Eleventh Circuit Finds Insufficient Evidence to Determine Whether Attorney was Providing Legal Services in Offering Title Insurance Assistance

In Miss. Valley Title Ins. Co. v. Thompson, No. 12-16188, 2015 WL 5693118 (11th Cir. Sept. 29, 2015), the defendant appealed from the United States District Court for the Southern District of Alabama’s decision to grant the insurance company’s motion for partial summary judgment. The insurance company sued Thompson, an attorney agent, for breach of contract for failing to except the prior mortgages before issuing title insurance commitments and policies on behalf of the company. Thompson’s only defense was that in performing these activities, he was acting as a “legal service provider,” which would render the suit time-barred under the Alabama Legal Services Liability Act (ALSLA), ALA. CODE § 6–5–570 (1988). The district court determined that Thompson was not acting as a legal service provider, and thus granted the plaintiff’s motion for summary judgment.

This was an issue of first impression in Alabama, therefore the Eleventh Circuit certified the following question to the Alabama Supreme Court:

Is an attorney whom an insurance company hires as an attorney agent providing a “legal service” within the meaning of ALA. CODE § 6–5–574 when he performs a title search, forms an unwritten opinion about the status of title, and then acts on that unwritten opinion by issuing a commitment to insure or an insurance policy?

The Alabama Supreme Court, in exercising its discretionary powers, declined to answer the question. While the Eleventh Circuit also declined to answer the question, the court determined that whether or not the defendant was providing legal services depended upon whether there existed an attorney-client relationship or a principal-agent relationship between Thompson and the insurance company.

In favor of finding an attorney-client relationship, the Eleventh Circuit pointed to the fact that Thompson was a practicing attorney in the state. It specified, however, that he was not acting as a legal service provider unless the claim originated from the receipt of legal services. The Eleventh Circuit looked to Alabama precedent to determine what the Alabama Supreme Court had recognized as legal services in the title insurance context. In Land Title Ins. Co. of Ala. v. State ex rel. Porter, 299 So. 2d 289, 295–96 (Ala. 1974), the Court there held that non-attorney agents are not engaged in the unauthorized practice of law when they review title records and issue commitments for title insurance, but explained that rendering formal title opinions is an activity that only attorney agents may engage in. In another case, Miss. Valley Title Ins. Co. v. Hooper, 707 So. 2d 209, 213 & n.4 (Ala. 1997), the Court held that because legal and non-legal duties were intertwined, the attorney agent was providing legal services when performing a title search, rendering a formal title opinion, issuing a certificate of title, and issuing a title insurance policy based on the attorney agent’s own title opinion.

The precedent was not determinative regarding whether Thompson was providing legal services, therefore the court concluded that in order to provide legal services, there must be an attorney-client relationship rather than a principal-agent relationship. An attorney-client relationship hinges on the subjective intent of the client in creating the contract. The court determined, however, that the evidence presented, including the documents governing this relationship, failed to provide sufficient evidence to establish which relationship existed. The court consequently remanded the case for a determination of the contractual relationship based upon further evidence.

Twitter Digg Delicious Stumbleupon Technorati Facebook Email