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ARTICLE ID 2676

$________ Breach of contract by title insurance company - Failure to payoff existing mortgage - Breach of fiduciary duty.

Dade County

This action was brought by the plaintiff mortgage company against the defendant title insurance company and its principal which failed to payoff a $________ first mortgage on a residential property after the plaintiff paid the funds to the defendant for disbursement. The plaintiff alleged that the defendant breached a contractual obligation and fiduciary duty which it owed to the plaintiff. Also named as a defendant was an attorney which the plaintiff claimed was part of a joint venture with the president of the defendant title company. The defendant attorney argued that he was not in a joint venture with the co-defendant. The principal of the title insurance company contended that she had purchased the business with a deficit in its trust account of which she was unaware until the check written to payoff the mortgage was returned for insufficient funds.

The plaintiff’s representative testified that it provided a mortgage to the purchaser of a new home and paid the defendant, as escrow agent, $________ to payoff an existing mortgage on the premises and place the plaintiff in a first mortgagee position.

However the existing mortgage was not paid and the plaintiff’s mortgage was recorded as a second mortgage behind the existing mortgage, according to evidence presented.

The plaintiff’s representative testified that the plaintiff felt that this was an unfair situation to the home purchaser and undertook to payoff the existing mortgage. The plaintiff’s accounting expert testified that proper accounting procedures require that trust accounts be balanced on a regular basis and that such a procedure would have revealed any trust account deficit.

The principal of the defendant title insurance company testified that she had purchased the business years earlier and was unaware that a deficit existed in the trust account at the time she purchased it. The deficit was not discovered due to the large volume of closings (12 to 20) per day and the constant flux of the trust account balance, according to this witness.

The jury found for the plaintiff against the defendant title insurance company and principal only. The defendant attorney was found not to have formed a joint venture with the co-defendant.

The plaintiff was awarded $________ which included attorney fees and interest.

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