The Superior Court of New Jersey, Appellate Division, recently affirmed the trial court’s grant of summary judgment dismissing plaintiff’s complaint against multiple defendants, including the title agent and title insurance company, alleging fraudulent transfer of title to realty, holding that “one, who knows a deed transferring her ownership in property has been filed, but declines to repudiate that conduct and also acts to later approve the conduct and benefits from same, has ratified the conduct and loses the right to challenge the forgery.” Thurber v. Thurber, 2017 WL 164480 (App. Div. 2017). In the case, the property at issue was acquired in 1997 via a deed issued solely in plaintiff’s name. In 2003, her defendant husband sought to refinance the property but learned he could not do so without plaintiff’s approval. Accordingly, at the closing, he presented an unidentified woman posing as plaintiff, who offered an executed quitclaim deed. Closing was completed and defendant received a loan of $241,077, and the bank was given a mortgage as security for this debt. Plaintiff learned of this mortgage in August 2004, after which she filed a divorce complaint and a lis pendens. She later dismissed both. Defendant subsequently obtained two additional loans, in November 2004 and in March 2005, from Countrywide and Investor Commercial Capital, LLC (“ICC”), respectively, which paid off the first mortgage. In October 2005, Countrywide attempted to foreclose on the second loan and, shortly thereafter, ICC also commenced foreclosure proceedings. Plaintiff testified that she was aware of these proceedings and that she let defendant “handle those things.” In November 2006, defendant negotiated a lease-purchase agreement for the property with a third party. That transaction was financed by two mortgages, and defendant received $325,000 from the remaining proceeds, $295,000 of which he deposited into plaintiff’s bank account. As a result of this transaction, the debts due to Countrywide and ICC were satisfied.
Plaintiff again filed for divorce in March 2008. In March 2009, default judgment was entered. Plaintiff filed the instant action on October 31, 2008, against, among other, her husband as well as the title agent and the title insurance company involved in the 2003 mortgage. The title agent and title insurance company moved to dismiss plaintiff’s complaint. The judge granted summary judgment on each motion on the ground plaintiff waived her rights. Specifically, the judge held that plaintiff knew of the forgery and mortgages and did nothing, and “allow[ed] another mortgage, another mortgage, another mortgage, until we get up to where finally this guy  buys the property. . . . She knew of it, she did nothing, and that she allowed it to go forward.” In January 2012, a different judge granted default judgment against defendant and others after determining that plaintiff was the “sole fee simple absolute titleholder” of the Property. Plaintiff was awarded $2,025,095.10 in damages. Plaintiff then appealed from the grant of summary judgment to the title agent and title insurance company.
On appeal, plaintiff argued that the judge failed to afford her all reasonable factual inferences and erroneously made factual findings. The appellate court noted that plaintiff challenges only one single fact – the statement that she “did nothing after discovering in August 2004[,] the fraudulent transaction of August 2003.” However, plaintiff offered no arguments to support her claim, and the appellate court considered the matter waived. Plaintiff also argued that the judge incorrectly applied the law; specifically, that a forged deed cannot pass good title and therefore, she had no obligation to act and defendant’s use of a forgery is inoperative as a matter of law. On this point, the appellate court noted that generally a forged deed is deemed void and a nullity, but “a person such as plaintiff wronged by a forgery may engage in a course of conduct that bars her from obtaining redress.” The appellate court held that it is undisputed that plaintiff became aware of the forged deed and had full knowledge of defendant’s fraudulent conduct, but then waived her rights when she sought legal advice, initiated steps to enforce these rights but then withdrew her claims. Therefore, the facts supported ratification and warrant granting summary judgment.
Finally, plaintiff argued that the title insurance company is liable to her because it created the appearance of apparent authority of its agents in conducting the closing, and placed its agents in a position to commit fraud by allowing them to control the closing funds. The appellate court held that plaintiff’s proofs do not show that the individual closing agents’ conduct occurred as agents for the title insurance company. Additionally, the appellate court declined to allow plaintiff, who was not the insured, recover against the title insurance company. “There is no authority presented allowing a seller or non-party to the real estate transaction to recover against a buyer's title insurer, using theories of agency or apparent authority.”