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Home owners cannot sue title company whose error resulted in subcontractor liens

A recently Oakland County case against the Philip R. Seaver Title Co. was summarily dismissed by the Court of Appeals, after the trial judge denied summary judgment.  The homeowners had sued the title company employed by their bank, Charter One, after it distributed construction loan proceeds to the general contractor without verifying that subs had been paid.  The homeowners argued that the title company was guilty of negligent breach of fiduciary duty and should be responsible for the unpaid sub-contractors' liens.  The Court held that the Title Company "owed no duty" to the plaintiff's because the fraudulent, criminal behavior of the General Contractor was "unforeseeable."  (We wonder by whom.  This seems like the very essence of the purpose for escrow accounts and agents.)  The Court held that disbursing money is a common obligation of a title agent, and since that duty was contained in the Defendant's contract with Charter One, the Defendant owed no duty to the homeowners outside the contract. A typical Kirsten Frank Kelly-pro insurance-anti-victim outcome.

Thompson O’Neil, P.C.
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Traverse City, Michigan 49684
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