Title Insurance Policy - Alleged Failure to Disclose Zoning Amendment
In Notaro Homes, Inc. v. Chicago Title Insurance Co., 309 Ill. App. 3d 246, 722 N.E.2d 208, 242 Ill. Dec. 719 (1999), the plaintiff alleged that the defendant, Chicago Title Insurance Co., negligently misrepresented the condition of a title by failing to disclose the existence of a recorded zoning amendment.
The Notaro Homes court determined that the plaintiff had indeed stated a cause of action.
The relevant portion of the court's ruling follows:
"We now examine whether the Moorman doctrine applies.
Plaintiff acknowledges that the Moorman doctrine does prohibit a recovery in tort for purely economic losses but argues that the doctrine does not apply to those in the business of supplying information for the guidance of others in their business transactions and, in this case, the above exception applies.
We believe the exception to Moorman does apply to cases where a prospective, purchaser orders a commitment for title insurance and in reliance thereon enters into a business transaction.
When a title insurance company issues a commitment, it is in fact in the business of supplying information for the guidance of others in their business transactions, whether the transaction is the decision to purchase property or the decision to simply purchase the title insurance policy.
It owes a duty not to be negligent in providing the information, and, if negligent, the injured party may recover economic damages.
By this decision, we are not holding that failure to set forth the recorded ordinance was a negligent misrepresentation.
Whether the ordinance impacted the use and value of the property to the extent that it affected the property's marketability is a question of fact to be resolved by the trier of fact.
Additionally, the plaintiff's level of sophistication and the degree to which it relied upon the commitment are questions of fact for the trier of fact to determine.
Further, we are not stating as a matter of law that in all instances a land title insurance company will be responsible under the theory of negligent misrepresentation.
The scope of a title insurance company's duty to disclose may be limited based upon the agreement of the parties when the commitment for title insurance is purchased." Notaro Homes, Inc., 309 Ill. App. 3d at 257.