Title: Barry I. Hechtman v. National Title Insurance Of New York
Citation: N/A
Docket Number: SC00-2242
State: Florida
Issuer: Florida Supreme Court
Date: February 6, 2003

Supreme Court of Florida
____________
No. SC00-2242
____________
BARRY I. HECHTMAN, et al.,
Petitioners,
vs.
NATIONS TITLE INSURANCE OF NEW YORK, et al., 
Respondents.
[February 6, 2003]
QUINCE, J.
We have for review a decision on the following question certified by the
Third District Court of Appeal to be of great public importance:
WHETHER § 627.792, FLA. STAT. (1997), WHICH PROVIDES
THAT AN INSURER IS LIABLE FOR THE MISFEASANCE OF A
"LICENSED TITLE INSURANCE AGENT" APPLIES TO A TITLE
INSURANCE AGENT WHO IS AN ATTORNEY AND IS
THEREFORE EXEMPT FROM LICENSING AS A TITLE
INSURANCE AGENT BY THE DEPARTMENT OF INSURANCE
UNDER § 626.8417, FLA. STAT. (1997).
Hechtman v. Nations Title Ins. New York, Inc., 767 So. 2d 505, 509 (Fla. 3d DCA
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2000).  We have jurisdiction.  See art. V, § 3(b)(4), Fla. Const.  For the reasons set
forth below, we answer the certified question in the negative and find that section
627.792, Florida Statutes (1997), does not apply to attorneys who are acting as title
insurance agents if those attorneys are exempt from the licensing requirements of
section 626.8417, Florida Statutes (1997).
Barry and Brenda Hechtman brought suit against Nations Title Insurance of
New York (Nations Title) and Commonwealth Land Title Insurance Company 
(Commonwealth), pursuant to section 627.792, Florida Statutes (1997), alleging that
Nations Title and Commonwealth were liable to them for the defalcation of funds
committed by a licensed Florida attorney who was serving as a title insurance agent
on behalf of the insurance companies.  The attorney held the Hechtmans’ funds in
his attorney escrow account and subsequently misappropriated the funds for his
own use.  Section 627.792 makes title insurers liable for the defalcation of funds by
their licensed title agents if the funds are held in trust pursuant to section 626.8473,
Florida Statutes (1997).  Specifically, section 627.792 provides as follows:
A title insurer is liable for the defalcation, conversion, or
misappropriation by a licensed title insurance agent of funds held in
trust by the agent pursuant to s. 626.8473.  If the agent is licensed by
two or more title insurers, any liability shall be borne by the title insurer
upon which a title insurance binder, commitment, policy, or title
guarantee was issued prior to the illegal act.  If no binder,
commitment, policy, or guarantee was issued, each title insurer
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represented by the agent at the time of the illegal act shares in the
liability in the same proportion that the premium remitted to it by the
agent during the 1-year period before the illegal act bears to the total
premium remitted to all title insurers by the agent during the same time
period. 
Generally, however, attorneys licensed to practice law in Florida who serve
as title insurance agents are statutorily exempt from the title insurance licensing
requirements.  See § 626.8417(4)(a), Fla. Stat. (1997).  Attorneys who are exempt
from the title insurance licensing requirements may act as escrow agents and hold
funds in their attorney trust accounts pursuant to Rules Regulating the Florida Bar
4-1.15, 5-1.1, and 5-1.2.  Ordinarily, a nonattorney may not act as an escrow agent;
however, the nonattorney may do so pursuant to section 626.8473 if he or she is
licensed as a title insurance agent under section 626.8417.  In most cases, attorneys
act as title insurance agents pursuant to their license to practice law, not by virtue of
a license issued by the Department of Insurance; therefore, they hold the insured’s
funds in escrow pursuant to the Rules Regulating the Florida Bar.   
The Hechtmans argue that it is irrelevant whether the title insurance agent is
acting pursuant to a license to practice law or pursuant to a license issued by the
Department of Insurance, and it does not matter if their funds were held in escrow
pursuant to the authority granted by section 626.8473 or the authority of the Rules
Regulating the Florida Bar.  The Hechtmans maintain that the intent of section
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627.792 is to hold a title insurer liable for the defalcation of funds held in escrow by
any of its agents, regardless of the authority under which the agent acts.
The question presented here is whether the Legislature intended to include in
section 627.792 title insurance agents not licensed under chapter 627, Florida
Statutes (1997).  Legislative intent is the polestar by which a court must be guided
in interpreting the provisions of a law.  See City of Clearwater v. Acker, 755 So. 2d
597 (Fla. 1999).  In ascertaining the legislative intent, a court must consider the plain
language of the statute, give effect to all statutory provisions, and construe related
provisions in harmony with one another.  See M.W. v. Davis, 756 So. 2d 90 (Fla.
2000); Hawkins v. Ford Motor Co., 748 So. 2d 993 (Fla. 1999).  To that end, we
are required to consider and give meaning to the Legislature’s reference to section
626.8473 in section 627.792 and give meaning to the language which limits a title
insurer’s liability for defalcation of funds by its agents to those “funds held in trust
by the agent pursuant to § 626.8473."  § 627.792, Fla. Stat. (1997).  Not all title
insurance transactions involve funds held in trust pursuant to section 626.8473, and
if the funds are not held in trust pursuant to section 626.8473, we cannot impute
liability to the insurer.  The language of the statute, as well as the legislative intent, is
clear in this regard.  
The Hechtmans argue that the word “licensed,” which is used in the first two
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sentences of section 627.792, has a different meaning in each sentence.  The
Hechtmans claim that in the first sentence of the statute, the word “licensed” means
licensed by the Department of Insurance, but in the second sentence, the word
“licensed” should be read in a broad sense to mean appointed or given permission
to act by the title insurers.  Giving the word “licensed” two different meanings
within the same statute, the Hechtmans argue, is the only logical way to effectuate
the Legislature’s intent to protect the public from any title insurance agent who
misappropriates funds from a trust account.  The Hechtmans further argue that
there is no rational basis to rule otherwise and to do so would be a violation of their
equal protection rights.  We disagree.  
First, if we were to read the statute in the manner proposed by the
Hechtmans, we would necessarily be required to ignore the language in the first
sentence of the statute that limits liability for the defalcation of only those funds
held in trust pursuant to section 626.8473.  It is an elementary principle of statutory
construction that significance and effect must be given to every word, phrase,
sentence, and part of the statute if possible, and words in a statute should not be
construed as mere surplusage.  See  Hawkins v. Ford Motor Co., 748 So. 2d 993
(Fla. 1999).  
Second, in the absence of a fundamental right or a protected class, equal
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protection requires only that a distinction which results in unequal treatment bear
some rational relationship to a legitimate state purpose.  See Duncan v. Moore, 754
So. 2d 708 (Fla. 2000).  In this case, there is no fundamental right or protected
class involved.  To properly apply the rational basis test, we must determine (1)
whether the statute serves a legitimate governmental purpose, and (2) whether it was
reasonable for the Legislature to believe that the challenged classification would
promote that purpose.  See State Dep't. of Ins. v. Keys Title & Abstract Co., 741
So. 2d 599, 602 (Fla. 1st DCA 1999) (citing Western & Southern Life Ins. Co. v.
State Bd. of Equalization, 451 U.S. 648 (1981); Minnesota v. Clover Leaf Creamery
Co., 499 U.S. 456 (1981)).  As the First District stated in Keys Title, "[i]t would be
proper to sustain an equal protection challenge to a statute only if ‘the Legislature
could not have had any reasonable ground for believing that there were public
considerations justifying the particular classification and distinction made.’"  741
So. 2d at 602 (quoting North Ridge General Hosp. v. City of Oakland Park, 374
So. 2d 461, 465 (Fla. 1979)).
In this case, the Legislature reasonably distinguished between those title
insurance agents doing business pursuant to a license issued by the Department of
Insurance and those doing business pursuant to a license to practice law.   The
Department of Insurance does not have the authority to regulate attorneys and may
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not oversee or enforce the trust account requirements mandated by the Rules
Regulating the Florida Bar.  Furthermore, to allow the Department of Insurance
access to attorney trust accounts would jeopardize the attorney-client privilege and
infringe upon this Court’s authority to regulate the practice of law in Florida. 
Additionally, victims of those lawyers who are exempt from the Department of
Insurance licensing requirements, such as the Hechtmans, may seek compensation
from the Clients’ Security Fund offered through The Florida Bar.  
It is reasonable to conclude that by enacting section 627.792, the Legislature
intended to create an avenue of relief for victims of nonattorney title insurance
agents that otherwise did not exist.  It is not within our authority to pass upon the
wisdom of the Legislature’s classification.  We must only consider whether there
are any reasonable facts to support the classification attempt made by the
Legislature.  See Gallagher v. Motors Ins. Corp., 605 So. 2d 62, 69 (Fla. 1992)
(holding that an equal protection challenge must be rejected if there is a “plausible
reason for the classification”); Lewis v. Mathis, 345 So. 2d 1066 (Fla. 1977); Keys
Title, 741 So. 2d at 602 (citing North Ridge General Hosp. v. City of Oakland
Park, 374 So. 2d 461 (Fla. 1979).  In this case, section 627.792 serves the
legitimate governmental purpose of providing an avenue of civil relief for a certain
class of victims of defalcation, conversion, or misappropriation of funds held in
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escrow accounts pursuant to section 626.8473, as this particular class would not
otherwise have a civil remedy.  Further, it is reasonable for the Legislature to believe
that exempting title insurers from liability for certain acts committed by attorneys
who act pursuant to their license to practice law would promote that purpose
because the victims of these attorneys have other avenues for relief.
We acknowledge Judge Schwartz’s dissent in the court below.  Judge
Schwartz views section 626.792 as holding title insurers responsible for the
defalcation of funds by any agent acting on the insurers’ behalf, be it an agent
licensed by the Department of Insurance or an attorney authorized by virtue of a
license to practice law.  We disagree, however, and find that the plain language of
the statute indicates that the statute is not intended to protect all insureds, but only
those who obtain title insurance through agents licensed under 626.8417. 
For the reasons set forth above, we answer the certified question in the
negative and approve the Third District’s decision.
It is so ordered.
ANSTEAD, C.J., WELLS, PARIENTE, and LEWIS, JJ., and SHAW and
HARDING, Senior Justices, concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
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Application for Review of the Decision of the District Court of Appeal - Certified
Great Public Importance 
Third District - Case No. 3D99-1597
(Dade County)
Hendrik G. Milne of Aballi, Milne, Kalil & Garrigo, P.A., Miami, Florida,
for Petitioners
James S. Telepman of Cohen, Norris, Scherer, Weinberger & Wolmer, North Palm
Beach, Florida; and Robert A. Cohen of Cohen/Fox, P.A., Miami, Florida,
for Respondents