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IN Lewis v. Fidelity National Title Insurance Companyno. A23A0030, Court of Appeals of Georgia, Fifth Division (April 26, 2023) Torriel Deyon Lewis appealed the grant of summary judgment to Fidelity National Title Insurance Company in Fidelity’s fraud action against him.
When a party moves for summary judgment and supports his or her motion by filing affidavits, depositions, or answers to interrogatories, the nonmoving party may not rest on the allegations alone and must state specific facts showing the existence of a genuine triable issue.
In 2007, an entity called House Rescue 911 LLC (“old House Rescue 911 LLC”) acquired a parcel of real property. In 2010, the old House Rescue 911 LLC was administratively dissolved by the Secretary of State. Georgia Secretary of State records show that on February 3, 2017, an entity named House Rescue 911 LLC (“new House Rescue 911 LLC”) was formed. New House Rescue 911 LLC’s name was identical to old House Rescue 911 LLC’s name except for the lack of periods between the letters LLC. Lewis was listed as the registered agent for the new House Rescue 911 LLC. New House Rescue 911 LLC and Lewis were in no way affiliated with old House Rescue 911 LLC
Three weeks after it was formed, the new House Rescue 911 LLC allegedly sold and conveyed the property that the old House Rescue 911 LLC acquired in 2007 through a limited warranty deed.
Lewis and the new House Rescue 911 LLC had no basis to assert title to the property and had no right to assign any rights to the property.
In 2019, the buyer of the property, Fidelity’s insured, was named as a defendant in a quiet title petition brought by the members of the administratively dissolved former House Rescue 911 LLC. The Superior Court quieted the title in favor of petitioners, and Fidelity paid its insured $66,000 under the title policy.
Fidelity then sued New House Rescue 911 LLC and Lewis. The trial court entered default judgment against New House Rescue 911 LLC and granted Fidelity’s motion for summary judgment against Lewis. Lewis filed this pro se appeal.
The crime of fraud has five elements: a false representation by a defendant, scienter, intent to induce the plaintiff to act or refrain from acting, legitimate reliance by the plaintiff, and injury to the plaintiff.
Fidelity presented evidence that the new House Rescue 911 LLC never owned the property; that Lewis and the new House Rescue 911 LLC had no basis to assert title to the property and had no right to assign any rights to the property; but that Lewis still testified that the new House Rescue 911 LLC owned the property.
In the owner’s affidavit, Lewis testified that he made the affidavit “to induce [the purchaser] to purchase said property and to cause FIDELITY NATIONAL TITLE INSURANCE COMPANY to issue a . . . title insurance.” And of course, Fidelity issued title insurance.
Lewis argued that any reliance on his false representation was not justified because Fidelity did not exercise due diligence. Fidelity presented undisputed evidence that the chain of title showed that title to the property was assigned to “House Rescue 911 LLC” A title search would not have shown that the new House Rescue 911 LLC was a different entity and was not formed until after the old House Rescue 911 LLC had acquired the property.
A purchaser of land is charged with constructive notice of the contents of a recorded instrument within its chain of title. Conversely, a purchaser is not burdened with constructive notice of interests or encumbrances that have been recorded outside the chain of title. The Court of Appeals concluded that Lewis did not point to any evidence creating a triable issue of fact on the legitimate reliance element of Fidelity’s fraud claim.
An LLC member may be held individually liable if he or she personally participates or cooperates in a tort committed by the LLC or encourages it to be committed. The undisputed evidence is that Lewis was a member of New House Rescue 911 LLC, that he misrepresented that New House Rescue 911 LLC owned the property, and that he signed the Limited Warranty Deed and Owner’s Declaration on behalf of New House Rescue 911 LLC. . The District Court did not err in finding that he is personally liable.
The verdict was upheld.
Scammers are not honest or trustworthy. They are lying. It is clear that New House Rescue 911 LLC and its manager lied to the buyer of a property it did not own and also intentionally defrauded the insurer. Mr. Lewis was personally liable to reimburse the insurer for the money it was liable to pay to its insured and it was entitled to successfully proceed against the tortfeasor.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and firstname.lastname@example.org
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