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Fansler v. North American Title Insurance Co.

Superior Court of Delaware

March 19, 2019



          Eric M. Davis, Judge

         Upon consideration of the Motion to Dismiss (the "Motion") filed by Defendant Global Title, Inc. ("Global Title"); the Opposition to Defendants Richard M. Longo and Hillcrest Associates, Inc.'s Motion to Dismiss or for a More Definite Statement (the "Opposition") filed by Plaintiffs Mark Fansler and Linda Goldstein (collectively, "Plaintiffs"); Defendant's Reply to Plaintiffs' Response to Motion to Dismiss (the "Reply"); the Amended Complaint; and the entire record of this civil action, the Court will, for the reasons set forth below, DENY in part and GRANT in part the Motion.

         I. BACKGROUND[1]

         Global Title is a defendant in this action. The Plaintiffs added Global Title as a party in their Amended Complaint. The Plaintiffs allege that Global Title: (i) is an agent of Defendant North American Title Insurance Co. ("North American");[2] and (ii) was retained by the Plaintiffs to find the appropriate title insurance for the "unique characteristics of the Covered Premises."[3] In the Amended Complaint, the Plaintiffs expressly contend that Global Title:

(a) failed to inform [North American] in writing of the nonexistent access easement during underwriting before it bound the policy; (b) failed to provide the policy terms until seventeen (17) days before closing; (c) prepared the deed identifying the nonexistent access easement; (d) failed to inform [North American] of its acts in May 2015 to attempt to correct its prior errors; and (e) failed to obtain in May 2015 an amended title insurance policy for the [Plaintiffs] adding the new utility easement.[4]

         The Plaintiffs contend that "[a]ll acts of [Global Title] are imputed onto [North American]."[5] North American is a corporation based in California which underwrites insurance policies for customers in Delaware, among other states.

         The Plaintiffs purchased a landlocked plot of land at 1805 Walnut Street, Wilmington, DE 19809 (the "Property"). After signing a sale agreement, the Plaintiffs retained R. Matthew Longo, Esq. ("Attorney") to act as their attorney in the transaction. As alleged, Attorney incorrectly informed the Plaintiffs that the Property had an easement for access. The Plaintiffs retained Global Title to obtain the appropriate title insurance for the Property.[6] Global Title retained a Richard Longo of Hillcrest Associates, Inc. (collectively, "Surveyor") to perform a survey of the Property.[7] Surveyor performed a survey of the Property and purportedly identified the Property as "landlocked."[8] Despite this, Global Title prepared a deed, approved by the Attorney, that stated that the Property had an easement through which the Plaintiffs could access the Property.[9] The Plaintiffs purchased the Property on July 25, 2014 and received an insurance policy (the "Policy") from North American on August 11, 2014.[10]

         In January 2015, the Plaintiffs learned that the easement that Global Title included in the deed did not exist.[11] On May 13, 2016, Attorney negotiated an easement with an adjoining property owner.[12] On May 20, 2015, Global Title prepared a second deed in order to correct its errors and the Plaintiffs signed this deed on May 21, 2015 and then recorded the deed. [13] This second deed included an access and utility easement, but also included defects. For example, the deed states that the Plaintiffs could access the Property from Walnut Street, but the Property was not accessible from Walnut Street.[14] Global Title did not inform North American that it had revised the deed and so the Policy does not include the new easements. [15]

         The Plaintiffs eventually petitioned the Chancery Court for relief. The Chancery Court granted relief and created an access and utility easement. [16] The Plaintiffs stated that they incurred damages of $169, 187.74 because they could not access the Property. The insurance policy between the Plaintiffs and North American provides for $117, 000 for "loss or damages" but North American has not reimbursed the Plaintiffs for their damages accessing the Property.

         The Plaintiffs filed a complaint against North American on September 1, 2017 (the "Complaint"). The Plaintiffs allege that North American breached the Policy by not providing coverage for the Plaintiffs' damages. Then, the Plaintiffs filed an Amended Complaint which added R. Matthew Longo, Longo & Associates, LP, Richard M. Longo, Hillcrest Associates, Inc. and Global Title as defendants on or about May 21, 2018.

         In the Amended Complaint, the Plaintiffs allege that Global Title was professionally negligent as to the Plaintiffs because Global Title (1) prepared a deed which included a nonexistent easement, (2) did not provide the Policy to the Plaintiffs until seventeen days after the Plaintiffs purchased the Property, (3) prepared a corrected deed that did not provide an appropriate easement, (4) did not provide the Plaintiffs with an amended Policy, which included the easements.

         Global Title filed the Motion on September 21, 2018. On October 1, 2018, the Plaintiffs the Opposition. On October 15, 2018, Global Title filed the Reply on October 15, 2018. The Plaintiffs also filed the Affidavit of Plaintiff Mark Fansler in Opposition to Global Title, Inc.' Motion to Dismiss. As the Motion seeks relief under Rule 12(b)(6) of the Superior Court Rules of Civil Procedure, the Court did not consider the Mr. Fansler's affidavit in arriving at its decision on the Motion.

         The Court held a hearing (the "Hearing") on the Motion, the Opposition and the Reply on December 18, 2018. At the conclusion of the Hearing, the Court took the matter under advisement.


         A. Global Title's Contentions

         Global Title argues that the Plaintiffs' claims are barred by the three-year statute of limitations for negligence. Global Title also contends that the statute of limitations is not tolled by the "time of discovery" rule. Finally, Global Title claims that the Plaintiffs fail to state a claim upon which relief can be granted against Global Title.

         B. Plaintiffs' Contentions

         The Plaintiffs argue that the statute of limitations should be tolled by the "time of discovery" rule. In addition, the Plaintiffs contend that Global Title's acts creating liability span a period of time and fall within the three-year limitation period. The Plaintiffs also claim that the Motion relies on facts outside the Amended Complaint, which the Court should not consider under Rule 12.


         Upon a motion to dismiss, the Court (i) accepts all well-pleaded factual allegations as true, (ii) accepts even vague allegations as well-pleaded if they give the opposing party notice of the claim, (iii) draws all reasonable inferences in favor of the non-moving party, and (iv) only dismisses a case where the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances.[17] However, the Court must "ignore conclusory allegations that lack specific supporting factual allegations."[18]


         A. Statute of Limitations

         Under Delaware law, claims for negligence and professional negligence are subject to a three-year statute of limitations.[19] Courts apply a three-step analysis to determine whether a claim is time-barred.[20] First, the court determines when the cause of action accrues. Second, the court determines whether the statute of limitations may be tolled so that the cause of action accrues after the time of the breach.[21] The plaintiff must plead with specificity why the statute of limitations should be tolled.[22] Third, if a tolling exception applies, the court determines when the plaintiff received inquiry notice. [23] The statute of limitations begins to run from the date when the plaintiff received inquiry notice.[24]

         In tort cases, the cause of action accrues at the time of the injury.[25] In Kaufman v. C.L. McCabe & Sons, Inc., [26] the plaintiffs brought a civil action against an insurance agent alleging that the agent negligently procured insurance coverage because the agent had excluded loss-of-use coverage. The fact that the policy did not have loss-of-use coverage was clear as the policy, on its face, did not have such coverage. The Supreme Court found that the injury accrued when the plaintiffs signed the insurance contract which the plaintiffs claimed was defective.

         Delaware courts have tolled the statute of limitations using the "time of discovery" rule. The "time of discovery" rule applies where the injury is (a) "inherently unknowable"; and (b) sustained by a "blamelessly ignorant" plaintiff.[27] In Kaufman, the plaintiffs argued that the court should toll the statute of limitations using the time of discovery rule because the plaintiffs were not aware that their insurance policy was defective and the plaintiffs relied on the advice of a professional. The Supreme Court disagreed. The Supreme Court stated that "[a] party to a contract cannot silently accept its benefits and then object to its perceived disadvantages . . . ." The Supreme Court held that if the plaintiffs had read the insurance contract, the plaintiffs would have discovered the defects. So, the plaintiffs' injury was not ...

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