New York court rules title insurer didn’t need to notify agent of title claim or seek agent’s consent to settle – Insurance
United States: New York court rules title insurer did not need to notify agent of title claim or seek agent consent to settle
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The Supreme Court of the State of New York, New York County, recently allowed a motion by a title insurance company to dismiss the counterclaim of its policy issuing agent, ruling that the title insurer did not had no obligation to notify the agent of a claim for title arising from a policy that the agent issued, nor did the insurer have to seek the agent’s consent before proceeding with settlement. See
Fidelity National Title Insurance Co. v. Rockwell Abstract, et al., 652588-2021 (NY Sup. Ct. September 1, 2021). In 2006, the non-party owner (“Ada”) took out a mortgage on her property. The lender obtained a title insurance policy underwritten by the plaintiff and issued by the defendant, the issuing agent for the plaintiff’s policy. In 2015, the children of Ada’s late husband, who died in 2001, filed a lawsuit claiming that they owned 50% of the property and that Ada had no right to mortgage the property in 2006. The lender filed a claim. to the plaintiff, who ultimately settled the matter. The plaintiff then brought this action for damages against the defendant, claiming that the defendant had not correctly identified the children’s interest in the property. The defendant filed a counterclaim alleging that the plaintiff breached its duty of good faith and fair treatment because the plaintiff failed to notify the defendant of the claim or sought the defendant’s consent to settle. The plaintiff requested that the counterclaim be dismissed.
The Court allowed the plaintiff’s motion to dismiss the counterclaim in good faith and fair dealing. By virtue of the agency agreement of the parties, “the Agent accepts that the Company is fully authorized and empowered, at its sole discretion, to monitor, defend, prosecute, settle, compromise and / or dispose of any claim, dispute or proceeding. for which: (i) the company can be held liable; and / or (ii) an insured under title insurance may be held liable. “On the basis of this provision, the Court concluded that the agent” had contracted [its] right to participate in a potential settlement “and that” the plaintiff had the right to settle the title dispute “at its sole discretion” and did not need to inform the defendant. As a result, the Court dismissed the agent’s counterclaim.
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