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ARTICLE ID 8221

$________ Title abstracter negligence - Failure to detect judgment against property owner - Title insurance company forced to pay amount of judgment to mortgage holder.

Delaware County, Pennsylvania

This action involved a claim brought by the plaintiff title insurance company against the defendant abstract company which provided judgment searches for the plaintiff. The plaintiff claimed that the defendant negligently failed to advise of an outstanding judgment against a property owner, resulting in the plaintiff being forced to pay the amount of the mortgage insured by the title insurance policy. The defendant conceded that it missed the judgment in question, but argued that its liability was limited.

The evidence revealed that the plaintiff had issued a title insurance policy to a lender which was providing funds for a residential refinance.

The title insurance policy was issued based on several documents, including a title abstract provided to the plaintiff by the defendant abstract company. The defendant admitted that the title abstract failed to list a judgment of approximately $________ against the homeowners stemming from the homeowners’ guarantee of several loans.

The plaintiff title insurance company paid $________ to the bank which had issued the mortgage to the homeowner. The original judgment holder foreclosed on the homeowner’s property and the plaintiff assumed the rights of the mortgage holder. By intervening in the sheriff’s sale of the homeowner’s property, the plaintiff was able to recover approximately half of the amount it had paid on the policy. The plaintiff sought the remainder of the amount paid under the policy along with attorneys fees incurred in defending the underlying claim brought by the mortgagee.

The defendant pointed to the language which appeared on its search reports to argue that its liability was limited to $25 per search.

The plaintiff countered that forms sent when the defendant was first retained for abstract work required that the defendant maintain $________ insurance for each transaction and that the plaintiff did not agree to limit the defendant’s liability.

The jury found that the defendant’s liability was not limited by the language of its reports and awarded the plaintiff $________. The award included the remainder of the amount paid by the plaintiff on the title insurance policy and a portion of the attorneys fees incurred by the plaintiff. Post-trial motions are pending.

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