108 N.E.3d 342
Ind. Ct. App.2018Background
- Curtis Pearman bought a quitclaim deed and obtained a title policy from Stewart Title Guaranty Company (STGC) covering three parcels; one parcel (Parcel 3) had previously been sold to a church and Pearman lacked clear title to it.
- Pearman submitted a claim to STGC for Parcel 3; STGC appointed counsel, negotiated settlement offers ($8,000 and later $30,000 diminution), and ultimately interpled the $70,000 policy limits and sought court approval to tender them.
- Pearman sued Hale Abstract and STGC alleging breach of contract, negligent misrepresentation, and seeking declaratory relief and attorney fees; he did not plead bad faith or punitive damages in the complaint.
- The trial court granted summary judgment for STGC, awarding Pearman the $70,000 policy limits, but denied Pearman’s summary judgment on his claims against STGC.
- On appeal Pearman argued negligent misrepresentation, insurer bad faith, entitlement to attorney fees, and punitive damages; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Negligent misrepresentation by STGC | Pearman argued STGC’s title commitment misrepresented title to Parcel 3 and caused pecuniary loss. | STGC argued Pearman is in contractual privity and thus negligent misrepresentation is barred. | Held: Dismissed — U.S. Bank bars negligent misrepresentation claims where parties are in contract. |
| Insurer bad faith | Pearman asserted STGC acted in bad faith in handling/denying the claim. | STGC argued bad-faith was not pled and cannot be raised first at summary judgment. | Held: Dismissed — bad-faith claim was not pleaded; cannot be raised for first time in summary judgment. |
| Attorney fees | Pearman sought attorney fees (as part of bad-faith theory). | STGC noted no statute or contractual basis to award fees; policy’s defense-duty provision does not cover this circumstance. | Held: Denied — no contractual or statutory basis to award attorney fees. |
| Punitive damages | Pearman sought punitive damages for STGC’s conduct. | STGC argued punitive damages were not pleaded and cannot be raised on appeal. | Held: Waived — punitive damages were not presented below and cannot be raised for first time on appeal. |
Key Cases Cited
- U.S. Bank, N.A. v. Integrity Land Title Corp., 929 N.E.2d 742 (Ind. 2010) (title insurer may be liable in tort for negligent misrepresentation only when no contractual privity exists)
- Izynski v. Chicago Title Ins. Co., 963 N.E.2d 592 (Ind. Ct. App. 2012) (discussing reliance on title commitments and when negligent misrepresentation claim may lie)
- Erie Ins. Co. v. Hickman ex rel. Smith, 622 N.E.2d 515 (Ind. 1993) (recognizing insurer’s implied duty of good faith and fair dealing)
- Missler v. State Farm Ins. Co., 41 N.E.3d 297 (Ind. Ct. App. 2015) (elements and clear-and-convincing standard for bad-faith claims)
- Dreibelbiss Title Co. v. MorEquity, Inc., 861 N.E.2d 1218 (Ind. Ct. App. 2007) (explaining that policy limits constrain insurer’s contractual obligation but not necessarily tort damages)