HAMELIN v. ETNA ABSTRACT CORP

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Supreme Court, Franklin County, New York.

Rickey L. HAMELIN, Plaintiff, v. ETNA ABSTRACT CORP., Defendant.

Decided: October 31, 1997

O'Connell & Aronowitz (Krista A. Zinser, of counsel), for plaintiff. Brooks & Meyer, Lake Placid (Richard B. Meyer, of counsel), for defendant.

This lawsuit alleges causes of action for breach of contract and negligence arising out of Defendant's purported failure to discover and disclose a Notice of Attachment on certain real property which was a matter of public record when Defendant undertook to conduct a title search for Plaintiff.   Plaintiff moves and Defendant cross-moves for summary judgment.   The Court has considered Plaintiff's submissions and renders the following decision and order.

In March of 1994 Plaintiff, as mortgagee, accepted a Collateral Security Mortgage of property from Duplisses Trading Co., Inc., as mortgagor, securing the principal amount of Seventy-seven thousand dollars ($77,000.00).   In February 1995 the mortgagor fell into default and offered a deed in lieu of foreclosure.   To accomplish this task Defendant was asked by Plaintiff's then-attorney, Edward LaVarnway, Esq., to “bring abstract to date and if there are no impediments against Duplisses Trading Company kindly record.”  (February 21, 1995 LaVarnway letter, emphasis added).   In reply, Defendant updated the abstract of title providing a certification that:

Etna Abstract Corp., a corporation duly organized under the laws of the State of New York ․ does hereby certify that it has examined the records in the Franklin County Clerk's Office by means of the alphabetical indices therein contained against the following named persons for the period of time set forth opposite their respective names, to wit:

Duplisses Trading From:  November 2, 1993

Company, Inc. To:  February 27, 1995

and find no deed, contract, lease, will, mortgage, assignment of mortgage, mechanic's lien, lis pendens, judgment, federal tax lien, order, financing statement, criminal surety bond or building and loan agreement which appears to affect the premises described in

 Set Out No. 20

except as hereinafter set forth.

Relying on the Certified Abstract, Plaintiff accepted title to the property, recording the deed on February 27, 1995.

Thereafter, in or around June 1995, and upon negotiating sale of the property for One hundred Seventy-five Thousand dollars ($175,000.00), the prospective purchaser caused additional title work to be performed.   In the course of this activity, Plaintiff came to learn the property was subject to an Order of Attachment in an action by Frederick G. Dupee against Dewey P. Duplissey and Duplissey's Trading Company, Inc. recorded on July 12, 1994 in the Franklin County Clerk's Office, constituting a preexisting lien or encumbrance upon title to the property in the amount of $85,000.00, plus interest.

It is Plaintiff's contention that Defendant's failure to discover the Notice of Attachment against Duplissey's Trading Company, Inc. constituted a per se breach of contract and negligence.   To this extent Plaintiff argues the unique and uncommon nature of the name-“Duplissey's” or “Duplisses”-should have alerted Defendant.   Defendant argues it fulfilled its obligation to search the alphabetical indices for “Duplisses Trading Co., Inc.” and may not be held liable for failure to discover and note any encumbrances respecting “Duplissey's Trading Co., Inc.” as the two names are entirely different and distinct from one another;  it was instructed to search “Duplisses”;  and use of alphabetical indices (as disclosed to Plaintiff in Defendant's certification) to search “Duplisses” would not have revealed encumbrances against “Duplissey's.”

Plaintiff has tendered affidavits of area title searchers who undertook the same search and discovered the Notice of Attachment despite the spelling variation.   Both parties tender affidavits of local title searchers summarizing their search methods.   Plaintiff's experts argue that spelling variations are to be noted in an abstract of title and that the spelling variation in the case at bar was inconsequential and should have been detected.   Moreover, Plaintiff's counsel provides a copy of the Standards for Title Examination of the New York State Bar Association which states, in pertinent part:

“7. Corporate Names-Minor Variations.

Objections should not be made to a minor variation between the name of a corporation appearing in the chain of title and its correct name if there is no other corporate name filed with the Secretary of State with which the name in the chain of title can be confused.”

In this vein, Plaintiff alleges, on information and belief, there is no other corporate name with which Duplisses can be confused.   Defendant's expert notes that to

“search against all possibilities of name spelling would be a task beyond what an ordinary abstractor could accomplish and be paid for․  For example, the name LaTray is also LeTray, LaTrey, Latreill and Latreille ․ I know of no law or rule of abstracting in this State which requires an abstractor to go beyond his or her specific request and order.   The fact that a name will be close in spelling does not require the abstractor [to] follow it out ․”

Walsh affidavit, sworn to September 22, 1997, par. 3.

 Dismissal of Plaintiff's negligence cause of action is proper in light of Plaintiff's failure to establish a violation of a legal duty independent of the contract.   See Murray-Gardner Management Inc. v. Iroquois Gas Transmission System, L.P., 229 A.D.2d 852, 854, 646 N.Y.S.2d 418 (3d Dep't 1996) citing Clark-Fitzpatrick Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 521 N.Y.S.2d 653, 516 N.E.2d 190 (1987).   A simple breach of contract may not be transformed into a tort unless a legal duty independent of the contract itself has been violated.  Fleet Bank of New York v. Douglas-Guardian Warehouse Corp., 229 A.D.2d 962, 645 N.Y.S.2d 384 (4th Dep't 1996);  T.A.T. Property v. Concrete Sealants (U.S.), Inc., 184 A.D.2d 689, 585 N.Y.S.2d 463 (2d Dep't 1992).   Lack of a separate relationship between Plaintiff and Defendant distinct from and independent of contract precludes Plaintiff's claim against Defendant for negligence.   Neither does a conventional business relationship create a fiduciary relationship in the absence of additional factors.   See generally RKB Enterprises Inc. v. Ernst & Young, 182 A.D.2d 971, 582 N.Y.S.2d 814 (3d Dep't 1992).

 Plaintiff and Defendant entered into a simple contractual business relationship for abstracting services.

“[I]f a negligent search causes an insurer to represent that title is when it is not, its liability is in contract, not tort, since the effect of such negligence is not to create a risk of a defect in title but simply to leave undiscovered a risk that already exists.”

Cruz v. Commonwealth Land Title Ins. Co., 157 A.D.2d 333, 337, 556 N.Y.S.2d 270 (1st Dep't 1990).  (emphasis added)

Plaintiff cites Cruz for support of its position that negligence remedies are available in addition to contract remedies.   In Cruz, however, it was not an undiscovered lien that gave rise to plaintiff's lawsuit, but defendant's failure to promptly record the deed, thereby permitting recordation of an intervening lien.   The First Department held that

“․ the damages plaintiff allegedly sustained as a consequence of defendant's negligence in recording the deed were not within the contemplation of the [title insurance] policy (see, Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co., supra, at 390, 521 N.Y.S.2d 653, 516 N.E.2d 190).”

Cruz at p. 337, 556 N.Y.S.2d 270.

There being no other, additional allegations other than Plaintiff's claim Defendant failed to discover a pre-existing lien on the property, Plaintiff may not properly maintain a cause of action against the defendant for negligence.

 Plaintiff is left with a breach of contract cause of action.   Surprisingly, there is no New York precedent addressing an abstractor's duty to search beyond the express terms stated in its title certificate.   To the extent Defendant relies on the case of Turk v. Benson, 30 N.D. 200, 152 N.W. 354 (1915), the Court is not persuaded its factual scenario is sufficiently similar to provide insight into the matter at hand.   Specifically, Turk involved whether a judgment docket containing the name William J. Rideout was sufficiently similar to the name William G. Rideout as to have required the abstractor to show the judgment.   In that case, a judgment, as a debt of William G. Rideout, was erroneously docketed against a non-existent William J. Rideout, forcing the plaintiff (real estate purchaser) to pay the judgment.   The Court pointed out:

“Judgments stand in a class by themselves because there is no extraneous data from which the examiner can determine the identity of the person.   In this it differs from chattel mortgages where the searcher always has the description of the property covered thereby as a guide to aid him in determining the identity of the person executing the same.   For these reasons we limit application of this rule to judgments alone, leaving other questions to be determined when reached.   In the case at bar there is nothing to indicate that William J. was the same and identical person as William G., the middle initials being different.   Had one or the other of the initials been entirely omitted and either the grantee of the deed or the judgment debtor been shown as simply William Rideout, a different state of facts would exist, and possibly it would be the duty of the abstractor to show the judgment.   Upon this, however, we express no opinion.”

Turk at p. 355.

These facts are different from ours since, unlike a recorded judgment, a property description would have accompanied the Notice of Attachment;  and, assuming “Duplissey's” (as opposed to “Duplisses”) was discovered by the abstractor in the docket, a comparison of the property descriptions would have resolved all doubt.   Similarly unpersuasive is Defendant's citation of Berkowitz v. Dam, 122 Misc. 143, 202 N.Y.S. 584, aff'd 212 A.D. 836, 207 N.Y.S. 811 (2d Dep't 1925).   In Berkowitz the Court held that the judgment docket reflecting a judgment against Max Sorcher, not discovered by the searchers, was ineffective as against Max Soicher, the name against which the dockets were searched.   In so holding the Court stated (at 144, 202 N.Y.S. 584):

“The creditor must see that the docket of a judgment is in the correct name of the debtor.   If it is not it is not notice to subsequent purchasers.”

The Court is constrained to deny both parties' summary judgment motions on the basis that questions of fact preclude summary disposition.   It is clear, based on the parties' expert affidavits tendered, that a fact finder must decide whether Defendant breached its duty to Plaintiff in conducting the title search.   The jury will be in a position to assess and weigh the credibility of the parties and witnesses.

DAVID DEMAREST, Justice.

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