Orlando Millenia, LC v. United Title Services of Utah, Inc.
2015 UT 55
| Utah | 2015Background
- Orlando Millenia lent earnest money and was expressly named in the special escrow instructions incorporated into the REPC.
- IDR Investments planned to purchase SITLA property; Paydirt, the seller, agreed to the deal, with United Title acting as escrow agent and title insurer facilitator.
- Two title commitments were issued Oct 24 (one from First American, one from Stewart Title) accidentally; the closing occurred before November 15 and the special instructions were not discussed at closing.
- After closing, Orlando discovered title defects and realized Paydirt did not hold title to SITLA; IDR filed bankruptcy in Feb 2008, and Orlando sued in Mar 2008 for breach of fiduciary duty and vicarious liability.
- District court granted summary judgment for Stewart and First American; on appeal the Utah Supreme Court reversed, allowing primary fiduciary duty claims and vicarious liability under section 31A-23a-407 to proceed.
- Court held that Orlando has viable claims for breach of fiduciary duty by United Title and for vicarious liability of Stewart Title and First American under section 407, with remand for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether United Title breached fiduciary duty to Orlando | Orlando, as intended beneficiary, owed fiduciary duties by United Title in processing escrow. | Escrow duties are owed to the formal parties; Orlando is not a party to the escrow. | Yes; genuine issues of material fact on duty and breach survive |
| Whether Stewart Title and First American can be vicariously liable under section 31A-23a-407 | Section 407 imposes vicarious liability for dealings involving receipt/disbursement of escrow funds with a committed title insurance. | Limitation and scope of 407 constrain liability; arguments about ‘dealing with’ and ‘commitment ordered’ are narrow. | Yes; Orlando entitled to judgment as a matter of law on liability under §31A-23a-407 |
| Whether the parties’ actions and causation support damages | United Title’s breach proximately caused Orlando to suffer damages related to the $1 million earnest money and lost title opportunity. | Causation and mitigation are disputed; Orlando may have failed to mitigate. | Genuine disputes on proximate causation and damages preclude summary judgment |
| Whether the transaction fell within the scope of ‘dealing with’ the title producer | Orlando interacted with United Title via the special escrow instructions and earnest-money wiring, signaling dealing. | Orlando was not a formal party; dealing requires a narrow interpretation. | Ordinary sense of dealing; Orlando engaged with United Title and falls within §407 |
| Whether a preliminary report/distribution issue affects First American’s liability | If a commitment in First American’s name was ordered, First American bears liability. | The document was a misnamed commitment; not ordered by First American. | Rejected; liability tied to the commitment/transactions context; remand noted for potential findings |
Key Cases Cited
- Freegard v. First W. Nat’l Bank, 738 P.2d 614 (Utah 1987) (escrow fiduciary duties to parties to the escrow contract)
- New Fed. Sav. & Loan Ass’n v. Guardian Title Co. of Utah, 818 P.2d 585 (Utah Ct. App. 1991) (escrow fiduciary duties and third-party considerations)
- Bodell Constr. Co. v. Stewart Title Guar. Co., 945 P.2d 119 (Utah Ct. App. 1997) (title company vicarious liability framework)
- Tucson Title Ins. Co. v. D’Ascoli, 383 P.2d 119 (Ariz. 1963) (title-related duties and escrow considerations)
- Judd v. Drezga, 103 P.3d 135 (Utah 2004) (rational basis due process in liability extensions)