Stewart Title Guaranty Co. - New Jersey Supreme Court Victory
Representation of Stewart Title Guaranty Co. in its New Jersey Supreme Court victory limiting the scope of a title insurance company's liability for attorney misconduct. The homebuyers' attorney stole their escrow funds in conjunction with a real estate transaction. The New Jersey Lawyers Fund For Client Protection paid the victims for the attorney's theft, and then sued Stewart Title for reimbursement, in keeping with NJLF's long-held belief that a title insurer's liability should blanket all aspects of the closing process. The attorney here, however, had stolen the money before he contacted Stewart Title's agent to request a title insurance commitment and policy on behalf of the homebuyers. The trial court dismissed NJLF's lawsuit, but the Appellate Division reversed, ruling that in order for Stewart Title to avoid liability, it would have had to provide the homebuyers with direct notice informing them that their title insurance policy did not cover attorney theft. The Supreme Court unanimously reversed, ruling that the lack of notice was irrelevant, since the attorney was not acting as an agent of the title company at the time that he committed his crime.