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A:·I~DE / : CLIIIICI OI'FICI ,, 

1MJ11181ECCIURI',rDnr1111W.W!fli'OII 

DATE JUL f 4 lifl6 . 

(~~ Supreme Court Cieri< 

IN THE SUPREME COURT OF THE STATE OF WASHINGTON 

CERTIFICATION FROM THE UNITED ) 

STATES COURT OF APPEALS FOR THE ) 

NINTH CIRCUIT ) No. 91932-1 

IN ) 

) En Bane 

CENTURION PROPERTIES Ill, LLC; SMI ) 

GROUP XIV, LLC, ) JUL. 1 4 2016 ) Filed 

Plaintiffs-Appellants, ) 

) 

v. ) 

) 

CHICAGO TITLE INSURANCE ) 

COMPANY, a Nebraska company, ) 

) 

Defendant-Appellee. ) 

) 

WIGGINS, J,-The United States Court of Appeals for the Ninth Circuit certified 

the following question to this court: "Does a title company owe a duty of care to third 

parties in the recording of legal instruments?" We answer the certified question no and 

hold that title companies do not owe a duty of care to third parties in the recording of 

legal instruments. Such a duty is contrary to Washington's policy and precedent, and 

other duty of care considerations. 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

FACTS 

This certified question arises from a civil action for money damages filed in the 

United States District Court for the Eastern District of Washington. Plaintiffs Centurion 

Properties Ill LLC (CP Ill) and SMI Group XIV LLC (collectively Plaintiffs) assert that 

defendant Chicago Title Insurance Company negligently breached its duty of care and 

caused damages when it recorded unauthorized liens on CP Ill's property. 

Michael Henry, the sole member of SMI, joined with Thomas Hazelrigg to form 

CP Ill. They formed CP Ill in order to purchase property and commercial buildings in 

Richland, Washington. They further agreed that 90 percent of CP Ill would be owned 

by individuals and entities controlled by Hazelrigg and 10 percent would be owned by 

SMI. Aaron Hazelrigg, through nonparty Centurion Management Ill LLC, was the 

managing member of CP Ill. 

To purchase the property, CP Ill obtained a $70.8 million loan from General 

Electric Capital Corporation (GECC). The loan was secured by a deed of trust on the 

property naming GECC as the beneficiary. The deed of trust and two other 

instruments-the CP Ill operating agreement and the GECC loan agreementprohibited the placement of any liens or encumbrances on the property without 

GECC's approval. Any unauthorized lien or encumbrance would constitute an event 

of default. 

Defendant Chicago Title served as escrow agent, closing agent, and title 

insurer for the purchase of the property at issue. Chicago Title recorded the GECC 

deed of trust and is named trustee for GECC's senior lien. Chicago Title, as trustee, 

2 

 	 
	 
   
		

		

Centurion Props. 1/1, LLC v. Chicago Title Ins. Co., No. 91932-1 

also received and reviewed copies of the CP Ill operating agreement and the GECC 

loan agreement as part of the transaction. 

Following the sale, four liens were placed on the property without GECC's 

approval. The four unauthorized liens were recorded by Chicago Title: two separate 

deeds of trust granted by CP Ill in favor of Centrum Financial Services Inc.; a deed of 

trust granted by CP Ill to Trident Investments Inc.; and a memorandum of agreement 

between CP Ill and Trident. Two additional liens are not at issue in this case. 

Each of these liens was a facially valid instrument: the instruments bore the 

correct legal description, and they were all signed and notarized through Centurion 

Management by either Aaron Hazelrigg or Thomas Hazelrigg as director of CP 

Management on behalf of CP 111. 1 Chicago Title initially recorded Centrum Financial's 

deed of trust in conjunction with issuing a commitment for title insurance. The 

remaining three recordings were done as accommodations. 

Later, GECC obtained a title report and learned of the four (prohibited) liens 

that Chicago Title recorded. GECC notified CP Ill that the junior liens were events of 

default and accelerated the entire unpaid balance of the loan, imposing a default rate 

of interest. Though CP Ill attempted to refinance the loan, no lender would refinance 

it while the prohibited liens remained on CP Ill's title. GECC moved forward with its 

foreclosure, forcing CP Ill to file for bankruptcy2 

1 Plaintiffs allege that even though these liens were purportedly entered into by Centurion 

Management on behalf of CP Ill, they were not authorized liens. They further assert that 

Chicago Title was under a duty to look behind the instruments to determine whether the 

signatures were, in fact, valid. 

2 During this time, Henry, as the sole member of SMI, took control of CP Ill from the 

Hazel riggs. He is now the sole owner of both companies. 

3 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

Plaintiffs filed a civil action against the Hazelriggs, Centrum Financial, and 

others, alleging that the named defendants misappropriated funds from CP Ill, 

improperly transferred ownership of CP Ill, and secretly placed liens on CP Ill's 

property. These claims sought to (1) enjoin foreclosure of the allegedly unauthorized 

liens and (2) quiet title by voiding the instruments that created them. Plaintiffs later 

added a sole complaint against Chicago Title; this complaint asserted that Chicago 

Title was negligent in recording the prohibited liens and that the resulting defaults 

caused CP Ill to incur more than $7.5 million in damages, including $3 million in 

default interest. The claims against all other parties settled, leaving only the 

negligence claim against Chicago Title. The district court dismissed this claim on 

summary judgment, finding that Chicago Title did not owe Plaintiffs a duty of care. 

Centurion Props. Ill, LLC v. Chi. Title Ins. Co., No. CV-12-5130-RMP, 2013 WL 

3350836 (E.D. Wash. July 3, 2013) (court order). Plaintiffs appealed, and the Ninth 

Circuit certified its question to this court. Centurion Props. Ill, LLC v. Chi. Title Ins. Co., 

793 F. 3d 1087 (9th Cir. 2015). We accepted review pursuant to RCW 2.60.020. 

ANALYSIS 

We are asked whether a title insurance company owes a duty of care to third 

parties in the recording of legal instruments. A duty of care is '"an obligation, to which 

the law will give recognition and effect, to conform to a particular standard of conduct 

toward another."' Affil. FM Ins. Co. v. LTK Consulting Servs., Inc., 170 Wn.2d 442, 

449, 243 P.3d 521 (2010) (internal quotation marks omitted) (quoting Transamerica 

Title Ins. Co. v. Johnson, 103 Wn.2d 409, 413, 693 P.2d 697 (1985). The duty of care 

question implicates three main issues-the existence of a duty, the measure of that 

4 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

duty, and the scope of that duty. /d. (quoting DAN B. DOBBS, THE LAW OF TORTS§ 226, 

at 578 (2000)). "In a negligence action, in determining whether a duty is owed to the 

plaintiff, a court must not only decide who owes the duty, but also to whom the duty is 

owed, and what is the nature of the duty owed." Keller v. City of Spokane, 146 Wn.2d 

237, 243, 44 P.3d 845 (2002). The existence of a duty and the scope of that duty are 

questions of law, and both are determined by considering the factors listed below. 

We consider logic, common sense, justice, policy, and precedent, as applied to 

the facts of the case, when determining whether a defendant owes a duty in tort. Affil. 

FM Ins. Co., 170 Wn.2d at 449. We have long applied these factors when defining 

"duty," and they can be traced back for more than 100 years. 3 We apply these factors 

here. We first examine precedent and analyze whether our decisions or the decisions 

of neighboring jurisdictions support finding a duty here. We next consider whether 

Washington's policy of protecting the rights of property owners through the title 

recording system is advanced or frustrated by imposing a legal duty of care. Finally, 

we consider logic, common sense, and justice. These considerations lead us to 

conclude that a title insurance company does not owe a duty of care to third parties in 

the recording of legal instruments. 

I. Standard of review 

Certified questions from a federal court are questions of law that we review de 

novo. Gray v. Sutte/1 & Assocs., 181 Wn.2d 329, 337, 334 P.3d 14 (2014). We consider 

3 The original language from 1 Thomas Atkins Street, The Foundations of Legal Liability 100, 

110 (1906) is quoted time and again from Affiliated FM Insurance Co., 170 Wn.2d at 449, to 

Snyder v. Medical Service Corp. of Eastern Washington, 145 Wn.2d 233, 243, 35 P.3d 1158 

(2001 ), to Hartley v. State, 103 Wn.2d 768, 779, 698 P.2d 77 (1985), to King v. City of Seattle, 

84 Wn.2d 239, 250, 525 P.2d 228 (1974). 

5 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

the legal issues not in the abstract but rather based on the certified record provided 

by the federal court. /d. (citing RCW 2.60.030(2)). Our ruling is not advisory-pursuant 

to RCW 2.60.020, our ruling in answer to the certified question resolves actual issues 

pending in the federal proceeding and will be legal precedent in all future 

controversies involving the same legal question. /d. 

II. Precedent 

We first consider precedent. Whether a title insurance company owes a duty of 

care to third parties in the recording of legal instruments is a question of first 

impression for this court. However, our precedent firmly supports the conclusion that 

the answer to this certified question is no. 

Our analysis begins by considering the duties owed by title insurance 

companies in prior cases. We next consider other circumstances that have led us to 

recognize a professional duty of care. Washington law treats professional duties as 

discrete duties owed to clients-absent a special relationship, we have extended a 

professional duty of care to third parties only (1) when the third party is an intended 

beneficiary, (2) when the third party justifiably relied on a professional's 

representations under a theory of negligent misrepresentation, or (3) when a 

professional is best able to mitigate the risk of a physical injury. See, e.g., Stewart 

Title Guar. Co. v. Sterling Sav. Bank, 178 Wn.2d 561, 567, 311 P.3d 1 (2013) (no duty 

to nonclient absent intent to benefit nonclient); ESCA Corp. v. KPMG Peat Marwick, 

135 Wn.2d 820, 832, 959 P.2d 651 (1998) (negligent misrepresentation); Affil. FM Ins. 

Co., 170 Wn.2d at 545 (engineer owed a duty of care to third parties who may be 

harmed by engineer's negligence). Because Plaintiffs do not assert a theory of 

6 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

negligent misrepresentation, our analysis considers our rule limiting duties to third 

parties who are intended beneficiaries and the rationale extending a duty to 

professionals able to mitigate the risk of physical injury. We conclude by considering 

the approaches of Arizona and California, the only other states to consider the duty 

owed by a title insurance company to a third party when recording legal instruments. 

A. Title insurance companies do not owe a general duty to clients to search for 

and disclose potential title defects when issuing preliminary commitments 

Title insurance companies may perform several services for their own benefit 

or for their client's benefit. Consistent with chapter 48.29 RCW ("Title Insurers"), our 

analysis of the duty owed by title insurance companies to their clients follows the 

nature of the service at issue. 

Though we have not considered the duty owed by a title insurance company to 

nonclient third parties, we thoroughly analyzed and explored the duty of a title insurer 

to its clients-namely to its insureds-in Barstad v. Stewart Title Guaranty Co., 145 

Wn.2d 528, 541, 39 P.3d 984 (2002). We specifically considered a title insurance 

company's duty to search for and/or to disclose title defects to its clients when issuing 

a preliminary commitment. We held that title insurance companies do not owe their 

clients a duty to search for and/or to disclose title defects when preparing a 

"preliminary title commitment" pursuant to the plain language of RCW 48.29.01 0(3)(c). 

/d. at 530. To reach this conclusion, we considered the meaning of chapter 48.29 

RCW, the legislative purpose of that statutory scheme, and standard industry practice, 

and we conducted a comparative analysis of other states in the Ninth Circuit. /d. at 

535-42. 

7 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

Barstad considered the general duties imposed on title insurance companies 

by chapter 48.29 RCW. /d. at 535. There, the insureds asserted that title insurers owe 

a duty of care when preparing abstracts of title and argued that a preliminary title 

commitment serves the same purpose as an abstract of title, giving rise to the same 

duty of care. /d. We rejected this argument. /d. 

We began by examining the definitions of the services performed-and 

resultant duties owed-by title insurers. /d. We observed that an abstract of title is 

"a written representation, provided pursuant to contract, whether written 

or oral, intended to be relied upon by the person who has contracted for 

the receipt of such representation, listing all recorded conveyances, 

instruments, or documents which, under the laws of the state of 

Washington, impart constructive notice with respect to the chain of title 

to the real property described. An abstract of title is not a title policy as 

defined in this subsection." 

/d. at 535 n.8 (quoting former RCW 48.29.01 0(3)(b) (1997)4). Due to the contractual 

and reliance principles associated with an abstract, we noted that we have long 

recognized the potential duties associated with an abstract of title. /d. at 539 n.14. 

We contrasted this service with the statutory definition of a "preliminary 

commitment" at RCW 48.29.01 0(3)(c): 

'"Preliminary report,' 'commitment,' or 'binder' means reports furnished 

in connection with an application for title insurance and are offers to issue 

a title policy subject to the stated exceptions in the reports, the conditions 

and stipulations of the report and the issued policy, and such other 

matters as may be incorporated by reference. The reports are not 

abstracts of title, nor are any of the rights, duties, or responsibilities 

applicable to the preparation and issuance of an abstract of title 

applicable to the issuance of any report. Any such report shall not be 

construed as, nor constitute, a representation as to the condition of the 

title to real property, but shall constitute a statement of terms and 

4 Minor wording changes were made in 2005 but do not alter the meaning. LAWS OF 2005, 

ch. 223, § 14. 

8 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

conditions upon which the issuer is willing to issue its title policy, if such 

offer is accepted." 

/d. at 535 n.8 (quoting former RCW 48.29.01 0(3)( c)5). We observed that a preliminary 

commitment is "merely an offer to issue the title insurance subject to the stated 

conditions." /d. at 536 (citing former RCW 48.29.010(3)(c)). This research is 

performed specifically for the title insurance company's benefit and not for the benefit 

of the insured. /d. at 540. 

We also considered industry practice, legislative intent, and the approach of 

other jurisdictions, as well as the insured's argument that title insurance companies 

owe a fiduciary duty to disclose title defects. /d. at 542-44. Every one of these 

considerations led to the conclusion that title insurance companies have no general 

duty to disclose potential or known title defects when they are not preparing an 

abstract of title because these services are not prepared for or intended to be relied 

on by a person other than the insurer. /d. at 530. 

Our holding in Barstad follows a long line of cases in which we have rejected 

attempts to impose a duty on title insurance companies to search for and disclose title 

defects. See, e.g., Transamerica Title Ins. Co. v. Johnson, 103 Wn.2d 409, 413-14, 

693 P.2d 697 (1985) (no reliance by third party on title insurer's preliminary 

commitment); Klickman v. Title Guar. Co. of Lewis County, 105 Wn.2d 526, 528, 716 

P.2d 840 (1986) (no liability because no title defect); Lombardo v. Pierson, 121 Wn.2d 

5 Minor wording changes were made in 2005, including the following changes to the final 

sentence of subsection (3)(c): "Any such The report shall not be construed as, nor constitute, 

is not a representation as to the condition of the title to real property, but shall constitute is a 

statement of terms and conditions upon which the issuer is willing to issue a its title policy, if 

stiGA the offer is accepted." LAWS OF 2005, ch. 223, § 14. The changes do not affect our 

analysis. 

9 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

577, 581-83, 852 P.2d 308 (1993) (same). These cases strongly suggest that title 

insurers do not owe a duty of care to third parties when merely recording legal 

instruments. 

Title companies may record documents with the county recorder's office in 

conjunction with the issuance of a title commitment or policy, or as a separate 

accommodation recording at the request of the customer. Here, Chicago Title 

recorded Centrum Financial's deed of trust in conjunction with issuing a commitment 

for title insurance and later completed three such accommodation recordings. No 

party requested an abstract of title, and none of these recordings was done at the 

request of Plaintiffs. 

Chicago Title did not have a duty to identify or disclose title defects to its client, 

Centrum Financial, in preparing a commitment for title insurance; such a duty is owed 

only in preparing an abstract of title. Accord Barstad, 145 Wn.2d at 536; former RCW 

48.29.010(3)(b), (3)(c). Further, Washington's title insurance and recording statutes 

do not impose liability for the negligent recording of titles. See generally ch. 48.29 

RCW; ch. 65.08 RCW. Because our title insurer liability precedent does not support 

finding a duty to identify and disclose title defects to its own clients, it cannot support 

extending this duty of care to nonclient third parties when recording a legal instrument, 

particularly when that legal instrument is facially valid, as it is here.6 

6 Plaintiffs cite Hu Hyun Kim v. Lee for the proposition that title companies owe a duty of 

reasonable care when fulfilling professional when fulfilling professional obligations and giving 

professional advice to their clients. 145 Wn.2d 79, 91, 31 P.3d 665 (2001) (title company 

negligent in rendering an expert opinion when it failed to discover and disclose an existing, 

recorded, and perfected lien on the client's property). We are unpersuaded by Kim on these 

facts in view of our decision two years later in Barstad, 145 Wn.2d 528, where we held that 

title insurance companies do not have a duty of care when preparing commitment reports 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

B. Our other title insurance company cases do not inform our analysis of this 

issue 

Plaintiffs' citations to other cases holding that title insurance companies owe 

duties in tort are not well taken. 

Plaintiffs cite Denaxas v. Sandstone Court of Bellevue, LLC, 148 Wn.2d 654, 

663, 63 P.3d 125 (2003) for the proposition that title insurance companies have a duty 

to exercise reasonable care in carrying out their instructions. However, Denaxas 

actually held that "the Title Company did not have a duty to point out the discrepancy 

between the legal description in the Agreement and that in the closing documents." 

/d. To the extent Denaxas discussed a duty to follow instructions, we held that an 

"'escrow agent's duties and limitations are defined . . . by his instructions."' /d. 

(alteration in original) (quoting Nat'/ Bank of Wash. v. Equity Investors, 81 Wn.2d 886, 

910, 506 P.2d 20 (1973)). This point arises strictly out of the specific characteristics 

governing escrow holders-characteristics that are undisputedly not at issue in this 

case as Chicago Title did not perform any escrow services. See Nat'/ Bank of Wash., 

81 Wn.2d at 910. 

Plaintiffs also rely on Walker v. Transamerica Title Insurance Co., 65 Wn. App. 

399, 828 P.2d 621 (1992). But Walker addresses only proximate cause; the court did 

not address duty because Transamerica Title conceded duty for the purpose of its 

summary judgment motion. /d. at 402. Further, Walker involved the recording of a 

under RCW 48.29.010. Kim addresses neither chapter 48.29 RCW nor liability in regard to 

commitments. Furthermore, there being no contract here between Chicago Title and CP Ill, 

Kim cannot inform our analysis of the certified question before us. 

11 

 	 
	 
   
		

		

Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

facially invalid lien that did not contain a description of the property at issue. /d. at 401. 

Walker does not inform our duty analysis. 

C. Absent a substantial risk to public safety or property damage, professionals 

do not owe a duty to third parties when the transaction at issue is not intended 

to benefit the third party 

The duty of a title insurance company to third parties is a question of first 

impression to this court. Therefore, we turn to analogous considerations of a 

professional's duty to third-party nonclients for guidance. Using a modified version of 

California's multifactor test,? we recently considered whether attorneys owe nonclient 

third parties a duty of care in Sterling Savings Bank, 178 Wn.2d 561. Because our 

multifactor test is derived from the California test applied in Seeley v. Seymour, 190 

Cal. App. 3d 844, 237 Cal. Rptr. 282 (1987) (see infra Section II .D) and because the 

issue of a lawyer's duty to a nonclient is similar to the duty of a title insurer to a 

nonclient, our analysis in Sterling is instructive to our analysis here. 

In Sterling, we applied a multifactor test designed to determine when an 

attorney rnay be liable for malpractice to a nonclient third party. These factors are: 

"1. The extent to which the transaction was intended to benefit the 

plaintiff [that is, the third party suing the attorney]; 

"2. The foreseeability of harm to the plaintiff; 

"3. The degree of certainty that the plaintiff suffered injury; 

"4. The closeness of the connection between the defendant's . 

conduct and the injury; 

7 We first adopted the multifactortest in Trask v. Butler, 123 Wn.2d 835, 872 P.2d 1080 (1993). 

In Trask, we considered California's multifactor test and the Illinois "third party beneficiary'' 

test in deciding whether an attorney owes a duty to a nonclient. /d. at 840. After discussing 

both tests, the court combined the two and created Washington's modified multifactor test. 

/d. at 841-43. 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

"5. The policy of preventing future harm; and 

"6. The extent to which the profession would be unduly burdened by 

a finding of liability." 

178 Wn.2d at 565-66 (first alteration in original) (quoting Trask v. Butler, 123 Wn.2d 

835, 843, 872 P.2d 1080 (1994)). Quoting Trask, we explained that the first factor is 

the '"primary inquiry"' in determining liability to third parties. /d. (quoting Trask, 123 

Wn.2d at 842). We further explained that "'under the modified multifactor balancing 

test, the threshold question is whether the plaintiff is an intended beneficiary of the 

transaction to which the advice pertained'" and held that "'no further inquiry need be 

made unless such an intent exists."' /d. (quoting Trask, 123 Wn.2d at 843). Ultimately, 

we found no duty because the transaction at issue was not intended to benefit the 

third party. /d. at 570. 

These factors do not support finding a duty in this case. Neither Chicago Title's 

preliminary commitment and recording nor its subsequent accommodation recordings 

for the benefit of its client, Centrum Financial, were intended to benefit CP Ill. Indeed, 

the opposite is true-any recording of Centrum Financial's interest in the property 

would burden CP Ill. Under the multifactor test, this threshold inquiry is dispositive of 

Plaintiffs' claim. 

Plaintiffs do not argue that the transaction between Centrum Financial and 

Chicago Title was intended to benefit them. Instead, they seem to assert two separate 

arguments in support of liability. First, they argue that Chicago Title assumed a duty 

of care arising out of the foreseeability of the injury to CP Ill when it agreed to issue a 

commitment to Centrum Financial and to record its instruments. Second, they assert 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

that Washington law recognizes tort duties by title insurance companies. Our 

precedent requires rejection of both arguments. 

Plaintiffs' first argument is that liability to CP Ill arises out of Centrum Financial's 

instruction to Chicago Title. From this instruction, Plaintiffs argue that Chicago Title 

owed them a duty of care "given the obvious and known risks to the landowner." Pis.' 

Reply Br. at 7. This assertion assumes that a duty to CP Ill could be inferred from the 

contractual agreement between Centrum Financial and Chicago Title, an argument 

we reject. See infra Section IV. a. This argument for a duty also appears to be entirely 

predicated on the foreseeability of the harm. However, foreseeability of harm is only 

one of six factors necessary to determine whether a duty exists. Sterling, 178 Wn.2d 

at 566. Further, we do not consider the foreseeability of harm when a transaction is 

not intended to benefit the third-party plaintiff. /d. Thus, foreseeability of harm, alone, 

is insufficient to support imposing a duty. 

Plaintiffs also assert that title insurance companies are professional institutions 

charged with the public trust; therefore, they owe a duty of reasonable care to third 

parties in the exercise of their professional responsibilities. Recognizing that title 

insurance companies may owe a duty of reasonable care to their clients in certain 

scenarios not before us today, we hold that the duty considerations do not support 

extending the duties owed by title insurance companies to encompass liability to third 

parties in the recording of legal instruments. 

Plaintiffs rely heavily on a recent decision establishing a professional duty of 

care toward third parties under a theory of general negligence. See Affil. FM Ins. Co., 

170 Wn.2d at 453-54. Plaintiffs read Affiliated FM Insurance Co. too broadly: the policy 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

considerations, precedent, logic, justice, and common sense underlying that decision 

are not present here. 

In Affiliated FM Insurance Co., we considered a certified question from the 

Ninth Circuit. The question asked whether a party who has a contractual right to 

operate commercially and extensively on property owned by a nonparty may sue an 

engineering consulting firm in tort for damage to that property when the party and the 

engineers are not in privity of contract. /d. at 447. The dispute arose from a fire aboard 

a train on Seattle's monorail system. /d. at 445. Though the city of Seattle owned the 

property that was physically damaged by the fire, Seattle Monorail Service operated 

the monorail and suffered significant economic damages as a result of the fire. /d. 

Seattle Monorail Services argued that the fire was the result of an engineer's negligent 

design and sued, arguing that the engineers were under a duty to Seattle Monorail 

Services to exercise reasonable care, despite the lack of contractual privity. /d. at 446. 

We found that a duty existed. /d. at 453-54. In doing so, we balanced the risk 

to the physical safety of persons and property arising out of an engineer's work against 

the usefulness of private ordering (e.g., preference for contractual remedies) and 

against the economic burden a duty would place on engineers. See id. at 451-54. 

These policy considerations supported the court's analysis that a duty exists where 

"the interest in safety is significant" and the engineers occupy a position of control 

such that their training, education, and experience place them in the best position to 

prevent harms caused by their work. /d. at 453. We also considered precedent, both 

here and nationally, finding that the "engineers' common law duty of care has long 

been acknowledged in Washington. /d. at 454. 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

These considerations do not weigh in favor of a duty here. There is no 

significant interest in public safety at issue and no concerns for physical safety. We 

therefore reject Plaintiffs' attempts to borrow our professional duty analysis from 

inapposite contexts. 

D. Other jurisdictions do not provide persuasive authority on this issue 

As the Ninth Circuit recognized in its certification order, only two cases have 

considered whether title insurance companies owe a duty of care to third parties: the 

Arizona Court of Appeals in Luce v. State Title Agency, Inc., 190 Ariz. 500, 950 P.2d 

159 (1997) and the California Court of Appeals in Seeley, 190 Cal. App. 3d 844 (1987). 

These decisions reach opposite conclusions, in part because the decisions are based 

on different legal theories and different facts. Due to the difference in legal theories 

and facts, these cases provide limited persuasive reasoning for our consideration in 

this case. 

On facts nearly identical to this case, the Arizona Court of Appeals considered 

whether a title agency owed a professional duty of care to protect a third party from 

foreseeable harm when it gratuitously recorded a deed of trust on behalf of a lender. 

See Luce, 190 Ariz. at 502. In Luce, a general partner signed a deed of trust to a 

lender without the approval of his limited partners, despite the fact that the partnership 

agreement required him to have their approval. /d. at 501. The lender asked State 

Title Agency to insure the policy and to record the deed of trust. /d. State Title issued 

a preliminary title report, provided a lender's policy of title insurance, and gratuitously 

recorded the deed. /d. State Title acknowledged that it read the partnership agreement 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

during this process, and the court inferred that State Title had actual knowledge of the 

agreement's limitations on the general partner's authority. !d. 

The limited partners sued, asserting that State Title owed a duty based on either 

its review of the partnership agreement or its gratuitous recording of the deed of trust. 

!d. at 501-02. The trial court granted summary judgment in favor of State Title, id. at 

501, and the Court of Appeals affirmed. !d. at 504. The Court of Appeals first held that 

there was no professional duty arising out of the foreseeable harm because State Title 

had no contractual relationship with anyone, no special relationship (or indeed, any 

relationship at all) with the injured plaintiff, and no ability to control the behavior of the 

general partner. !d. at 502-03.s 

The facts presented to the Arizona Court of Appeals are virtually identical to 

those in the case before us and reinforce our conclusion here. Further, as discussed 

supra Section ll.c of this opinion, Washington recognizes that foreseeability of harm 

is one of six factors the court considers in deciding whether a duty is owed to a 

nonclient. Though Arizona applied a different legal analysis and did not explicitly 

consider the intent to benefit, the application of the "intent to benefit" factor would have 

resulted in the same conclusion. Their conclusion that no duty exists on analogous 

facts supports our decision here. 

In Seeley, the California Court of Appeals reached the opposite conclusion on 

significantly different facts. See 190 Cal. App. 3d 844. In Seeley, a buyer attempted 

8 The Arizona Court of Appeals also considered whether State Title owed a duty of care under 

Restatement (Second) of Torts § 324A (Am. Law lnst. 1965) and concluded that the section 

was inapplicable. 

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to buy property owned by Seeley. /d. at 850. Seeley was not interested in selling but 

indicated that he would consider a long term lease of the property. /d. at 851. The 

parties negotiated the terms of the lease at length but did not come to an agreement. 

/d. 

Following further negotiations, the buyer unilaterally prepared a "'Memorandum 

of Agreement"' that set forth the terms of a 60-year lease between himself and Seeley. 

/d. The buyer signed the agreement and had his signature notarized; he never 

presented the agreement to Seeley. /d. Instead, the buyer took the agreement to a 

title insurance company. /d. The buyer was a regular customer of the title insurance 

company, which agreed to file the unsigned agreement for recording. /d. The title 

insurance company filed the agreement in a stack of documents insured by their 

company, and the recorder recorded the invalid, unsigned encumbrance on Seeley's 

property. /d. Seeley knew nothing of this agreement. /d. 

The encumbrance affected Seeley's ability to sell his title. /d. at 852. He then 

sued the county recording office for negligent recording; he later amended his 

complaint and sued the title insurance company for negligence. /d. 

The California Court of Appeals considered whether a title insurance company, 

not acting as escrow, may be held liable "for the negligent recordation of a 

nonrecordable document." /d. at 860. In holding that the title company here was liable, 

the court considered six factors: 

"(1) the extent to which the transaction was intended to affect the plaintiff; 

(2) the foreseeability of harm to the plaintiff; (3) the degree of certainty 

that the plaintiff suffered injury; (4) the closeness of the connection 

between the defendant's conduct and the injury suffered; (5) the moral 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

blame attached to the defendant's conduct; and (6) the policy of 

preventing future harm." 

!d. at 861 (quoting Earp v. Nobmann, 122 Cal. App. 3d 270, 290, 175 Cal. Rptr. 767 

(1981 )). As discussed earlier, these factors are comparable to Washington's 

multifactor test in Sterling and support our adoption of that test here. Compare Seeley, 

190 Cal. App. 3d at 861, with Sterling, 178 Wn.2d at 566. 

But there are critical differences between Seeley and this case that limit its 

persuasive value here. Seeley first considered whether the transaction was intended 

to affect a third-party plaintiff. 190 Cal. App.3d at 861. The transaction was intended 

to undermine Seeley's interest in the property. !d. at 861. Conversely, the recordation 

in the instant case was intended to secure Centrum Financial's procured lien; there 

was no intent to benefit or harm CP 111. 9 

Further, the instrument at issue in Seeley was facially invalid. 10 Thus-unlike 

our case-the title insurance company in Seeley did not have to review any other 

documents to know that the document was not recordable. The title insurer in Seeley 

also submitted the facially invalid instrument to a special "'stopped clock"' station. /d. 

at 861 n.7. The county recorder automatically recorded all instruments dropped at that 

station pursuant to a contract with the title insurer that required the title insurer to 

review all documents for recording compliance prior to filing; the title insurer in Seeley 

violated its contract with the recording office by submitting the invalid instrument with 

other, compliant instruments at this station. /d. 

9 In Washington, the factor to be considered is whether the transaction was intended to benefit 

the third party. Sterling, 178 Wn.2d at 566 (emphasis added). 

10 The Arizona Court of Appeals also distinguished the case on this ground. Luce, 190 Ariz. 

at 503 (citing Seeley, 190 Cal. App. 3d at 861 ). 

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These facts played a significant role in the Seeley court's evaluation of factors 

two, four, five, and six. /d. at 861. The court held that these facts made the harm 

foreseeable and that the title insurance company's actions gave the invalid instrument 

a presumption of validity-establishing both a close connection between the act and 

the harm, and rendering the title insurer's conduct worthy of moral blame. /d. at 861-

62. The title insurance company's violation of the recording statutes as well as its 

contract with the county recording office also presented a danger to title stability in the 

future, satisfying California's sixth factor. /d. at 862. 

These considerations are not present here, where a title insurer presented 

facially valid instruments to a county recording office. We discuss the arguments 

against burdening title insurance companies to look behind facially valid instruments 

before recording throughout this memorandum; in sum, placing this burden on title 

insurance companies frustrates Washington's strong public policy of protecting 

property owners through the recording process. These factual differences are 

substantial; Seeley's facts and conclusions are inappositen 

In sum, our precedent supports our conclusion that title insurance companies 

have a duty of care in only limited situations outside of a contractual relationship and 

no duty to third parties in the recording of legal instruments. Plaintiff's argument that 

a duty is created merely because the harm is foreseeable is inconsistent with our 

11 We recognize the slight variations between the Seeley factors and the Sterling factors. 

Compare Seeley, 190 Cal. App.3d at 861, with Sterling, 178 Wn.2d at 566. Due to the 

significant factual differences, we do not address the differences in the factors. We also note 

that the Seeley court expressly denied that it was recognizing a "tort of 'negligent slander of 

title"' or that liability arose "solely from the recordation of the document." 190 Cal. App. 3d at 

862 n.8. 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

jurisprudence; their remaining citations to our case law and to other jurisdictional 

approaches are not instructive to our analysis. Our review of our precedent suggests 

that the answer to the certified question is no. 

Ill. Public policy does not support extending a duty on title companies recording 

legal instruments to search for and disclose potential title defects 

We next consider public policy. "The concept of duty is a reflection of all those 

considerations of public policy which lead the law to conclude that a 'plaintiff's interests 

are entitled to legal protection."' Taylorv. Stevens County, 111 Wn.2d 159, 168, 759 

P.2d 447 (1988) (quoting W. PAGE KEETON, ET AL., PROSSER AND KEETON ON THE LAW 

OF TORTS § 53, at 357 (5th ed. 1984 )). We balance the interests at stake to determine 

whether a title insurance company owes a duty to search for and disclose potential 

title defects when recording legal instruments. Accord Affil. FM Ins. Co., 170 Wn.2d at 

450. 

Plaintiffs encourage us to find a duty, arguing that the Washington state courts 

and legislature have long recognized the important public policy of protecting the 

rights of property owners. We agree that this is an important policy of this State, but 

Plaintiffs are incorrect to suggest that extending a duty of care to title insurance 

companies would further this public policy. Washington has a comprehensive title 

insurance scheme, see generally ch. 48.29 RCW, and extensive recording 

requirements, see generally ch. 65.08 RCW. The purpose of the recording acts is to 

ensure stability and certainty of title to real property. See Ellingsen v. Franklin County, 

117 Wn.2d 24, 28-29, 810 P.2d 910 (1991 ). These recording requirements further this 

purpose by holding recorded interests superior to unrecorded interests. See RCW 

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65.08.070. Thus, these statutory schemes further Washington's policy of protecting 

property rights by encouraging parties to record their interests. 

We evaluate whether finding a duty of care from title insurance companies to 

third parties in the recording of legal instruments fulfills or frustrates these public 

policies. Washington's statutory schemes do not contemplate liability to third parties 

for the negligent recording of titles. See generally ch. 65.08 RCW. In lieu of a statutory 

remedy, Washington protects the valid interests of property owners from improper 

recording through the torts of slander of title and tortious interference with a contract. 12 

Rorvig v. Douglas, 123 Wn.2d 854, 873 P.2d 492 (1994) (slander of title); Calbom v. 

Knudtzon, 65 Wn.2d 157, 396 P.2d 148 (1964) (tortious interference). These torts, 

discussed below, are not within the scope of this opinion. 13 

"Slander of title is defined as: (1) false words; (2) maliciously published; (3) with 

reference to some pending sale or purchase of property; (4) which go to defeat 

plaintiff's title; and (5) result in plaintiff's pecuniary loss." Rorvig, 123 Wn.2d at 859. 

Tortious interference with a contract requires (1) the existence of a valid contractual 

relationship or business expectancy, (2) knowledge of the relationship or expectancy 

on the part of the interferer, (3) intentional interference inducing or causing a breach 

or termination of the relationship or expectancy, and (4) resultant damage to the party 

whose relationship or expectancy has been disrupted. Ca/bom, 65 Wn.2d at 162-63. 

12 Washington residents may also secure their property rights through equitable actions to 

quiet title. See, e.g., Kobza v. Tripp, 105 Wn. App. 90, 93, 18 P.3d 621 (2001 ). 

13 CP Ill does not argue that its proposed duty arises out of a special relationship, such as a 

fiduciary duty, between itself and Chicago Title. Nor do they argue that Chicago Title acted 

maliciously or in bad faith. Plaintiffs assert only that Chicago Title owes them a duty under 

general negligence principles. In rejecting Plaintiffs' argument, our decision does not suggest 

that title insurance companies are not liable for their intentional torts. 

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Neither of these torts is satisfied by simple negligence. Tortious interference 

with a contract requires intentional conduct, and slander of title requires malicious 

conduct. The reason for this rule is clear: if simple negligence were the rule, a party 

claiming an erroneous but good faith interest in real property would not be entitled to 

litigate his claim and have an adjudication without fear of being penalized in damages. 

See, e.g., Ward v. Mid-West & Gulf Co., 1923 OK 972, 97 Okla. 252, 223 P. 170; see 

a/so RESTATEMENT (SECOND) OF TORTS § 773 (AM. LAW INST. 1979) (recognizing 

privilege to assert claim in good faith). These heightened requirements further the 

policy of protecting the rights of property owners by encouraging property owners to 

assert valid property rights while protecting property owners from unlawful claims. 

Thus, we agree with Chicago Title that recognizing liability for the "negligent recording" 

of a facially valid instrument would have a chilling effect on recording documents and 

undermine the goals of RCW 65.08.070. Policy supports our answer of no; to hold 

otherwise would frustrate Washington's policy of protecting property rights through the 

title recording process. 

IV. Considerations of common sense, logic, and justice provide further support 

Our conclusion that title insurance companies do not owe third parties a duty 

of care when recording legal instruments is consistent with Washington's policies and 

precedent. The remaining considerations of common sense, logic, and justice only 

reinforce this conclusion. 

A. Logic and common sense weigh against finding a duty of care 

Logic and common sense require us to reject Plaintiffs' argument that Chicago 

Title's duty of care to CP Ill arises out of Centrum Financial's instruction to Chicago 

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Title directing it to record the leasehold deed of trust only if they are committed to 

providing title insurance. That instruction reads in full: 

You may record the Leasehold [deed of trust]. provided you are 

irrevocably committed to insure the enclosed Mortgage, on a 

mortgagee's extended basis with coverage of $10,000,000.00, as a valid 

SECOND lien against the leasehold property which is the subject of the 

commitment for title insurance issued under the referenced file number, 

subject only to the matters set forth therein. 

2 Appellant's Excerpts of R. at 58. 

This instruction plainly directs Chicago Title to issue an insurance policy on the 

mortgage and to record if it is committed to issue that insurance policy. Chicago Title 

did so: it issued a commitment, insured the lien as valid, and recorded it. Under 

Barstad, Chicago Title did not owe a duty to Centrum Financial (its actual client) in 

issuing the title commitment because the commitment was for Chicago Title's benefit. 

145 Wn.2d at 541. If the lien was not valid, Centrum Financial may have had a claim 

under its insurance policy. But it is impossible to understand how this action and 

agreement between Centrum Financial and Chicago Title created a duty to CP Ill 

when CP Ill could not possibly have relied on the commitment or the insurance policy. 

See ESCA Corp., 135 Wn.2d at 832 (accountant did not owe a duty of care to bank 

absent justifiable reliance on accountant's draft report in making loan). 

As a matter of logic and common sense, CP Ill is not entitled to something for 

not11ing; not having entered into a contract with Chicago Title relating to future 

recordings, CP Ill is not entitled to the benefit of Centrum Financial's bargain with 

Chicago Title. Nor are they entitled to have Chicago Title review operating agreements 

and presumably lengthy loan agreements without a contract for-and paying for-that 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

benefit. These factors reinforce our conclusion that title insurance companies do not 

owe third parties a duty of care when recording legal instruments. 

B. Justice does not support finding a duty to search for and disclose potential 

title defects to third-party nonclients 

Finally, considerations of justice do not support finding a duty of care for the 

recording of these legal instruments. This factor supports placing liability on the party 

best able to mitigate or control the anticipated harm. Cf. Affil. FM Ins. Co., 170 Wn.2d 

at 453-54 (responsibility on party best able to mitigate the risks; balancing engineer's 

ability to design a project safely against an "innocent party who never had the 

opportunity to negotiate the risk of harm"); see also Zabka v. Bank of Am. Corp., 131 

Wn. App. 167, 173, 127 P.3d 722 (2005) (bank owed no duty of care to plaintiffs who 

could have easily taken steps to avoid fraud by bank's customer). Here, the manager 

of CP Ill had signed the documents filed by Chicago Title. When facially valid 

instruments are at issue, justice supports placing liability on the parties to those 

instruments. 

Plaintiffs urge us to hold that justice requires title insurance companies to look 

behind the signatures on the document and police the parties' agreements against 

conflicting corporate documents or loan agreements. This is not a just result, and 

placing this burden on title insurance companies increases their costs, slows the 

recording process, and frustrates public policy, with no appreciable benefit. Here, the 

existence of the invalid liens was the result of an (arguably invalid) agreement 

between CP Ill and Centrum Financial. These liens, which were signed and notarized 

by CP Ill's manager, placed CP Ill in default and caused damages. These actions 

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Centurion Props. Ill, LLC v. Chicago Title Ins. Co., No. 91932-1 

placed CP Ill in default regardless of any action taken by Chicago Title. We decline to 

impose these damages on Chicago Title. 14 

After considering each of the duty factors, we hold that title insurance 

companies do not owe third parties a duty of care when recording legal instruments. 

CONCLUSION 

In light of the foregoing, we answer the certified question as follows: 

Question: Does a title company owe a duty of care to third parties in the 

recording of legal instruments? 

Answer: No. 

14 Plaintiffs' argument that Chicago Title "knew" it was recording invalid liens is unavailing. 

Chicago Title conceded, for the purposes of its summary judgment motion arguing that it did 

not owe Plaintiffs a duty, that it could be charged with knowledge of the GECC loan 

agreement's prohibition on secondary liens because it had access to that information but did 

not check it. Washington recognizes that both actual and constructive notice provides a party 

with knowledge of another person's real property interest. E.g., Miebach v. Colasurdo, 102 

Wn.2d 170, 175-76, 685 P.2d 1074 (1984). Requiring title insurance companies to look behind 

every facially valid instrument because they have documents in their possession that may 

undermine that instrument frustrates public policy, increases costs, and asks title insurance 

companies to police legal instruments entered into by the independent parties. 

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WE CONCUR. 

27