Friedeberg v. Bullard

          FINDINGS AND RECOMMENDATION

         INSTRUCTIONS

         The following proposed Findings and Recommendation have been sent to United States District Judge James M. Moody, Jr. You may file written objections to all or part of this Recommendation. If you do so, those objections must: (1) specifically explain the factual and/or legal basis for your objection, and (2) be received by the Clerk of this Court within fourteen (14) days of this Recommendation. By not objecting, you may waive the right to appeal questions of fact.

         DISPOSITION

         A. INTRODUCTION.

         Defendants Commonwealth Land and Title (“Commonwealth”) and Mary Jo Bullard (“Bullard”) have filed separate motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. See Docket Entry 31, 35.^[1] For the reasons that follow, the undersigned recommends that the motions be granted.

         B. PLEADINGS.

         Plaintiff David Friedeberg (“Friedeberg”) began this diversity case by filing a pro se complaint. In it, he alleged the following:

... [Friedeberg] purchased a home located at 203 [South Seventh Street in] West Helena, Arkansas ... through Delta Realty who represented both [Friedeberg] and [Bullard]. Delta Realty used East Arkansas Title Insurance Company and their attorney Charles D. Roscopf to handle closing. [Friedeberg] was issued [an] owner title policy through [Commonwealth] without a proper title exam and/or opinion rendered. Their issuance of a policy without a proper title exam was in bad faith.

... [The] property was not legally transferred to [Bullard] and therefore [Friedeberg] does not have a clear title to 203 [South Seventh Street] ... This flaw of title should have been detected by [Commonwealth] upon writing a title policy without proper title examination.

See Docket Entry 2 at CM/ECF 4. Friedeberg asked that he be awarded damages for the present value of the lot and residence at 203 South Seventh Street, West Helena, Arkansas, (“residence”), which he estimates to be $125, 000.00; for the loss of securing an education for his son; and for the loss of the enjoyment of the residence.

         1. Commonwealth's motion for summary judgment.

         After the issues were joined, Commonwealth filed the pending motion for summary judgment. In it, Commonwealth asked that Friedeberg's complaint be dismissed for the following reasons:

On December 19, 2014, Commonwealth issued a title policy ... to Friedeberg. Friedeberg later made a claim under that Policy, and Commonwealth paid him the policy limits, which terminates its obligations under the Policy. Nevertheless, Friedeberg has sued Commonwealth seeking damages of $125, 000 in his complaint.

Friedeberg's complaint is unclear as to whether he is suing in contract or for negligence. But he has no claim for negligence for two reasons. First, Arkansas law does not permit a negligence claim against title insurance companies “for lack of reasonable care in searching and disclosing the state of title to the property.” Ark. Code Ann. 23-103-408(e)(1). The exclusive remedy in such cases “is to file a claim against the title insurance policy subject to the terms and conditions of the title insurance policy.” Ark. Code Ann. 23-103-408(e)(2). Second, even if a negligence claim were permitted, it would be barred by the three-year statute of limitations. Ark. Code Ann. 16-56-105. The Policy was issued December 19, 2014, so any negligence by Commonwealth would have occurred before that date. Friedeberg did not file his complaint until April 19, 2018, more than three years after any negligence would have occurred.

The only possible claim that Friedeberg has is for breach of contract and that claim fails as a matter of law because Commonwealth's payment of $8, 000, which was the amount of insurance provided under the Policy, terminated its obligations under the terms of the Policy. That $8, 000 is the most that Friedeberg can possibly recover under the Policy.

Finally, Friedeberg's bad faith claim fails as a matter of law because he cannot prove that Commonwealth engaged in any behavior sufficiently egregious to support a claim for bad faith.

See Docket Entry 31 at CM/ECF 1-2.

         Friedeberg filed a response to Commonwealth's motion. In the response, he maintained that his complaint should be liberally construed and the motion denied, in part, for the following reasons:

... [Friedeberg] provided a copy of the Warranty Deed ... which the closing attorney who prepared ... [the] legal document stamped “This instrument prepared by Roscoph & Roscoph, P.A. Attorneys, Helena, Arkansas, but no title examination requested or title opinion rendered.” ... [B]oth [Friedeberg] and ... Bullard were charged for title search and owners policy. ... The Warranty Deed being stamped by the closing attorney “... no title examination requested or title opinion rendered, ” clearly shows bad faith and breach of contract on Commonwealth ... to issue a policy without a title exam requested [or] opinion rendered. [Friedeberg] purchased a title policy in good faith and with full expectation of title work and review of title company and any other agents of Commonwealth ... [He] furthermore did not receive a certified copy of the Warranty Deed and Title Policy until December 1, 2015 ... [Commonwealth] claims [he] is time barred due to the statute of [limitations] being only three years starting on December 19, 2014, however the closing attorney did not provide a certified copy of the warranty deed and the title policy until December 1, 2015 so at least the three years would have run until December 1, 2018.

See Docket Entry 41 at CM/ECF 2-3. [Emphasis in original].^[2]

         2. Bullard's motion for summary judgment. Bullard also filed a motion for summary judgment. In it, Bullard asked that Friedeberg's complaint be dismissed, in part, for the following reasons:

... [Friedeberg's] complaint alleges that the subject “property was not legally transferred” to ... Bullard ... prior to sale and “therefore [Friedeberg] does not have a clear title” to his purchased property ..., however, there are absolutely no allegations made directly against Bullard or a request for relief against Bullard in [Friedeberg's] complaint. ...

[Friedeberg's] complaint alleges he was issued an Owner's title policy through ... Commonwealth ... without a proper title exam or opinion rendered in bad faith. Discovery in this case reveals a title exam was made by Commonwealth and that an owner's policy was issued in the amount of $8, 000.00, and there is no evidence of bad faith on the part of any defendant ...

[Friedeberg's] complaint further alleges that the subject property was not legally transferred to ... Bullard ... prior to sale and therefore [Friedeberg] does not have clear title to his purchased property ... Discovery has not revealed anything more than what was already known to the parties and of public record at the time of the sale. There is no evidence Bullard withheld information regarding ownership of the subject property and no evidence that Bullard did not have legal title to the subject property at the time of sale. There is also no evidence of anyone challenging [Friedeberg's] title in and to the subject property or that a thorough title search was not conducted.

[Friedeberg's] complaint alleges “the home was to be used as an investment” to ensure funding for son's college education. Response to discovery has revealed [Friedeberg] was unable “to obtain an equity line of credit” due to “concerns to transfer of title, ” but [Friedeberg] has not revealed where he applied for ...