Summary
explaining that similar claims based on identical agency agreement were "properly characterized as claims by a principal against an agent for breach of the parties' agency agreement and the enforcement of the express contractual indemnity agreement contained therein"
Summary of this case from Fid. Nat'l Title Ins. Co. v. B & G Abstractors, Inc.Opinion
14-P-1501
08-18-2015
FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK v. MILDRED CROWLEY, personal representative.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Fidelity National Title Insurance Company of New York (Fidelity) brought this suit alleging that George Crowley violated the terms of his issuing agency agreement (agency agreement) with Fidelity in connection with five title insurance policies that he issued in Fidelity's name during 2004 and 2005, and that he therefore must reimburse Fidelity for losses paid under those policies. On the parties' cross motions for summary judgment, a judge of the Superior Court ruled that Fidelity's claims were for legal malpractice, and all but one of the claims were time barred by the three-year statute of limitations specified in G. L. c. 260, § 4. As to the remaining claim, the judge ruled that, as matter of law, Crowley was liable to Fidelity for the monetary loss it sustained as a result of his malpractice.
Before us are the parties' cross appeals from the ensuing judgment. After de novo review, see Deutsche Bank Natl. Trust Co. v. Fitchburg Capital, LLC, 471 Mass. 248, 252-253 (2015), we conclude that Fidelity's claims are contractual indemnity claims subject to a six-year statute of limitations, see G. L. c. 260, § 2, and that Crowley's liability to Fidelity extends only to instances where his underlying error or omission resulted from gross negligence, or wilful or reckless conduct. Because factual issues remain as to both the application of the statute of limitations and Crowley's liability, we remand to the Superior Court for further proceedings.
Background. A. The agency agreement. Under the agency agreement, Fidelity appointed Crowley as its agent "solely to countersign and issue title insurance commitments, binders, guarantees, endorsements, title insurance policies of [Fidelity], or any other form whereby [Fidelity] assumes liability." Crowley agreed not to "[c]ommit [Fidelity] to insure any [e]xtra [h]azardous [r]isk" -- defined as risks that would result in liability not "normally assumed," including the issuance of a title insurance policy for property with "[e]xisting liens and encumbrances."
In paragraph 6(B) of the agency agreement, Crowley also agreed to reimburse Fidelity for any "[l]oss" that "resulted or arose from [his] grossly negligent, willful or reckless conduct" (emphasis supplied). The word "grossly" was typed above the word "negligent" with the handwritten letters "PCH" appearing in the margin next to the addition.
These initials were those of an attorney at the law firm of Hall & Dwyer, Crowley's predecessor in interest to the agency agreement. It is undisputed that Crowley was substituted as Fidelity's agent in 2001, and that the terms negotiated by the Hall & Dwyer attorney applied to him.
In the subparagraphs immediately following this amended provision, the agency agreement identified six nonexclusive instances where Crowley would be liable to Fidelity for a "[l]oss," including: the "[f]ailure of [Crowley] to comply with the terms and conditions of this [a]greement or with the manuals, underwriting bulletins and/or instructions given to [him] by [Fidelity]; and the "[i]ssuance of [title insurance policies] which contain errors or omissions which could reasonably have been detected by [Crowley] from the commitment, examiner's report, title search or abstract."
The agency agreement defined "[l]oss" as "sums paid or to be paid by [Fidelity], in cash or otherwise, to settle or compromise claims under any of [Fidelity's title insurance policies] issued by [Crowley]," including, but not limited to "expenses, costs and attorneys' fees actually paid or incurred in connection with investigation, negotiation, litigation, or settlement of such claim which ultimately requires payment of any sum by [Fidelity]."
B. The claims against Crowley. The operative complaint is Fidelity's second amended complaint. It alleges claims arising from five transactions in which Crowley issued title insurance policies on behalf of Fidelity. In those transactions, Crowley served as the closing attorney, having been retained by mortgage lenders to represent them in connection with the financing or refinancing of the properties in question. Fidelity alleges that in each of these transactions, Crowley issued title insurance in its name despite the existence of title defects, and that in each case the mortgage lender made a claim against the policy, and Fidelity incurred a loss. It is for these losses that Fidelity seeks reimbursement from Crowley.
Discussion. A. Statute of limitations. The applicable statute of limitations depends upon the nature of Fidelity's claims. Here, the claims are properly characterized as claims by a principal against an agent for breach of the parties' agency agreement and the enforcement of the express contractual indemnity agreement contained therein. Accordingly, the claims are governed by the six-year statute of limitations for breach of contract. See G. L. c. 260, § 2.
The fact that Crowley was an attorney and served as such vis-à-vis the mortgage lenders does not transmute the claims into ones for legal malpractice. See Private Lending & Purchasing, Inc. v. First Am. Title Ins. Co., 54 Mass. App. Ct. 532, 538-539 (2002) (discussing distinct roles of attorney who acted as both agent for title insurer and attorney for lender). While the mortgage lenders might have brought malpractice claims against Crowley for failing to discover title defects that impaired their positions and required rectification, they elected, instead, to make claims against their title insurance policies. Thereafter, when the claims of the mortgage lenders resulted in losses to Fidelity, it was entitled to enforce its contractual rights under the agency agreement and seek reimbursement from Crowley.
There was no attorney-client relationship between Crowley and Fidelity, and it is far from clear that Fidelity would fall within the limited category of nonclients eligible to sue an attorney for malpractice. See Miller v. Mooney, 431 Mass. 57, 61 & n.3 (2000). But even if Fidelity might have sued Crowley for malpractice it was not required to do so, when suit on the agency agreement provided it with more certain protection.
There is nothing in the agency agreement that requires the issuing agent to be an attorney. To the contrary, schedules at the end of the agency agreement indicate that both attorneys and nonattorneys may serve as agents.
B. Accrual. "When there is an express agreement of indemnity in a contract, a claim for indemnity accrues when there is a breach of that provision." Fall River Hous. Authy. v. H. V. Collins Co., 414 Mass. 10, 13 (1992). Ordinarily, payment of a loss by the indemnitee is a prerequisite to bringing suit on an indemnity claim. See New England Merchs. Natl. Bank v. Latshaw, 12 Mass. App. Ct. 150, 153 (1981). Thus, Fidelity may recover losses that Crowley is contractually obliged to indemnify, so long as those losses were paid within six years of the date when the action was commenced. Because neither the record nor the parties' appellate arguments are sufficiently developed to allow us to make these calculations, they are left to be determined on remand.
We are not dealing here with the indemnity obligations of a liability insurer, whose duties turn on policy language, statutes, and case law specific to that situation. See, e.g., OneBeacon America Ins. Co. v. Narragansett Elec. Co., 87 Mass. App. Ct. 417, 430 (2015) (insured's claims for breach of duty to indemnify accrued when insurer failed or refused to pay costs that insured became "legally obligated to pay"). See also Berkshire Mut. Ins. Co. v. Burbank, 422 Mass. 659, 663 n.5 (1996).
To the extent that the agency agreement is unclear as to what constitutes a loss or when a loss occurs, any ambiguities should be construed against Fidelity as the drafter of this printed form agreement. See DeWolfe v. Hingham Centre, Ltd., 464 Mass. 795, 804 (2013).
C. Insertion of "grossly" in the agency agreement. "[W]here the contract is partly printed and partly written or typewritten, . . . in case of conflict the printed part must yield to the other, which is more likely to represent the intent of the parties." King Features Syndicate, Inc. v. Cape Cod Bdcst. Co., 317 Mass. 652, 654 (1945). See Levenson v. L.M.I. Realty Corp., 31 Mass. App. Ct. 127, 130-131 (1991). Here, the word "grossly" reflects the parties' intent that more than the mere failure to exercise ordinary care would be needed to establish Crowley's liability under the agency agreement. See Altman v. Aronson, 231 Mass. 588, 591-592 (1919). Because it cannot be determined as matter of law on the summary judgment record that the losses for which Fidelity seeks to be indemnified "resulted or arose from the grossly negligent, willful or reckless conduct" of Crowley, those issues must be resolved at trial.
Conclusion. The judgment is vacated, and the case is remanded for further proceedings consistent with this memorandum and order.
So ordered.
By the Court (Cohen, Wolohojian & Maldonado, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: August 18, 2015.