June 29th, 2020

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Early Sullivan Prevails in Breach of Contract/Bad Faith Case for Client Stewart Title Guaranty Company

Sophia Lau recently prevailed on appeal in Ifeoma Ukoha v. Provident Title Company, et al., a breach of contract/bad faith case, on behalf of client Stewart Title Guaranty Company (“STGC”). Plaintiff Ifeoma Ukoha purchased an apartment building that was later lost to foreclosure due to the seller’s misappropriation of Ukoha’s mortgage payments. In her first amended complaint, Ukoha asserted breach of contract, breach of the implied covenant of good faith and fair dealing, concealment, promissory fraud, and violation of California Business and Professions Code section 17200/unfair competition.

Ukoha alleged that STGC was effectively a long-time business partner of the seller, whose other properties were embroiled in civil and criminal litigation, and STGC should have informed Ukoha of the risk of purchasing the subject property because of the seller’s bad business practices. Ukoha sued both the underwritten title company, Provident Title Company, Inc. (“Provident”), and the title insurer, STGC, alleging collusion with the seller. The trial court sustained both STGC’s and Provident’s demurrers without leave to amend on the grounds that the post-policy foreclosure was not a title defect, and the title companies owed no duty of disclosure to Ukoha.

The California Court of Appeal agreed with the trial court and stated that a title insurance company does not owe the insured any duty of disclosure outside the policy. In affirming the judgment, the appellate court held that “[b]ecause Ukoha alleged no facts indicating she had any viable cause of action, defendants’ demurrers were properly sustained. Because she offers no alternate, cognizable theory on appeal, nor any indication that she could successfully amend, and none appearing from the record, leave to amend was properly denied.”