Flyer's Body Shop Profit Sharing Plan v. Ticor Title Insurance

A title insurance company which negligently disburses a client’s funds in breach of its fiduciary duty is not liable for punitive damages where the evidence fails to show a conscious disregard for plaintiff’s rights. We also hold that it is improper to award attorney fees as damages for the prosecution of a separate tort which is unrelated to the defendant’s negligent conduct.

Defendant Ticor Title Insurance Company (Ticor) breached its duty as an escrow holder to plaintiff, Flyer’s Body Shop Profit Sharing Plan (Flyer’s). The jury awarded plaintiff compensatory damages in the sum of $48,178.08, punitive damages in the sum of $250,000 and attorney fees in the sum of $27,412 which were incurred in a separate action to impose a constructive trust. Ticor appeals from the award of punitive damages and attorney fees. We reverse that part of the judgment.

In March 1981, Flyer Tabata, president of the company, and his wife, Janet, as trustees for Flyer’s, placed $50,000 with Terrence Batt, president of American Oak Investments and Home Loans, to be invested in a Lake Tahoe marina. The money was to be loaned for 24 months at an annual rate of 26 percent, which loan was to be…