Real estate developer 2,022 Ranch LLC bought 2,022 acres of land for development of residences. Chicago Title Co. issued a preliminary title report showing 16 title encumbrances and exceptions against the property.

The buyer agreed to proceed with the purchase, subject to the 16 title liens. The sale closed in May 2000 for $5 million. But in July 2000, Chicago Title issued its owner’s title policy that showed 16 additional title exceptions, such as easements and boundary discrepancies.

Purchase Bob Bruss reports online.

The developer-buyer immediately filed a title claim against Chicago Title Co. But no response was received for 15 months. In September 2001, buyer 2,022 Ranch LLC sued Chicago Title Co. for breach of contract and bad faith.

Chicago Title Co. then admitted liability for its breach of contract and bad-faith damages of $270,000. But 2,022 Ranch LLC claimed it lost $17 million in profits due to the title mistakes, plus punitive damages for fraud, malice and oppression.

The title insurer then claimed the attorney-client privilege to prevent the insured buyer from discovering its documents in the claim file. Chicago Title Co. argued its claims adjusters are also attorneys so, under the attorney-client privilege, their work need not be disclosed.

If you were the judge would you rule Chicago Title Co. is entitled to protect all the work of its attorney-adjusters from discovery by the insured claimant?

The judge said no!

The attorney-client privilege protects the discovery by the other party to a lawsuit of information the attorney learns during the course of a legal action, the judge began.

However, this is not an absolute privilege, he continued.

“Only those communications reflecting the requesting of, or rendering of, legal advice are protected by the attorney-client privilege,” the judge explained. “Only the attorney’s legal impressions, conclusions, opinions or legal research or theories are subject to the attorney work product privilege,” the judge emphasized.

It is up to the trial court judge to determine which title documents are subject to the attorney-client or work product privilege and which information discovered by the Chicago Title attorney-adjusters must be revealed to the title policy claimant, the judge ruled.

Based on the 2004 California Court of Appeal decision in 2,022 Ranch LLC v. Superior Court (Chicago Title Co.), 7 Cal.Rptr.3d 197.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

***

Send a Letter to the Editor for publication.
Send a comment or news tip to our newsroom.
Please include the headline of the story.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top