WINKLER v. LAWYERS TITLE Ins. Corp.

41 So.3d 414

Bernard WINKLER, et al., Appellants, v. LAWYERS TITLE INSURANCE CORP., etc., Appellee.

No. 3D09-2905.

District Court of Appeal of Florida, Third District.

August 4, 2010.

COPYRIGHT MATERIAL OMITTED.

Conroy, Simberg, Ganon, Krevans, Abel, Lurvey, Morrow & Schefer and Lawrence S. Gordon, Hollywood, for appellants.

Cohen Fox and Robert A. Cohen and Mario M. Ruiz, Miami; Holland & Knight and Rodolfo Sorondo, Jr., and Rebecca M. Plasencia, Miami, for appellee.

Before SUAREZ, ROTHENBERG, and LAGOA, JJ.

LAGOA, J.

Bernard Winkler, Lynn J. Winkler, Bernardo J. Del Riesgo, Vivian Del Riesgo, Jaime L. Ortiz and Carmen A. Gallo (collectively "appellants") appeal a final declaratory judgment finding that the appellee, Lawyers Title Insurance Corporation ("Lawyers Title"), was not liable under section 627.792, Florida Statutes (2009), for the alleged misappropriation of the appellants' escrow deposits by Coastal Title Services, Inc. ("Coastal"). Because substantial record evidence supports the trial court's findings that Coastal was not the designated title agent for any of the appellants' transactions and that the appellants' escrow deposits did not constitute funds held in trust pursuant to section 626.8473, Florida Statutes (2009), we affirm.

I. FACTUAL AND PROCEDURAL HISTORY

Coastal was a licensed title insurance agency authorized to issue title insurance commitments, policies and endorsements as an agent for, and on behalf of, Lawyers Title. The principal of Coastal was Ira Hatch, a Florida attorney who has since been disbarred. Hatch was also a "manager" of Lake Buena Vista Vacation Resort LC (the "developer"), which was the developer of the San Marco Resort Condominium Project (the "project") in Orlando, Florida.

In the fall of 2004 and spring of 2005, the appellants entered into separate Reservation Agreements with the developer. Pursuant to the terms of the Reservation Agreements, each couple paid a $15,000 deposit to Coastal, as escrow agent, to reserve a condominium unit at the project. Subsequently, in the fall of 2006, the appellants executed Purchase Agreements for their respective condominium units, and made initial contract deposits payable to Coastal as escrow agent. The project had an anticipated completion date of April 2009. However, construction never began, and the developer eventually terminated the project. Neither the developer nor Coastal returned the escrow deposits to the appellants. The appellants then sought reimbursement for their escrow deposits from Lawyers Title pursuant to section 627.792, which imposes liability upon a title insurer for the defalcation of funds by their licensed title agents if the funds are held in trust pursuant to section 626.8473.

Section 627.792, provides as follows:

A title insurer is liable for the defalcation, conversion, or misappropriation by a licensed title insurance agent or agency of funds held in trust by the agent or agency pursuant to s. 626.8473. If the agent or agency is an agent or agency for two or more title insurers, any liability shall be borne by the title insurer upon which a title insurance commitment or policy was issued prior to the illegal act. If no commitment or policy was issued, each title insurer represented by the agent or agency at the time of the illegal act shares in the liability in the same proportion that the premium remitted to it by the agent or agency during the 1-year period before the illegal act bears to the total premium remitted to all title insurers by the agent or agency during the same time period.

(emphasis added). Section 626.8473, in turn, provides in relevant part as follows:

(1) A title insurance agent may engage in business as an escrow agent as to funds received from others to be subsequently disbursed by the title insurance agent in connection with real estate closing transactions involving the issuance of title insurance binders, commitments, policies of title insurance, or guarantees of title, provided that a licensed and appointed title insurance agent complies with the requirements of s. 626.8417, including such requirements added after the initial licensure of the agent.

(2) All funds received by a title insurance agent as described in subsection (1) shall be trust funds received in a fiduciary capacity by the title insurance agent and shall be the property of the person or persons entitled thereto.

(emphasis added).

Lawyers Title filed a complaint seeking a declaratory judgment that it was not liable under section 627.792 for Coastal's alleged misappropriation of the appellants' escrow deposits. The appellants counterclaimed for a declaratory judgment that Lawyers Title was liable under the statute. The matter proceeded to a non-jury trial.

Lawyers Title argued below that the escrow deposits that Coastal received from the appellants were not trust funds as defined by subsection 626.8473(1) because Coastal was never designated the closing agent for the appellants' transactions, and the deposits were received in Coastal's limited capacity as escrow agent and not in connection with a real estate closing transaction involving the issuance of a title commitment or policy. The appellants, on the other hand, argued that Coastal was the closing agent because of various oral representations made by the developer and Coastal and thus the escrow deposits were trust funds as defined by subsection 626.8473(1). The appellants also asserted that subsection 626.8473(1) permits a title agent to receive escrow deposits as an escrow agent only when those deposits are contemplated to be used at closing for the issuance of title.

The trial court found that Coastal was never designated as the title issuing agent for any of the appellants' transactions. As a result, "[b]ecause Coastal Title had not been designated as the title issuing agent in these transactions, these deposits did not constitute funds held in trust pursuant to section 626.8473, Florida Statutes. Therefore, section 627.792, Florida Statutes does not apply to these deposits, and Lawyers Title is not liable to replace them." This appeal ensued.

II. ANALYSIS

In a non-jury trial, the court's findings of fact come to the appellate court with a presumption of correctness, and those findings will not be disturbed unless the appellant can show that they are clearly erroneous. Tropical Jewelers Inc. v. Bank of Am., N.A., 19 So.3d 424, 426 (Fla. 3d DCA 2009); Universal Beverages Holdings, Inc. v. Merkin, 902 So.2d 288, 290 (Fla. 3d DCA 2005). A factual finding made by a court in a non-jury trial is clearly erroneous only when there is no substantial evidence to sustain it, it is clearly against the weight of the evidence, or it was induced by an erroneous view of the law. In re Donner's Estate, 364 So.2d 742, 748 (Fla. 3d DCA 1978); Oceanic Int'l Corp. v. Lantana Boatyard, 402 So.2d 507, 511 (Fla. 4th DCA 1981). In addition, "it is for the trial court who heard the testimony below, not this [appellate] court, to evaluate and weigh the credibility of witness testimony and other evidence...