Fairmont-Tillett, Ltd. ex rel. American Title Insurance v. First Memphis Realty Trust

This is a diversity action controlled by Florida law. A title insurance company, as subrogee of the purchaser, obtained a damage award against the seller in a suit on the Warranty Deed because of an encumbrance to the title, neither excepted from the seller’s warranty nor discovered by the title company’s admittedly negligent search. The seller held a mortgagee title policy from the insurance company.

Under the Florida case of Harvey v. J. & H. Holdings, Inc., 310 So.2d 371 (Fla. 2d D.C.A.1975), the controlling issue is whether the seller had knowledge of the restrictive encumbrance. Based on…