THORNTON v. LITTLE SISTERS OF THE POOR

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Docket Number

No. 11008.

Attorney(S)

Samuel A. Culotta, Baltimore, Md., of the bar of the State of Maryland, pro hac vice, by special leave of the court, with whom Frank W. Marsalek, Washington, D.C., was on the brief, for appellants. David J. Hensler, Washington, D.C., with whom Suzanne Donnelly Kitchings, Washington, D.C., was on the brief, for appellee Little Sisters of the Poor, and Ross O'Donoghue, Washington, D.C., was on the brief, for appellees St. Joseph's Home and School and Associated Catholic Charities. Alan R. Swendiman, Washington, D.C., with whom Benjamin W. Dulany, Washington, D.C., was on the brief, for appellee Lawyers Title Insurance Corporation.

Judges

PER CURIAM:

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Smart Summary

Factual and Procedural Background

This appeal arises from the dismissal by the Superior Court of a civil action brought by the Administrators and Trustees of the estates of Joseph Foller and Katherine Rohleder against the Little Sisters of the Poor, St. Joseph's Home and School, and Lawyers Title Insurance Company. The underlying facts as stated in the opinion are:

In June 1971 the District of Columbia Redevelopment Land Agency ("the Agency") filed a Complaint in Condemnation and Declaration of Taking in the United States District Court concerning the parcel at issue.
In May 1969 the Agency contracted with Lawyers Title Insurance Company to obtain a title report. The title report was completed in January 1971 and, according to the opinion, "was mailed to the Agency on January 10, 1973." The report disclosed one-quarter interests in the property in favor of the Little Sisters and St. Joseph's, and that the remaining one-half interest was vested in heirs and devisees of Joseph Foller and Katherine Rohleder.
Because the identities and addresses of certain heirs/devisees were not ascertainable from the Land Records, the Agency gave notice by publication under F.R.Civ.P. 71A(d)(3) and conducted an independent investigation; some interested parties also received actual notice but none filed answers.
At the just compensation hearing on January 26, 1973, the United States District Court ordered payment of $10,462.50 each to the Little Sisters and to St. Joseph's based on their purported one-quarter interests. On February 7, 1973, Lawyers Title received the checks from the clerk and turned them over to the two charities.
In May and September 1975 the Administrators and Trustees filed motions to set aside the distribution orders; those motions were denied and the denials were upheld by the United States Court of Appeals for the D.C. Circuit.
Subsequently the Administrators and Trustees sued in the Superior Court alleging (1) that the Little Sisters and St. Joseph's had no interest and seeking recovery of amounts received, and (2) that Lawyers Title was negligent in its title examination. The Superior Court dismissed the claims against the Little Sisters and St. Joseph's as barred by the doctrine of res judicata and for failure to state a claim, and dismissed the claim against Lawyers Title as barred by the applicable statute of limitations. The present appeal followed.

Legal Issues Presented

Whether the doctrine of res judicata barred the Administrators' and Trustees' Superior Court action challenging the Little Sisters' and St. Joseph's asserted one-quarter interests in the condemnation award, given the prior federal condemnation proceedings and related rulings.
Whether the appellants have a cause of action against Lawyers Title Insurance Company for negligence in preparing the title report (including whether Lawyers Title owed a duty to the appellants and whether any statutory limitations bar the claim).

Arguments of the Parties

Appellants' Arguments

The Little Sisters of the Poor and St. Joseph's had no interest in the property condemned and thus should not have received distributions from the condemnation award.
Res judicata should not bar their suit because, they contend, notice in the federal condemnation proceedings was defective.
Lawyers Title was negligent in its examination of the title and that negligence deprived the appellants of their interests paid to the charities.

The opinion does not contain a detailed account of the appellees' legal arguments in the Superior Court or on appeal beyond the bases on which the Superior Court and the federal courts ruled (res judicata, failure to state a claim, and statute of limitations).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Taylor v. England, D.C. App., 213 A.2d 821 (1965)	Res judicata is a complete bar to subsequent actions involving the same claim or demand and precludes consideration of issues that were or might have been litigated.	Used to state the established principle that res judicata bars the appellants' relitigation of ownership rights already determined.
Annat v. Beard, 277 F.2d 554 (5th Cir. 1960)	Doctrine of res judicata applies to condemnation proceedings.	Cited to support the proposition that res judicata is applicable in condemnation contexts relevant to this case.
Bullen v. De Bretteville, 239 F.2d 824 (9th Cir. 1957)	Doctrine of res judicata applies to condemnation proceedings.	Cited alongside Annat to support applicability of res judicata to condemnation proceedings.
District of Columbia Redevelopment Land Agency v. Seven Parcels of Land, No. 1278-71 (D.C.D.C., July 15, 1975), aff'd, 176 U.S.App.D.C. 240, 539 F.2d 242 (1976)	Prior adjudication of the ownership interests in the same property and issues.	The court treated the ownership issue decided in that federal condemnation case as the same issue now asserted by appellants; that prior adjudication bars relitigation under res judicata.
Emmco Ins. Co. v. Brown, D.C.Mun.App., 178 A.2d 429 (1962)	Additional authority regarding finality and preclusive effect of judgments (cited by the court).	Listed as a supporting authority for the court's res judicata analysis.
Tutt v. Doby, 148 U.S.App.D.C. 171, 459 F.2d 1195 (1972)	Additional authority regarding preclusion principles.	Listed as a supporting authority for the court's res judicata analysis.
Westgate-Sun Harbor Co. v. Watson, 92 U.S.App.D.C. 341, 206 F.2d 458 (1952)	Principle that litigation must come to an end; finality of judgments is required for orderly judicial process.	Cited to reinforce the court's statement that relitigation should not be permitted and litigation must end.
Spilker v. Hankin, 88 U.S.App.D.C. 206, 188 F.2d 35 (1951)	Principle supporting finality of litigation and preclusive effect of judgments.	Cited to support the court's insistence on finality and the preclusive effect of prior federal rulings.
Long v. American Savings and Loan Ass'n, D.C. Mun.App., 151 A.2d 770 (1959)	One who examines titles assumes responsibility to perform with reasonable skill and care to his employer; liability of abstractor is contractual and generally limited to the employer/parties in privity.	Used to state the general rule limiting an abstractor's liability to his employer (contractual/privity basis) and to support dismissal of appellants' negligence claim against Lawyers Title.
Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931)	Duty of one supplying information does not extend beyond his employer; liability for mistakes is bounded by contract and enforceable between contracting parties.	Cited as the leading case establishing the limitation of duty of information-suppliers to parties in privity; used to support refusal to impose liability to appellants.
Doonis v. Mutual Title Co., D.C. App., 196 A.2d 480 (1964)	A right of action against a title company for omission to report legal imperfections exists only in favor of the real parties to the employment contract or their privies.	Cited to support the conclusion that appellants, not being real parties or in privity with the Agency, have no cause of action against Lawyers Title.

Court's Reasoning and Analysis

The court's analysis proceeded in two principal parts corresponding to the claims against the charities and the claim against Lawyers Title.

Res judicata and the claims against the Little Sisters and St. Joseph's

The court observed that res judicata bars subsequent actions between parties involving the same claim or demand and precludes relitigation of issues that were or could have been litigated (citing Taylor v. England).
The court determined that the principal issue the appellants sought to litigate in Superior Court — the right of the Little Sisters and St. Joseph's to one-quarter interests in the condemnation award — had already been decided in the federal condemnation proceedings (District of Columbia Redevelopment Land Agency v. Seven Parcels of Land) and affirmed on appeal.
The court rejected appellants' contention that res judicata should not apply because notice in the federal proceedings was defective. The district court's memorandum and order denying relief had explicitly found that full and adequate notice to unknown owners was given by publication under F.R.Civ.P. 71A(d)(3)(ii), that there was actual notice to many heirs, that movants had "ample notice," had "slept on their rights for more than a year," and had failed to present evidence of extrinsic fraud. Those findings were upheld on appeal.
The court emphasized the importance of finality in litigation, citing authorities to the effect that litigation must come to an end, and concluded that appellants could not relitigate issues already determined and reviewed in federal court.

Negligence claim against Lawyers Title

The court stated the general rule that an abstractor or title examiner assumes responsibility to perform with reasonable skill and care toward the employer, and that liability for negligent performance is contractual in nature (citing Long v. American Savings and Loan Ass'n).
The court cited Ultramares for the proposition that the duty of one supplying information does not extend to persons beyond the employer and that liability for mistakes is bounded by contract and enforced between contracting parties.
Applying these principles and Doonis, the court concluded that a right of action against a title company generally exists only in favor of the real parties to the employment contract or their privies. The appellants were neither the real parties nor in privity with the Agency; therefore, the appellants had no cause of action against Lawyers Title.
The court noted the record was "surprisingly bare" of allegations specifying the nature of Lawyers Title's negligence and observed that a second title report obtained by the charities from Columbia Real Estate Title Insurance Company was consistent with the Lawyers Title report.
Because the court concluded appellants had no cause of action against Lawyers Title, it did not reach the question of the applicability of the statute of limitations to that claim.

Holding and Implications

Affirmed.

Holding (direct effect): The judgments of the Superior Court dismissing the appellants' claims were affirmed. Specifically, (1) the claims against the Little Sisters of the Poor and St. Joseph's Home and School were barred by res judicata (and dismissed for failure to state a claim), and (2) the negligence claim against Lawyers Title Insurance Company failed because the appellants had no cause of action (they were not parties to or in privity with the employment contract between the Agency and Lawyers Title), so the court did not reach the statute of limitations defense.

Implications: The decision prevents the appellants from relitigating ownership interests already adjudicated in the federal condemnation proceedings and confirms the principle applied here that a title examiner's liability is generally contractual and confined to the contracting parties or their privies. The opinion does not announce a novel rule of law; it applies existing preclusion and privity principles to the facts of this case and enforces finality of the prior federal adjudication.

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James R. THORNTON, Administrator d. b. n., c. t. a. of the Estate of Joseph Foller, late of Baltimore City, Deceased, et al., Appellants, v. The LITTLE SISTERS OF THE POOR, a District of Columbia charitable corporation, et al., Appellees.

PER CURIAM:

This is an appeal from the dismissal by the Superior Court of a civil action instituted by the Administrators and Trustees of the estate of Joseph Foller, deceased, and Katherine Rohleder, deceased, against the Little Sisters of the Poor, St. Joseph's Home and School, and Lawyers Title Insurance Company.

The case arose out of the condemnation of a parcel of land instituted in June of 1971 when the District of Columbia Redevelopment Land Agency (the Agency) filed a Complaint in Condemnation and Declaration of Taking with the United States District Court. To ascertain the property's ownership, the Agency in May of 1969 contracted to obtain a title report on the property from Lawyers Title Insurance Company. The title report, completed in January 1971, disclosed that the Little Sisters and St. Joseph's each held a one-quarter interest in the property to be condemned, and that the remaining one-half interest was vested in the heirs and devisees of Joseph Foller and Katherine Rohleder. This report was mailed to the Agency on January 10, 1973.

Since the identity and addresses of the various heirs and devisees could not be ascertained from the Land Records, the Agency gave notice by publication as provided by Rule 71A(d)(3) of the Federal Rules of Civil Procedure. In addition, the Agency made an independent investigation in an attempt to locate persons with an interest in the property. Although as a result of this investigation some of the interested parties also received actual notice of the proceedings, none of them filed an answer to the Declaration of Taking. At the just compensation hearing on January 26, 1973, the United States District Court ordered payment of $10,462.50 each to the Little Sisters and St. Joseph's based on the one-quarter interest each was shown to have by the title report. On February 7, 1973, Lawyers Title received the checks from the clerk of court, and subsequently turned them over to the two charities. In May and again in September of 1975, the Administrators and Trustees filed motions to set aside the distribution orders. Both motions were denied, and the denials upheld by the United States Court of Appeals for the District of Columbia Circuit.

Alleging that the Little Sisters and St. Joseph's had no interest in the property condemned, the Administrators and Trustees then sued in Superior Court to recover from them the amount received from the condemnation award, and sued Lawyers Title for negligence in its examination of the title. The Superior Court dismissed the claims against the Little Sisters and St. Joseph's as barred by the doctrine of res judicata, and because the complaint failed to state a claim upon which relief could be granted. The court dismissed the claim against Lawyer's Title on the ground that it was barred by the applicable Statute of Limitations.

It is settled that res judicata is a complete bar to subsequent actions between parties involving the same claim or demand, and prevents the consideration not only of those issues which were litigated but also those which might have been litigated in the first action. Taylor v. England, D.C. App., 213 A.2d 821 (1965). The doctrine of res judicata is equally applicable to condemnation proceedings. Annat v. Beard, 277 F.2d 554 (5th Cir. 1960); Bullen v. De Bretteville, 239 F.2d 824 (9th Cir. 1957). Yet here the principal issue which the Administrators and Trustees sought to litigate in Superior Court, that is, the right of the Little Sisters and St. Joseph's to one-quarter interests in the condemnation award, was the very issue decided by the district court in District of Columbia Redevelopment Land Agency v. Seven Parcels of Land, No. 1278-71 (D.C.D.C., July 15, 1975), aff'd, 176 U.S.App.D.C. 240, 539 F.2d 242 (1976), involving the same property.

See also Emmco Ins. Co. v. Brown, D.C.Mun.App., 178 A.2d 429, 431-32 (1962); Tutt v. Doby, 148 U.S.App.D.C. 171, 173, 459 F.2d 1195, 1197 (1972).

The Administrators and Trustees seek to avoid the operation of the doctrine by claiming that res judicata may not apply because their notice was defective. This contention is without merit. In determining this point the district court judge stated in his memorandum and order denying the motion for relief from the judgment that

It appears that prior to the just compensation proceeding full and adequate notice to all "unknown owners" was given by publication, F.R.Civ.P. 71A(d)(3)(ii). There was also actual notice to many of the Foller and Rohleder heirs. None responded. Assuming, without deciding, that the administrators of these long-dormant estates have standing — which is highly questionable since under the law of Maryland prior to 1969 realty generally appears not to have been part of the estate subject to probate, . . . the motion must nevertheless fail. No basis exists for reopening a final judgment where movants had ample notice, slept on their rights for more than a year and failed to present any evidence of extrinsic fraud. (Emphasis added.)

Furthermore, these considerations were upheld on appeal.

There must at some time come an end to litigation, not only for the sake of the adverse party who should not be vexed again with the same cause, but also in the interest of the state in settled law and legal relations, and the interest of the court and litigants in an orderly judicial process. Westgate-Sun Harbor Co. v. Watson, 92 U.S.App.D.C. 341, 206 F.2d 458 (1952); Spilker v. Hankin, 88 U.S.App.D.C. 206, 188 F.2d 35 (1951). Since the issues raised by the appellants here have already been determined and reviewed in federal court, they should not now be allowed to relitigate those same issues.

II.

The claim against Lawyers Title for negligence in its preparation of a title report was also properly dismissed, as appellants have no cause of action against that company.

It is generally held that one employed to examine titles to real estate assumes the responsibility of discharging that duty with a reasonable degree of skill and care. For the negligent performance of the undertaking, he is liable to his employer. Though sounding in tort, the liability of the abstractor is in reality contractual, resting on his employment agreement. Long v. American Savings and Loan Ass'n, D.C. Mun.App., 151 A.2d 770 (1959). A thorough treatment of the general rule is given in the leading case of Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931), cited by this court in Long, supra, where Justice Cardozo, writing for the court, held that the duty of one in the business of supplying information to exercise reasonable care does not extend to persons beyond his employer. In the absence of fraud or collusion, his liability for damages resulting from a mistake is "bounded by the contract and is to be enforced between the parties by whom the contract has been made." Id. 255 N.Y. 188, 174 N.E. at 448. In discussing the scope of liability Prosser states that ". . . mere reasonable anticipation that the statement will be communicated to others, or even knowledge that the recipient intends to make a commercial use of it in dealing with unspecified strangers, is not sufficient to create a duty of care toward them. Thus attorneys, abstractors of title . . . all have been held to be under no obligation to third parties." Prosser on Torts § 88 at 543-44 (2d ed. 1955).

This court has stated that a right of action against a title company for omission to report any legal imperfection in the title of property exists only in favor of the real parties to the employment contract or their privies. Doonis v. Mutual Title Co., D.C. App., 196 A.2d 480 (1964). Here the Administrators and Trustees are neither real parties nor privies to the employment contract between the Agency and Lawyers Title. There would thus appear to be no duty owed to appellants by Lawyers Title to support a claim of negligence. As a result of our conclusion that the appellants have no cause of action against Lawyers Title, we need not reach a determination of the applicability of the Statute of Limitations.

See also 1 C.J.S. Abstracts of Title § 11c:

It is a general rule, so thoroughly established it has been said, that it would seem scarcely necessary to cite any cases in support of it, that since the liability of an abstracter for errors, defects, or omissions in an abstract made by him is founded on contract, and not on tort, he is not to be held responsible for injuries or loss occurring to any or every person into whose hands the abstract may subsequently find its way, or who may rely on it to his prejudice, but it is liable only to the person who contracted for the abstract, or by whom the abstractor was employed to make it, or, in other words, those with whom he has privity of contract in preparing and furnishing the abstract; and so, generally speaking, he sustains no liability to others, even though they act in reliance upon the abstract and suffer injury or loss in so doing. (Footnotes omitted.)

The record is surprisingly bare of allegations as to the specific nature of Lawyers Title's negligence. Appellants merely contend that it was negligence of some kind that deprived them of the interests paid over to the Little Sisters and St. Joseph's. It is noteworthy in this respect that the Little Sisters and St. Joseph's obtained a second title report from Columbia Real Estate Title Insurance Company which was consistent with the Lawyers Title report.

Accordingly, the judgments appealed from are

Affirmed.