First Questions to David Saag, SVP/Chief Claims Counsel, Fidelity National Title

Dear Mr. Saag,

 

First of all let me thank you again in advance for your kind offer to answer all of my questions.  For the sake of clarity I have framed them in red type.

 

Needless to say it is impossible to readily explain now five years of agony, frustration and unhappiness dealing with your claims department on a claim that your own company filed on my behalf.  After four years, three claims offices and six claims officers I finally filed a lawsuit.  I discovered though that an individual is in no position to fight a corporation such as yours.  I have now heard from individuals who have spent $50,000, $250,000 and $300,000 in lawsuits against Fidelity National Title.  I settled the suit to pay the legal fees and compensate my attorney for his time as after the devastating loss of the marketability of my property – I was not financially able to continue with the lawsuit.

 

I also discovered that although well educated in the area of real estate (was a licensed architect and real estate broker at the time of purchase), I was remarkably ignorant and naïve in how title and escrow service relate to title insurance and also how title insurance works (or in my case does not in my opinion.)

 

Having only two days before the Settlement Conference to pour through thousands of pages of documents provided weeks late by Fidelity (most of which was just multiple copies of my own emails) I was truly puzzled by the lack of information provided.

 

So my first question, as both an architect and a real estate broker I keep extensive notes and phone logs and email records of all conversations and interactions with my clients.  There were no phone calls, only one or two log sheets and a handful of emails between your employees provided in the disclosure documents.  I was taught, also, that this is a normal standard of care.  Don’t your employees (claims counsels) keep phone logs and transaction notes?  And if not, how do they possibly keep track of what is happening with the various claims??

 

There were none of the research nor meeting notes from the original Title Officer Lee Grice nor Craig Donner who opened the claim on my behalf.  Don’t your claims counsel have access to these critical files?

 

I finally put some of the pieces of the puzzle together and formed this list of events for the Settlement Conference:

 

Chronological Order of Events

·          1998 Hamilton Vose subdivided off this property and sold it to Arnie Kresch.  At that time the Grant Deed from Napa Land Title Co. lists only Parcel One (the property) and Parcel Two (our Parcel Six – the easement thru Chateau Potelle).  This Grant Deed was provided

·         2002 -2004 AND HERE IS THE MISTAKE.  When we purchased the property from the Kresch kids after Arnie Kresch’s death Fidelity added in Parcels Two thru Five to both the prelim and the Grant Deed on the purchase and subsequent re-finance.  I understand that the reason they were not valid was because they were not the sellers’ to convey.  How did this happen?

·         2002 I met with the title officer in Napa prior to purchasing the property and received the map and recorded documents on all of the easements leading me to believe that there was this second deeded easement from Mt. Veeder.  As the Prelim is an offer to insure, how does Fidelity National Title Insurance Company have no record of the Prelim nor the research done to produce it?

From www.fntic.com (Fidelity National Title Insurance Company) website under “Steps in the Title Process”:

Initial Request for Title Insurance
An order for title insurance is opened with a title officer who produces the initial response promptly within 24 to 48 hours. A preliminary report can be issued with the minimum of information; without even identifying the buyer or the terms of the sale. It shows the record title as it presently exists and is only an offer to provide insurance. To order a preliminary report contact your local Fidelity National Title representative or office.

On-Site Searching and Examining
Your title officer performs three searches: Property, Name, and Tax searches. From that information, a preliminary report is created. Our on-site customer service center expedites the process of obtaining hard copies of recorded documents. Imaging helps to expedite searches with the ability to obtain documents online.

Technical Review
The skill and expertise of our title officer is the key to providing you with a useful, accurate title report. Once the report is issued the review begins by making a technical analysis of the documents of record. An interpretive view of all recorded matters is made to evaluate their impact on the title to the property. Among the questions the examiner asks are: Would any of the recorded matters prevent the buyer from using the property for its intended purpose? Can antiquated leases be eliminated from the policy per a review of the current leases?

This states “expedites the process of obtaining hard copies of recorded documents” and “an interpretive view of all recorded maters is made to evaluate their impact on the title,” etc.  So what happened to the file of these documents that was created when the property was purchased and again when it was refinanced?

 

·         June 2008  When I went to sell the property I (obviously) thought there was a valid easement which is the reason I contacted Doreen Ho, a neighbor who owned the servient property, which started the entire claim.  Fax to Debbie Shelton

Did any of the Claims Counsels contact Ms. Ho to see if she would sell her easement?

·         October 2008  Craig Donner of Fidelity National Title determines the easements are not valid as they were not the sellers to convey and opens the claim on my behalf.  “Our insured is now putting the property on the market and wants to advertise that she has an additional access being the insured easement.  I know we need to forward to claims department, but escrow wants to know what she should advise her customer.  I think we should be up front and let her know the facts and that it will be handled by the claims department.”   Email re: telling Zollinger and Confidential Claim Report to General Counsel

·         October 29, 2008 Claim assigned to Dennis Lucey, Walnut Creek.   Email to Craig Donner

“Since she ‘s trying to sell the property, and needs the claim resolved first, (and we apparently have a long professional history with her) I’m going to be sure to keep this on, or near, the front burner.”  Conversation was he was going to attempt to get the easements back.

So what happened to Craig Donner and did he attempt to get the easements back??  It seemed logical to keep the claim in Walnut Creek so why was it transferred to Chicago?

·         November 13, 2008 Claim re-assigned to Adam Pinchuck, Chicago

·         November 18, 2008 Initial Fact and Claims Analysis “However, since these easements were included as insured parcels in Schedule A, we have provided coverage to our insured.”

·         December 30, 2009 Mr. Pinchuck “determined” “coverage is appropriate…..”

After this Adam Pinchuck seemed to disappear – what happened to him and the claim?

·         January 26, 2009 Zollinger reaches Dennis Lucey who tells her she has been re-assigned to Robert Kelly in Omaha.  (Kelly told Zollinger in a phone conversation he was swamped from the closing of the Chicago Office closing and asked for the names of local appraisers.)

I provided the list of local appraisers, what happened to that list?

Instead I was told that Jim Gibson of Boise Idaho would be doing the appraisal as he was on Fidelity National Title’s list of “approved appraisers.”  How does an appraiser get on that list?

·         February 23, 2009 Email from Jim Gibson to Owen Girard, “Thank you for taking the time with me this morning.  As I indicated, I have been, and continue to perform Diminution In Value (DIV) appraisals for Fidelity National-Chicago Title, covering numerous states, including:…….  I work with a small team of appraisers who have experience in DIV projects.  We have offices scattered across the county, providing local market knowledge.”

What office do they have in the Napa Valley “providing local market knowledge?”  What did Mr. Girard to qualify Mr. Gibson to do this appraisal?  Where is Mr. Girard’s phone record of this conversation?  How did he get involved in this in the first place?

·         March 5, 2009 Email from Jim Gibson to Robert Kelly, “We will take care of this project.  It’s very similar to a DIV project I did in Aspen/Snowmass CO last fall.  A key issue for this type of project is not to over look the “Cost to Cure” for the noted defect in title.  If the estimated Cost to Cure is less than the difference of the “Before and After Value”, the Cost to Cure is considered to be the appropriate measure of damages.  In terms of this project, we have valued numerous commercial vineyards within the Napa/Sonoma market over the past few years.”

How is this project in the Napa Valley similar to one in Snowmass/Aspen?

So as he first did a “cost to cure” it can be assumed that this value was less than the DIV, correct?

·         May 1, 2009 Jim Gibson completes his appraisal determining that perfecting the prescriptive easement to Cavedale Road in Sonoma County can be substituted for perfecting the easement to Mount Veeder Road in Napa County and valued the “Cost to Cure” at $13,500.

How can there be a “cost to cure” value to a different road in a different county??  And that no one else thought this was odd but me?

·         Zollinger refutes the appraisal.

I presented a tome of information refuting everything from Mr. Gibson’s market analysis was not of the area my property was in (American Canyon rather than Oakville) to most of his comparable properties were not even on his Market Area Map.  Has anyone in the Claim’s Department even read this?  Or compare the information provided to Mr. Gibson’s appraisal and observe that he really was not familiar with the market area?

·         June 15, 2009 Email Robert Kelly to John Hilvka and Gary Colemere, “I’ll call Ann and advise her that I’m waiting for Mr. Gibson to provide a written response to his review of the information Ann submitted in an attempt to increase the loss amount indicated in his original DIV report.  I really need to discuss options 1 & 2 with you because Ann is asking me if we have acted on either of these options. (Note #1 is regaining Parcels 2 – 5, #2 obtaining another easement (not thru a winery) to Mt. Veeder Road.)  See June 26, 2009 comment.

·         June 25, 2009 Jim Gibson responds with more false and misleading information

Did the Claims Counsel read my response to this letter?

·         June 26, 2009 Policy Payment Approval Report

“After investigating this issue extensively with Gary Colemere out of the Napa County office it appears that Parcels 2 – 5 may run with Parcel 1 after all.”

“Legal Arguments:  Once the Company indicates to the Insured that the Property does not include Parcels 2 – 5 and as a result, this is a covered loss, and the insured relies on our statement and does not market the property as having a secondary easement access through parcels 2 – 5, can the company now say 6 months later that there is no loss, the property is as insured.”

This was perhaps my most interesting discovery.  Apparently for the first time due to my query on June 15, 2009 another study was done and it was discovered that the easements were valid.

So the easements were valid the entire time and I was never told?  And if so, then why was not attempt made by Fidelity to defend my right to the easements? And is this saying that although Fidelity agreed that they were not valid and opened a claim on my behalf, now that they discovered a year later that they were valid but I had loss the marketability of the property because of the false statement that there was no liability?

·         June 30, 2009  Email from Steven Johnson to Robert Kelly, “We should provide our best explanation of the basis for the tendered claim payment, pointing out that it looks like there is a valid easement, that there are exceptions to the easement, and that we have diligently responded to requests in handling the claim.”  Who is Steven Johnson?  And how did they respond diligently to requests in handling the claim?

·         July 10, 2009 Robert Kelly writes, “Based on your request of 5/27209, our Company in good faith reviewed Parcel……  Based on this information the interest in the land is as described in Schedule A of the Policy.”  Then he excepts the coverage under Schedule B but states that in good faith the Company treated this matter as a covered loss.  Then, “so if the Historical Easements provide another access to the Property it would be the third access easement to the Property.”  I did not get from his letter that there was a valid easement. Nor did my attorney.  We thought that he was saying that the easements were excepted but further in the policy is states unless they are recorded in the public records and if you recall I was given the public records by the original title officer.

Are you confused yet?

·         Zollinger files claim with DOI

·         August 18, 2009 letter from Jeff Hansen (replacing Robert Kelly).  Why was Jeff Hansen replacing Robert Kelly?

·         September 23, 2009 Brief by Jeff Hansen, “On 9/23/09 sent the following email to appraiser Jim Gibson of PGP after discovering bob Kelly had instructed Jim to appraise base on “cost to cure”, i.e. of obtaining alternative easement, as opposed to straight DIV.  “Talked to Todd Moody about this on 09/22/09 and also talked to Todd about fact that it’s come to light that Zollinger recently lost the property in foreclosure (Bank of America now owns).  Todd and I decided that due to DOI complaint, we should go ahead and get DIV appraisal, which will likely be lower than what Bob already paid Zollinger based on “cost to cure” appraisal.  Todd suggested if Zollinger complains about lower appraisal, we can then raise the issue of the foreclosure.” 

First, did Jeff Hansen not understand also that the easements are valid?  Isn’t he again treating it still as a valid loss?

Gibson stated clearly in his first communication that “If the estimated Cost to Cure is less than the difference of the “Before and After Value”, the Cost to Cure is considered to be the appropriate measure of damages.”

So as he chose to use the “cost to cure” (granted perfecting a prescriptive easement to a different road in a different county that the original lost easements) isn’t is understood that this was the lesser value?  And if so, why would Mr. Hansen predetermine that it is likely to be lower?  And who is Todd Moody and why would he suggest that I would complain about lower appraisal when the new appraisal had not even been requested?  How did he know it would be lower?

·         November 9, 2009 Hansen writes, “In your letter of September 27, 2009, you made reference to the extensive sales data you had submitted on six other properties.  Rest assured, all of that data you submitted was sent to the appraiser and I told the appraiser to analyze it as part of the new appraisal and to make sure and address it in the appraisal report.” 

So why was this not done?

·         November 19, 2009 Jeff Hansen sent an almost identical appraisal without any analysis of the submitted data only now DIV is $0.

Do you not find that the loss of a mile long easement through residential property leaving only an entrance through a commercial property to an 80 acre single family residential property with sweeping views of the infamous Napa is worth nothing?

·         November 21, 2009 Zollinger complains.

Are you surprised?

·         December 16, 2009 Jeff Hansen writes, “The PGP Valuation Inc. report concludes the diminution in value is zero.”  “Additionally, your coverage under the above –referenced policy of title insurance terminated because, due to foreclosure, you ceased to be the record owner of the property”.

As the property was unmarketable at the value of the loan I did let it go back to the bank.  The difference between the comparable properties with the easement at the time is was listed for sale with the lost easement was approximately $675,000.

Was the reason I was shuffled from Claims Office to Claims Office and Claims Officer to Claims Officer with months of no communication (this can be verified by the Sonoma County Manager John Hilvka and the reason I went to the Department of Insurance) so that Fidelity would no longer be liable as I would no longer be the owner of the property?

By the way, why was there no record of the communication with the Department of Insurance in the documents sent?

·         July 26, 2010 Jennifer Reeves writes, “If you would like to provide us with an appraisal from a certified appraiser we would be more than willing to review it.”

I did prepare a rather extensive (and more accurate) market report than what Mr. Gibson provided.  Has anyone read it?

I cannot thank you enough for taking the time to answer all of these questions.  I believe that getting these answers will not only help me understand what happened with this claim and why but will also help me and my readers understand how title insurance works and how we should ”Rely On Fidelity National Title To Protect Your Investment”. This is again from www.fntic.com.  But at the bottom of the page copyrighted in 2010 is the statement: “The statements made on this web page and any page that follows within the Fidelity National Title website are not intended, and shall not be construed to expressly or impliedly issue or deliver any form of written guaranty, affirmation, indemnification, or certification of any fact, insurance coverage or conclusion of law.”  So my final question for today, does this mean that since 2010 we should not rely on Fidelity National Title to protect are investments – but we should have prior to that date?  This is a little confusing.  I pulled quotes off the website and sent them to various claims officers and I do not remember this disclaimer.  Is this new?

Thank you again for your assistance. 

Ann Zollinger