Mark DeGirolomo v. Kenneth J. Papa et al. (2010)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT # 101

The plaintiff, Mark DeGirolomo, commenced this action against the defendants, Kenneth J. Papa and the Connecticut Attorneys Title Insurance Company (CATIC), by service of process on June 17, 2009.   The complaint consists of three counts.   In count one, which sets forth a claim of fraud against Papa, the plaintiff alleges the following relevant facts:  On or about June 19, 2007, Papa, an attorney licensed to practice in the state of Connecticut, facilitated a transaction and acted as settlement agent for a loan made by the plaintiff to Daniel J. McKenna in the amount of $30,000 in exchange for a note secured by a mortgage on real property known as 223 A East Main Street, Unit 2, in Clinton.  “Immediately prior to the closing, prior to [the plaintiff] turning over the funds to Papa, Papa gave [the plaintiff], along with the Note and Mortgage, a copy of the Title Commitment purporting to show the current state of title to the property.”  “The information contained in the Title Commitment was false in that it failed to disclose a lis pendens recorded on the Clinton land records in favor of the Town of Clinton relating to a property tax foreclosure” as well as “a lis pendens recorded on the Clinton land records in favor of the Cadle Company relating to a foreclosure of a mortgage.”  “Papa knew the information contained within the Title Commitment was false” at the time and his “actions were wilful, wanton and [conducted] with reckless disregard for the consequences.”  “Papa knew that his false statement was material and that [the plaintiff] would rely upon those statements to his detriment in lending McKenna the money.”   The plaintiff also lent an additional $5,000 in reliance upon Papa's false statements.  “As a direct and proximate result of the foregoing [the plaintiff] has suffered damages.”   Count two sets forth a claim of negligent misrepresentation against Papa, alleging that “Papa knew, or should have known, that the information contained in the Title Commitment was false, in that Papa failed to exercise reasonable care or competence in obtaining or communicating the information contained in the Title Commitment”;  the plaintiff “justifiably relied upon the Title Commitment given to him by Papa”;  the plaintiff's reliance resulted in him being damaged;  and Papa's negligence “was a direct and proximate case” of the plaintiff's damages.

Count three of the complaint, which is the subject of CATIC's motion for summary judgment, sets forth a claim of negligent supervision against CATIC.   In that count, the plaintiff incorporates all of the allegations of counts one and two and alleges the following additional facts:  “Papa was an agent of CATIC at the time he gave the Title Commitment to DeGirolomo”;  “Catic failed to properly supervise Papa in his issuance and use of the Title Commitment”;  and “CATIC's failure to supervise Papa was a direct and proximate cause of DeGirolomo's damages.”

On September 25, 2009, CATIC filed a motion for summary judgment as to count three on the ground that there is no factual basis on which the plaintiff can claim that the CATIC had a duty to supervise Papa and, consequently, that it acted negligently in connection with that duty.   CATIC submitted a memorandum of law in support with exhibits.   The plaintiff filed a memorandum in opposition to the motion on October 9, 2009.¹

“Summary judgment is a method of resolving litigation when pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law ․ The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried.”  (Citations omitted.)  Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).  “In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”   (Internal quotation marks omitted.)  Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007).  “[T]he ‘genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred.   A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Citation omitted;  internal quotation marks omitted.)   Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).

“In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.   The courts hold the movant to a strict standard.   To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ․ As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent.   When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, camel refute evidence properly presented to the court under Practice Book § [17-45].”  (Internal quotation marks omitted.)  Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).

CATIC argues that its motion for summary judgment should be granted because it had no duty to supervise Papa in connection with his issuance of the title commitment.   In support of this argument, CATIC has submitted a signed and sworn affidavit of Guy R. DeFrances, Jr., Associate General Counsel for CATIC, to which is attached a true and accurate copy of the rules and regulations governing the rights and obligations of CATIC's shareholders.   Relying on this evidence, CATIC argues that imposing a duty to supervise Papa and all of the other shareholders is unsupported by CATIC's governing documents, is impractical “and would severely hamstring its ability to effectively run its business” because, at the relevant time, it had over 3000 active members “issuing tens of thousands of title policies each year.”   Moreover, it contends, the rules and regulations impose affirmative obligations on the shareholders in connection with the preparation, issuance and submission of title policies, inter alia, to exercise due care, to follow CATIC's published and disseminated procedures and guidelines, and to inquire of CATIC for clarification regarding the application of such policies as needed.   It notes that these rules do not obligate CATIC to monitor shareholders such as Papa in connection with their compliance with these obligations.   Further, it notes that CATIC's rules and regulations do not contain any provision imposing responsibility upon CATIC for the alleged malpractice of its shareholders or active members in connection with issuance of title policies.

In opposition to the motion, the plaintiff counters that CATIC had a duty to supervise Papa in his use of CATIC forms.   In support of this position, the plaintiff first argues that a negligent supervision claim requires pleading ² and proof that the defendant had a duty to supervise and knew or should have known that a particular behavior would have caused an injury of the general nature of that suffered by the plaintiff.   He maintains that the ultimate test of the existence of a duty of care is found in the foreseeability that harm might result if it is not exercised.   He argues that fraud or negligence by Papa is a foreseeable result of CATIC's inadequate supervision of issuers of title commitments and that, therefore, CATIC had a duty to supervise Papa with regard to his issuance of title commitments.

Next, the plaintiff contends that CATIC's rules and regulations are irrelevant to the issue of whether CATIC owed a duty to the plaintiff because such rules and regulations cannot absolve CATIC of its responsibilities.   Finally, the plaintiff argues that even if CATIC had no duty to supervise Papa, it is nevertheless vicariously responsible for torts committed by Papa against the plaintiff.   Accordingly, he argues, CATIC's motion for summary judgment must be denied.

As a threshold matter, the undisputed evidence submitted by CATIC supports its position that it did not voluntarily assume a duty to supervise Papa. Although the rules and regulations are not conclusive as to whether CATIC owes a duty to third parties to supervise its shareholders or agents, these rules and regulations are relevant to discerning the nature of the relationship between CATIC and its shareholders and contain no indication that CATIC has assumed any responsibility for the supervision of those shareholders.   To the contrary, as CATIC notes, these rules and regulations impose an affirmative duty on each shareholder to “exercise due care in the performance of the Shareholder's duties as an agent of [CATIC] in all aspects of the preparation, issuance and submission of [CATIC's] title insurance policies.”  (Memorandum of Law in Support of Defendant's Motion for Summary Judgment, Exh. B. 1, p. 6.) No duty of supervision imposed upon CATIC is referenced in CATIC's rules and regulations.   Accordingly, the court must consider whether CATIC nevertheless has a legal duty to supervise its agents.

The issue of whether a title insurance company has a duty to supervise its shareholders or agents in connection with their preparation and issuance of title commitments is an issue of first impression in Connecticut.   Moreover, the plaintiff has offered no legal authority to support its more general argument that a principal has a duty to supervise its agents, and research reveals none.   Accordingly, the court must consider whether the imposition of such a duty would be proper under Connecticut law.

“The test for determining legal duty is a two-pronged analysis that includes:  (1) a determination of foreseeability;  and (2) public policy analysis.”  Monk v. Temple George Associates, LLC, 273 Conn. 108, 114, 869 A.2d 179 (2005).  “Duty is a legal conclusion about relationships between individuals, made after the fact, and imperative to a negligence cause of action ․ The ultimate test of the existence of the duty to use care is found in the foreseeability that harm may result if it is not exercised ․ [In other words], would the ordinary [person] in the defendant's position, knowing what he knew or should have known, anticipate that harm of the general nature of that suffered was likely to result?”  (Internal quotation marks omitted.)   Id., 115.

“Foreseeability notwithstanding, it is well established that Connecticut courts will not impose a duty of care on the defendants if doing so would be inconsistent with public policy.”  Id., 116.  “Many harms are quite literally foreseeable, yet for pragmatic reasons, no recovery is allowed ․ A further inquiry must be made, for we recognize that duty is not sacrosanct in itself, but is only an expression of the sum total of those considerations of policy which lead the law to say that the plaintiff is entitled to protection ․ While it may seem that there should be a remedy for every wrong, this is an ideal limited perforce by the realities of this world.   Every injury has ramifying consequences, like the ripplings of the waters, without end.   The problem for the law is to limit the legal consequences of wrongs to a controllable degree ․ The final step in the duty inquiry, then, is to make a determination of the fundamental policy of the law, as to whether the defendant's responsibility should extend to such results.”  (Internal quotation marks omitted.)  Clohessy v. Bachelor, 237 Conn. 31, 45-46, 675 A.2d 852 (1996).

The Supreme Court has recognized that “[i]n considering whether public policy suggests the imposition of a duty, we ․ consider the following four factors:  (1) the normal expectations of the participants in the activity under review;  (2) the public policy of encouraging participation in the activity, while weighing the safety of the participants;  (3) the avoidance of increased litigation;  and (4) the decisions of other jurisdictions.”  (Internal quotation marks omitted.)  Monk v. Temple George Associates, LLC, supra, 273 Conn. 118.

Public policy considerations militate against imposing a duty of supervision on CATIC in this case.   First, the evidence submitted demonstrates that imposing such a duty would defy the normal expectations of the participants in the activity under review, that is, the issuance of title insurance policies.   In his affidavit, DeFrances avers, inter alia, that “[a]s of June 2007, CATIC had an estimated 3,000 Active Members practicing throughout New England and issuing tens of thousands of title policies each year.”  (Memorandum of Law in Support of Defendant's Motion for Summary Judgment, Exh. B, p. 2.) Imposing upon CATIC a duty to supervise each of its active members with regard to their issuance of title commitments would require CATIC to oversee each title search conducted by its active members in order to prevent the type of harm alleged in the present case.   The undisputed evidence submitted by CATIC indicates that the imposition of such a duty would not comport with the normal expectations of either CATIC or its shareholders and agents because the rules and regulations do not contemplate imposition of such a duty on CATIC but, rather, place sole responsibility for accurate performance of title searches on its shareholders and agents, who are required to “maintain professional liability insurance in the minimum amount of $500,000 in the aggregate.”  (Memorandum of Law in Support of Defendant's Motion for Summary Judgment, Exh. B. 1, p. 3.) Further, the plaintiff has not pleaded or offered evidence to prove facts demonstrating that he had any reasonable expectation that CATIC had supervised Papa's actions with regard to preparation of the the commitment.

With regard to the second factor articulated in Monk v. Temple George Associates, LLC, supra, 273 Conn. 118, that is, encouraging participation in the activity, also militates against imposing a duty.   As CATIC argues and DeFrances' affidavit indicates, imposing such a duty upon CATIC would “severely hamstring its ability to effectively run its business”;  (Memorandum of Law in Support of Defendant's Motion for Summary Judgment, p. 9);  because CATIC had “an estimated 3,000 Active Members practicing throughout New England and issuing tens of thousands of title policies each year.”  (Memorandum of Law in Support of Defendant's Motion for Summary Judgment, Exh. B., p. 2.) Imposing upon CATIC the duty to supervise the preparation of each title commitment would increase its cost of doing business and would thereby impose a restriction on its participation in this activity.

Consideration of the third and fourth factors also militate against imposing a duty to supervise under the circumstances of this case.   Turning to the third factor, avoidance of increased litigation, imposing a duty to supervise upon CATIC would result in increased litigation as title insurance companies could become liable for their failure to supervise their agents.   Finally, with respect to the fourth factor, research does not reveal any decisions from other jurisdictions imposing liability upon a title insurance company for its failure to supervise its agents.   Accordingly, public policy considerations do not support the imposition of a duty to supervise upon CATIC in the present case.

“[W]hen a duty is not found to exist under the public policy prong of the test, there is no need to perform an analysis under the foreseeability prong.”  Ryan Transportation, Inc. v. M & C Associates, 266 Conn. 520, 529, 832 A.2d 1180 (2003).   Consequently, the court does not need to consider whether the harm alleged by the plaintiff in the present case was foreseeable.

Finally, the plaintiff also argues that even if CATIC had no duty to supervise Papa, it is nevertheless vicariously responsible for torts committed by Papa against the plaintiff.   This argument raises an issue that has not been raised in the pleadings.  “The issue must be one which the party opposing the motion is entitled to litigate under his pleadings and the mere existence of a factual dispute apart from the pleadings is not enough to preclude summary judgment.”   (Internal quotation marks omitted.)  LaBow v. Rubin, 95 Conn.App. 454, 471, 897 A.2d 136, cert. denied, 280 Conn. 933, 909 A.2d 960 (2006).   Regardless of whether CATIC would be liable to the plaintiff under a theory of vicarious liability for its alleged acts or omissions, no such claim has been alleged in this case.   Accordingly, any factual issue relating to such a claim would not be a proper basis for the court's denial of CATIC's motion for summary judgment on count three of the complaint.

CONCLUSION

For the foregoing reasons, the motion for summary judgment is granted.

Howard F. Zoarski

Judge Trial Referee

FOOTNOTES

FN1. Two copies of the plaintiff's memorandum in opposition were filed on the same day.   Although these were coded as separate documents in the court file, listed as 102 and 103, they are identical..  FN1. Two copies of the plaintiff's memorandum in opposition were filed on the same day.   Although these were coded as separate documents in the court file, listed as 102 and 103, they are identical.

FN2. Although the plaintiff acknowledged in his memorandum in opposition that “[a] cause of action in negligent supervision requires pleading and proving that the defendant had a duty to supervise,” he has not specifically alleged that CATIC had a duty to supervise Papa. In the complaint, the plaintiff merely alleges that (1) Papa was an agent of CATIC at the time he gave the title commitment to the plaintiff, (2) CATIC failed to properly supervise Papa in his issuance and use of the title commitment, and (3) CATIC's failure to supervise Papa was a direct and proximate cause of the plaintiff's damages.   Nevertheless, because CATIC has not raised the issue of whether such allegations are legally sufficient, the court does not need to address it..  FN2. Although the plaintiff acknowledged in his memorandum in opposition that “[a] cause of action in negligent supervision requires pleading and proving that the defendant had a duty to supervise,” he has not specifically alleged that CATIC had a duty to supervise Papa. In the complaint, the plaintiff merely alleges that (1) Papa was an agent of CATIC at the time he gave the title commitment to the plaintiff, (2) CATIC failed to properly supervise Papa in his issuance and use of the title commitment, and (3) CATIC's failure to supervise Papa was a direct and proximate cause of the plaintiff's damages.   Nevertheless, because CATIC has not raised the issue of whether such allegations are legally sufficient, the court does not need to address it.

Zoarski, Howard F., J.T.R.