When do title insurers face tort liability as abstractors? Walker v. Anderson-Oliver Title Insurance Explained

In Walker v. Anderson-Oliver Title Insurance Agency, the Utah Court of Appeals clarified when title insurance companies face tort liability for their title examination activities, distinguishing between the functions of title insurers and abstractors.

Background and Facts

Walker owned property adjacent to the Bank Property and operated a drug store for decades. In 1969, he recorded Access Deeds purporting to grant himself an easement over the Bank Property for access and parking. When the Bank Property was sold in 2003, Anderson-Oliver Title Insurance Agency conducted a title search and discovered the Access Deeds. After analysis, the title company determined the Access Deeds were invalid because Walker was not the record owner when he recorded them. The company chose not to list the Access Deeds as exceptions in the commitment for title insurance or the final policy, effectively insuring over them.

Key Legal Issues

The central issue was whether title insurers who conduct title searches and make legal determinations about discovered documents assume the duties and tort liability of abstractors. Walker argued the defendants breached abstractor duties by failing to disclose the Access Deeds, and alternatively claimed they violated industry standards supporting claims for negligence and tortious interference.

Court’s Analysis and Holding

The Court of Appeals affirmed summary judgment for the title company. Drawing on Culp Construction Co. v. Buildmart Mall and Chapman v. Uintah County, the court emphasized that title insurers and abstractors serve different functions. Abstractors provide comprehensive title histories, while title insurers determine coverage terms and insure against specified risks. The court held that making legal determinations during the statutorily required “reasonable search and examination” does not transform title insurers into abstractors absent unusual circumstances where they assume duties distinct from issuing insurance.

Practice Implications

This decision reinforces the limited circumstances under which title companies face tort liability. Practitioners should recognize that routine title examination activities, including legal conclusions about discovered documents, generally fall within the insurer’s statutory role rather than creating abstractor duties. However, title companies may still face tort liability when they assume responsibilities beyond issuing insurance, such as agreeing to specific disclosure obligations or taking on duties as escrow agents.