Summary Judgment Ends $2.5 Million Failed Development Claim Against Law Firm
Billy Newcomb and Joe Kingma successfully defended a law firm sued after a Chatham County waterfront development failed. There was no question that the legal description drafted by the law firm prior to the pouring of the foundation did not accurately reflect the final boundary lines for the development. The lender claimed it could not foreclose on the condos in the development because of the description issue, and the borrower claimed it could not sell the property because it did not have good title. Claims against the law firm were brought by the title insurer and the borrower. The lender had been put into involuntary bankruptcy and its successor in interest, which had purchased the loan out of bankruptcy, was a party defendant as well.CCS filed a motion for summary judgment against the title insurer. It argued that the insurer had no duty to defend or indemnify its insured (the purchaser of the loan that it was already defending under the policy) because the potential for a discrepancy was made known to the failed lender by the law firm and thus the title insurer had no claim against the law firm that issued the policy. In the face of a strong brief, the title insurer settled its claim against the law firm rather than file a response.That left CCS free to tee off on the borrower. On summary judgment, CCS argued that the borrower’s claims failed because: 1) there was no attorney-client relationship; 2) the borrower could not show the law firm made a false representation on which the borrower was entitled to rely; and 3) the borrower, who had also declared bankruptcy, could not show damages proximately caused by the law firm’s alleged error. At oral argument Joe Kingma hammered the facts that the borrower had received 100% financing on her investment, her husband’s employer had received a loan commission on her $2.5 million loan, and the lender that funded the loan had engaged in a complex lapping scheme. The Superior Court of Chatham County granted summary judgment to the law firm on May 30, 2014. The case may be appealed and the borrower’s suit continues against the purchaser of the loan, so stay tuned for further developments.