173 Conn. App. 463
Conn. App. Ct.2017Background
- Ticor Title (later Chicago Title) issued a lender’s title policy to NationOne for property sold by Joseph Davis to Janice Flemming; Ticor relied on title searches performed by Accurate Title Searches (defendant).
- Accurate performed two searches (Apr and Jun 2006) but failed to check the grantor-grantee index and did not disclose a quitclaim deed (from Davis to Terry Road, recorded Apr 21, 2006) and Terry Road’s mortgage.
- Flemming defaulted; NPL Investment (assignee of the mortgage) faced counterclaims from Terry Road and CATIC asserting superior title, prompting Chicago Title to investigate and settle those claims for $77,500 and to incur $20,161.26 in attorney’s fees/expenses.
- Chicago Title sued Accurate for negligence; the trial court granted summary judgment on liability for Accurate’s negligent search and awarded $77,500 for settlement costs but denied recovery of prior attorney’s fees/expenses and prejudgment interest.
- Accurate appealed, arguing the claim was really common-law indemnification requiring notice/opportunity to defend and proof of NPL’s legal liability; Chicago Title cross-appealed the denial of attorney’s fees as compensatory damages (American rule issue).
- The appellate court held the claim sounded in negligence (not indemnification), affirmed liability and the settlement damages, but reversed as to denial of prior attorney’s fees/expenses — remanding for a damages hearing on that item.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nature of claim: negligence vs common-law indemnification | Claim sounds in negligence based on defendant’s duty to perform accurate title searches and plaintiff’s contractual obligation to its insured; recovery is for negligence-caused losses | This is an indemnification claim; plaintiff was passively negligent and thus must prove underlying legal liability and should have given defendant notice/opportunity to defend | Court: Claim is negligence, not common-law indemnification; defendant’s notice/indemnity arguments inapplicable |
| Standard for recovering settlement paid to third parties | Plaintiff may recover reasonable sums paid to settle claims proximately caused by defendant’s negligence | Defendant says plaintiff must prove NPL’s legal liability (since indemnification), not just reasonableness of settlement | Court: Plaintiff entitled to recover the reasonable settlement ($77,500) as compensatory damages |
| Recoverability of attorney’s fees/expenses incurred in prior litigation (American rule) | Fees/expenses spent defending insured in separate litigation are compensatory and recoverable (exception to American rule) | American rule bars recovery of attorney’s fees absent statute/contract; plaintiff failed to notify defendant of prior action | Court: American rule does not bar recovery of reasonable attorney’s fees/expenses incurred in separate prior litigation as compensatory damages; remanded for further hearing on that issue |
| Validity/effect of corrective deed and causation for summary judgment | Corrective deed (July 6, 2006) related back to May 19, 2004, validating Davis’s title and Terry Road’s later quitclaim; defendant’s negligence proximately caused plaintiff’s loss | Defendant argued McCalop deed ambiguity meant Davis had no title, so summary judgment was improper | Court: Corrective deed relates back; defendant’s cursory summary-judgment challenge inadequately briefed and meritless in light of admitted negligence |
Key Cases Cited
- Kaplan v. Merberg Wrecking Corp., 152 Conn. 405 (1965) (announcing common-law indemnification doctrine and the active/passive negligence framework)
- Amoco Oil Co. v. Liberty Auto & Electric Co., 262 Conn. 142 (2002) (defining "loss" for indemnity and elements of indemnification claims)
- Smith v. New Haven, 258 Conn. 56 (2001) (confirming requirement that indemnitee be chargeable with some negligence for Kaplan indemnity)
- Prokolkin v. General Motors Corp., 170 Conn. 289 (1976) (permitting negligence claims to recover sums a plaintiff paid in settling third-party claims)
- ACMAT Corp. v. Greater New York Mutual Ins. Co., 282 Conn. 576 (2007) (explaining the American rule and its limited equitable/statutory exceptions)
- Chapman Lumber, Inc. v. Tager, 288 Conn. 69 (2008) (noting attorney’s fees incurred in other litigation can be an element of compensatory damages)