Opinion ID: 1036249
Heading Depth: 3
Heading Rank: 1

Heading: Land Title was a general agent of CTIC

Text: A general agent is 'an agent authorized to conduct a series of transactions involving a continuity of service.' Costco Wholesale Corp. v. World Wide Licensing Corp., 78 Wn. App. 637, 646, 898 P.2d 347 (1995) (quoting RESTATEMENT (SECOND) 18 No. 87215-5 OF AGENCY§ 3(1 )). A general agent is to be distinguished from a special agent, or 'an agent authorized to conduct a single transaction or a series of transactions not involving continuity of service.' /d. (quoting RESTATEMENT (SECOND) OF AGENCY § 3(2)). Some factors that aid in determining an agent's status include the number of acts performed, number of persons with whom the agent must deal, and the length of service. /d. (citing RESTATEMENT (SECOND) OF AGENCY§ 3 cmt. a). These factors weigh heavily toward Land Title being CTIC's general agent. Land Title and CTIC were involved in a long-standing relationship; the Agreement had been in force since 1992. Moreover, their relationship was exclusive. Land Title could only issue CTIC's title insurance; it is not licensed to issue insurance on its own. Land Title was appointed only by CTIC and no other insurer, and the Agreement further barred Land Title from issuing assurances by any insurer other than CTIC. On CTIC's end, the insurer conducted no operations in those counties where Land Title sold CTIC insurance policies. Finally, Land Title created business for CTIC every time it did business with anyone. Aside from title insurance, Land Title's only other offering was escrow services, which constituted only 28 percent of Land Title's revenue. Even Land Title's escrow services were sold only in conjunction with title insurance. Thus, every one of Land Title's customers ultimately walked away with a CTIC title insurance policy, whether they bought the insurance directly or were required to purchase it in conjunction with an escrow transaction. Land Title's agency relationship with CTIC was not a discrete, arm's length contract assignment but involved continuous service. Land Title did no business that 19 No. 87215-5 did not result in a sale for CTIC, and within Kitsap, Clallam, Jefferson, and Mason Counties, CTIC did no business other than through Land Title. As far as these four counties were concerned, Land Title was an integrated part of CTIC's operations. Land Title was a general agent of CTIC, and thus under the doctrine of implied authority, could bind CTIC through acts necessary to or customary with those transactions that CTIC authorized. B. Unlawful inducements were customary in Land Title's industry In keeping with the common law, we presume that when a principal gives its agent authority to perform a certain act, the principal also grants implied authority to carry out that act in the usual and customary way. See Johns, 67 Wash. at 406. Here, unlawful inducements were the norm in the title insurance industry, CTIC was aware of the pervasiveness of unlawful inducements in the industry, and CTIC took no affirmative steps to stop Land Title from engaging in unlawful inducements. CTIC should have foreseen Land Title's unlawful inducements, and CTIC is vicariously liable for those acts. In the Washington title insurance industry, vendors of title insurance frequently used unlawful inducements as part of their marketing. Indeed, OIC brought the present enforcement action precisely because unlawful inducements were widespread and pervasive [and] occur[ring] throughout this industry ....  AR at 473-E. CTIC does not challenge OIC's finding that [the title insurance] industry is rife with practices gone haywire. /d. In fact, CTIC itself was directly implicated in numerous transgressions of the anti-inducement laws. 20 No. 87215-5 CTIC appointed Land Title as an agent to solicit applications for its title insurance. Because Land Title sold a CTIC insurance policy with every transaction it engaged in, it solicited for CTIC's title insurance whenever it did any marketing. CTIC cannot have failed to realize that inducements to middlemen were typical in the industry, having engaged in unlawful inducements itself. Yet CTIC did not attempt to dissuade Land Title from engaging in the usual practice of unlawful inducements, outside of boilerplate language in the Agreement. There is no evidence that CTIC exercised its right to investigate Land Title's records or reminded Land Title of its obligation to obey the anti-inducement laws. CTIC cannot now evade liability by willfully blinding itself to Land Title's unlawful marketing practices. CTIC argues that it would be absurd to apply per se vicarious liability every time a statute used the label agent. As CTIC points out, the term agent appears thousands of times in Washington statutes; for example, RCW 23B.05.01 0 requires a corporation to register an agent for accepting service of process. But we do not suggest that all acts of a process agent should be binding on the corporation. There must be some nexus between the act at issue and the prescribed duties of the agent. As we have explained above, there is clearly such a nexus between soliciting applications for insurance and inducing middlemen to direct end-consumers to an insurer. As we held in NFRP, 'solicits' includes inviting, requesting, urging, or advising a person to subscribe to insurance, endeavoring to obtain such a subscription, or approaching a person for the purpose of receiving an application for insurance coverage. 120 Wn.2d at 110-11 (citing Paulson, 292 Or. at 62). This definition requires neither that the soliciting party approach the end-consumer, nor 21 No. 87215-5 that the insurance application be for the party's own insurance. It clearly encompasses a situation where a UTC approaches a middleman for the purpose of receiving an application (from that middleman's consumers) for insurance coverage (provided by the UTC's parent insurer).