Title company didn't have authority to close real estate deal

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For the first time, the Indiana Court of Appeals has decided that a title insurance agent is not also an agent of the title insurance company with respect to escrow and closing services.

The issue arose in Fidelity National Title Insurance Company v. Rhys Mussman and Sally Mussman, No. 64A03-0905-CV-204, in which the Mussmans were awarded $1.6 million on summary judgment on their complaint alleging conversion of funds held in an escrow account by Intercounty Title Company. Fidelity National Title Insurance Company hired ITC as its title insurance agent based on an issuing agency agreement.

The Mussmans contracted to sell real estate for $1.6 million, in which the purchase agreement provided that ITC would issue owner’s and mortgagee’s title insurance policies. ITC also acted as closing agent and escrow agent for the parties. Fidelity didn’t have any contact with the parties during the transaction.

The Mussmans later discovered insufficient funds in ITC’s escrow account when they tried to collect their money. The escrow account funds had been stolen by ITC’s owner and others as part of a Ponzi-like scheme.

The Mussmans sued for conversion and theft against ITC and its owner and filed an amended complaint alleging negligence by Fidelity.

The Mussmans argued on appeal that ITC had implicit actual authority as Fidelity’s agent to close the action based on the agreement and conduct of the companies. They emphasized the fact that Fidelity had and exercised the right to audit ITC’s closing records and escrow accounts.

The appellate court used Southwest Title Insurance Co. v. Northland Building Co., 552 S.W.2d 425 (Tex. 1977), and Proctor v. Metropolitan Money Store Corp., 579 F.Supp.2d 724 (D. Md. 2008), to conclude that Fidelity’s authority to audit ITC’s escrow accounts doesn’t convert ITC’s limited agency to issue title insurance commitments and polices into a broader general agency in which Fidelity has vicarious liability as the principal.

“We conclude that neither the indemnification provisions in the Agreement, nor ITC’s issuance of policies and collection and remittance of premiums confers a sufficient benefit upon Fidelity to establish a general agency relationship that does not otherwise exist,” wrote Judge Edward Najam. “Thus, we agree with the court in Proctor that the primary purpose for general escrow account requirements, including reconciliation, access for audits, and indemnification, is to minimize the risk of loss under the title insurance policies, and even allegations of vicarious liability like the ones raised in this case.”

There’s no evidence Fidelity conducted any business other than the issuance of title insurance or that ITC had any more authority from Fidelity than to issue its polices, he continued.

Even if the agreement and conduct of the companies implied actual authority, it’s well settled that a determination of actual authority focuses on the belief of the agent and there’s no designated evidence showing whether ITC believed it had authority to conduct escrow or closing services on Fidelity’s behalf.

Fidelity is entitled to summary judgment on the Mussmans’ complaint.


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  1. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

  3. (A)ll (C)riminals (L)ove (U)s is up to their old, "If it's honorable and pro-American, we're against it," nonsense. I'm not a big Pence fan but at least he's showing his patriotism which is something the left won't do.

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  5. He has refused his Assent to Laws, the most wholesome and necessary for the public good. He has forbidden his Governors to pass Laws of immediate and pressing importance, He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For imposing Taxes on us without our Consent: He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.. He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless [ ] Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions. GOD BLESS THE GOVERNORS RESISTING! Count on the gutless judiciary to tie our children down and facilitate the swords being drawn across their throats. Wake Up America ...