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Lawyers Title Insurance Corp. v. Groff9/17/2002
agent is responsible to the principal for the conduct of a subservant or other subagent with reference to the principal's affairs entrusted to the subagent"). "A subagent is a person appointed by an agent empowered to do so, to perform functions undertaken by the agent for the principal, but for whose conduct the agent agrees with the principal to be primarily responsible." Id. ยง 5. In the agency agreement, the defendant agreed to be responsible only for his own acts and omissions, not for the acts and omissions of others. Thus, the title abstractor was not the defendant's "subagent," and section 406 of the Restatement (Second) of Agency does not apply.
II. Breach of Contract Claim
The court ruled that the defendant breached paragraph 2(a) of the agency agreement by issuing a title insurance policy that failed to except a prior recorded mortgage. Paragraph 2(a) provided:
2. Duties of Agent. Agent shall: (a) Receive and process applications for title insurance in a timely, prudent and ethical manner with due regard to recognized title insurance underwriting practices and in accordance with the rules, regulations, bulletins, manuals and instructions of [the plaintiff] and its subsidiaries.
This provision, however, merely required the defendant to give "due regard" to "recognized title insurance underwriting practices" and to process applications prudently, ethically and "in a timely . . . manner." There was no evidence that the defendant failed to give "due regard" to "recognized title insurance underwriting practices," or that he behaved imprudently, unethically or in an untimely manner. Nor was there evidence that he failed to "exercise due care and diligence" in committing the plaintiff to insurance risks, as set forth in paragraph 4(a) of the agreement. Moreover, while the agreement prohibited the defendant from committing the plaintiff to insurance risks which he knew were based upon disputed title, it was silent as to risks of which he was reasonably unaware. In short, there was no evidence that the defendant breached the parties' agreement.
In light of our ruling, we need not address the parties' arguments regarding whether the agency agreement entitled the plaintiff to attorney's fees.
Reversed.
BRODERICK, NADEAU, DALIANIS and DUGGAN, JJ., concurred.
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