United States District Court, D. Maryland
WELLS FARGO BANK, N.A., as trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT1, ASSET-BACKED CERTIFICATES, SERIES 2007-OPT1
FIRST AMERICAN TITLE INSURANCE CO.
William M. Nickerson Senior United States District Judge.
the Court are cross motions for summary judgment filed by
Defendant First American Title Insurance Company (First
American or Defendant), ECF No. 39, and by Plaintiff Wells
Fargo Bank, N.A., as trustee for Soundview Home Loan Trust
2007-OPT1, Asset-Backed Certificates, Series 2007-OPT1 (Wells
Fargo or Plaintiff). ECF No. 40. The motions are fully
briefed. Upon review of the motions and the applicable case
law, the Court determines that no hearing is necessary, Local
Rule 105.6, and that the motion of First American will be
granted and the motion of Wells Fargo denied.
FACTUAL AND PROCEDURAL BACKGROUND
Fargo brought this action alleging that First American
improperly denied Wells Fargo's claim under a title
insurance policy issued by First American. Briefly stated,
Wells Fargo brought a claim under the policy after its lien
was extinguished in a foreclosure proceeding. First American
denied the claim on the ground that Wells Fargo failed to
provide it with notice of the foreclosure proceeding in a
timely manner, as Wells Fargo was required to do under the
terms of the title insurance policy, and that the late notice
caused it actual prejudice. The facts relevant to this
dispute are largely undisputed and are as follows.
about September 29, 1994, Thomas and Derry Hardnett purchased
real property known as 7405 Kathydale Road in Baltimore,
Maryland, (the Property) for $111, 000.00. The Hardnetts
financed the purchase with a loan from United Mortgage &
Financial Services for $110, 941.00 (the Purchase Money
Loan). This loan was secured by the Property under a deed of
trust dated September 29, 1994, which was recorded in the
Land Records of Baltimore County (Purchase Money Deed of
about September 4, 1998, Little Dimples Enterprises, Inc.
(Little Dimples), a Maryland corporation owned by the
Hardnetts, obtained a loan of $130, 000 from the Bank of
America, FSB (Bank of America), under a program of the United
States Small Business Administration (the Little Dimples
Loan). A deed of trust was executed which purported to secure
the Little Dimples Loan with the Property and that deed of
trust (the Little Dimples Deed of Trust) was recorded in the
Land Records of Baltimore County, and then re-recorded to
correct a typographical error as to the amount of the loan.
The Little Dimples Deed of Trust, however, listed Little
Dimples as the “grantor” of the interest in the
Property, despite the fact that it is undisputed that Little
Dimples had no ownership interest in the Property. The deed
was signed by Thomas and Derry Hardnett.
about October 23, 2006, the Hardnetts refinanced the Purchase
Money Loan with a new loan from Cooper & Shein, LLC d/b/a
Great Oak Lending Partners in the principal amount of $185,
250.00 (the Great Oak Loan). This loan was secured by the
Property under a deed of trust dated October 23, 2006, which
was also recorded among the Land Records of Baltimore County.
(the Great Oak Deed of Trust). The Hardnetts used $89, 015.39
of the Great Oak Loan to satisfy and retire the Purchase
Money Loan and to obtain a release of the Purchase Money Deed
months later, on or about March 19, 2007, the Hardnetts
refinanced again, this time with loan of $240, 000.00 from
Option One Mortgage Company (Option One). This loan (the
Plaintiff's Loan) was secured by the Property under a
deed of trust executed on that same date and subsequently
recorded in the Land Records of Baltimore County
(Plaintiff's Deed of Trust). The Hardnetts used $192,
618.04 of the Plaintiff's Loan to satisfy and retire the
Great Oak Loan and obtain a release of the Great Oak Deed of
Trust. This loan was subsequently assigned to and transferred
closing of the Plaintiff's Loan was performed by
Huntington Title & Escrow Company (Huntington Title). In
conjunction with the closing, Huntington Title issued a First
American title insurance policy (the Title Policy). ECF No.
40-8. The Title Policy provided that Option One, its
successors and assigns, as their interests may appear, was
insured against loss or damage, sustained or incurred by the
insured by reason of, inter alia,
2. Any defect in or lien or encumbrances to the title; 3.
Unmarketability of the title; . . .
5. The invalidity or unenforceability of the lien of the
6. The priority of any lien or encumbrance over the lien of
the insured mortgage.
. . .
The company will also pay the costs, attorneys' fees and
expenses incurred in defense of the title or the lien of the
insured mortgage, as insured, but only to the extent ...