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

NOT FOR PUBLICATION WITHOUT THE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,
v.
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,
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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).
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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
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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
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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
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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.
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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
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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.
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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.
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