellees.
———————
No. 20130190
Filed July 17, 2015
———————
Fifth District, St. George
The Honorable James L. Shumate
No. 080500762
———————
Attorneys:
J. Bryan Quesenberry, Casa Grande, AZ, for appellant
Laura S. Scott, Salt Lake City, for appellee Stewart Title
Ronald G. Russell, Royce B. Covington, Salt Lake City, for
appellee First American
Jenny T. Jones, St. George, for appellee United Title
———————
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court, in
which CHIEF JUSTICE DURRANT, JUSTICE PARRISH, JUDGE PEARCE,
and JUDGE HANSEN joined.
JUSTICE DURHAM, having recused herself, does not participate;
DISTRICT JUDGE ROYAL I. HANSEN sat. JUSTICE NEHRING, due to his
retirement, did not participate; COURT OF APPEALS JUDGE JOHN A.
PEARCE sat.
JUSTICE DENO G. HIMONAS became a member of the Court on Feb-
ruary 13, 2015, after oral argument in this matter, and accordingly
did not participate.
__________________________________________________________
* UNITED TITLE SERVICE OF SOUTHERN UTAH dba of CCD, L.C.;
PAYDIRT, LP; TODD VOWELL; JASON VOWELL; JEREMY JOHNSON;
KATTS, LLC; STEWART TITLE INSURANCE CO.; and FIRST AMERICAN
TITLE INSURANCE CO.
ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
¶1 Orlando Millenia was a lender on a multi-million dollar re-
al estate transaction. It filed this suit alleging that United Title
breached its fiduciary duty as an escrow agent in the transaction
at issue. And it also asserted claims for vicarious liability against
Stewart Title and First American Title under Utah Code section
31A-23a-407. The district court dismissed these claims on sum-
mary judgment.
¶2 We reverse. In the circumstances of this case—in which Or-
lando submitted and was identified expressly on the special es-
crow instructions, and the instructions were incorporated in the
real estate purchase contract in question—we conclude that Or-
lando has stated a claim for breach of fiduciary duty that survives
the defendant-appellees’ motions for summary judgment. We also
conclude that Orlando has successfully stated a claim for vicari-
ous liability under the statute.
¶3 In upholding Orlando’s claim under section 407, we
acknowledge a degree of uncertainty regarding the proper con-
struction of some of the terms of this statute. And we likewise
acknowledge the weight of the title companies’ policy concerns
regarding the scope of vicarious liability set forth in this provi-
sion. But we ultimately find ourselves bound by the broad terms
of the statute as we understand it, and thus leave for the legisla-
ture the question (if it chooses to take it up) of whether to pare
back on the standard of secondary liability set forth in Utah Code
section 31A-23a-407.
I
¶4 The factual background of this case is somewhat compli-
cated. To set the stage, we begin with an introduction of the key
parties and players, as well as the two properties involved in the
transaction. We then proceed to describe the specific events that
gave rise to this appeal.
¶5 Orlando Millenia is the lender and plaintiff/appellant in
this case. It is a small real estate investment company. It financed
the down-payment for the property transaction at issue in this
case, and Orlando’s principals, Blaine Hofeling and David Grant,
variously fulfilled Orlando’s accompanying responsibilities. Ho-
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Opinion of the Court
feling and Grant, in addition to being principals of Orlando, are
also members of Commonwealth Holdings, LC, a separate real
estate investment company.
¶6 IDR Investments LLC is the buyer and Orlando’s lendee.
Through its principal, Ryan Gregerson, IDR participated in the
closing meeting, communicated frequently with the escrow agent
and the seller, and signed the real estate purchase contract
(REPC). Several months after the transaction, IDR filed for bank-
ruptcy, an event that precipitated Orlando’s action against United
Title.
¶7 Paydirt, LP is the seller. It owned the property and agreed
to sell it to IDR after signing the REPC. Following a settlement, the
parties agreed to dismiss Paydirt from this action.
¶8 United Title is the title insurance producer for Stewart Title
Guaranty Company and First American Title Insurance Company.
United Title issued a commitment for title insurance to IDR. It al-
so acted as the escrow agent for this transaction.
¶9 Stewart Title is a title company. It authorized United Title
to issue title insurance to IDR in Stewart Title’s name. Orlando
seeks to hold Stewart Title vicariously liable for United’s “deal-
ings” under Utah Code section 31A-23a-407.
¶10 First American Title is also a title company. It became in-
volved in this suit when United Title accidentally sent an unau-
thorized First American commitment to IDR. That commitment
from United Title was the second commitment IDR received,
though IDR ordered only one.
¶11 IDR had designs to purchase two different properties. The
first, the so-called Stout property, was located in Hurricane, Utah.
Upon learning of the property’s availability, IDR approached Or-
lando about providing a $1 million down payment for it. IDR in-
tended to subdivide this property and sell the lots to individual
developers.
¶12 In an effort to secure funding for the purchase of the Stout
property, IDR approached an investor, Commonwealth Holdings,
LC (and more specifically, its separate investment arm, Orlando
Millenia) in August 2006. IDR asked Commonwealth to supply
the earnest money for the Stout property. The Commonwealth
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
principals agreed to loan IDR the earnest money through Orlan-
do.
¶13 Later, IDR learned of another parcel, referred to as the
SITLA property, and decided to abandon its efforts to purchase
the Stout property. As the shorthand name suggests, this property
was owned by the School and Institutional Trust Lands Admin-
istration. Paydirt purchased the land at an auction and immedi-
ately began shopping the parcel to other buyers and ultimately
agreed to sell the property to IDR for $6.4 million, including a $1
million earnest money deposit. IDR spoke with Orlando about us-
ing the $1 million earnest money (previously designated for the
Stout property) to purchase the SITLA property instead.
¶14 IDR and Paydirt entered into a Real Estate Purchase Con-
tract (REPC) on October 20. They agreed that United Title would
serve as the escrow agent and that the closing would take place
before November 15. Orlando agreed to extend its original loan to
cover the earnest money deposit for the SITLA property transac-
tion.
¶15 In the meantime, IDR sought a commitment for title insur-
ance in connection with this transaction. IDR approached United
Title, a title insurance producer and also the escrow agent for the
upcoming transaction, for this commitment. As it happened,
United Title issued two commitments to IDR, both on October 24:
one from First American, and another from Stewart Title. This ap-
pears to have been an accident. Nothing in the record suggests
that IDR sought two commitments. Yet it is clear that two com-
mitments were provided.1
¶16 Also during the interim between the REPC and the closing,
Orlando Millenia drafted Special Escrow Instructions, which con-
ditioned the disbursement of the earnest money on Orlando’s and
IDR’s receipt of certain documents. Specifically, these instructions
required United Title to obtain and provide Orlando: (1) a land
patent and/or land grant vesting title to the SITLA property, (2) a
promissory note executed by Paydirt in favor of SITLA, (3) a rec-
1 It is worth noting that Stewart Title, but not First American, au-
thorized United Title to deliver a commitment, and that United
Title believes that IDR received the First American commitment
by accident.
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Opinion of the Court
ord trust deed, and (4) a warranty deed from Paydirt to Orlando.
The instructions also required that Orlando review the docu-
ments. And they authorized United Title to disburse the funds on-
ly after receiving Orlando’s written approval.
¶17 On October 30, IDR’s Ryan Gregerson sent these instruc-
tions to United Title. The instructions were signed by both
Gregerson (on behalf of IDR) and Grant (on behalf of Orlando).
Grant then contacted United Title to confirm the receipt of the
special instructions. Also on October 30, Commonwealth Hold-
ings wired the $1 million in earnest money to United Title.
¶18 As noted above, the parties agreed to close the transaction
no later than November 15. Yet on November 6, according to
Gregerson, Paydirt demanded that the deal close “today or else.”
Gregerson made his way to United Title, but, at least according to
Orlando, neither of Orlando’s principals attended because
Gregerson failed to tell them that his reason for going to United
Title’s office was to participate in the closing. That said, while en
route, Hofeling did tell Gregerson “to protect his interest” and
that he “should be fine” at the meeting because “[t]he title com-
pany has to follow escrow instructions.”
¶19 Thus, when the closing occurred, the only significant play-
ers in attendance were Gregerson, Paydirt’s principals, and Unit-
ed Title’s agent. The Special Escrow Instructions were never men-
tioned during the closing meeting, though the parties did have
copies of them. What Gregerson did attempt to make clear, how-
ever, was that IDR must receive a warranty deed (required by the
REPC, not the special instructions) in connection with the sale.
United Title assured him that he would receive the warranty
deed, but that it would take a couple of weeks for the state to pro-
cess all the required paperwork. With that understanding,
Gregerson signed the closing documents.
¶20 Following the closing, Gregerson felt “very pleased.” He
also felt a bit confused, due to the length and complexity of the
closing documents he had just signed. Orlando’s principals met
with Gregerson ten to fourteen days later (between November 16
and 20). At that meeting, Orlando became troubled by what had
transpired at the closing. Gregerson admitted that he had signed
“a bunch of documents that he’d never seen before.” And Orlan-
do learned that a warranty deed had not yet been issued and, as-
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
suming the money had already been disbursed (which it had not),
felt that “something very strange had taken place.”
¶21 Despite these troubling revelations about the closing, nei-
ther Orlando nor IDR attempted to prevent United Title from re-
leasing the earnest money. And, on November 20, United Title
did just that. Paydirt deposited the funds that same day. The
funds then became available one to three business days later. It
was not until late February 2007 that Orlando contacted United
Title with concerns about the closing.
¶22 That’s where things stood until sometime after November
20. At that point Orlando contacted SITLA’s office to clear up
some of the confusion surrounding the closing. It was then that
Orlando learned that SITLA still owned the property and that
Paydirt would not receive title until it could pay off what it owed
SITLA for the property. This meant that Paydirt did not have title
to the property and that Orlando’s trust deed (for the earnest
money loan) therefore could not be recorded against it. Further
confirming its fears, Orlando received a title report on the SITLA
property in December showing that SITLA still held title to the
property. Orlando and IDR met daily over the ensuing weeks to
determine what had happened and how the problem might be
solved. They developed a plan to obtain financing to pay off Pay-
dirt, which would in turn pay off SITLA, and set off a chain of
events ultimately vesting title in IDR.
¶23 That plan failed. On February 23, Orlando finally relayed
its concerns to United Title. At that point United Title’s agent as-
serted that he had “done nothing wrong” and had “completed the
transaction as requested by all parties, including Orlando.” Four
days later, Orlando sent demand letters to United Title, demand-
ing the return of the $1 million earnest money deposit and resolu-
tion of IDR’s inability to obtain title in the SITLA property. IDR
declared bankruptcy shortly thereafter, in February 2008, listing
the Orlando loan as among its debts. Orlando filed this action in
district court the following month.
¶24 Orlando’s complaint asserted a claim for breach of fiduci-
ary duty against United Title, alleging that United Title had an
obligation to disburse the escrowed funds only after the terms of
Orlando’s special escrow instructions had been fulfilled. In addi-
tion, Orlando sought to hold Stewart Title and First American Ti-
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Opinion of the Court
tle vicariously liable for United Title’s breach. In support of this
claim, Orlando cited Utah Code section 31A-23a-407 (2003), which
provides that a “title company, represented by one or more title
insurance producers, is directly and primarily liable to others
dealing with the title insurance producers for the receipt and dis-
bursement of funds deposited in escrows with the title insurance
producers in all those transactions where a commitment or binder
for or policy or contract of title insurance of that title insurance
company has been ordered.”
¶25 Following discovery, three summary judgment motions
were filed. Stewart Title moved for summary judgment on several
grounds: (a) that Stewart Title was not vicariously liable for Unit-
ed Title’s actions as escrow agent under Utah Code section 31A-
23a-407; (b) that Orlando’s claims that United Title breached its
fiduciary duty or was unjustly enriched fail as a matter of law; (c)
that Orlando did not suffer damages; and (d) that Orlando failed
to mitigate its alleged damages.
¶26 First American also moved for summary judgment on two
grounds, both related to the title insurance commitment Orlando
received from United Title. First, it argued that the commitment
was never “issued” or “distributed” to Orlando because there was
never any intent for Orlando to obtain the commitment. And se-
cond, it asserted that United Title did not have any authority—
actual, apparent, or implied—to issue the commitment, so First
American could not be held liable under section 407.
¶27 Orlando moved for summary judgment (in part) as well. In
its motion, Orlando asked the district court to conclude that sec-
tion 407 imputes liability to both Stewart Title and First American.
¶28 The district court granted Stewart Title’s and First Ameri-
can’s motions and denied Orlando’s. It neither issued a written
opinion nor gave any other explanation for its decision. Orlando
filed this appeal. We review the district court’s summary judg-
ment ruling de novo. Bahr v. Imus, 2011 UT 19, ¶ 16, 250 P.3d 56.
II
¶29 Orlando’s claims in this action are twofold: (a) claims for
primary liability arising out of United Title’s alleged breach of fi-
duciary duty; and (b) claims for vicarious liability under Utah
Code section 31A-23a-407—a provision that Orlando views as im-
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
posing vicarious liability on Stewart and First American for Unit-
ed Title’s actions as escrow agent in the SITLA property transac-
tion. The defendant title companies challenge the viability of Or-
lando’s claims at every turn. They contend, first, that the fiduciary
duty claim fails as a matter of law on each of the elements of such
a claim. And they also contest the basis for imposing vicarious li-
ability under Utah Code section 31A-23a-407, identifying a range
of roadblocks to their statutory liability under various provisions
of the statute as they interpret them.
¶30 We reverse. First, we conclude that Orlando has asserted a
viable claim for primary liability as to United Title arising from its
alleged breach of fiduciary duty. We uphold that claim against the
title companies’ motions for summary judgment, concluding that
there are, at a minimum, genuine issues of material fact on each of
the elements of this claim. Second, we conclude that Orlando has
asserted a successful claim for vicarious liability against Stewart
Title and First American Title under Utah Code section 31A-23a-
407 as we interpret its terms. On this claim, we interpret the terms
of the statute in a manner consistent with Orlando’s claim2 and
hold that Orlando is entitled to judgment as a matter of law.3
A. Primary Liability (Fiduciary Duty Claim)
¶31 Orlando’s threshold claim is for breach of fiduciary duty. It
alleges that United Title breached such a duty in its failure to fol-
low the special escrow instructions. In advancing their motions
2 For reasons noted below, our determination of the title compa-
nies’ statutory liability is contingent on Orlando’s success in pur-
suing the primary fiduciary duty claim to a favorable judgment.
See Old Standard Life Ins. Co. in Rehab. v. Duckhunt Family Ltd.
P’ship, No. 2:05-CV-00536, 2006 WL 3716110, at *9 (D. Dec. 14,
Utah 2006) (explaining that section 407 “must not hold the title
company liable for acts for which the producer could not be inde-
pendently liable”).
3 There is one other claim mentioned in passing in Orlando’s
briefing (and in its summary judgment motion below)—its claim
for conversion. Yet the briefing on this claim—both on appeal and
in the district court—is inadequate. Orlando’s briefing on this is-
sue fails to cite any authority and makes no attempt to connect the
law to the facts of this case. And no other brief mentions the claim.
The district court’s decision dismissing this claim accordingly
stands.
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Opinion of the Court
for summary judgment, United, Stewart, and First American all
challenge this claim on each of its component elements—breach,
causation, duty, and damages.4 We reject each argument for rea-
sons that follow.
1. Duty of escrow agent to nonparty lender
¶32 The first question is one of duty—whether an escrow agent
owes a duty to lenders who are not formal parties to the escrow
transaction but who are identified as intended beneficiaries who
will be submitting escrow instructions. United points to Utah
precedent suggesting that an escrow agent owes a fiduciary duty
to “both parties to the transaction.” Freegard v. First W. Nat’l Bank,
738 P.2d 614, 616 (Utah 1987). And it asks us to embrace a nega-
tive implication of the Freegard premise—in holding that there is
no duty to a nonparty lender.
¶33 We do not read the Freegard opinion to have resolved that
question. The question of extending the fiduciary duty to a non-
party lender was not presented in Freegard or in any other Utah
case that we have found. So the question is a matter of first im-
pression. And it is one we must consider as a matter of first prin-
ciples, and not by foreclosing a duty just because our cases have
not previously recognized one.
¶34 Fiduciary duties are implicated by certain special relation-
ships. See Hal Taylor Assocs. v. Unionamerica, Inc., 657 P.2d 743, 749
(Utah 1982). A “fiduciary relationship” exists between two parties
when one of them “is required to act for the benefit of [the other]
on all matters within the scope of their relationship.” BLACK’S LAW
DICTIONARY 702 (9th ed. 2009) (defining fiduciary). Because, for
instance, attorneys are required to represent their clients’ interests
diligently, they are considered fiduciaries of their clients. The
same goes for a principal’s agent, who is required to act solely for
the benefit of the principal in matters connected with the agency.
See RESTATEMENT (SECOND) OF AGENCY §§ 13, 387 (1958).
4 The lead brief on appeal on these points is Stewart Title’s.
United Title and First American Title both filed briefs joining in
the arguments advanced by Stewart. For the sake of brevity and
clarity, however, we refer to the arguments below as United’s, as
the question goes initially to an alleged breach on the part of
United.
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
¶35 Escrow agents are often considered fiduciaries, too, and
most commonly as to the parties to the escrow agreement. This
makes sense because the relationship between them is similar to
those relationships mentioned above. Thus, while we have long
held that an escrow agent “assumes the role of the agent of both
parties to the transaction,” Freegard, 738 P.2d at 616, this appears
to be rooted in the nature of this relationship. By agreement, the
escrow agent is required to perform essential functions on behalf
of the parties, like receiving and disbursing funds. The agent’s
mishandling of those funds, then, can give rise to a claim for
breach of fiduciary duty. Id.
¶36 The question presented here is whether that same duty ex-
tends to a third-party beneficiary of the escrow agreement. An es-
crow agent has no duty to a nonparty with a mere incidental in-
terest in the escrow transaction. See Markowitz v. Fid. Nat’l Title
Co., 48 Cal. Rptr. 3d 217, 229–30 (Cal. Ct. App. 2006). But that does
not answer the question whether the duty might extend to Orlan-
do, whose connection to the transaction is much closer.
¶37 In contract law, a third party has standing to sue if it is an
intended, and not merely an incidental, beneficiary. Ron Case Roof-
ing & Asphalt Paving v. Blomquist, 773 P.2d 1382, 1386 (Utah 1989).
The distinction between intended and incidental beneficiaries to a
contract is especially significant here. For reasons explained be-
low, Orlando was such a third-party beneficiary. And as such it is
also a party to the fiduciary relationship established by the escrow
contract. See Markowitz, 48 Cal. Rptr. 3d at 230–31; Blank v. Baro-
nowski, 959 F. Supp. 172, 177 (S.D.N.Y. 1997) (stating that tort lia-
bility “may be predicated upon the precise conduct which also
consistutes a breach of contractual obligations” (internal quotation
marks omitted)).
¶38 Orlando is expressly named in the special escrow instruc-
tions. The instructions are headed with the byline “From: IDR In-
vestments and Orlando Millenia.” And Orlando’s name is men-
tioned eight times throughout, with the instructions requiring
specific actions from Orlando before United Title may disburse
the funds to Paydirt. The parties’ actions confirm Orlando’s cen-
tral role in the escrow process. After Gregerson faxed the instruc-
tions, Orlando called United Title’s office directly to confirm re-
ceipt.
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Opinion of the Court
¶39 The REPC, moreover, required United Title to follow these
instructions, which are incorporated therein by reference. Clause 3
of that contract provides that settlement may occur only after the
“Buyer and Seller have signed and delivered to each other or to
the escrow/closing office all documents required by this Contract,
by the Lendor, by written escrow instructions or by applicable
law.” The reference to “the Lendor” is at least arguably a nod to
Orlando. And for present purposes we deem it as such, given that
Orlando gets the benefit of reasonable inferences as the nonmov-
ing party on summary judgment.
¶40 In these circumstances, Orlando is no mere incidental bene-
ficiary of United’s escrow services. It is for all practical purposes a
party to the escrow agreement with United Title. It is at least an
intended third-party beneficiary (and one expressly identified by
the parties). And in that capacity it is entitled to the fiduciary du-
ties that run to those formal parties to the underlying contract. See
Markowitz, 48 Cal. Rptr. 3d at 230–31.5
5 Our analysis here proceeds on the premise that United Title’s
duties to Orlando are defined by the law of fiduciary duty. That
premise is consistent with our past cases. See Freegard v. First W.
Nat’l Bank, 738 P.2d 614, 616 (Utah 1987); New Fed. Sav. & Loan
Ass’n v. Guardian Title Co. of Utah, 818 P.2d 585 (Utah Ct. App.
1991); see also Tucson Title Ins. Co. v. D’Ascoli, 383 P.2d 119, 121–22
(Ariz. 1963); Money Store Inv. Corp. v. S. Cal. Bank, 120 Cal. Rptr. 2d
58, 62–64 (Cal. Ct. App. 2002); Logan v. Chicago Title Ins. Co.,
B238348, 2013 WL 1080300, at *3 (Cal. Ct. App., Mar. 15, 2013). Yet
of course an escrow agent’s duties may also be defined by con-
tract. And at least in some jurisdictions, a duty defined explicitly
by contract is enforceable only in contract, and may not be sup-
plemented by a claim for breach of fiduciary duty. See Litton In-
dus., Inc. v. Lehman Bros. Kuhn Loeb Inc., 767 F. Supp. 1220, 1231
(S.D.N.Y. 1991) rev’d on other grounds, 967 F.2d 742 (2d Cir. 1992);
Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F.
Supp. 2d 162, 196 (S.D.N.Y. 2011); Guthrie Clinic, Ltd. v. Travelers
Indem. Co. of Ill., No. 3:00 CV 1173, 2000 WL 1853044, at *3 (M.D.
Pa. Dec. 18, 2000); Gale v. Bershad, No. Civ. A. 15714, 1998 WL
118022, at *5 (Del. Ch. 1998). We do not reach this question here,
however, as the issue has not been raised by the parties.
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
2. Breach
¶41 United’s duty can sustain a claim by Orlando only if there
was also a breach. Orlando insists that there was a breach, noting
that it is undisputed that United failed to send the documents
listed in the instructions, and that Orlando did not “fully review[]
the documents . . . and give written approval” for disbursement.
Yet United claims that IDR waived the instructions at the closing,
eliminating any responsibility that United had to follow them. We
disagree.
¶42 Even if IDR consented to waiver of the instructions at the
closing (a question of fact we need not decide), Orlando never
gave its consent. That is fatal to United’s argument. IDR was not
Orlando’s agent. And United could not reasonably have believed
it was.
¶43 Escrow instructions are not subject to unilateral waiver.6 So
given the absence of any actual or apparent agency relationship
between Orlando and IDR, and in light of the fact that both Or-
lando and IDR signed the escrow instructions, IDR could not le-
gally waive United’s obligations without first obtaining Orlando’s
permission. Without such waiver, moreover, there is at least a
genuine issue as to whether United Title breached its duty to Or-
lando by failing to follow the escrow instructions.
3. Proximate Causation
¶44 That leads to the question of causation. United Title seeks
summary judgment on the ground that Orlando has failed to
demonstrate that its damages were proximately caused by Unit-
ed’s breach. United advances two separate grounds for this con-
clusion. First, it contends that Orlando cannot prevail unless it can
show that “but for United Title’s [breach], IDR would have repaid
Orlando,” a burden Orlando cannot meet. Second, it asserts that
Orlando failed, as a matter of law, to take reasonable steps to
6 See Westamerica Bank v. City of Berkeley, 133 Cal. Rptr. 3d 883,
893 (Cal. Ct. App. 2011) (“[A] unilateral change in the terms of the
escrow agreement . . . is not permitted . . . .”); Jones v. Title Guar. &
Trust Co., 173 P. 586, 587–588 (Cal. 1918) (holding that the escrow
agreement could not be changed by another party when one of
the original parties who signed and submitted the first instruc-
tions was not present for the change and did not know about it).
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Opinion of the Court
avoid its damages. We disagree, as issues of material fact remain
rendering summary judgment inappropriate.
¶45 On the first argument, United misstates the governing
standard of proximate cause. The special escrow instructions con-
ditioned disbursement on the receipt of documents providing Or-
lando certain assurances about title. The causation question, then,
is not whether IDR would have repaid Orlando if the instructions
had been followed; it is whether United’s failure to provide the
required assurances caused harm to Orlando. And material facts
remain in dispute on this question. Perhaps it is conceivable that
Orlando would have approved the disbursement despite not re-
ceiving the title documents, on the basis of a belief that the title
documents would be forthcoming. Yet a simple title search, which
Orlando ultimately performed on its own at a later date, would
have revealed a fundamental title problem—that Paydirt did not
hold title to the SITLA property and thus could never have pro-
vided the documents required in the escrow instructions. Accord-
ingly, there is a genuine dispute foreclosing summary judgment.
¶46 United’s second point, about Orlando’s failure to avoid
damages, is a closer call. According to United, Orlando had, at the
very least, six days between the time it knew the transaction had
to be settled (November 15) and the day the funds became availa-
ble to Paydirt (November 21) to place a simple phone call to Unit-
ed Title. Not having received any of the required documents, but
knowing the deal had closed, Orlando knew “something very
strange had taken place.” And in these circumstances, United
claims that Orlando abdicated its duty to mitigate by unreasona-
bly failing to halt the transaction, especially given how easily it
could have done so.
¶47 Yet this argument also fails in the factual circumstances of
this case, as viewed through the prism of the doctrine of mitiga-
tion. Under the doctrine of mitigation, injured parties may not re-
cover if the “damage arising from the wrongful conduct . . . could
have been avoided or minimized by reasonable means.” Angelos v.
First Interstate Bank of Utah, 671 P.2d 772, 777 (Utah 1983). Signifi-
cantly, however, this duty to mitigate is implicated only when the
injured party “has knowledge” that “some damage has occurred.”
Smith v. U.S. Fid. & Guar. Co., 949 P.2d 337, 345 (Utah 1997).
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Opinion of the Court
¶48 On this record, genuine issues of material fact foreclose our
ability to sustain summary judgment under this standard. The
matter of a party’s “reasonable means” of mitigating is fact-
intensive and context-dependent. And on this record there is evi-
dence that could sustain a reasonable determination that Orlando
performed reasonably.
¶49 Orlando’s mitigation window was short, between two and
six days. Though the deal actually closed November 6, Orlando
did not learn about the problems that took place at the closing un-
til ten to fourteen days later (November 16–20). In that timeframe,
it is true that Orlando failed to contact United Title to halt the
deal. But Orlando did not do nothing. It began working with IDR
in pursuit of other means to preserve the deal, such as locating
other investors to cover the purchase price of the property. After
learning what transpired at the closing, moreover, Orlando made
two assumptions, both of which could provide some justification
for the decision not to call United Title. Orlando assumed (1) that
United had already disbursed the earnest money, and (2) that the
title documents were currently being processed by the state and
would be forthcoming (as promised by United). The first assump-
tion may be justified by the fact that the closing had taken place
ten to fourteen days earlier, and there was no agreed upon date
for releasing the money. The second assumption was also argua-
bly justified, since United assured Gregerson that the warranty
deed would take time to process.
¶50 These assumptions could render reasonable Orlando’s de-
cision to attempt mitigation through other means. And Orlando,
as the nonmoving party on summary judgment, is entitled to the
benefit of the doubt on these matters. We reject United’s argument
on that basis.
4. Damages
¶51 That leaves the final element of damages. In United Title’s
view, it was Commonwealth Holdings, and not Orlando, that suf-
fered harm resulting from United’s breach. It was Common-
wealth, after all, that wired the $1 million to United Title. So Unit-
ed says that Orlando has not been harmed, but instead stands to
gain a $1 million windfall if it prevails.
¶52 We reject this argument in the face of disputed questions of
fact in the record. United Title’s argument ignores the nature of
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Opinion of the Court
the relationship between Orlando and Commonwealth. Under Or-
lando’s version of the facts, Orlando, not Commonwealth, owned
the rights to the $1 million IDR loan. At the time the loan was
made, Commonwealth owned the loan, and Orlando was Com-
monwealth’s subsidiary. But later, due to strategic differences sur-
rounding the development of one of its properties, the Common-
wealth principals decided to part ways. And in an effort to part
ways amicably, they agreed to divide assets, with Hofeling and
Grant taking over Orlando and the IDR loan. From that point
forward, Orlando held the rights to the IDR loan and thus, under
this version of the facts, Orlando, not Commonwealth, suffered $1
million in damages.
B. Vicarious Liability under Section 407
¶53 Orlando’s secondary claims seek to impose vicarious liabil-
ity on Stewart Title and First American Title. The basis for such
liability is statutory—Utah Code section 31A-23a-407. That provi-
sion outlines the conditions under which a title company may be
secondarily liable7 for a title insurance producer’s conduct:
Any title company, represented by one or more title
insurance producers, is directly and primarily liable
to others dealing with the title insurance producers
for the receipt and disbursement of funds deposited
in escrows with the title insurance producers in all
those transactions where a commitment or binder
for or policy or contract of title insurance of that title
insurance company has been ordered, or a prelimi-
nary report of the title insurance company has been
issued or distributed. This liability does not modify,
7 The statute uses the terminology of “direct[]” and “primar[y]”
liability. UTAH CODE § 31A-23a-407. Yet we characterize it as im-
posing vicarious or secondary liability because that is its apparent
impact, and because the parties in this case and others have con-
ceptualized it in this way. See Old Standard Life Ins. Co., 2006 WL
3716110, at *11 (denying a summary judgment motion because
disputed facts remain as to whether the title company “may be
vicariously liable” under this same statute); Bodell Constr. Co. v.
Stewart Title Guar. Co., 945 P.2d 119, 123 (Utah Ct. App. 1997)
(holding title company was not “vicariously liable” under this
statute).
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
mitigate, impair, or affect the contractual obligations
between the title insurance producers and the title
insurance company.
UTAH CODE § 31A-23a-407 (2003).
¶54 This provision is hardly a model of clarity. Its broad terms
implicate a series of questions regarding the breadth of its cover-
age. And of course counsel for each of the parties seize on those
questions to advance competing arguments as to the statute’s ap-
plicability to this case.
¶55 At the outset, we acknowledge a degree of uncertainty on
the various problems of statutory interpretation presented. This is
not one of those cases where we may retreat quickly to our defer-
ence to the statute’s “plain language,” as we find little here that is
plain.
¶56 In so noting, we intend no offense to the legislative branch
of government. Lawmaking is complex and cumbersome. It is the
product of give and take among competing interest groups and
opposing political parties. And our human language is inherently
imprecise. For all these reasons our statutes are destined for occa-
sional ambiguity—and hence for the need of judicial interpreta-
tion.
¶57 Yet the difficulty of the interpretive task is no justification
for standing down. Judges don’t get to declare ties. We must re-
solve questions of statutory interpretation—even hard ones—that
come before us. So we proceed to do our best to resolve the inter-
pretive questions raised by the parties—while acknowledging, of
course, the prerogative of the legislature to step back into this dia-
logue (by amending the statute) if it deems it appropriate to do so.
¶58 Stewart Title presents a litany of barriers to the imposition
of statutory liability in this case. First American endorses those
same grounds and also offers an additional argument of its own.
We reject each argument in turn, concluding that the title compa-
nies’ limiting constructions fail on their merits and that Orlando is
entitled to judgment as a matter of law.8 Specifically, we conclude
8 Orlando’s right to judgment, as noted above, is contingent on
its ultimate success on the primary claim for breach of fiduciary
duty. The title companies’ statutory liability, after all, is vicari-
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Opinion of the Court
that (1) Orlando was an “other[] dealing with” the title companies;
(2) the dealing was “for the receipt and disbursement of funds
deposited in escrows”; (3) this transaction was one “where a
commitment . . . has been ordered.” Next, on a matter raised only
by First American, we conclude that it has not established a basis
for avoiding its statutory liability on the ground that it was not
involved in a transaction in which “a preliminary report of the ti-
tle insurance company has been issued or distributed.” And final-
ly, we also reject the title companies’ request that we give section
407 a limiting construction under the doctrine of constitutional
avoidance.
1. “Dealing with” the title insurance producer
¶59 The first ground raised by the title companies for question-
ing their statutory liability is in the clause that extends liability
only as to “others dealing with” the title insurance producer. Id.
(emphasis added). In the title companies’ view, this clause is not
implicated here because Orlando did not “deal with” United Title
as a formal party to a real estate transaction. As with the duty ar-
gument above, supra ¶ 32, the title companies claim that Orlando
was an outsider to the escrow transaction at issue, and thus con-
tend that there was no “dealing” sufficient to sustain liability un-
der the statute.
¶60 That position might be viable if we construed the statute to
use “dealing with” in a specialized legal sense. In legal parlance,
dealing is sometimes understood as “transacting business.” See
BLACK’S LAW DICTIONARY 457 (defining the verb “deal” as “to
transact business with”).9 And there is a sense in which the rele-
ous—and thus dependent on the establishment of some primary
liability arising from United Title’s actions in managing the re-
ceipt and disbursement of escrow funds. Thus, we agree with the
federal district court’s analysis in Old Std. Life Ins. Co. in Rehabilita-
tion v. Duckhunt Family Ltd. P’ship, 2006 WL 3716110 (D. Utah
2006): “Although the statute does not directly hinge the title com-
pany’s liability on a showing of liability by the title insurance
producer, it can be read no other way. To avoid absurdity, the
statute must not hold the title company liable for acts for which
the producer could not be independently liable.”
9 We say that position “might be viable” because, as discussed
above, there is a sense in which Orlando did transact business
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
vant transaction—the purchase of title insurance through United
Title—did not involve Orlando. The title commitment in question
was ordered not by Orlando but by IDR, and on that ground it
could arguably be said that Orlando was not “dealing with” Unit-
ed in this case.
¶61 There is another sense of “dealing with,” however—the or-
dinary sense of this term. That sense is broad. It encompasses any
interaction with the title insurance producer. See WEBSTER’S THIRD
INT’L DICT. 581 (3d ed. 2002) (defining the verb “deal” as “to act
toward a person or regarding a thing”).
¶62 We construe the statute to embrace this ordinary sense of
“dealing with.” That conclusion follows first from the terms and
context of the statute. Nothing in section 407 or in its surrounding
provisions suggests the use of legalese. “Dealing with” has no ob-
vious connection to legal parlance. Phrases like “course of deal-
ing” or “dealing at arm’s length” might invoke a sense of legalese.
But on its own, “dealing” smacks of ordinary language.
¶63 Second, “dealing” has no “universal” meaning within the
common law or other legislation. See Moskal v. United States, 498
U.S. 103, 115 (1990). Instead this is a term that takes on a range of
different meanings in our law. In other parts of Title 31A of the
Utah code, for example, “dealing” takes on a broad range of
meanings—including the colloquial sense of interacting with.10
with United Title—in that it submitted escrow instructions to
United and United agreed to fulfill those instructions as a precon-
dition to closing. See supra ¶¶ 16–18.
10 See UTAH CODE § 31A-25-205 (permitting “any person dealing
with [third party administrators]” to require insurance coverage
above statutory minimums); id. § 31A-40-102(15)(d)(i) (defining a
“qualified actuary” as one who has not “violated a provision
of . . . statute or other law in the course of the actuary’s dealings”);
id. § 31A-14-101(3) (stating that one purpose of chapter 14 is to
“provide Utah policyholders dealing with foreign insurers with
regulatory protection”); id. § 31A-15-103(6)(c) (stating that “[t]he
commissioner may prohibit . . . all insurance producers from deal-
ing with the insurer” under certain circumstances); id. § 31A-17-
404(2)(d) (“A domestic ceding insurer is allowed credit for rein-
surance . . . only if the reinsurance contract contains a provision
placing on the reinsurer the credit risk of all dealings with inter-
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Opinion of the Court
That is a significant barrier to an interpretation of section 407 that
would import a specialized legal sense of “dealing with.” If there
is no uniform legal sense of the term, we cannot appropriately in-
corporate it into the statute.
¶64 We accordingly construe section 407 to use “dealing with”
in the ordinary sense of interacting with. And we conclude that
Orlando has established that it was “dealing with” United Title in
this sense.
¶65 Orlando and United Title had two principal interactions:
on the special escrow instructions and in connection with the ear-
nest money wire transfer. The byline of the instructions notes that
they are “[f]rom” both IDR and Orlando, and the instructions con-
tain numerous references to Orlando’s anticipated involvement in
approving the disbursement to Paydirt. Most significantly, the in-
structions were signed by David Grant, an Orlando principal, on a
signature block expressly designated for Orlando. After Greger-
son sent the instructions to IDR, Grant called United Title’s office
to confirm that they had been received.
¶66 Stewart Title notes that the instructions were faxed by IDR,
not Orlando. And it insists that Orlando’s role in drafting the in-
structions did not rise to the level of “dealings.” Perhaps it’s true
that behind-the-scenes drafting would not amount to “dealing.”
But Orlando did more than that. The instructions expressly noted
Orlando’s anticipated role in the disbursement of the earnest
money. And Orlando’s signature was specifically indicated. Those
elements would have signaled to United that it was “dealing
with” Orlando. As noted above, the instructions required Orlan-
do’s written approval prior to any disbursement, so United Title
could not avoid Orlando and complete the transaction without
breaching the instructions.
¶67 The title companies contend that the earnest money came
from Commonwealth Holdings and not Orlando. Orlando cites
contrary evidence, suggesting that United knew that Orlando was
ultimately the lender. We need not resolve that controversy here,
mediaries regarding the insurance contract.”); id. § 31A-37a-
205(9)(c)(ii) (“[T]he receiver shall deal with the asset or liability in
accordance with the terms of a relevant governing instrument or
contract.”).
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
however, as there is sufficient evidence that United was “dealing
with” Orlando in connection with the escrow instructions. That
evidence defeats the title companies’ motions for summary judg-
ment and sustains judgment in Orlando’s favor regardless of
whether Commonwealth or Orlando was viewed as the lender.
2. For the “receipt and disbursement of funds”
¶68 The second basis for the title companies’ motions for sum-
mary judgment arises out of a further qualification on the statuto-
ry principle of vicarious liability. Under section 407, title compa-
nies are not liable for all of an insurance producer’s “dealings.”
They are liable as to dealings “for the receipt and disbursement of
funds deposited in escrows.” UTAH CODE § 31A-23a-407 (empha-
sis added).
¶69 This clause confines a title company’s vicarious liability to
the title insurance producer’s handling of escrowed funds. And
each of Orlando’s above-mentioned dealings with United Title
seems to meet this qualification. Orlando, through Common-
wealth Holdings, wired $1 million to United Title (for its receipt)
and provided escrow instructions (governing disbursement). And
in the interim between that receipt and disbursement, United Title
placed these funds in escrow.
¶70 The title companies’ attempts to avoid that conclusion are
unpersuasive. They offer a limiting construction of the “receipt
and disbursement” clause and a separate factual argument. Both
arguments fail.
¶71 The limiting construction would limit liability of title in-
surance producers to acts involving “misappropriation or misdi-
rection” of escrow funds. In support of that limitation, the title
companies cite the statute’s legislative history. They also cite an
amicus brief filed by the Utah Insurance Department in a 2006
federal district court action involving section 407. As the title
companies indicate, that brief asserted that section 407 “serves the
important purpose of preventing the misdirection of escrow
funds.” And because the brief nowhere suggested that the “mere
breach of a closing instruction would fall under the statute,” the
title companies urge us to limit this provision to the “misdirec-
tion” circumstance noted in the brief.
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Opinion of the Court
¶72 This argument fails on at least two levels. First is the fact
that the limitation urged by the title companies appears nowhere
on the face of the statute. Section 407 speaks generally of a title
insurance producer’s “receipt and disbursement” of escrow funds.
This clause is not limited to the misdirection or misappropriation of
such funds, and we will not read such a limitation into the statute.
See Nevares v. M.L.S., 2015 UT 34, ¶ 34, 345 P.3d 719.
¶73 Second, the title companies’ argument confuses statutory
purpose with statutory text. It may well be that the prevention of
misdirection of escrow funds was the problem that sparked the
legislature’s attention in the first place. But statutes are not always
limited to the problem that initiated legislative activity. And
where the statute reaches more broadly, it is the statutory text that
governs, not our understanding of the purpose that motivated its
enactment.11
¶74 Perhaps such a limitation would be appropriate as a matter
of legislative policy. As a policy matter, there are downsides to
holding a title insurance company vicariously liable for all wrongs
the producer perpetrates in the receipt and disbursement of es-
crow funds. It may even be that the legislature meant to limit the
vicarious liability of title insurers to terms not stated on the face of
section 407. But intentions are not laws unless they are enacted as
such. So the answer to the title companies’ policy concerns is that
they are better directed to the body that enacted this statute. We
reject the argument on that basis, while acknowledging the pre-
11 See Hooban v. Unicity Int’l, Inc., 2012 UT 40, ¶ 17, 285 P.3d 766
(“Our evaluation of the statute’s purpose must start with its text,
not the legislative history. Where the statute’s language marks its
reach in clear and unambiguous terms, it is our role to enforce a
legislative purpose that matches those terms, not to supplant it
with a narrower or broader one that we might infer from the legis-
lative history. That history might identify a social problem that
first sparked the legislature’s attention. But we cannot presume
that the legislature meant only to deal with that particular prob-
lem, as legislative bodies often start with one problem in mind but
then reach more broadly in their ultimate enactment. And when
they do, we cannot limit the reach of their enactment to the ill that
initially sparked their interest.” (footnotes omitted)).
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
rogative of the legislature to revisit section 407 if it prefers a limi-
tation not evident on the face of the statute as it currently stands.
¶75 The title companies’ factual argument likewise fails. The
notion that United’s alleged breaches arise not from its receipt and
disbursement of earnest money but from its failure to collect doc-
uments is a distinction without a difference. The basis for Orlan-
do’s claim is the assertion that United improperly disbursed es-
crowed funds. And the collection of the documents in question
was an express condition of the disbursement of escrow funds. So
although it’s true that United’s alleged breach was its failure to
collect documents, that failure was also inextricably connected to
its receipt and disbursement of earnest money.
¶76 On these grounds we reject the title companies’ argument
under the “receipt and disbursement” clause. And on this point
we hold that it is Orlando, and not the title companies, that is enti-
tled to judgment in its favor.
3. Transactions “where a commitment” for “title insurance . . . has
been ordered”
¶77 The third statutory limitation advanced by the title compa-
nies is in the clause that defines the types of transactions in which
a title company’s vicarious liability is triggered—in a “transac-
tion[] where a commitment . . . for . . . title insurance of that title
insurance company has been ordered.” UTAH CODE 31A-23a-407.
The title companies assert that this element is not satisfied here
because the commitment for title insurance at issue was not “or-
dered” by Orlando. Again we disagree.
¶78 The grammatical structure of the statute forecloses the title
companies’ position. Instead of specifying a subject of the opera-
tive verb (“order[]”), section 407 speaks in the passive voice. All
that is required is that a title insurance commitment “has been or-
dered.” Id. (emphasis added). That passive formulation means
that there is no requirement that the title insurance commitment
be ordered by any particular party. And, as we noted earlier, we
will not read a restriction into the statute that does not appear on
its face. See supra ¶ 72; Iselin v. United States, 270 U.S. 245, 251
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Opinion of the Court
(1926) (Brandeis, J.) (“To supply omissions transcends the judicial
function.”).12
¶79 The limits on the liability in this statute appear in other
clauses. The claimant must be “dealing with” the title insurance
producer. And the transaction must involve the “receipt and dis-
bursement of funds” in escrow. But where those (and other) statu-
tory conditions are satisfied, it matters not who ordered the com-
mitment for title insurance. It is enough that it “has been or-
dered.” That is enough to defeat the title companies’ argument, as
there is no question that a title insurance commitment was or-
dered in this case.
4. A transaction in which a “preliminary report of the title insur-
ance company has been issued or distributed”
¶80 A fourth ground for summary judgment is advanced only
by First American. It seeks to get out of this case on the ground
that there was no “preliminary report of the title insurance com-
pany” that was “issued or distributed” in First American’s name.
In First American’s view, a report is “issued or distributed” only if
it was sent intentionally. And First American claims that its in-
volvement in this transaction was unintentional—the result of an
unexplained move by United Title, in inadvertently sending a title
insurance commitment mistakenly prepared in First American’s
name, but never intended to be sent (and never authorized by
First American).
¶81 This argument is a nonstarter. It fails at the threshold be-
cause it invokes a clause of the statute that is simply inapplicable.
Even if “issued or distributed” could be construed to mean sent
intentionally, it would not matter because the “issued or distribut-
ed” clause is simply not implicated. That clause attaches, after all,
to a “preliminary report of the title insurance company.” UTAH
12 In support of their argument on this point, the title companies
cite the decision of our court of appeals in Bodell, 945 P.2d at 123–
24. We find nothing in that decision that cuts against our analysis
here, however. The Bodell court dismissed a plaintiff’s section 407
claim under the “transactions” clause. Id. But the court’s opinion
provides no explanation for that decision, and thus no basis for
calling our analysis into question. Id.
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
CODE § 31A-23a-407. And this case did not involve such a report.
It involved a “commitment” for title insurance.
¶82 The First American document at issue, in other words, is
not a “preliminary report”; it is a “commitment.” And for this sort
of document the statutory limitation has nothing to do with it be-
ing “issued or distributed.” It has only to do with it being “or-
dered.” We have already rejected the title companies’ argument
on that element, moreover. See supra ¶¶ 78–79. We therefore reject
this additional argument raised by First American, and uphold
Orlando’s right to judgment on this issue.13
5. Constitutional avoidance
¶83 A final argument advanced by the title companies invokes
the canon of constitutional avoidance. The constitutional issue
they identify is a matter of due process. Specifically, the title com-
panies challenge the rationality of a statutory scheme that imposes
liability on title companies absent any evidence of fault,
13 In so doing, we do not foreclose the possibility of First Ameri-
can advancing a related argument in further proceedings on re-
mand. We concluded above that a title insurance commitment
“has been ordered” in this case. See supra ¶ 79. That happened
when IDR sought title insurance coverage—through a commit-
ment provided through United—in connection with the SITLA
property transaction. But that does not necessarily mean that a
First American title commitment was “ordered.” Under section 407
it is not sufficient that any old “commitment” for “title insurance”
have been ordered. In order for the vicarious liability prescribed
by statute to be triggered, the title insurance commitment that
“has been ordered” must have been “of that title insurance compa-
ny”—the title insurance company that is vicariously responsible
for the liabilities of the title insurance producer. UTAH CODE
§ 31A-23a-407 (emphasis added). On remand, it may be that First
American can demonstrate that no First American title commit-
ment was “ordered” in connection with the SITLA property trans-
action. That could arguably be so, for example, if First American
could establish that the commitment provided in its name was
never “ordered”—by IDR or by United Title as its agent—but in-
stead was simply prepared by mistake and without First Ameri-
can’s approval. We need not and do not resolve that matter here,
however, as it was not raised in the parties’ briefing.
24
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Opinion of the Court
knowledge of misconduct, or capacity to prevent it. Stewart Title,
in particular, asserts that it appointed United Title as a limited
agent (not encompassing escrow services), and complains that it is
irrational to impose liability on Stewart for United’s escrow activi-
ties. And, in an attempt to avoid the constitutional problems that
they identify, the title companies urge us to read a “meaningful
involvement” limitation into section 407.
¶84 This argument fails at two levels. For one thing, the avoid-
ance canon is not a license to rewrite statutes. It is a tool for inter-
preting them. If the title companies could identify “grave” consti-
tutional questions with the application of section 407, the avoid-
ance canon could justify our resolving ambiguities in the statute
in a manner avoiding those problems. See Utah Dep’t of Transp. v.
Carlson, 2014 UT 24, ¶ 23, 332 P.3d 900. But the mere existence of
such questions does not give us license to add a qualifier or limi-
tation not evident on the face of the statute. And that is what the
title companies request here. There is no way to read a “meaning-
ful involvement” limitation on the vicarious liability set forth in
section 407. We accordingly decline to do so.
¶85 Second, the constitutional concerns raised by the title com-
panies are insufficient in any event. Section 407, as broadly writ-
ten, may be subject to challenge on policy grounds. At some level
it might make more sense to limit the vicarious liability of a title
company for the acts of a title insurance producer to activities in
which the former had some knowledge or participation. But the
Due Process Clause is not a license for judicial second-guessing of
legislative policy judgments.
¶86 To succeed in attacking section 407 on due process
grounds, the title companies would have to show that there is no
“rational basis” for imposing vicarious liability on title insurance
companies for the acts of a title insurance producer. Judd v.
Drezga, 2004 UT 91, ¶ 30, 103 P.3d 135 (stating that, for nonfun-
damental rights, “we apply a rational basis test in substantive due
process cases”). This they cannot do. The principle of vicarious
liability has been around for a long time, and has long been up-
held against constitutional attack. See Louis Pizitz Dry Goods Co. v.
Yeldell, 274 U.S. 112, 115 (1927).
¶87 “The extension of the doctrine of liability without fault to
new situations to attain a permissible legislative object is not so
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ORLANDO MILLENIA v. UNITED TITLE et al.
Opinion of the Court
novel in the law or so shocking ‘to reason or to conscience’ as to
afford in itself any ground for the contention that it denies due
process of law.” Id. Broad-sweeping liability for title insurance
companies—extending beyond the acts of the title insurance pro-
ducer—can be understood to advance a “permissible legislative
object.” Perhaps, as the title companies indicate, such liability
would not effectively “prevent misappropriation of escrow
funds” or “protect consumers by ensuring vigilance in monitoring
escrow agents” in circumstances in which the title company has
no knowledge of or involvement in those activities. But section
407 can easily be understood to encompass broader purposes—
including, most obviously, the protection of (and compensation
for) all parties “dealing with” title insurance producers for the
“receipt and disbursement” of escrow funds. Such a legislative
purpose is certainly permissible. And the apparent legislative goal
of protecting that interest is sufficient to defeat the constitutional
concern raised by the title companies.
III
¶88 We reverse and remand for reasons set forth above. In so
doing, we acknowledge the weight of some of the concerns raised
by the title companies in this case. The opaque terms of Utah
Code section 31A-23a-407 harbor some points of ambiguity; and
candidly they give us some pause as to whether the extensive lia-
bility sought by Orlando was intended by the legislature. For rea-
sons noted above, however, we interpret the broad terms of the
statute to sustain the broad liability sought by Orlando, and leave
the question whether to limit that liability for the legislature if it
chooses to revisit this issue.
¶89 Perhaps the legislature will eventually adopt one or more
of the limitations of liability advanced here by the title companies.
But unless and until it does, we are left to give effect to the statu-
tory language that it adopted. And we read that language to sus-
tain statutory liability in this case, contingent on Orlando’s suc-
cess on the primary claim for breach of fiduciary duty.
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26