Chemical Bank v. Title Services

Mears Park Central Limited Partnership (Central) was the developer of a plaza. Chemical Bank (Chemical) (plaintiff) agreed to make a substantial loan to Central. The parties agreed that some of the loaned funds would go to a tenant in the plaza named Fitzgerald’s of St. Paul, Inc. (Fitzgerald). As security, Fitzgerald gave Chemical a security interest in certain collateral (the Fitzgerald collateral). Fitzgerald represented that it owned the Fitzgerald collateral free of liens. Before entering into the loan transaction, Chemical required Central to produce Uniform Commercial Code (UCC) search results regarding any relevant liens, which, in relevant part, included a search involving Boisclair Corporation (Boisclair). Central hired Title Services, Inc. (TSI) (defendant) to perform the search. Only the Secretary of State had access to the records, so TSI submitted a UCC form to the Secretary of State requesting a search of records identifying Boisclair as the debtor. The Secretary of State performed the search and certified on the bottom of the form that the search revealed only one financing statement (Financing Statement One), which was filed by Aslesen Company (Aslesen). Chemical required Central to obtain a termination statement from Aslesen revoking the Financing Statement One lien. However, Aslesen had filed another financing statement covering the Fitzgerald collateral (Financing Statement Two), which listed the debtor as “Bois Clair.” Aslesen sued Boisclair to foreclose on its Financing Statement Two lien. Chemical intervened and eventually settled with Aslesen by paying Aslesen $120,000 in exchange for release of its lien. Chemical then sued TSI and alleged that TSI failed to properly conduct the searches for liens against Boisclair. TSI moved for summary judgment.