J-S27041-13 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 MARTIN YURCHISON, PERSONAL REPRESENTATIVE OF THE ESTATE OF DIANE LOUISE YURCHISON, a/k/a DIANE YURCHISON, Appellant v. UNITED GENERAL TITLE INSURANCE COMPANY, AEGIS WHOLESALE CORPORATION, FOX HILL MORTGAGE AND LOAN SERVICES AND SOUTH WEST SETTLEMENT SERVICES, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellees No. 1824 WDA 2012 Appeal from the Order entered on November 13, 2012 in the Court of Common Pleas of Westmoreland County, Civil Division, No. 919 of 2010 BEFORE STEVENS, P.J., BOWES and MUSMANNO, JJ. MEMORANDUM BY MUSMANNO, J. FILED SEPTEMBER 05, 2013 Martin Yurchison ( Yurchison ), Personal Representative of the Estate of Diane Louise Yurchison, a/k/a Diane Yurchison, appeals from the Order denying his Motion for summary judgment and granting the Motion for summary judgment filed by United General Title Insurance Company ( UGTIC ). We affirm. The trial court set forth the relevant underlying facts as follows Diane Yurchison ( Diane ) refinanced an existing mortgage loan that she had with National City Bank on her property in Champion, Pennsylvania. The refinance[ing] transaction was to
J-S27041-13 be with Aegis Wholesale Corporation ( Aegis ) in a mortgage amount of $359,000. It was contemplated that at the closing of the Aegis mortgage, Diane s existing mortgage with National City Bank would be paid in full. As a condition of that mortgage commitment, Aegis had requested that it receive a title insurance policy to protect its security interest in the subject property. The closing took place on March 8, 2005. The closing agent for Aegis was 1 st Olympic Settlement Services ( 1 st Olympic ). At the closing, 1 st Olympic[] acted in its capacity as a limited agent for [UGTIC] for the purpose of issuing a policy of title insurance to provide Aegis with an ALTA Loan Policy [1] in the amount of $359,000 along with a Closing Protection Letter. Subsequent to the closing of the refinanced mortgage, 1 st Olympic issued an ALTA Loan Policy of title insurance bearing Policy No. M- 63289682 naming Aegis as the only insured party. Diane and her husband, [Yurchison], who is also the personal representative of [Diane s] estate, later learned, in fact, [that]diane s National City Bank mortgage was not paid off or satisfied of record. [fn] Apparently, a third party had absconded with the funds that were provided by Aegis that were to have been used to pay off the National City Bank loan. [fn] Diane [] died in April of 2009. The Yurchisons apparently were aware that the National City Bank mortgage loan had not been paid off because payments continued to be made on this loan subsequent to the Aegis closing. [] UGTIC states that based on the averments of a mortgage foreclosure complaint filed by National City Bank in 2006, it was alleged that the Yurchisons made eleven payments on the National City Bank loan subsequent to the Aegis closing on March 8, 2005. [] Yurchison was personally served by the Fayette County Sheriff with a copy of the foreclosure complaint[,] on his behalf and on behalf of Diane[,] on September 11, 2006. Even after being served with the foreclosure complaint, the Yurchisons continued to make periodic payments to National City Bank until [] Yurchison, individually, 1 The contents of an ALTA loan policy are set forth in 1 Title Ins. Law 48. - 2 -
J-S27041-13 commenced this action by filing a complaint in which he alleged that UGTIC breached a contractual relationship with him by failing to pay off the National City Mortgage. [] Yurchison amended his complaint by adding a new party to the action and by changing the plaintiff from himself as an individual to himself as the personal representative of [Diane s] estate[,] since she was the only party to the National City Bank mortgage and the refinance transaction. The amended complaint reiterates the breach of contract claim filed in the original complaint in that it avers that UGTIC owed Diane a contractual obligation to pay off the National City Bank mortgage by virtue of its issuance of the title insurance loan policy to Aegis. It also includes an allegation that Diane was [a] third-party beneficiary to the loan policy issued by Aegis to UGTIC. [The amended complaint also raised breach of contract claims against Aegis, Fox Hill Mortgage and Loan Services and South West Settlement Services and a negligent entrustment claim against Aegis.] UGTIC [] filed a motion for summary judgment alleging that [Yurchison s] claims [were] barred by the applicable statute of limitation; that Diane [was] not a third-party beneficiary pursuant to the policy of title insurance issued by it to Aegis and that it [had] no contractual duty to perform any duties other than provide a policy of title insurance to Aegis. [Yurchison] also filed a motion for summary judgment in which he contend[ed] that the record includes admissions of UGTIC s agents and its documents which clearly show the purpose of the refinance loan was to pay off [] the existing mortgage and that also creat[ed] no doubt that Diane was a third-party beneficiary of the title insurance policy issued by UGTIC. Trial Court Opinion, 11/13/12, at 1-4 (footnote in original and footnote added). The trial court granted UGTIC s Motion for summary judgment and denied Yurchison s Motion for summary judgment. Yurchison filed a timely Notice of appeal. UGTIC filed a Motion to quash the appeal, arguing that the trial court s Order was not final due to claims remaining against Aegis, Fox - 3 -
J-S27041-13 Hill Mortgage and Loan Services and South West Settlement Services. Yurchison then filed a Praecipe to settle, discontinue and end the actions against these parties. Thereafter, this Court denied UGTIC s Motion to quash. On appeal, Yurchison raises the following question for our review Did the lower court err in granting [UGTIC s] Motion for summary judgment thereby determining as a matter of law [that] there was insufficient record [] evidence that would have allowed a jury to find that [Yurchison] was a third party beneficiary to [UGTIC s] title insurance policy? Brief for Appellant at 4. In reviewing an order granting summary judgment, our scope of review is plenary, and our standard of review is the same as that applied by the trial court... An appellate court may reverse the entry of a summary judgment only where it finds that the lower court erred in concluding that the matter presented no genuine issue as to any material fact and that it is clear that the moving party was entitled to a judgment as a matter of law. In making this assessment, we view the record in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. As our inquiry involves solely questions of law, our review is de novo. Thus, our responsibility as an appellate court is to determine whether the record either establishes that the material facts are undisputed or contains insufficient evidence of facts to make out a prima facie cause of action, such that there is no issue to be decided by the fact-finder. If there is evidence that would allow a fact-finder to render a verdict in favor of the non-moving party, then summary judgment should be denied. Brandon v. Ryder Truck Rental, Inc., 34 A.3d 104, 107-08 (Pa. Super. 2011). - 4 -
J-S27041-13 Yurchison contends that the trial court erred in granting summary judgment because Diane was a third-party beneficiary of the title insurance policy. Brief for Appellant at 8-10. Yurchison argues that Diane s refinancing of the mortgage and subsequent payment of a title insurance premium established Diane s status as a third-party beneficiary. Id. at 9, 10-11. Yurchison further argues that the concept of third-party beneficiary has been expanded to include the equitable concept of a donee beneficiary. Id. at 10. Yurchison asserts that pursuant to Biggins v. Shore, 565 A.2d 737 (Pa. 1989), Diane also qualified as a donee beneficiary. Brief for Appellant at 10-11. The trial court set forth the relevant law and determined that Diane was not a third-party beneficiary in this case. See Trial Court Opinion, 11/13/12, at 4-8; see also Hicks v. Saboe, 555 A.2d 1241, 1244 (Pa. 1989) (concluding that the plaintiff was not a party to the title insurance policy and therefore, there was no basis for her to sue the title company under the third-party beneficiary rule); Hooper v. Commonwealth Land Title Ins. Co., 427 A.2d 215, 217 (Pa. Super. 1981) (stating that a title insurer is only liable to its insured and not to third parties). We adopt the sound reasoning of the trial court for the purpose of this appeal. See Trial Court Opinion, 11/13/12, at 4-8. As an addendum, we note the following. Here, Yurchison has failed to cite to any relevant authority demonstrating that Diane s payment of the - 5 -
J-S27041-13 premium for the title insurance policy was sufficient to show that she was a third-party beneficiary. 2 See Pa.R.A.P. 2119(a); see also Logan v. Gans, 419 A.2d 772, 774 (Pa. Super. 1980) (stating that the plaintiffs, who were not parties to the title insurance policy, could not claim the benefits of the policy even though the plaintiffs, as sellers, were compelled to clear any defects in the title to the property they were conveying to make it marketable before the buyers were compelled to accept a deed). Indeed, Yurchison has not pointed to any facts suggesting that the parties to the title insurance policy, Aegis and UGTIC, intended to benefit Diane. See Logan, 419 A.2d at 774 (concluding that the sellers to the property were not contemplated by the contracting parties as persons being insured or entitled to benefits from the policy); see also Hicks, 555 A.2d at 1244. On the contrary, Aegis contracted with UGTIC to protect itself, not to benefit anyone else, including Diane. Thus, Yurchison has not demonstrated that the trial court erred in determining that Diane was not a third-party beneficiary as a matter of law. 2 Customarily, the home builder/borrower pays [the premium for a title policy], because a lending institution requires that the borrower has title to the real property on which its loan proceeds will be expended. First Am. Title Ins. Co. of Texas v. Willard, 949 S.W.2d 342, 348 (Tex. App. 1997); see also 1 Title Ins. Law 12. Rather than require the borrower to incur the expense of a title examination, a title insurance policy in favor of the lender is an inexpensive means of assuring the validity of its title. Willard, 949 S.W.2d at 248. - 6 -
J-S27041-13 Moreover, with regard to Yurchison s donee beneficiary claim and the application of Biggins to this case, we conclude that Yurchison s claim is without merit. A person is defined as a donee beneficiary if it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promisee in obtaining the promise of all or part of the performance is to make a gift to the beneficiary or to confer upon him a right against the promisor to some performance neither due from the promisee to the beneficiary; nor supposed or asserted to be due[.] Hillbrook Apartments, Inc. v. Nyce Crete Co., 352 A.2d 148, 151 (Pa. Super. 1975) (citation omitted). In Biggins, our Supreme Court held that a party, who was a clearly named donee beneficiary under the contract, had a right of action to enforce the duty of the promisor to perform under the terms of the contract, which the beneficiary acquired immediately upon the making of the contract. See Biggins, 565 A.2d at 739-42. The reasoning in Biggins does not apply in this case because Diane was not a named beneficiary on the title insurance policy nor did the contracting parties to the policy intend to benefit Diane. Based upon the foregoing, the trial court properly granted summary judgment in favor of UGTIC. Order affirmed. Judgment Entered. Deputy Prothonotary Date 9/5/2013-7 -
IN THE COURT OF COMMON PLEAS OF WESTMORELAND COUNTY, PENNSYLVANIA CIVIL DIVISION-LAW.\ MARTIN YURCHISON, Personal representative Of the Estate of Diane Louise Yurchison a/k/a Diane Yurchison, PLAINTIFF, VS. NO. 919 of 2010 UNITED GENERAL TITLE INSURANCE COMPANY, AEGIS WHOLESALE CORPORATION, FOX HILL MORTGAGE AND LOAN SERVICES AND SOUTHWEST SETTLEMENT SERVICES, CERTIFICATEO~d ;..2 ANDNOW,thiS~~YOf~~.-, J do hereby certity tjj<lt I have sent a copy'of ~&S, DEFENDANTS. a41~~. 7-. ANITAM. VlVIO, SaClWTARY DECISION AND ORDER Diane Yurchison ("Diane") refinanced an existing mortgage loan that she had with National City Bank on her property in Champion, Pennsylvania. The refinanced transaction was to be with Aegis Wholesale Corporation ("Aegis") in a mortgage amount of $359,000. It was contemplated that at the closing of the Aegis mortgage, Diane's existing mortgage with National City Bank would be paid in full. As a condition of that mortgage commitment, Aegis had requested that it receive a title insurance ~~~~ C)n '- ; ~'--i," ~-' ~~.- ;~~ --. ~-. 1 _. I ~
, ( policy to protect its security interest in the subject property. The closing took place on March 8, 2005. The closing agent for Aegis was 1 st Olympic Settlement Services ("1 st Olympic"). At the closing, 1 st Olympic, acted in its capacity as a limited agent for the defendant, United General Title Insurance Company, ("UGTIC") for the purpose of issuing a policy of title insurance to provide Aegis with an ALTA Loan Policy in an amount of $359,000 along with a Closing Protection Letter. Subsequent to the closing of the refinanced mortgage, 1 st Olympic issued an ALTA Loan Policy of title insurance bearing Policy No. M- 63289682 naming Aegis as the only insured party. Diane and her husband, Martin Yurchison, who is also the personal representative of her estate, later learned that, in fact, Diane's National City Bank mortgage was not paid off or satisfied of record. 1 Apparently, a third party had absconded with the funds that were provided by Aegis that were to have been used to payoff the National City Bank loan. The Yurchisons apparently were aware that the National City Bank mortgage loan had not been paid off because payments continued to be made on this loan subsequent to 1 Diane Yurchison died in April of 2009. 2
tt -- / ( ( the Aegis closing. The defendant, UGTIC, in its brief, states that based on the averments of a mortgage foreclosure complaint filed by National City Bank in 2006, it was alleged that the Yurchisons made eleven payments on the National City Bank loan subsequent to the Aegis closing on March 8, 2005. Martin Yurchison was personally served by the Fayette County Sheriff with a copy of the foreclosure complaint on his behalf and on behalf of Diane on September 11, 2006. Even after being served with the foreclosure complaint, the Yurchisons continued to make periodic payments to National City Bank until Martin Yurchison, individually, commenced this action by filing a complaint in which he alleged that UGTIC breached a contractual relationship with him by failing to payoff the National City Mortgage. Martin Yurchison amended his complaint by adding a new party to the action and by changing the plaintiff from himself as an individual to himself as the personal representative of his spouse's estate since she was the only party to the National City Bank mortgage and the refinance transaction. The amended complaint reiterates the breach of contract claim filed in the original complaint in that it avers that UGTIC owed Diane a contractual obligation to pay off the National City Bank mortgage by virtue of its 3
issuance of the title insurance loan policy to Aegis. It also includes an allegation that Diane was third-party beneficiary to the loan policy issued by Aegis to UGTIC. UGTIC has filed a motion for summary judgment alleging that the plaintiff's claims are barred by the applicable statute of limitation; that Diane is not a third-party beneficiary pursuant to the policy of title insurance issued by it to Aegis and that it has no contractual duty to perform any duties other than provide a policy of title insurance to Aegis. The plaintiff has also filed a motion for summary judgment in which he contends that the record includes admissions of UGTIC's agents and its documents which clearly show the purpose of the refinance loan was to payoff of the existing mortgage and that also creates no doubt that Diane was a third-party beneficiary of the title insurance policy issued by UGTIC. After careful consideration of the record in this case along with the briefs and oral arguments of the parties, I have corne to the conclusion that Diane is not an intended third-party beneficiary of the title insurance policy issued by the defendant, UGTIC, nor did UGTIC have any contractual obligations that it owed to Diane in the mortgage refinance transaction. Based on this conclusion, I will be granting the motion for summary judgment filed by 4
UGTIC and denying the motion filed by the plaintiff. As a result of this conclusion, it will not be necessary for me to decide the statute of limitation's issue raised by UGTIC in its brief. The title insurance policy issued in this case by UGTIC specifically names Aegis as the insured party and makes no reference to any other insureds. The purpose of title insurance is to protect the insured from loss arising from defects in the title. Hooper v. Commonwealth Land Title Ins. Co., 427 A.2d 215 (Pa. Super. 1981). In general, the duty of a title insurance company runs only to its insured and not the third parties who are not a party to the contract. Hicks v. Saboe, 521 Pa. 380, 555 A.2d 1241 (1989). A title insurance company, when acting exclusively as an insurer, is liable only to its insured and not the third parties. Hooper, supra. Clearly, none of the title insurance documents including the title commitment, the Closing Protection Letter, the title insurance policy, etc... mentioned Diane as an insured. All documents clearly indicate that UGTIC intended Aegis to be the sole beneficiary of the title insurance policy. Pennsylvania Supreme Court has held in the case of Guy vs. Liederbach, 501 Pa. 47, 459 A.2d 744 (1983) that there is a two-part test for determining 5
!. whether one can be an intended third-party beneficiary of a contract. The test is 1. The recognition of the beneficiary's right must be appropriate to effectuate the intention of the parties, and 2. The performance must satisfy an obligation of the promisee to pay money to the beneficiary or the circumstances indicate that the promisee intends to give a beneficiary the benefit of the promise to performance. There is no question but that the title insurance policy was to insure that Aegis' mortgage had a first lien position when the closing was completed. In order to have a first lien position, by definition, the First National Bank mortgage would have had to been paid off and satisfied. However, there is nothing in the title insurance policy or in the related documents that require UGTIC to actually payoff the National City Bank mortgage itself. If, for any reason, the National City Bank mortgage is not satisfied of record, the Aegis mortgage will not have first lien position and that is the type of risk that is insured against by the policy. In other words, the "promised performance" in the title insurance policy in this case, was the insuring of the first lien 6
status of the new mortgage and not the payment of the National City Bank mortgage. Also, there is no evidence that Aegis, or for that matter, UGTIC, intended to benefit Diane when this contract, i.e., the title insurance policy was issued. Aegis contracted for title insurance to protect itself, not to "benefit Diane or anyone else, except its successors and/or assigns. In my opinion, after reviewing the title insurance policy and its terms as a whole and construing it in the light of the circumstances under which it was made, I am unable to conclude that the policy was intended to benefit Diane and clearly there is no evidence of record that UGTIC intended the policy it issued to Aegis to be for Diane's benefit. The plaintiff argues that Diane was an intended beneficiary of the mortgagee's title insurance policy since she was required to pay the premium for that policy. I am not convinced that the fact that Diane had to pay the premium made her an intended beneficiary of that policy. The requirement of the lender's title insurance was a condition that Diane had to fulfill in order for her to receive the loan commitment. I would guess that it is no different than the lender requiring a credit report, 7
property appraisal, surveyor any other item that is related to a mortgage closing. As cited in UGTIC's brief, it is common practice throughout the country that a purchaser of real property or a refinancing party is required to purchase lender's title insurance. See 1 Title Ins. Law 429. It is also important to note that Diane could have purchased an owner's title insurance policy which would have insured her ownership interest in this real estate. Apparently, she chbse not to do so. I am also convinced as a matter of law that UGTIC was under no duty to perform any tasks other than to provide a title insurance policy to its insured, Aegis. I agree with UGTIC that it had no affirmative duty owed to Diane to insure that her National City Bank mortgage was paid in full from the proceeds of the refinance mortgage. It is possible to argue that UGTIC may have had a duty of this sort owed to Aegis based upon its insuring that Aegis' mortgage was a first lien on the property, but this duty would not extend to Diane. Accordingly, I will enter the following Order 8