Lawyers Title Insurance Company hired lawyer David Groff as Lawyers Title’s sett

Question

Lawyers Title Insurance Company hired lawyer David Groff as Lawyers Title’s settlement agent and attorney for the lender in a real estate transaction involving property in Londonderry, New Hampshire. Prior to closing the real estate sale, Groff retained a title abstractor to conduct a title search and prepare an abstractor’s report. Because the title abstractor negligently failed to find and disclose a construction mortgage on the property, Groff issued title insurance policies to both the lender and the buyers without excepting the mortgage. As a result, the construction mortgage was not discharged prior to the sale. The mortgagee asserted its rights and threatened to foreclose on the property until Lawyers Title paid the mortgagee $152,000. On what grounds did Lawyers Title seek to recover a portion of its loss from Groff?

Explanation / Answer

Brock, C.J. The defendant, David M. Groff, Esq., appeals from a judgment in desire of the plaintiff, legal professionals Title insurance Corp., on its claims for breach of contract and negligence. Following a bench trial, the very best court (Conboy, J.) dominated that the defendant was once vicariously responsible for a title search conducted by means of a third get together. We reverse.

The crucial undisputed data follow. In 1991, the events entered into an contract which made the defendant the plaintiff's agent for the rationale of issuing title coverage insurance policies. Below the agreement, the defendant used to be to "[r]eceive and procedure functions for title insurance in a well timed, prudent, and moral manner with due regard to well-known title insurance underwriting practices and according to the . . . Instructional materials of [the plaintiff]." not one of the responsibilities specific within the agreement were delegable with out the opposite get together's prior written consent.
The agreement prohibited the defendant from committing the plaintiff "to a hazard which [the plaintiff] has determined to be one more-hazardous threat or which [the defendant] is aware of to be established upon a disputed title" without the plaintiff's written approval. It additionally prohibited him from issuing a commitment, coverage or endorsement except it used to be "founded on reviews or certificates of title made through either attorneys at regulation permitted by means of [the plaintiff], . . . Or on stories or certificates of staff staff of [the defendant], or on studies of others permitted in advance by using [the plaintiff] at [the defendants request." The contract required these experiences and certificates to "be supplemented by abstracts of title whenever required by way of [the plaintiff]." every time a document or certificates used to be based upon an abstract of title, the defendant could no longer difficulty a commitment or coverage thereon until the plaintiff authorised "the person, firm or manufacturer which all set such summary."
The agreement made the defendant accountable to the plaintiff for all "losses as a result of acts or omissions of [the defendant]," together with his failure to undertaking "due care and diligence" in committing the plaintiff to dangers with the aid of issuance of insurance policies or to comply with both the terms of the contract or the plaintiffs instructional materials.
In November 1998, the defendant was once the contract agent and legal professional for a lender in an actual estate transaction involving property in Londonderry. Previous to closing, he retained a title abstractor as an unbiased contractor to habits a title search and put together an abstractors document. The title abstractor negligently failed to search out and reveal a construction loan on the property. The defendant for this reason issued title insurance insurance policies to each the lender and the buyers with out excepting the loan. Therefore, at closing, the development personal loan was once no longer discharged, and the defendant disbursed more than $128,000 immediately to the seller.
The mortgagee later asserted its rights and threatened to foreclose on the property. The plaintiff paid the mortgagee over $152,000 to receive an challenge of the loan after which discharged it. After obtaining a partial restoration from the seller, the plaintiff sued the defendant to get better $72,340.81, the change between what the plaintiff paid the mortgagee and what it acquired from the vendor, plus attorneys prices and fees.

The plaintiff asserted four claims in opposition to the defendant: negligence arising from tasks the defendant owed it; negligence arising from obligations the defendant owed to the lender, to which the plaintiff was once subrogated; breach of contract; and breach of fiduciary obligation. The trial courtroom dominated in the plaintiffs prefer on the breach of contract and negligence claims.
With appreciate to each negligence claims, the court discovered that the defendant did not breach a duty of care owed either to the plaintiff or to the mortgagee. In particular, the trial court discovered that the defendant used to be not negligent in his choice to use an independent abstractor, his decision of the unbiased abstractor, or his review of the abstractors work.
The court observed the defendant vicariously responsible, however, for the negligence of the title abstractor, whom the courtroom ruled used to be an unbiased contractor. The defendant was once liable for the abstractors negligence, the court ruled, considering the fact that his obligation to participate in an ample title search was once nondelegable both pursuant to the agency contract and considering this obligation used to be fundamental to his illustration of the lender.
With respect to the breach of contract declare, the court rejected the plaintiffs argument that the defendant breached the company agreement by way of making use of an "unapproved" abstractor, a ruling that has no longer been appealed. The trial courtroom ruled, nevertheless, that the defendant breached the contract by way of issuing an insurance policy that didn't besides a prior recorded personal loan, and, for that reason, "was opposite to well-known title underwriting specifications and was once not prudent."
we will be able to affirm the trial court docket's factual findings until they're unsupported by the proof and can verify the trial courtroom's authorized rulings unless they are inaccurate as a matter of law. Morgenstern v. Town of Rye, 147 N.H. 558, 561 (2002).

I. Negligence Claims

in general, an employer shouldn't be responsible for the negligence of an unbiased contractor. See Valenti v. Internet homes administration, 142 N.H. 633, 635 (1998); 8 R. McNamara, New Hampshire observe, personal injury Tort and coverage observe § 169, at 238 (1996). There are three exceptions to this normal rule: (1) negligence of the company in settling on, instructing or supervising the contractor; (2) employment for work that is inherently harmful; and (3) occasions where the corporation is beneath a nondelegable responsibility. See McNamara, supra § one hundred seventy, at 241-43.
This case includes the 1/3 exception to this basic rule the exception for nondelegable obligations. The trial court ruled that the defendants obligation to examine and clear title was once nondelegable due to the fact of the company contracts nondelegation provision and seeing that the obligation used to be primary to the defendants representation of the lender. We disagree. Below the company agreement, the defendant had no obligation to compare and clear title. Moreover, assuming arguendo that the defendants illustration of the lender incorporated the duty to compare and clear title, we maintain that this responsibility was no longer so most important to the representation as to render it nondelegable. A contrary ruling might require attorneys to guarantee the outcome obtained through any number of gurus employed as impartial contractors, even when the attorneys did not agree to count on this responsibility.

A. Contractual obligation

"given that the correct interpretation of a contract is finally a question of law for this courtroom, we review the trial court's interpretation of the contract de novo." Royal o.K.Realty trust v. Mordita Realty believe, 146 N.H. 578, 581 (2001) (quotations, brackets and citations disregarded). "When decoding a written agreement, we provide the language used by the events its reasonable which means, on the grounds that the situations and the context where the contract used to be negotiated, and reading the report as a whole." identification. (quotation disregarded). "Absent ambiguity, nevertheless, the parties intent can be determined from the plain that means of the language used within the contract." identification. (quotation overlooked).
Paragraph 10 of the agreement between the parties recounted that "[n]both [the] agreement nor any proper, curiosity, or duty coming up beneath it's . . . Delegable by way of either party hereto without the prior written consent of the opposite." The trial court docket reasoned that on account that the defendant contractual duties incorporated "a careful title search," the defendant was prohibited from delegating this obligation.
To the opposite, the contract explicitly reflected that the defendant would delegate this mission. Paragraph 1(h) of the agreement required the defendant to base any protection "on studies or certificates of staff employees of [the defendant], or on studies of others permitted prematurely by way of [the plaintiff] at [the defendant]s request." Paragraph 1(h) extra supplied that if the record or certificate of title used to be founded on a title summary, the defendant could no longer hindrance a coverage or dedication until the plaintiff accepted of "the person, organization or manufacturer which prepared such summary."
certainly, the defendant handiest contractual tasks with admire to inspecting title was to exercise "due care and diligence" when acquiring reports or certificates prepared through others. He had no contractual obligation to examine title himself, or to make sure that these completing stories, certificates of title, or title abstracts, did so carefully. Had the parties supposed the defendant to perform these tasks, they would have integrated a provision in the agreement to that outcomes.

Additionally, the agreement expressly constrained the defendant legal responsibility to damages triggered by using his possess acts and omissions. Paragraph 4 of the contract supplied that he used to be liable "for all lawyers prices, courtroom fees, bills, legal responsibility, damages, and loss or combination of losses on account of acts or omissions of [the] Agent." (Emphasis brought.) Paragraph 5 of the contract similarly stated:
As between main and Agent, foremost will likely be in charge for all losses, damages, fees and charges arising out of claims blanketed by and based upon any title coverage commitments, insurance policies or endorsements issued under the phrases of this contract, excepting most effective these losses, damages, bills, and costs brought on through moves or omissions for which the Agent is in this agreement made dependable.
Had the events supposed the defendant to be in charge for the acts and omissions of others, the contract could have with no trouble so acknowledged.
B. Responsibility important to legal illustration

The trial court dominated that the lender had a legitimate malpractice declare against the defendant and permitted the plaintiff to claim it pursuant to the title protection subrogation clause. The court docket dominated that the defendant was no longer negligent in his resolution of the title abstractor or his overview of the abstractors work. However, the court determined the defendant vicariously accountable for the abstractors negligence on the grounds that analyzing title was once "primary" to his illustration of the lender and, thus, a nondelegable undertaking.
New Hampshire regulation acknowledges that specified responsibilities are nondelegable. For example, employers have a nondelegable obligation to maintain a risk-free workplace, see Rounds v. Standex international, 131 N.H. 71, 76 (1988). In a similar way, in Valenti, 142 N.H. At 636, the court docket held that a possessor of industry premises has a nondelegable responsibility to keep the premises and is therefore dependable for the negligence of an impartial contractor hired to participate in this responsibility on the possessor behalf.
Whether lawyers owe any nondelegable duties to their customers is an trouble of first affect for this court docket. "There aren't any certainly outlined criteria for opting for tasks which can be nondelegable." Kleeman v. Rheingold, 614 N.E.2d 712, 715 (N.Y. 1993). Eventually, the resolution to categorize a duty as nondelegable rests upon coverage issues. Identity.
Handiest a handful of courts have addressed this limitation. For illustration, in Kleeman, the brand new York court docket of Appeals dominated that the obligation of an legal professional retained to begin an action to "exercise care in the provider of system" was once nondelegable. Identification. At 716. The court observed that timely and accurate provider of method is an "essential section" of establishing an action and is "a peculiarly principal aspect of a attorney over-all responsibility for commencing a patrons lawsuit, due to the fact a mistake or oversight on this subject can deprive the patron of his or her day in courtroom." id.
The Supreme court of recent Jersey has dominated that an legal professionals fiduciary responsibility for client trust money is nondelegable. Subject of Stransky, 612 A.2nd 373, 376 (N.J. 1992). And, courts in Louisiana have ruled that a signing legal professionals responsibility, imposed by using the Louisiana Code of Civil method, to fulfill himself that the pleading is factually and legally liable is nondelegable. See Cooks v. Rodenbeck, 711 So. 2d 444, 449 (La. Ct. App. 1998).
We decline to hold that an lawyer would possibly not delegate to an impartial contractor the responsibility to examine title in an actual property transaction. See Smith v. Boyd, 639 A.Second 413, 415 (N.J. Super. 1993) (legal professional who thoroughly relied on title record ready by means of impartial contractor no longer responsible for contractors negligence).
As the trial courtroom found, "it's customary and permitted follow for brand spanking new Hampshire attorneys to commission unbiased contractors to search titles" and to rely on stories all set by way of these unbiased title abstractors in getting ready title opinions and issuing title insurance insurance policies. As the trial court also determined, "[t]itle abstracting does no longer involve the observe of law; and does no longer require the endeavor of legitimate judgment or the rendering of authorized opinions on marketability and insurability [of title]." And, because the defendant observes in his temporary, the general use of impartial title abstractors is patron-driven, "a response to the demand of refined shoppers of authorized offerings (corresponding to lenders and title businesses) for most price-mighty title work."
had been we to categorise the duty to examine title as nondelegable, we would "open[ ] up an unrealistic and undue liability channel no longer best with appreciate to the relationship of attorneys to [title abstractors] but, via analogous extension, additionally to many other relationships wherein attorneys retain experts and gurus within the discharge of their reputable duties to consumers." Kleeman, 614 N.E.2d at 718 (Bellacosa, J., concurring).
Opposite to the plaintiffs assertions, an lawyer does now not "get away legal responsibility" by way of hiring an impartial contractor to evaluate title. The legal professional stays discipline to legal responsibility for negligently hiring, supervising or keeping the abstractor, negligently reviewing the abstractor record, or negligently rendering an opinion founded upon the abstractors document. See North Bay Council, Inc. V. Bruckner, 131 N.H. 538 (1989) (lawyer negligently did not propose purchaser that language creating first refusal correct constituted cloud on title). Additionally, the parties are free to agree that the obligation to examine title is nondelegable.
C. Legal responsibility beneath company regulation

The plaintiff depends upon basic company legislation concepts to argue that the defendant is in charge for the negligence of the independent title abstractor whom the plaintiff mischaracterizes as the defendant "subagent." See Restatement (2nd) of agency § 406 (1958) ("[u]nless otherwise agreed, an agent is dependable to the fundamental for the behavior of a subservant or different subagent on the subject of the foremosts affairs entrusted to the subagent"). "A subagent is a person appointed with the aid of an agent empowered to do so, to participate in functions undertaken by the agent for the fundamental, but for whose behavior the agent has the same opinion with the essential to be exceptionally responsible." identity. § 5. In the company contract, the defendant agreed to be accountable only for his possess acts and omissions, not for the acts and omissions of others. Accordingly, the title abstractor was not the defendant "subagent," and part 406 of the Restatement (2d) of agency does now not observe.

II. Breach of Contract claim
The court docket ruled that the defendant breached paragraph 2(a) of the agency contract through issuing a title protection that did not besides a previous recorded personal loan. Paragraph 2(a) furnished:
2. Duties of Agent. Agent shall: (a) obtain and approach purposes for title insurance in a well timed, prudent and ethical manner with due regard to famous title insurance underwriting practices and in keeping with the principles, laws, bulletins, manuals and directions of [the plaintiff] and its subsidiaries.
This provision, however, purely required the defendant to provide "due regard" to "well-known title coverage underwriting practices" and to approach purposes prudently, ethically and "in a well timed . . . Manner." There was no proof that the defendant failed to offer "due regard" to "recognized title insurance underwriting practices," or that he behaved imprudently, unethically or in an untimely method. Nor used to be there evidence that he did not "exercise due care and diligence" in committing the plaintiff to coverage dangers, as set forth in paragraph four(a) of the agreement. Furthermore, at the same time the agreement prohibited the defendant from committing the plaintiff to insurance risks which he knew had been centered upon disputed title, it was silent as to risks of which he used to be reasonably unaware. In short, there used to be no proof that the defendant breached the events agreement.
In light of our ruling, we need not handle the parties arguments concerning whether or not the company

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