This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ' 480A.08, subd. 3 (1994).
STATE OF MINNESOTA
IN COURT OF APPEALS
DeWitt Bros. Homes, Inc.,
National Title Resources Corp.,
Filed May 28, 1996
Washington County District Court
File No. C95403
Thomas E. Harms, John J. Choi, Hessian, McKasy & Soderberg, P.A., 4700 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for Respondent)
Wayne Holstad, Karen Hill Fjeld, Holstad and Larson, P.L.C., 3535 Vadnais Center Drive, Suite 130, St. Paul, MN 55110 (for Appellant)
Considered and decided by Lansing, Presiding Judge, Schumacher, Judge, and Stone, Judge.*
U N P U B L I S H E D O P I N I O N
National Title Resources Corp. appeals from summary judgment granted to respondent DeWitt Bros. Homes, Inc., arguing that (1) there were genuine issues of material fact regarding the existence of a contract and damages, and (2) as a matter of law, National did not owe DeWitt a duty and DeWitt cannot recover attorney fees as damages. We affirm.
On March 31, 1994, Kiewel & Associates conveyed a vacant lot (the property) by warranty deed to Aspen Investment Company. On April 22, 1994, Aspen conveyed the property by warranty deed to DeWitt. National served as the closing agent in both transactions.
In addition to a $58,000 purchase price for the property, DeWitt also paid $583.06 in closing costs and $103.23 for county taxes. The closing costs included a $318 premium for an owner's title insurance policy that National sold DeWitt and $195.06 for government recording and transfer charges. Aspen paid $371.40 in settlement charges.
National failed to record DeWitt's warranty deed and pay the property taxes. As a result, three judgment liens were placed on the property after DeWitt purchased it from Aspen.
DeWitt constructed a single-family home on the property and then entered into a purchase agreement with Walter and Eva Nussbaumer to sell the property and home for $368,300. Shortly before closing, a title search revealed the existence of the judgment liens, as well as the fact that none of the delinquent property taxes had been paid. Because DeWitt could not convey clear title, the Nussbaumers threatened to rescind the agreement. DeWitt retained the law firm of Hessian, McKasy & Soderberg (HMS) to resolve the problem. HMS negotiated a settlement permitting the issuance of new title insurance so the property could be conveyed to the Nussbaumers. HMS also recorded the relevant documents and arranged for payment of the delinquent property taxes. HMS's legal fees were $12,899.26.
DeWitt filed a complaint against National alleging that National was negligent as the closing agent and breached its contract with DeWitt to provide closing services. DeWitt sought attorney fees it had incurred. After a hearing, the district court granted DeWitt's motion for summary judgment. This appeal followed.
D E C I S I O N
On appeal from summary judgment, we ask whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). The evidence is viewed in the light most favorable to the party against whom summary judgment was granted. Grondahl v. Bulluck, 318 N.W.2d 240, 242 (Minn. 1982).
The undisputed facts demonstrate that National was negligent as a matter of law. The elements of a cause of action for negligence are the existence of a duty, a breach of that duty, proximate cause, and damages. Hudson v. Snyder Body, Inc., 326 N.W.2d 149, 157 (Minn. 1982). National contends that it owed no duty to DeWitt. We disagree.
National agreed, as the settlement agent, to file the conveyance documents and pay the property taxes. The settlement statement, which was signed by representatives of National, Aspen, and DeWitt, provided that National has "caused or will cause the funds to be distributed in accordance with this statement." Even if National did not owe a duty to DeWitt in the first instance, it undertook a duty to properly record the documents and pay the property taxes. See Williams v. Harris, 518 N.W.2d 864, 868 (Minn. App. 1994) (even if no duty originally exists, if person voluntarily assumes duty, it must be performed with reasonable care or person will be liable for damages), review denied (Minn. Sept. 28, 1994).
There is no genuine issue of material fact regarding National's breach of its duty. In its memorandum of law opposing summary judgment, National itself conceded that it is undisputed that the judgment liens resulted from National's failure to properly record the documents.
National argues that even if it did breach a duty owed to DeWitt, DeWitt did not suffer any real damages, and attorney fees are not recoverable absent specific statutory or contractual authority. See Hopkins v. Empire Fire & Marine Ins. Co., 474 N.W.2d 209, 213 (Minn. App. 1991) (statute or contract usually must provide basis for recovering attorney fees). National contends it should have been granted an opportunity to resolve the problems with the title. We recognize that an insured may recover from its insurer attorney fees incurred in defending itself against claims only if the insurer refuses to defend after the insured has formally tendered a defense request. SCSC Corp. v. Allied Mutual Ins. Co., 536 N.W.2d 305, 316 (Minn. 1995); see also Hill v. Okay Constr. Co., 312 Minn. 324, 346, 252 N.W.2d 107, 121 (1977). Here, however, DeWitt is not seeking indemnity under its title insurance contract. Instead, it seeks to recover losses--which happen to be attorney fees--directly attributable to National's negligence in its role as the closing agent. As the court explained in Chris/Rob Realty v. Chrysler Realty Corp., 260 N.W.2d 456, 460 (Minn. 1977):
When one party as a direct result of tortious conduct * * * causes a second party to enter into litigation with a third party, the second party's litigation expenses are a proper element of damages in an action against the first party.
Id. at 460. DeWitt's retention of HMS to clear the legal problems created by National's negligence is akin to entering litigation with a third party to protect its rights; the attorney fees are recoverable as damages.
We do not address National's argument on appeal that the amount of the fees was unreasonable because it was not argued to the district court. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (reviewing court only considers issues presented to and considered by district court). Because we decide that summary judgment was proper with respect to DeWitt's negligence claim, we decline to address whether a contract existed between DeWitt and National.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, ' 10.