Opinion ID: 1596665
Heading Depth: 1
Heading Rank: 7

Heading: whether any of the defendants are liable in tort to muhlenkort?

Text: The trial court found that Abstractor was liable to Muhlenkort for professional negligence. Defendants contend that the court did not properly apply the test of foreseeability in determining whether Abstractor owed Muhlenkort a duty. We have previously recognized the tort of professional negligence beyond the strictures of privity of contract. Mid-Western Elect., v. DeWild Grant Reckert, 500 N.W.2d 250 (S.D.1993). However, to recover on a theory of professional negligence one must prove duty, breach of duty, causation, factual and proximate and damages. Lien v. McGladrey & Pullen, 509 N.W.2d 421, 423 (S.D.1993). Negligence is the breach of a duty owed to another, the proximate cause of which results in an injury. Mark, Inc. v. Maguire Ins. Agency, Inc., 518 N.W.2d 227, 229 (S.D.1994). To establish a duty on the part of the defendant, it must be foreseeable that a party would be injured by the defendant's failure to discharge that duty. Mid-Western Elect., 500 N.W.2d at 254. Whether it is foreseeable that a third party lien creditor would be injured by an abstractor's failure to note the existence of a lien is one of first impression. [3] We note that decisions of other jurisdictions which extended an abstractor's negligence liability to a third party not in privity of contract involved reliance on the part of the third party. See, Williams v. Polgar, 391 Mich. 6, 215 N.W.2d 149 (1974) (abstractor liable to third party who relied on erroneous abstract of title); 1st American Title Ins. Co. v. 1st Title Serv. Co., 457 So.2d 467 (Fla.1984) (abstractor liable to third party whom it knows or expects will rely on the abstract of title); Stagen v. Stewart-West Coast Title Co., 149 Cal.App.3d 114, 196 Cal.Rptr. 732 (2 Dist. 1983) (no liability for title company where third party did not rely on abstract of title); see also, William B. Johnson, Annotation, Negligence in Preparing Abstract of Title as Ground of Liability to One Other Than Person Ordering Abstract, 50 A.L.R.4th 314 (1986). We agree that to hold an abstractor liable in tort to a third party there must be some reliance on the part of the third party and find the Florida Supreme Court's analysis of the scope of an abstractor's duty and negligence liability persuasive: [W]hen an abstract is prepared in the knowledge or under conditions in which an abstracter should reasonably expect that the employer is to provide it to third persons for purposes of inducing those persons to rely on the abstract as evidence of title, the abstracter's contractual duty to perform the service skillfully and diligently runs to the benefit of such known third parties. 1st American Title Ins., 457 So.2d at 472. We think that analysis equally applies to a title insurance policy issued by an Abstractor. Here the trial court found that Muhlenkort had not relied on the title policies and we agree. Muhlenkort has not established that she relied on or was a beneficiary of the abstract of title or title insurance policies. The parties stipulated that the title policies were not supplied to Muhlenkort, that she did not communicate with representatives of the Abstractor or Insurer prior to the issuance of the policies and that she was not a named insured on the policies. Even more important is that the omission of Muhlenkort's judgment lien from the title insurance policy did not extinguish her lien on the property. Muhlenkort knew on July 22, 1986 of the omission of her lien on the title policy but did not seek to foreclose on it. Furthermore, there is no evidence that Abstractor had knowledge of or should have known that Muhlenkort, as a third party creditor, would be supplied with or relied on the title policy issued to the Trust and the bank. In addition, it simply was not foreseeable that Muhlenkort would let her lien expire even though her judgment lien was valid four more years after she learned of the omission in the title policy. Therefore, Abstractor owed no duty to Muhlenkort and is not liable to her under a negligence theory. We conclude that the trial court erred as a matter of law and reverse its decision on this issue. Because we conclude that the defendants are not liable to Muhlenkort under the theory of negligence we need not address issues four, five and six. MILLER, C.J., SABERS and KONENKAMP, JJ., and WUEST, Retired Justice, concur. TRANDAHL, Circuit Judge, for AMUNDSON, J., disqualified. GILBERTSON, J., not having been a member of the Court at the time this case was submitted, did not participate.