Court Opinion

ID: 6479178
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:50:35.600073+00
Date Added: 2024-06-11T14:59:07.873762
License: Public Domain

GERBER, Judge,
dissenting.
I respectfully dissent because, in my opinion, under the circumstances of this case, State Title owed a duty of care to Appellants. As the majority notes, Arizona courts have held that a professional may have a duty to protect foreseeable third parties from harm, and our Supreme Court has advocated a broad view of the class of risks and class of victims that are foreseeable. See Donnelly Constr. Co., 139 Ariz. at 187, 677 P.2d at 1295.
The majority sees this case like Ferguson, 171 Ariz. at 385, 831 P.2d at 384, in which we held that an insurance agent who failed to recommend an umbrella liability policy to the owner of a school did not owe a duty to a student injured at the school. It is more analogous, however, to Burkons, 168 Ariz. at 347-48, 354, 813 P.2d at 712-13, 719, where the escrow agent in a real estate sales transaction knew or had reason to know of fraud committed by the buyer. There our Supreme Court held that, while an escrow agent is not required to actively search for fraud, “when the agent is aware of facts and circumstances that a reasonable escrow agent would perceive ‘as evidence of fraud’ there is duty to disclose.” Although that escrow agent’s duty to disclose arose from a contractual relationship, Burkons resembles Appellants’ ease because of circumstances which “raised the flag of suspicion quite high.”
In Seeley v. Seymour, 190 Cal.App.3d 844, 237 Cal.Rptr. 282 (1987), the California Court of Appeal held a title insurance company liable to a landowner for transmitting an invalid memorandum of lease to the county recorder’s office as a client courtesy. The court found a duty because the memorandum was intended to affect the owner, it foresee-ably would impair his ability to sell the property, and the injury was clear and closely related to the recording of the memorandum. The court noted that the recording function has taken on something of a public character, implying that public policy favors the imposition of liability.
Similarly here, the recording of the deed of trust imposed a record lien against the partnership’s property and foreseeably affected the partnership’s and Appellants’ property interests. Because title companies participate in the vast majority of real estate transactions in this state, they are chargeable with a public trust regarding such property transactions. State Title’s frank admission that recordings such as this deed of trust are done as “a service to the public by title companies” recognizes this charge.
The majority attempts to distinguish Seeley because the recorded instrument in Seeley was void on its face and because the Seeley title company was required by contract to review documents to ensure their validity. However, the fact that the recorded deed of trust was facially valid only increases the likelihood that its recording would eventually harm Appellants. The Seeley title company’s contract to review documents for recording compliance is irrelevant here because there is no argument that the deed of trust fell below standards for recordability.
Given these factors, I would reverse.