Centurion Properties III, LLC v. Chicago Title Insurance Co., 375 P.3d 651

CP III bought commercial property using a $70.8 million loan from GECC secured by a deed of trust; loan documents prohibited junior liens without GECC approval and made unauthorized liens an event of default.
Chicago Title acted as title insurer and recorded GECC’s deed of trust; it also recorded four additional deeds/memoranda (two for Centrum Financial, two for Trident) that were later alleged to be unauthorized by CP III.
The four junior liens were facially valid on their face (correct legal descriptions, signatures, notarizations) and were recorded in part as accommodations by Chicago Title; one was recorded in connection with a title commitment.
GECC discovered the junior liens, treated them as events of default, accelerated the loan, and foreclosed; CP III ultimately filed bankruptcy and sued multiple parties; claims against others settled, leaving a negligence claim against Chicago Title.
The U.S. District Court granted summary judgment for Chicago Title, finding no duty of care to CP III; the Ninth Circuit certified the question to the Washington Supreme Court: whether a title company owes a duty of care to third parties in recording legal instruments.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does a title company owe a duty of care to third parties when recording legal instruments?	Chicago Title’s recording was foreseeable to harm CP III and Chicago Title assumed a duty by issuing commitments and recording at the lender’s request; it should have checked underlying agreements.	Title companies do not owe third parties a duty absent a special relationship or intent to benefit; recordings/commitments are for the insurer’s benefit and imposing a duty would undermine recording policy.	No — title companies do not owe a duty of care to third parties for recording legal instruments (especially facially valid ones); public policy, precedent, and multifactor duty analysis disfavor imposing such a duty.

Barstad v. Stewart Title Guaranty Co., 145 Wn.2d 528 (2002) (title insurer’s preliminary commitments are not abstracts of title and do not give rise to a duty to search or disclose title defects)
Affil. FM Ins. Co. v. LTK Consulting Servs., Inc., 170 Wn.2d 442 (2010) (multifactor duty analysis balancing safety, private ordering, and economic burden — duty may arise where public safety and control justify it)
Stewart Title Guar. Co. v. Sterling Sav. Bank, 178 Wn.2d 561 (2013) (adopts modified multifactor test for when professionals may owe duties to nonclient third parties)
ESCA Corp. v. KPMG Peat Marwick, 135 Wn.2d 820 (1998) (negligent misrepresentation and justifiable reliance required to extend professional duties to nonclients)
Transamerica Title Ins. Co. v. Johnson, 103 Wn.2d 409 (1985) (no third-party liability from preliminary title commitments where no reliance exists)
Seeley v. Seymour, 190 Cal. App. 3d 844 (1987) (title company held liable for recording a facially invalid instrument under circumstances showing intent to affect third party — factual contrast to this case)
Luce v. State Title Agency, Inc., 190 Ariz. 500 (1997) (on facts similar to this case, court declined to impose duty where no special relationship or ability to control third-party conduct existed)