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Walker Rogge Inc. v. Chelsea Title & Guaranty Co.

Decided: March 9, 1992.

WALKER ROGGE, INC., A NEW JERSEY CORPORATION, PLAINTIFF-RESPONDENT, CROSS-APPELLANT,
v.
CHELSEA TITLE & GUARANTY COMPANY, DEFENDANT-APPELLANT, CROSS-RESPONDENT, AND ARTHUR W. HOOD AND RONALD J. PRICE, DEFENDANTS, CROSS-RESPONDENTS



On appeal from the Superior Court of New Jersey, Law Division, Atlantic County.

Shebell, Skillman and D'Annunzio. The opinion of the court was delivered by Shebell, J.A.D.

Shebell

The opinion of the court was delivered by

SHEBELL, J.A.D.

This matter returns to us following its remand to the Law Division pursuant to the direction of our Supreme Court in its opinion of August 9, 1989. Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 562 A.2d 208 (1989), aff'g in part and rev'g in part, 222 N.J. Super. 363, 536 A.2d 1309 (App.Div.1988). The Supreme Court reversed the judgment against Chelsea Title & Guaranty Company (Chelsea), modified the judgment in favor of the surveyors, Arthur W. Hood and Ronald J. Price, and remanded the entire matter to the trial court to determine whether Chelsea assumed an independent duty to Walker Rogge, Inc. (Rogge) to insure the quantity of

acreage, whether it breached that duty, and whether plaintiff was damaged by the breach. Id. at 520, 541-42, 562 A.2d 208. The Supreme Court, while affirming the lower courts' dismissal of the negligence claims against Hood and Price, left open the issue of whether Hood and Price were liable under the certification Hood had signed on the updated 1975 survey. Id. at 542, 562 A.2d 208. The Court left to the trial Judge's discretion whether the matter could be decided on the existing record or whether additional testimony was required. Id.

On remand the trial Judge resolved the matter on the existing record. He concluded in a letter opinion dated September 6, 1990, that because there was no proof of negligence and because plaintiff did not pay for the oral update of an earlier survey known as the Price-Walker survey, plaintiff was not entitled to recover from the surveyors under the certification. Finding an implied covenant of good faith and fair dealing in every contract, the Judge determined that Chelsea should have known about the discrepancy in acreage and should have revealed this information to plaintiff. Judgment for plaintiff in the amount of $94,336, plus interest from the date of the filing of the complaint was entered on September 17, 1990. Thereafter it was brought to the Judge's attention that he had not considered the issue of plaintiff's comparative negligence. Following submission of supplemental memoranda, the Judge, by letter dated November 26, 1990, determined that plaintiff had not been negligent.

I.

We refer the reader to the opinion of the Supreme Court for a detailed recitation of the pertinent facts. Id. at 521-28, 562 A.2d 208. Although the Supreme Court reversed the holding that Chelsea was liable to plaintiff under the title insurance policy, it recognized that negligence was an alternative basis on which Chelsea could be liable. Id. at 541, 562 A.2d 208.

The Supreme Court held that Chelsea could be liable in negligence if the "act complained of was the direct result of duties voluntarily assumed by the insurer in addition to the mere contract to insure title." Id. (quoting Brown's Tie & Lumber Co. v. Chicago Title Co. of Idaho, 115 Idaho 56, 764 P. 2d 423, 426 (1988)). The Supreme Court pointed out that, because the trial court limited plaintiff's claim to the insurance policy, the trial court had not determined whether Chelsea knew or should have known of the difference in the acreage or its materiality to the transaction. Id. Thus, the Court remanded to the trial court for determination of whether Chelsea assumed an independent duty to assure the quantity of acreage, whether it breached that duty and whether its breach damaged plaintiff. Id. 116 N.J. at 541-42, 562 A.2d 208.

On remand, the Judge found that Chelsea should have known of the discrepancy in acreage between plaintiff's transaction and prior deeds and that, therefore, Chelsea was obligated to disclose the discrepancy to plaintiff under the implied covenant of good faith and fair dealing that is part of every contract. The Judge found that, because "Chelsea knew by virtue of the agreement of sale" that the purchase price would be calculated based on the parcel's acreage, it had a duty to reveal to plaintiff the contradictory information set forth in earlier deeds.

Chelsea now appeals the trial court's decision. Further, Rogge cross-appeals claiming that the trial court should have found the surveyors, defendants Price and Hood, liable ...


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