Claims brought by individuals who were defrauded by rogue real estate title insurance agents against the title insurer and its reinsurer, Attorneys Title Insurance Fund (“ATIF”). The plaintiffs alleged that the insurer and reinsurer had become aware that the title insurance agents were defrauding borrowers, but did not take appropriate action. The plaintiffs also asserted contract claims arising from the reinsurance treaty between ATIF and the title insurers.
The Court granted summary judgment to the defendants, finding that the plaintiffs failed to establish the necessary agency relationship between ATIF and the rogue agents, despite the fact that the agents’ placement of title insurance for the plaintiffs created an automatic reinsurance obligation on the part of ATIF to the reinsured title insurers. The Court rejected plaintiffs’ argument that the rogue agents were impliedly acting on behalf of both the title insurers and ATIF, pointedly noting that “there is no contract between the reinsurer and the insured.” The Court also granted summary judgment on the contract claims, holding alternatively that: (1) no valid insurance contract was actually created between the title insurer and the plaintiffs (as a result of the rogue agent’s fraud, and despite the plaintiffs’ claims of an oral contract); and (2) the Reinsurance Treaty specifically excluded liability for losses caused by the title insurers’ agents’ fraud. The plaintiffs have appealed the decision to the Tenth Circuit Court of Appeals. Albright v. Attorneys’ Title Insurance Fund, Case No. 2:03-CV-00517 (D. Utah 2008).