Session November 20, 2014
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed Case Remanded.
Appeal from the Chancery Court for Sevier County. No. 13-6-185. Telford E. Forgety, Jr., Chancellor.
Arthur G. Seymour, Jr. and James E. Wagner, Knoxville, Tennessee, for the appellant, Citizens Bank.
M. Edward Owens, Jr., Knoxville, Tennessee, for the appellee, First American Title Insurance Company.
D. MICHAEL SWINEY, J., delivered the opinion of the Court, in which JOHN W. MCCLARTY and THOMAS R. FRIERSON, II, JJ., joined.
First American Title Insurance Company (" First American" ) sued Citizens Bank seeking a declaratory judgment holding that First American had no liability to Citizens Bank for two specific transactions involving loan closings on real property located in Sevierville, Tennessee. First American filed a motion for summary judgment. After a hearing, the Chancery Court for Sevier County (" the Trial Court" ) granted First American summary judgment and dismissed Citizens Bank's counterclaim. Citizens Bank appeals to this Court raising issues regarding whether the Trial Court erred in finding that by assigning the mortgages and deeds of trust Citizens Bank also had assigned the two closing protection letters related to these specific transactions, and also that Citizens Bank's counterclaim was barred because Citizens Bank failed to give First American timely notice of the settlement between Citizens Bank and the assignee of the mortgages.
D. MICHAEL SWINEY, J.
In 2005, in connection with two specific loan closing transactions involving real property located in Sevierville, Tennessee, First American issued closing protection letters (" CPLs" ) to Citizens Bank. In pertinent
part, the CPLs, which were addressed to Citizens Bank, provide:
When title insurance of First American Title Insurance Company (the " Company" ) is specified for your protection in connection with closings of real estate transactions in which you are to be the lender secured by a mortgage (including any other security instrument) of an interest in land, the Company, subject to the Conditions and Exclusions set forth below, hereby agrees to reimburse you for actual loss incurred by you in connection with such closings when conducted by said Issuing Agent (an agent authorized to issue title insurance for the Company) or said Approved Attorney (an attorney upon whose certification of title the Company issues title insurance) and when such loss arises out of:
1. Failure of said Issuing Agent or Approved Attorney to comply with your written closing instructions to the extent that they relate to (a) the status of the title to said interest in land or the validity, enforceability and priority of the lien of said mortgage on said interest in land, including the obtaining of documents and the disbursement of funds necessary to establish such status of title or lien, or (b) the obtaining of any other document, specifically required by you, but not to the extent that said instructions require a determination of the validity, enforceability or effectiveness of such other document, or (c) the collection and payment of funds due you, or
2. Fraud or dishonesty of said Issuing Agent or Approved Attorney in handling your funds or documents in connection with such closings. Your borrower in connection with a loan secured by a mortgage on a one-to-four family dwelling shall be ...