Christenson v. Commonwealth Land Title Insurance Company

AGLA, a land development company, obtained a loan through Western Mortgage Loan Corporation for the development of Falconhurst, a residential subdivision. The loan was secured by a first deed of trust on each Falconhurst lot. AGLA hired Commonwealth Land Title Insurance Company (Commonwealth) (defendant) to act as its escrow agent. AGLA conveyed title of each lot sold to Commonwealth, including a second deed of trust. AGLA relied upon Commonwealth to handle the bookkeeping. AGLA obtained another loan from Capitol Thrift & Loan (Capitol), secured by an interest in several Falconhurst lots. AGLA then obtained financing from Cape Trust, a pension and profit-sharing trust for Capitol employees, to develop another subdivision. After Cape Trust failed to receive sufficient funds to cover AGLA’s debt, AGLA agreed to assign Cape Trust an interest in several Falconhurst lots. AGLA requested that Commonwealth send Cape Trust a list of lots in which AGLA still held a beneficial interest that could be assigned to Cape Trust. The list erroneously included five lots that had already been paid off. A Cape Trust trustee drew up an assignment, including the five lots, which was acknowledged by Commonwealth. The trustee also conducted a phone conversation with a Commonwealth employee, making it clear that Cape Trust would rely on the accuracy of the information provided by Commonwealth. Upon discovery of the error, another Cape Trust trustee, Richard Christenson (plaintiff), brought suit against AGLA and Commonwealth on Cape Trust’s behalf. The trial court dismissed the claim against AGLA but ruled in favor of Cape Trust on the claim against Commonwealth. Commonwealth appealed. The Utah Supreme Court granted certiorari.