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Title Company That Cured Title Defect Is Not Liable For Damages

In E.C.I. Financial Corp. v. American Title Ins. Co., 2014 N.Y. App. Div. LEXIS 6911, 2014 N.Y. Slip Op. 6937 (Oct. 15, 2014), the Appellate Division, Second Department held that a title insurer was entitled to judgment as a matter of law dismissing all claims against it.  The plaintiff, a lender, had previously been sued by a borrower seeking to invalidate a mortgage and note based on an alleged title defect.  The title insurer cured the alleged defect on behalf of the lender by recording the mortgage with a first priority lien, and was then able to settle the action brought the borrower.   The lender nonetheless sued the title insurer for damages allegedly caused by the failure to have recorded the mortgage earlier.  Affirming the dismissal of the Complaint in its entirety, the court held that the title insurer’s obligation was simply to provide indemnity for the alleged title defect, and that the insurer was not liable for its agent’s failure to have recorded the mortgage earlier, particularly where no actual compensable loss was established.  Ganfer Shore Leeds & Zauderer, LLP represented the title insurer in this case, both before the trial court and on appeal.