In February 1985, the plaintiffs, Barbara F. Nappen, Enoch L. Nappen and Evan Nappen, retained the defendant attorney, C. Kent Blanchard, to represent them in purchasing premises located at 21 Throckmorton Avenue, Eatontown, New Jersey ("Eatontown property"). The sellers were Kevin and Hettie Resch ("Resch").
The financing for this property was obtained partly through the plaintiffs' refinancing their home in Oakhurst, New Jersey ("Oakhurst property"), in the amount of $35,000, through First Fidelity Bank. Blanchard also represented the plaintiffs in this transaction.
For both transactions, the purchase of the Eatontown property and the refinancing of the Oakhurst property, Blanchard sought title commitments from defendant Chicago Title Insurance Company ("Chicago Title").
As the plaintiffs' attorney, Blanchard requested a title commitment for the Eatontown property from David-Pierce Abstract Co., an agent of Chicago Title. Chicago Title did issue the title commitment, number DP-93284, to the plaintiffs. The commitment listed, as an exception to any title policy issued, a mortgage given by Resch to City Federal Savings & Loan Association ("City Federal").
First Fidelity Bank issued a check for $35,000 to the plaintiffs for their Oakhurst property mortgage after Blanchard submitted a preliminary title binder issued by Chicago Title, along with an "approved attorney" letter designating Blanchard as such.
Blanchard was instructed by the plaintiffs alone to pay off the City Federal mortgage on the Eatontown property with this sum in order to clear title. Blanchard did not; consequently, plaintiffs acquired the premises encumbered by the City Federal
mortgage -- the very lien excepted by the Chicago Title commitment number DP-93284.
On October 24, 1985, plaintiffs sued Blanchard for conversion and sued Chicago Title for its refusal to clear the title defect. Plaintiffs assert that Blanchard was Chicago Title's agent and that his wrongful act may be imputed to Chicago Title.
Chicago Title now moves for summary judgment asserting that Blanchard was not its agent but was the agent of plaintiffs alone.
Plaintiffs counter by asserting that the "approved attorney" letter establishes an agency relation between Blanchard and Chicago Title. Specifically, plaintiffs cite the following language in the letter regarding losses for which Chicago Title would be liable:
1. Failure of the Issuing Agent or Approved Attorney to comply with your written closing instructions to the extent that they relate to (a) the status of the title to said interest in land or the validity, enforceability and priority of the lien of said mortgage on said interest in land, including the obtaining of documents and the disbursement of funds necessary to establish such status of title or lien, or (b) the obtaining of any other document, specifically required by you, but not to the extent that said instructions require a ...