ILNews

Judges rule on first impression escrow matter

Jennifer Nelson
April 28, 2011
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For the first time, the Indiana Court of Appeals addressed whether it’s possible to create an escrow absent an escrow agreement or fee.

In Meridian Title Corp., v. Pilgrim Financing, LLC, No. 45A05-1010-CC-613, the appellate court had to decide whether Meridian Title Corp., a title insurance company, negligently disbursed the net closings of proceeds from a refinancing transaction involving Pilgrim Financing. The trial court had ruled in Pilgrim’s favor on the claim.

Pilgrim sued Meridian after Meridian released proceeds of a property sale to the two property buyers instead of Pilgrim. The buyers had mortgages with Pilgrim. Meridian argued it didn’t have a relationship with Pilgrim that would serve to impose a duty of care on Meridian; Pilgrim claimed Meridian assumed a duty to it gratuitously.

Meridian argued it could not have assumed a duty in escrow as Pilgrim claimed because there wasn’t an escrow agreement or payment of an escrow fee. The Court of Appeals noted there is very little jurisprudence regarding the general standards for escrow, and cited cases from 1881 and 1921 to find that Indiana traditionally hasn’t required an escrow agreement or fee to establish an escrow. The judges also declined to adopt such a requirement.

They held there is sufficient evidence to establish that Meridian held Pilgrim’s payoff letter and partial release in escrow. The letter and partial release served as security to Meridian that Pilgrim would provide the original release of mortgage upon satisfaction of the conditions of the letter. The judges also concluded that parties to an escrow bear a duty toward one another to act with due care.

The Court of Appeals found that Meridian didn’t adequately clarify the nature of the two property buyers’ transactions to Pilgrim, so Pilgrim didn’t have all the necessary information to make an informed decision regarding Pilgrim’s rights to the proceeds.

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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