Jimerson v. First American Title Insurance Co.

Glen Edwin Jimerson (plaintiff) entered into a purchase and sales agreement to convey property located in Colorado to a buyer through a general-warranty deed. The agreement contained a provision that Jimerson would convey good title to the Colorado property. Jimerson then engaged First American Title Insurance Co. (First American) (defendant) to issue a title commitment, and ultimately a title-insurance policy. The terms of the title commitment, paid for by Jimerson as seller, included a provision that the First American’s only obligation was to issue the policy to the buyer. The buyer and the lender were the only insureds named on the title policy. Approximately one year later, Jimerson’s brothers filed a claim against the buyer, alleging they also had an interest in the property. The buyer, through First American, claimed that Jimerson had violated the warranties in the deed by not providing them with quiet title. Jimerson filed a cross-complaint against First American, alleging negligence because its title search did not raise any potential third-party interests in the property. First American filed a motion for summary judgment, claiming there was no contractual relationship between Jimerson and First American, because Jimerson was not the insured. The trial court held that First American did not owe a duty to Jimerson. Jimerson appealed, alleging that his payment for the title insurance created a contract with First American. Jimerson further asserted that even if First American did not owe him a contractual duty, it was liable for negligent misrepresentation for not identifying the third-party interests asserted by Jimerson’s brothers.