E. Shore Title Co. v. Ochse

EASTERN SHORE TITLE COMPANY v. STEVEN J. OCHSE, ET UX.

No. 0999

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2013

December 31, 2015

UNREPORTED

Leahy, ^**Hotten, Eyler, James R., (Retired, Specially Assigned), JJ.

Opinion by Leahy, J.

^**Michele D. Hotten, J., participated in the hearing of this case while still an active member of this Court but did not participate in either the preparation or adoption of this opinion.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

In 2001, Appellees/Cross-Appellants Steven J. Ochse and Shari S. Ochse ("the Ochses") purchased 2890 Mowbray Creek Road in Federalsburg, Maryland, from William O. Henry and Jessie B. Henry ("the Henrys"), who are not parties to the instant litigation. Before purchasing the property, the Ochses obtained title insurance from Chicago Title Insurance Company ("Chicago Title"),¹ and Appellant/Cross-Appellee Eastern Shore Title Company ("ESTC"), an agent of Chicago Title, conducted the title examination and prepared the deed.

When remodeling their property in 2005, the Ochses realized that their deed implied the existence of a right-of-way over their driveway. As a result, in 2007, the Ochses sued the Henrys for reformation of their deed and breach of contract ("the Henry litigation"). In 2008, during the initial stages of the Henry litigation, the Ochses discovered a deed from 1919 that conveyed a 30-foot wide strip of their property in a fee simple determinable interest to Dorchester County. The 1919 deed was not included in ESTC's title examination. This discovery thus prompted the Ochses to become embroiled in the underlying lawsuit, this time against ESTC and Chicago Title, in the Circuit Court for Talbot County, for negligent misrepresentation, breach of contract, and negligence stemming from the improper preparation of their deed and failure to discover the 1919 deed.

After a bench trial, the circuit court found in favor of the Ochses and against ESTC on the breach of contract and negligence claims. The court awarded the Ochses damages equaling the amount of attorney's fees that they had incurred in the Henry litigation; however, the court thereafter granted ESTC's motion to alter and amend the judgment and ordered that the judgment against ESTC be reduced by the amount of attorney's fees to be paid by the Henrys in the Henry litigation. In its timely appeal,² ESTC raises two questions for our review:

I. "Did the circuit court for Talbot County err when it concluded that the Ochses' claims against ESTC were not barred by the statute of limitations?"

II. "Did the circuit court for Talbot County err when it concluded that the Ochses' met their burden of proving that ESTC deviated from the standard of care and breached its contract with the Ochses?"

In their timely cross-appeal,³ the Ochses raise three additional questions for our review, which we have rephrased and subdivided as follows:

I. Did the circuit court have the post-trial authority to credit ESTC with payments made to the Ochses by a third party in an unrelated case when ESTC did not file pleadings seeking affirmative relief in the form of credits, offsets, payments or the like?

II. Did the circuit court have the post-trial authority to credit ESTC with payments made to the Ochses by a third party in an unrelated case when ESTC was adjudicated negligent and the payments made by the third-party were pursuant to an attorneys' fee provision in anunrelated residential real estate contract between only the Ochses and the third party?

III. Did the circuit court correctly compute the damages?

IV. Did the circuit court err in entering a final judgment that made the final amount of damages to be owed by ESTC contingent on an anticipated decision in a separate case tried in another circuit court subject to an ongoing appeal?

As to ESTC's appeal, we affirm the judgments of the circuit court. We conclude that the circuit court did not err in concluding that the Ochses did not have notice of their claims against ESTC until 2008 and, therefore, the statute of limitations does not bar the Ochses' breach of contract and negligence claims. We further conclude that the circuit court did not err in finding that ESTC breached the standard of care for title examination. As to the cross-appeal, however, we remand for the circuit court to render two findings regarding damages: (1) a determination of whether ETSC's wrongful conduct proximately caused the Ochses to engage in litigation with the Henrys; and (2) a clarification of whether the damages stem from negligence or breach of contract, and if the damages stem from negligence, the court must invoke the collateral source rule and permit recovery by the Ochses from ESTC.

BACKGROUND

The Ochses' case against ESTC and Chicago Title proceeded to a four-day bench trial before the Circuit Court for Talbot County beginning on July 9, 2012. The testimony and documents entered into evidence at trial reflect as follows.

A. Chain of Title to 2890 Mowbray Creek Road⁴

Tracing the chain of title to the Ochses' property back to the early 1900s, we begin with Henry B. Messenger+⁵ who acquired approximately 150 acres of land in Dorchester County via three separate deeds recorded on October 29, 1902, November 21, 1914, and March 17, 1916, respectively. In 1919, Messenger conveyed a strip of land "thirty feet wide its entire length" in a fee simple determinable interest to the County Commissioners of Dorchester County for the purpose of making a new county road.⁶ The deed for this conveyance—which is the deed at the heart of the instant litigation—was recorded on May 27, 1919 ("1919 deed"), yet as we shall see, it was not discovered by the parties on appeal until 2008.

Between 1921 and 1923, Messenger recorded various documents relating to his property, including two mortgages, a conveyance, a right-of-way to a telephone company, and a contract for the sale of timber. In 1926, Messenger defaulted on his mortgage payments, and the bank foreclosed on his property. This foreclosure ultimately resulted in the property being sold, in part, to a third party, with the remainder being sold back to Messenger. Messenger was thereafter delinquent in paying taxes, and by a deed datedNovember 23, 1929, a tax sale of the Messenger property occurred. The following year, the property sold in the tax sale was conveyed back to Messenger by a deed dated June 17, 1930; notably, and for reasons that are unclear, this deed was not recorded until May 16, 1949.

Meanwhile, from 1929 to 1966, Messenger recorded several mortgages, a right-of-way easement, an oil and gas lease, and conveyances to other landowners. Of particular relevance to this litigation was Messenger's 1966 conveyance of two parcels to the Mayor and Council of Federalsburg for its conservation efforts along Marshyhope Creek, which adjoined his property. This deed, dated August 30, 1966, references two plats that depict a roadway labeled as "county road" within the vicinity of the Messenger property ("1966 plats"). In 1972, Messenger conveyed approximately 35 acres to R.T.R., Inc.

The Henrys acquired the 35-acre property from R.T.R., Inc. by a deed dated March 18, 1987. About eleven years later, pursuant to a confirmatory easement and maintenance agreement dated February 2, 1998, the Mayor and Council of Federalsburg—which had acquired property from Messenger in 1966^—conveyed an easement to the Henrys permitting them to use and maintain the docking facilities along Marshyhope Creek⁷. This agreement references a plat (significant in the instant litigation) recorded earlier in 1998 ("1998 plat") depicting a road labeled as "driveway" traversing the Henrys' property. The Henrys then subdivided their property to create a sellable improved 4.791-acre parcel—now known as 2890 Mowbray Creek Road, Federalsburg, Maryland. The subdivided lot included the area depicted as a driveway on the 1998 plat. The Henrys retained the remaining balance of their property. Dorchester County approved this subdivision on July 22, 1998.

B. The Ochses Purchase 2890 Mowbray Creek Road

The Henrys listed 2890 Mowbray Creek Road, and on September 27, 2001, the Ochses entered into a contract of sale for purchase of the property for $325,000.00. The contract provided that "[t]itle to the Property . . . shall be good and merchantable, free of liens and encumbrances except as specified herein" and that the prevailing party to any litigation between the parties would be entitled to reasonable attorney's fees. In conjunction with the purchase, the Ochses obtained title insurance from Chicago Title in the amount of $325,000.00. The Ochses also hired ESTC, an agent of Chicago Title, which thereafter performed the title search for the Ochses, prepared a "title insurance binder" containing the results of the search, drafted the deed, and participated in the Ochses' real estate closing.

On December 14, 2001, the Henrys deeded the property in fee simple to the Ochses as tenants by entireties. Notably, the deed indicated that the property was

SUBJECT, HOWEVER, to the rights of others legally entitled to the use of a 'Driveway', for purposes of ingress, egress and regress over Lot 1, as said 'Driveway' is more fully designated and located on the above referenced Plat recorded in Plat Liber No. 46, folio 108B.

According to the Ochses' testimony at trial, when they asked what this language meant during their real estate closing, Veronica Wainright, the general manager at ESTC, advisedthat the language referred to a utility easement, although Ms. Wainright testified that she did not make this suggestion. Mr. Ochse maintained at trial that no one ever told them there might be a right-of-way on the property.

C. Questions About the Driveway Language

The Ochses testified that in 2005, they planned...