Dailey was eventually imprisoned for his role in this scheme. Schiffman sold the properties at a low price to Paul Dailey (operating through Monumental Investments), and Dailey—the “flipper” in the scheme—then sold the properties at inflated values to straw purchasers. The first took place between October 2001 and March 2002. (ABN), and the goal of the scheme was apparently for Dailey to receive the borrowed money based upon the inflated values and for the borrowers to default on the loans, defrauding ABN in favor of Dailey. Lincoln Financial was allegedly involved in two fraudulent schemes. In this first scheme (the “ABN Scheme”), Alan Schiffman originally owned the properties at issue, and Mary Kathryn DeCuir was his real estate agent. For each property, the closings for both steps of the property transactions (Schiffman to Dailey, then Dailey to the straw purchasers) took place on the same day, and Lincoln Financial’s president, Kevin Bluhm, presided over the closings of these transactions. The straw purchasers borrowed the money to finance the purchases from ABN AMRO Mortgage Group, Inc.
The properties at issue in this second scheme were originally owned by the Stollman Entities, and DeCuir was the real estate agent representing those entities. DeCuir allegedly convinced Robert Willey to appraise the properties at inflated values to support the high sales prices, often without Willey’s visiting the properties. Bergin Financial alleges that between May 21 and July 11, 2002, it issued 61 loans to finance the purchases related to this scheme, and that Bergin Financial has suffered millions of dollars in damages as a result of the non-payment of those loans. Lincoln Financial issued First American title insurance for all of the transactions in this case, and Lincoln Financial’s president, Bluhm, acted as the closing agent for these transactions. This case concerns the second fraudulent scheme in which Lincoln Financial was allegedly involved. The scheme involved a number of the same individuals, and it was structured in a similar way. (Bluhm did not actually attend all of the closings.) The straw purchasers borrowed the money from Bergin Financial acting through loan officer Steve Kohn, who had met a confederate of Barnes while working as a part-time cashier at a gas station. In this scheme, Terry Barnes (acting through Omicron Development) was the flipper; Barnes purchased the properties at low prices from the Stollman Entities and then resold the properties at substantially higher prices to straw buyers.
Ct. The clear contractual provisions demonstrate that Lincoln did not have actual authority—express or implied—to act as First American’s agent when closing real estate transactions. title insurance commitments and policies”—for which Lincoln Financial could act as First American’s agent. Mut. Ins. 1942). App. Mich. The agency agreement states that Lincoln Financial is an agent of First American “only for the purposes and in the manner specifically set forth in this agreement and for no other purpose and in no other manner whatsoever,” and the agreement sets forth only one purpose—”issu[ing] . Co. Ct. . Peschke Packing Co., 3 N.W.2d 295, 297 (Mich. v. v. Co., 565 N.W.2d 907, 912 (Mich. . Lincoln Financial did not act as First American’s agent when performing closings because implied agency cannot exist contrary to clear written agreements and because Bergin Financial has not produced sufficient evidence of apparent agency.[ 2 ] The written agency agreement in this case provides that Lincoln Financial did not have actual authority to close real estate transactions as First American’s agent. 1992). Under Michigan law, implied authority is one form of actual authority, Auto-Owners Ins. Peach, 491 N.W.2d 278, 280 (Mich. Because implied authority is a form of actual authority, “[a]n implied agency cannot exist contrary to the express intention of an alleged principal.” Flat Hots Co. App. 1997), and such authority is generally defined as the authority “to do business in the principal’s behalf in accordance with the general custom, usage and procedures in that business,” Meretta v.
The Michigan appellate court determined that Ticor and Consolidated had an agency relationship, and applied a rule that “a written agency agreement defines the scope of an agent’s undertaking.” Id. This conclusion accords with the most factually analogous case decided by a Michigan court, Pal Properties LLC v. Title Ins. at *2-3. See id. Ct. 280389, 2008 WL 5158894 (Mich. Ticor Title Insurance Co., No. Because the agency agreement at issue in this case is even more limited than the agreement at issue in Ticor, that case strongly supports a conclusion that Lincoln Financial did not have implied authority to close real estate transactions as an agent for First American under Michigan law. Id. Dec. The purchaser sued Ticor, alleging that Consolidated was acting as Ticor’s agent when conducting the closing and thus that Ticor was liable for Consolidated’s misconduct. In Pal Properties, the defendant Ticor Title Insurance Company (Ticor) “issued a title insurance commitment with respect to the property, through Consolidated Title Services, LLC [(Consolidated)], and Consolidated appeared at and conducted the closing.” Id. See Bluehaven Funding, LLC v. at *1. at *2. First Am. Even though that contract included an arguably broad delegation of authority—Consolidated was appointed as an agent “for promoting and transacting of a title insurance business”—the court interpreted that agreement as not granting Consolidated the authority to conduct closings on behalf of Ticor. Co., 594 F.3d 1055, 1056-60 (8th Cir. 9, 2008). Consolidated failed to pay off an existing mortgage, and the purchaser “eventually lost the home to foreclosure.” Id. A published federal circuit court case, interpreting a relevantly identical contract between First American and a different independent agent, reached the same result under Missouri law. 2010). App.
The conclusion that Lincoln Financial did not act as First American’s agent when closing real estate transactions is also supported by industry practice. Title insurance industry practice generally requires an additional document—a closing protection letter—before title insurance companies can be liable for the actions of their independent title insurance agents when those agents are conducting closings. As a district court recently explained,.
This statement appears in Michigan cases as a general characterization of implied authority, and Bergin Financial points to no cases in which a Michigan court applied this statement as a rule or held that an agent’s belief constituted a sufficient condition of implied agency.[ 3 ]. That Lincoln Financial’s president, Bluhm, believed he was acting as First American’s agent when closing real estate transactions does not support the opposite conclusion. The statement from Meretta is not a rule of law in Michigan. Bergin Financial points to Bluhm’s testimony that he believed his settlement activities were part of his agency contract, and asks this court to apply a rule that “[i]mplied authority is the authority which an agent believes he possesses,” Meretta, 491 N.W.2d at 280.
A principal’s knowledge of general industry customs can demonstrate the principal’s granting of implied authority to an agent that operates within those customs. First American’s knowledge that Lincoln Financial closed real estate transactions is also not sufficient to demonstrate implied authority. See id. In this case, however, it was not demonstrative of agency for First American to allow Lincoln Financial to close real estate transactions because Lincoln Financial was perfectly capable of performing closings under its own name and not as an agent of First American.
But the strength of this inference is greatly diminished by the fact that these notices were sent to two audiences: First American’s internal closing personnel and its independent insurance agents. The tone of the notices is apparently more appropriate to the internal personnel, over whom First American did exert detailed control. Bergin Financial relies upon the phrasing of the documents to argue that First American had the authority to control the closing activities of Lincoln Financial. The Underwriting Alerts and Escrow Bulletins also do not demonstrate that Lincoln Financial was an agent of First American for the purpose of closing real estate transactions. One might still be able to draw some inference of First American’s control over Lincoln Financial from the bulletins, but that inference would not be sufficient to overcome the terms of the agency agreement. Those terms limit the scope of Lincoln Financial’s agency and provide that only written and signed documents can amend the agency agreement.
The district court concluded that the agent was liable because it owed the title insurance company fiduciary duties, whether or not the agent was acting as an agent for the title insurance company while conducting closings. The cases cited by Bergin Financial in which a court held that conducting real estate closings was within the scope of an independent title insurance company’s agency do not support a conclusion that Lincoln Financial had implied authority to close real estate transactions on behalf of First American. 2008 WL 2157046, at *3, *5. & Concepts Co. Id. Ticor thus does not undermine our conclusion that Lincoln Financial was not First American’s agent for the purpose of closing real estate transactions. See Quality Prods., 666 N.W.2d at 254 (“In cases where a party relies on a course of conduct to establish waiver or modification, the law of waiver directs our inquiry and the significance of written modification and anti-waiver provisions regarding the parties’ intent is increased.”). 2003)). In Ticor, the only other case cited by Bergin Financial that interprets Michigan law, an independent agent had wrongly appropriated funds from an escrow account, and the title insurance company had become liable for the lost funds under closing protection letters. at *8. The court determined that the title insurance company had produced clear and convincing evidence that the parties had waived or modified that contractual limitation. Lincoln Financial thus did not have actual authority—express or implied—to close real estate transactions on First American’s behalf. at *1. Bergin Financial does not argue contractual waiver or modification and does not present evidence sufficient to support such a claim in this case. As an alternative basis for decision, the court also found that the agent “conducted closings within the scope of its agency relationship with [the title insurer],” id., notwithstanding a contractual provision limiting the scope of the agent’s authority to conducting title insurance business. (citing Quality Prods. The other, non-Michigan, cases cited by Bergin also do not provide any basis on which to disregard the rule stated by Flat Hots and Pal Properties that written agency agreements govern the scope of an agent’s authority. v. The title insurance company sued its agent, arguing that the agent was liable for the funds that the title insurance company had paid pursuant to the closing protection letters. Nagel Precision, Inc., 666 N.W.2d 251, 253-54 (Mich. See id. Id.
Ct. 1990); see Pal Properties, 2008 WL 5158894, at *3-4 (citing Chapa v. App. Bergin Financial relies upon a website printout from June 2007 to establish that First American made a representation that could justify a reasonable belief that an agency relationship existed. As in Pal Properties, Bergin Financial has not produced any evidence that it had any contact with First American before or during the closing of the relevant transactions. St. This evidence is not sufficient for two reasons. 1991)). Ct. Howard Johnson Co., 455 N.W.2d 390, 394 (Mich. Absent evidence of a representation made by First American and relied upon by Bergin Financial, Bergin Financial cannot establish apparent agency. Second, there is no evidence that anyone from Bergin Financial ever saw this website or that Bergin Financial relied upon this alleged representation. First, the evidence itself was not authenticated and there is no evidence that the website existed in this form in 2002. Bergin Financial has also not established that Lincoln Financial had apparent authority to close real estate transactions as First American’s agent. First American is therefore not liable for Lincoln Financial’s actions as a closing agent. See 2008 WL 5158894, at *4. Under Michigan law, apparent agency only exists where “the alleged principal [has] made a representation that leads the plaintiff to reasonably believe that an agency existed and to suffer harm on account of a justifiable reliance thereon.” Little v. App. Mary’s Hosp.of Saginaw, 480 N.W.2d 590, 592 (Mich.
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