Pennsylvania Federal Court Finds Title Insurer Not Liable for Failure to Supervise

The United States District Court for the Eastern District of Pennsylvania recently held that a title insurance company was entitled to summary judgment on a claim that it had failed to properly supervise its agent. See Scott v. BAC Home Loan Servicing, L.P., 2016 WL 320219 (E.D. Pa. Jan. 27, 2016). In the case, a husband and wife purchased a home and executed a mortgage, and then later transferred the property into the wife’s name and refinanced the mortgage. After the husband and wife divorced, the husband claimed that his signature on the deed to his wife was forged and that the mortgage therefore was invalid. He filed a lawsuit against a number of parties, including the title company. His claim against the title company was that it had failed to supervise it agent because (i) the agent allegedly forged the deed; and (ii) the agent failed to offer him an owner’s policy in writing, which it is required to do under 31 Pa. Code § 126.1. The title company moved for summary judgment, which the Court granted. It first held that 31 Pa. Code § 126.1 only requires that the title company offer an owner’s policy as part of a purchase of real property, and the statute did not apply to this case, as it was a refinancing. Second, it found that the plaintiff had not produced any evidence regarding the title company’s record-keeping procedures and, despite the plaintiff’s bald assertion that the agent had forged the deed, there was no evidence that the title company had knowledge thereof or had “failed to act in any way that the law required of it.” Therefore, the title company’s motion for summary judgment was granted. 

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com