Fidelity National Title Insurance Co. v. Worthington
344 P.3d 156
Utah Ct. App.2015Background
- Worthington bought an unfinished house, took a first and second trust deed, and later sought a $2,596,000 refinance through a bank.
- The refinance closing was handled by Priority Title (partly owned by Worthington’s sister) as agent for underwriter Fidelity, and Priority Title issued a lender’s title policy to the Bank.
- Two months after closing a construction company recorded a $600,000 mechanic’s lien, claiming priority based on preexisting construction; Fidelity paid ~ $490,000 to settle the Bank’s claim under the title policy.
- Fidelity sued Worthington, his sister, his brother‑in‑law, and Priority Title for fraud, intentional misrepresentation/civil conspiracy, and breach of fiduciary duty; only Fidelity and Worthington remained by the time of appeal.
- The district court dismissed Fidelity’s claims against Worthington under Utah R. Civ. P. 12(b)(6) (and found economic loss doctrine issues), holding Fidelity failed to plead fraud with the specificity Rule 9(b) requires and failed to allege facts showing Worthington participated in a fiduciary‑duty breach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud/intentional misrepresentation was pleaded with requisite particularity under Utah R. Civ. P. 9(b) | Fidelity: group allegations that defendants knew of possible mechanic’s lien and failed to disclose that fact induced Fidelity to insure the Bank | Worthington: fidelity failed to identify any specific false representation by him or particular facts showing his personal participation; Rule 9(b) not met | Affirmed — dismissal proper: complaint failed to plead any false representation by Worthington or particularized facts against him as required by Rule 9(b) |
| Whether civil conspiracy to commit fraud was adequately pleaded | Fidelity: defendants conspired to conceal lien risk to induce issuance of title policy | Worthington: no factual allegations showing a meeting of the minds or overt unlawful acts by him | Affirmed — conspiracy allegations were conclusory and lacked facts establishing a meeting of the minds |
| Whether nondisclosure by Worthington could constitute fraud without an alleged duty to disclose | Fidelity: failure to disclose the lien possibility induced issuance of policy | Worthington: silence alone is not fraud absent a legal duty to speak | Affirmed — complaint did not plead any duty Worthington owed to Fidelity requiring disclosure |
| Whether Worthington can be liable for breach of fiduciary duty (aiding/abetting) based on participation | Fidelity: Worthington knew of agent/fiduciary relationship and ‘actively participated’ in concealment, so liable jointly | Worthington: complaint alleges only conclusory participation, no facts showing acts in furtherance of the breach | Affirmed — conclusory allegation of participation insufficient; no factual pleading of aiding and abetting |
Key Cases Cited
- Webster v. JP Morgan Chase Bank, NA, 290 P.3d 930 (Utah Ct. App. 2012) (elements of fraud and reliance on Rule 9(b) particularity)
- Armed Forces Ins. Exch. v. Harrison, 70 P.3d 35 (Utah 2003) (fraud claim elements described)
- Chapman v. Primary Children’s Hosp., 784 P.2d 1181 (Utah 1989) (conclusory allegations insufficient to survive dismissal)
- Republic Bank & Trust Co. v. Bear Stearns & Co., 683 F.3d 239 (6th Cir. 2012) (Rule 9(b) prevents fishing expeditions and requires specificity)