Cheri Glassick v. Wells Federal Bank, Stewart Title Guaranty Company, Northwest Title Agency, Inc., Tim Breuer, Manufacturers Bank and Trust Company, and Stewart Title Guaranty Company, and third party v. Corey Hauer, third party
A16-247
| Minn. Ct. App. | Dec 19, 2016Background
- In 2011 Corey Hauer sold a rental property (the 514 property) to his then-fiancée Cheri Glassick by warranty deed that obligated him to convey title free and clear of liens and to provide an abstract showing clear title.
- A prior Wells Federal mortgage encumbered the 514 property; Hauer had executed the mortgage in 2007 and was not current on payments; there is no evidence Wells Federal agreed to release the 514 property.
- Glassick purchased an owner’s title insurance policy through Northwest Title Agency (Northwest), to be underwritten by Stewart Title; Northwest failed to issue the policy and did not disclose the Wells Federal mortgage in its title commitment.
- Wells Federal foreclosed in October 2012, purchased the property at sale (subject to redemption), and Glassick sued to quiet title and sued Northwest and Stewart Title for negligence; the district court found Stewart vicariously liable for Northwest’s negligence.
- Stewart impleaded Hauer and obtained summary judgment against him on equitable claims (indemnification/subrogation/contribution), settled with Glassick for $127,650, and recovered that amount plus $163,900.90 in attorney fees from Hauer; Hauer appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment against Hauer was proper for Glassick’s losses | Hauer argued factual issues (expectation that title search/insurance would clear encumbrances) preclude summary judgment | Stewart argued undisputed facts show Hauer breached the purchase agreement and warranty deed and caused Glassick’s losses | Court: Hauer forfeited new factual argument; as a matter of law his breach was proximate cause of Glassick’s damages; summary judgment affirmed |
| Whether Stewart Title could seek equitable relief (indemnification/subrogation/contribution) against Hauer | Hauer argued equitable relief unavailable because legal remedies existed and Stewart was not blameless | Stewart argued it was vicariously liable only and had no adequate legal remedy against Hauer, who was the true cause of loss | Court: Stewart had no adequate legal remedy against Hauer and was entitled to equitable relief (indemnification); other equitable grounds unnecessary to decide |
| Whether indemnification applies when the indemnitee had some vicarious liability | Hauer argued Stewart was not morally innocent and thus not entitled to indemnity | Stewart argued it was without personal fault and only vicariously liable due to Northwest’s negligence | Court: Indemnification appropriate where indemnitee is without personal fault and exposed to liability by another’s breach; Stewart entitled to indemnity from Hauer |
| Whether attorney fees could be awarded to Stewart under equitable indemnity and whether the amount was reasonable | Hauer argued fees not recoverable because of American Rule, Stewart’s own negligence, and that the fee award was excessive | Stewart invoked the third-party litigation exception to award fees as indemnity damages and submitted lodestar proof | Court: District court did not abuse discretion: fees recoverable under equitable indemnity/third-party litigation exception and the amount awarded was reasonable |
Key Cases Cited
- Ruiz v. 1st Fid. Loan Servicing, LLC, 829 N.W.2d 53 (Minn. 2013) (summary-judgment standard)
- STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72 (Minn. 2002) (view evidence in favor of nonmoving party on summary judgment)
- DLH, Inc. v. Russ, 566 N.W.2d 60 (Minn. 1997) (definition of genuine issue of material fact)
- In re Collier, 726 N.W.2d 799 (Minn. 2007) (review of legal application when facts undisputed)
- Lubbers v. Anderson, 539 N.W.2d 398 (Minn. 1995) (proximate cause may be decided as matter of law where only one conclusion reasonable)
- Larson v. City of Minneapolis, 114 N.W.2d 68 (Minn. 1962) (indemnity is equitable doctrine protecting legally liable but morally innocent parties)
- Tolbert v. Gerber Indus., Inc., 255 N.W.2d 362 (Minn. 1977) (party without personal fault may obtain indemnity for another’s failure to perform legal duty)
- Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998) (third-party litigation exception permits awarding attorney fees as indemnity when one’s tort projects another into litigation)
- Dunn v. Nat’l Beverage Corp., 745 N.W.2d 549 (Minn. 2008) (American Rule: attorney fees not recoverable absent statute or contract)
- Green v. BMW of N. Am., 826 N.W.2d 530 (Minn. 2013) (lodestar and factors for reasonableness of attorney fees)