Greenberg v. Stewart Title Guaranty Co.

492 N.W.2d 147 (1992)

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Nature of the Case

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Facts

P purchased four condominium units. Before acquiring them P contacted Ds. Title commitments were provided. P relied on the commitments and purchased the units. D issued owner's title insurance policies insuring P's title interest in the condominiums. P used the units to secure loans from several banks. P eventually decided to sell the units. P alleges that he was unable to sell the units because certain liens and encumbrances against the property made it impossible for him to transfer marketable title. P alleges that, as a result, his lending institutions obtained a foreclosure judgment, and, after a sheriff's sale of the units, deficiency judgments were entered against him in the amount of $564,771.71. P made a claim alleging that the titles were unmarketable. D denied the claim and P filed suit. P alleged five claims for relief: (1) negligent misrepresentation; (2) negligence; (3) breach of fiduciary duty; (4) breach of contract; (5) lack of good faith and fair dealing. The circuit court dismissed the first two claims holding that the relationship between the parties involved a contract of indemnity and that no tort liability existed. The court dismissed the third claim because P's complaint did not allege any facts from which the court could find a fiduciary duty. P voluntarily dismissed the fifth claim. The agent was dismissed as a party. The only claim remaining in the lawsuit was the breach of contract claim and the agent was not a party to the contract. P appealed. The court of appeals certified the following issue: 'Is a title insurance company liable in tort for failure to discover a title defect or does such liability sound in contract only?'