Fidelity National Title Co. v. First American Title Insurance Co.
2013 COA 80
Colo. Ct. App.2013Background
- Agent (Fidelity National Title) issued two title commitments underwritten by Underwriter (First American Title) for the same parcels, creating dual first-lien interests by Brown/Academy and Colorado East Bank & Trust (CEB&T).
- Agent facilitated closings in 2007–2008 and disbursed over $1 million to the Developer without obtaining a release of Academy’s deed of trust.
- Brown had assigned its deed of trust to Academy, but Brown’s payoff letter did not mention Academy or provide a proper payoff amount.
- Agent failed to notify Underwriter of the conflicting first-lien interests, leading to foreclosure-related litigation in which Underwriter paid $986,000 plus $55,000 in fees to resolve claims.
- Trial court found Agent liable under contract sections 7.3 and 7.4 for mishandling funds in escrow and for failing to provide notice, and Underwriter prevailed on breach claims; liability limits and preservation issues were raised on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of 'handling funds' in escrow | Underwriter argues 7.3 covers any error in handling funds in escrow | Agent contends no funds handling error; tasks were closing not escrow | Ambiguity resolved in favor of Underwriter; handling funds includes disbursing escrowed funds |
| Effect of payoff statement under § 88-85-124.5 | Underwriter argues Brown letter is not a valid payoff statement | Agent relied on payoff statement as contemplated by statute | Brown letter not a payoff statement; statute does not shield Agent here |
| Meaning of 'actual prejudice' under § 7.4 | Underwriter suffered prejudice due to late notice | Agent asserts no knowledge could be attributed to the corporation | Actual prejudice shown; late notice harmed Underwriter’s defense options |
| Limitation of liability under § 7.2 | Damages exceed $500 per claim; § 7.2 does not bar recovery | Liability limited to $500 per claim; issue not preserved for appeal | Issue not preserved; court did not apply $500 limit on appeal |
| Notice knowledge attribution under § 7.4 | Agent’s officers’ knowledge should be imputed to Agent | Knowledge fragmented across employees | Knowledge of branch manager imputed to Agent; notice obligation breached |
Key Cases Cited
- Mountain States Mut. Cas. Co. v. Roinestad, 2018 CO 14 (Colorado Supreme Court, 2018) (contract interpretation; de novo review of terms)
- Ad Two, Inc. v. City & County of Denver, 9 P.3d 873 (Colo. 2000) (ambiguous contract interpretation; plain language)
- Hamill v. Cheley Colorado Camps, Inc., 262 P.3d 945 (Colo.App. 2011) (contract ambiguity and interpretation)
- Kuta v. Joint Dist. No. 50(J), 799 P.2d 379 (Colo.1990) (contract interpretation; ambiguity not created by mere disagreement)
- Bock v. Am. Growth Fund Sponsors, Inc., 904 P.2d 1381 (Colo.App.1995) (notice to corporation via agent/officer)
- Bergeson v. Life Ins. Corp., 265 F.2d 227 (10th Cir.1959) (agency knowledge imputes to corporation)
- Moore v. Quarterman, 534 F.3d 454 (5th Cir.2008) (actual prejudice standard)
- Worthey v. Sedillo Title Guar., Inc., 512 P.2d 667 (N.M.1973) (prejudice measure in title context)