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COA reverses judgment in title insurance issue

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The Indiana Court of Appeals has declined to extend to an insurance agent the duty of an insurer as declared by the state’s highest court. In doing so, the judges reversed the denial of a title insurance company’s motion for summary judgment.

In Meridian Title Corporation v. Gainer Group, LLC, No. 46A03-1006-PL-312, Gainer Group LLC sued Meridian Title Corporation, alleging Meridian failed to properly handle Gainer Group’s claim in a lawsuit involving a piece of property. The Ruth N. Cathey Trust sold some property to the Gainer Group and the trust engaged Meridian to procure title insurance for the property. After the sale, the trust claimed it mistakenly sold more land to Gainer Group than it had intended.

Meridian tried to facilitate a resolution, but the trust ended up suing Gainer Group to recover the piece of property it didn’t want to sell. That’s when Gainer Group filed its lawsuit against Meridian, seeking to recover litigation expenses and attorney fees it incurred prior to its insurer accepting the claim.

There’s no evidence of an intimate, long-term relationship between Meridian and Gainer Group that would require Meridian to perform a duty that extends beyond its general duty to exercise reasonable care, skill, and good-faith diligence in obtaining the insurance policy, wrote Senior Judge John Sharpnack. But the facts of the case do constitute a special circumstance that triggers an extended duty to advise on the part of Meridian.

Meridian tried to facilitate a settlement between the trust and Gainer Group at its offices. At this meeting, Meridian’s president and CEO pointed to a provision in the title policy and said that Gainer Group didn’t have a claim because it had closed without a survey. Meridian also had a financial interest in no claim being made under Gainer Group’s policy of title insurance, the judge continued.

Meridian had this extended duty to advise Gainer Group regarding coverage, and it fulfilled that duty, the Court of Appeals concluded.

Gainer Group cited Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515 (Ind. 1993), to support its argument that Meridian owed it a duty of good faith and fair dealing beyond its general duty of reasonable care, skill, and good-faith diligence. But that case dealt with the duty of an insurer to an insured. In the instant case, Meridian is an agent.

“Our Supreme Court has yet to extend this duty to an agent; rather, an insurance agent’s duty does not extend beyond the general duty to exercise reasonable care, skill and good faith diligence in obtaining a policy of insurance unless the evidence, through certain factors as set forth above, establishes a special relationship,” wrote Senior Judge Sharpnack. “Therefore, we decline Gainer Group’s invitation to extend the application of the duty of an insurer as set out by the Supreme Court in Erie.”

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  1. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  2. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  3. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  4. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  5. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

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