A Second Bite at the Legal Malpractice Apple

Defendant attorney represented buyer in a real estate transaction, in which she obtained only a part of what she expected to get.  Who was at fault, the attorney or the title company?  The Court decided that the title company was not responsible and the attorney went to trial.  After trial, in which the buyer obtained a verdict, the attorney once again tried to sue the title company.  Result?  Dismissal upon a finding of collateral estoppel.

In Herrick v Statewide Abstract Corp.  2013 NY Slip Op 50152(U)   Decided on February 5, 2013
Supreme Court, Westchester County   Connolly, J.  we see that "Herrick, an attorney, represented Luis and Maria Rojas, who were the plaintiffs in the prior action, in all aspects of the purchase transaction of a parcel of property located at 16 Montana Place, White Plains, New York, from negotiation of the contract of sale through the closing of title. Along with the contract of sale, the purchasers were provided with a survey depicting the property to be purchased. The contract of sale included a legal description of the property attached as Schedule "A," which described the property as a "parcel of land, situate, lying and being in the Town of Greenburgh, County of Westchester, State of New York, known and designated as part of Lot No. 8 as shown on the certain Map . . . ."

In connection with the purchase, Herrick, on behalf of Rojas, ordered a title search and report of the subject property through Statewide and requested that Statewide certify title to Rojas' title insurer, Stewart Title Insurance Company. Herrick provided Statewide with the Schedule "A" legal description of the property and a survey that described the property as a "portion of Lot No.8." Statewide used these documents to conduct its title examination and prepare its title report of the property. This same legal description was included in the title insurance policy issued by Stewart Title, as well as a bargain and sale deed delivered to Rojas from the sellers at the closing held on June 6, 2005. Statewide's title report stated in several places, including in the Schedule B Title Exceptions and in copies of two deeds by which the sellers acquired the property in 2003, that the subject property to be conveyed was only a portion of Lot No. 8. The parcel conveyed to Rojas at closing consisted of approximately .45 acres of land improved by a residential home. The remaining parcel, which the sellers retained, consisted of approximately .34 acres of unimproved land that had been conveyed to the sellers by quitclaim deed in 2003.

Rojas resided at the property until 2007, when they decided to relocate for employment reasons. As part of the relocation process, Rojas' employer offered the services of a relocation [*3]company to purchase the property. The relocation company ordered a title search and report, wherein it was revealed that Rojas did not own the entirety of the parcel of land located at 16 Montana Place, in that only a "portion of Lot No. 8," referred to as the house parcel, was conveyed to Rojas, with the sellers retaining title to the remaining parcel containing unimproved land. Upon discovering that the property consisted of only a portion of Lot No. 8, the relocation company would not accept title to the property.

Rojas thereafter commenced a lawsuit against various defendants, including Statewide, Herrick, Stewart Title, the sellers, the sellers' attorney, and the real estate brokers and agents involved in the 2005 Rojas purchase transaction. The action was entitled, Luis X. Rojas and Maria Rojas v. Andrew Paine, et. al., Westchester County Supreme Court Index Number 27830/07. The Rojas complaint alleged that, despite the fact that the sellers owned two parcels comprising Lot No. 8, the contract of sale and deed purported to sell only a portion of the subject property, the house parcel. The complaint alleged the defendants failed to disclose that the subject property was illegally subdivided by deed into the house parcel and remaining parcel without the permission, consent, or authorization of the Town of Greenburgh, and that due to materially false representations about the true nature and condition of the title issues involving the subject property, Rojas only received the house parcel at the time of closing. Rojas alleged that the illegal subdivision of the parcel created an objection to title, rendering title unmarketable. As is relevant herein, Rojas asserted a cause of action against Herrick for legal malpractice, and asserted three causes of action against Statewide, sounding in breach of contract, negligence, and breach of insurance agreement.

Rojas claimed that Statewide breached its contract with them by failing to properly perform, investigate, and report upon title issues. Rojas also claimed that Statewide negligently, recklessly, and carelessly failed to properly perform, investigate, and report upon title issues and failed to raise an exception to title relative to the illegal subdivision and encroachments. In its answer to the Rojas complaint, Herrick asserted a cross-claim against Statewide for contribution and indemnification, alleging that if the plaintiffs were damaged, such damages were caused by the negligent, intentional, or reckless conduct, acts, or omissions of Statewide and therefore, Herrick would be entitled to judgment over against Statewide for any judgment plaintiff may recover against Herrick.

Following motions to dismiss by the various defendants, the only remaining defendant at the time of trial was Herrick. By decision and order entered on June 29, 2010, the Hon. William J. Giacomo, J.S.C., granted Statewide summary judgment dismissing Rojas' claims for negligence and breach of insurance contract. The court initially denied Statewide summary judgment on the breach of contract cause of action, stating "[i]n view of the fact that the tax lot issue was subsequently discovered . . . there is clearly a question of fact regarding whether Statewide breached its contract with plaintiffs to perform a proper title search which included a notation that the portion of Lot 8 being purchased by plaintiffs was part of a larger lot for which there was no filed subdivision in the Town of Greenburgh." It further held that "[u]nder the contract for searching titles the defendant may be liable for any damages which its negligence [*4]may have imposed upon the plaintiff," and that "liability can arise in the event the search is performed in a negligent manner."

Thereafter, Statewide moved to reargue Justice Giacomo's denial of summary judgment on Rojas' breach of contract claim. The motion was opposed by Rojas, who argued Statewide should be held liable for failing to properly conduct a title search and report title defects. Defendant Herrick also opposed Statewide's motion and moved for summary judgment against the plaintiffs. In Paul Herrick's affidavit dated December 22, 2010, he argued:

"The title report prepared by Statewide . . . was defective in several significant respects. First, the title report failed to disclose that the property plaintiffs had contracted to purchase did not conform with the legal description and was only a portion of the tax lot owned by sellers, Andrew and Karen Paine ("the Paines"). Second, the title report included an outdated tax map, which did not include current including their option to terminate the transaction upon receipt of the title report."

By decision and order dated September 30, 2011, the court granted reargument to Statewide, and upon reargument, dismissed Rojas' breach of contract claim against Statewide.Herrick now commences the instant action against Statewide, seeking contribution and indemnification. The complaint alleges that Statewide negligently performed a search of the public records, and due to Statewide's faulty title search, Herrick was not informed that the property upon which the house parcel was located constituted only a portion of the tax lot. Herrick alleges that had it been properly informed by Statewide that the property was located on only a portion of the tax map, Herrick would have advised Rojas to exercise their contractual rights to rescind the contract and refuse to purchase the property.

Statewide moves to dismiss the complaint pursuant to CPLR § 3211 (a) (1) and (5) on grounds that a defense is based upon documentary evidence and the cause of action may not be maintained because of collateral estoppel and res judicata. Herrick opposes the motion, arguing that it relied upon Statewide's faulty title report in counseling Rojas to purchase the property, which resulted in the damages sustained by Rojas. Herrick claims it was forced to concede liability and accept responsibility for the acts of its agent, Statewide, in preparing a defective title report, and that the issue of Statewide's liability to Herrick was never determined in the prior action.

"The party seeking the benefit of the doctrine of collateral estoppel must establish that the identical issue was necessarily decided in the prior action and is determinative in the present action" Mahler v Campagna, 60 AD3d 1009, 1011 [2d Dept 2009]). "Once the party invoking the doctrine discharges his or her burden in that regard, the party to be estopped bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination" (id.).

Here, Statewide has demonstrated that the identical issue was decided in the prior action and is determinative of the present action, while Herrick has failed to sustain its burden to establish that it lacked a full and fair opportunity to litigate the issue as a party defendant in the prior action. Herrick's recourse, to which it is availing itself, is to appeal from the orders and judgment in the prior action— not to commence a new action with the hope of relitigating the issue in its favor. Because the identical issue was already litigated and decided, and Herrick had a full and fair opportunity to litigate the issue in the prior action, the action against Statewide is dismissed on the ground of collateral estoppel. "


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