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Transamerica Title Insurance Co. v. Johnson

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Bloomberg Law

Citation. 22 Ill.103 Wn.2d 409, 693 P.2d 697 (1985)

Brief Fact Summary. The Plaintiff, Transamerica Title Insurance Co. (Plaintiff), in this subrogation suit is a title insurance company and the Defendant, Johnson (Defendant), is the seller-grantor of three parcels of land and the insureds were the purchasers-grantees. The Plaintiff failed to except from coverage a sewer assessment lien on each parcel. The Plaintiff paid the three assessments and then sued the Defendant under subrogation rights, which simply means that any rights, which the purchaser-grantees might have against the Defendant, are subrogated to the Plaintiff.

Synopsis of Rule of Law. A title insurance company is liable on a duty to search and disclose only when the non-insured (Defendant herein) has shown foreseeable reliance upon the preliminary commitment or upon the representation of the title insurance company.


Facts. The Plaintiff in this subrogation suit is a title insurance company and the Defendant is the seller-grantor of three parcels of land and the insureds were the purchasers-grantees. The Plaintiff failed to except from coverage a sewer assessment lien on each parcel. The Plaintiff paid the three assessments and then sued the Defendant under subrogation rights, which simply means that any rights which the purchaser-grantees might have against the Defendant are subrogated to the Plaintiff. The Defendant is a developer who purchased vacant lots for the purpose of building homes thereupon. When the purchase had been made, preliminary sewer district assessments had been made and the preliminary assessments were disclosed in title insurance policies issued by another title insurer, which the Defendant received. The Defendant’s corporate president testified in deposition that he knew about the assessments and knew that when the three parcels were purchased, the parcels would have been s
ubject to the assessment. Soon after the purchase the Defendant listed the parcels for sale, initially stating in the listing agreements that the buyers would have to assume the sewer assessment, but that requirement was later deleted. When the Plaintiff issued its preliminary commitment to title insurance, the preliminary sewer assessments had become final and were liens on the parcels. The Court found no dispute that (1) the Plaintiff was negligent in not disclosing the assessments and (2) the Defendant corporation breached its warranty of title and its contractual obligations to its purchasers. The trial court granted summary judgment against the Defendant, the intermediate appellate court affirmed and Defendant appealed.

Issue. Does the Plaintiff have any liability to the Defendant for its negligence in not disclosing the assessments?
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