Summary
The Louisiana Second Circuit considered claims arising from a title agent’s failure to obtain cancellation of a mortgage encumbering property purchased by the plaintiffs. The court held that genuine issues of material fact remained regarding the title insurer’s subrogation rights and whether applying the collateral source rule would create a windfall. It affirmed denial of the plaintiffs’ summary-judgment motion, reversed summary judgment for the defendants, and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether summary judgment was proper where material factual disputes existed concerning First American's subrogation rights.
- Whether the collateral source rule and the possibility of a windfall barred the Gregorys' claims as a matter of law after First American paid the mortgage and the Gregorys used those proceeds to obtain its cancellation.
- Whether the district court properly denied the Gregorys' motion for summary judgment on their claim for $575,000.
Holdings
- Summary judgment for Landowners Title and Continental Casualty was improper because genuine issues of material fact existed regarding whether First American had a right of subrogation and whether allowing the Gregorys to recover under the collateral source rule would result in a windfall.
- The district court properly denied the Gregorys' motion for summary judgment because the record did not establish their entitlement to judgment as a matter of law.
Key quotations
“Our de novo review of this record establishes genuine issues of material fact exist as to whether First American has a right of subrogation and whether any recovery by the Gregorys, pursuant to the collateral source rule, would result in a “windfall.”” (9)
“AFFIRMED IN PART; REVERSED IN PART; REMANDED.” (10)
Factual background
On December 19, 2017, Nicholas and Sara Gregory purchased Monroe, Louisiana property from Ronnie and Sharon Ward, with part of the purchase price secured by a Progressive Bank mortgage. The title examination disclosed a Homeland Bank collateral mortgage, and Landowners Title, acting as closing title agent, was required to obtain its cancellation but did not do so. After Homeland threatened foreclosure, First American Title Insurance paid the Gregorys' $575,000 policy limit, which they used to pay Homeland Bank and obtain cancellation of the mortgage. The parties disputed whether First American had subrogation rights and whether any recovery by the Gregorys would constitute a prohibited double recovery or windfall.
Procedural history
The Gregorys and Progressive Bank sued Landowners Title and Continental Casualty after a Homeland Bank mortgage was not cancelled at the closing of the Gregorys' property purchase. First American Title Insurance paid the policy limit of $575,000, which the Gregorys used to pay Homeland Bank and obtain cancellation of the mortgage. Progressive Bank later dismissed its claims without prejudice. The district court found that Landowners breached a duty but that the plaintiffs had not established actual damages and granted summary judgment to defendants. The appellate court affirmed denial of the plaintiffs' motion, reversed the grant of defendants' motion, and remanded.
Remand instructions
Remand for further proceedings addressing the unresolved factual issues concerning First American's subrogation rights and whether any recovery by the Gregorys under the collateral source rule would result in a windfall.