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Champagne v. Phenix Title Services, LLC

Superior Court of Maine, Cumberland

January 27, 2016

PHENIX TITLE SERVICES, LLC, et al., Defendants




Nancy Mills Justice, Superior Court

Before the court is defendant Phenix Title Services, LLC's motion for summary judgment on plaintiffs' amended complaint and on defendant Phenix's cross-claim against William G. Silber. For the following reasons, defendant's motion is granted.


Plaintiff Laurie Champagne is a real estate broker employed by plaintiff Maine Real Estate Network, which does business under the name Champ, Inc. (Supp. S.M.F. ¶ 1.) Defendant Phenix Title Services, LLC is a limited liability company that provides closing services for lenders, real estate brokers, and individuals. (Id. ¶ 2.) Defendant Dr. William Silber is an individual residing in Texas and the seller of property located at 7 Balsam Lane in Falmouth., Maine (the property). (Id. ¶ 3.)

On March 23, 2013, defendant Silber and his wife entered into an Exclusive Right to Sell Listing Agreement (listing agreement) with Maine Real Estate Network for the sale of the property. (Id. ¶ 11.) Under the listing agreement, signed by plaintiff Champagne on behalf of her employer, the Silbers agreed to pay a commission of 6% of the sale price to Maine Real Estate Network. (Id. ¶ 12.) The listing agreement expired on December 31, 2013 without a buyer. (Id. ¶¶13, 15.)

After the listing agreement expired, the Silbers entered into a contract with Tony Langdon to sell the property at an auction on January 18, 2014 (auction agreement). (Id. ¶ 13.) Under the auction agreement, the Silbers agreed to pay plaintiff Champagne 5% of the auction sales price at the closing as payment for her work under the listing agreement. (Id. ¶ 15.) The Silbers also agreed to inform Mr. Langdon of any encumbrances on the property and to obtain a release of those encumbrances. (Id. ¶ 14.) Defendant Phenix never entered into any contract with plaintiff Champagne. (Id. ¶18.)

On February 19, 2014, Norway Savings Bank, the buyers' lender, hired defendant Phenix to do a title search and provide closing services. (Id. ¶ 19.) That same day, defendant Phenix performed a title search on the property. (Id. ¶ 27.) The title search did not reveal any lien in favor of Katahdin Trust Company (Katahdin). (Id.) On February 28, 2014, a lien in the amount of $155, 439.89 was recorded on the property in favor of Katahdin (Katahdin lien) as a result of a separate action against defendant Silber, Katahdin Trust Co. v. Silber, CARSC-RE-14-09. (Id. ¶¶ 3, 28.)

On March 10, 2014, a writ of attachment was recorded against "[a]ll the right, title and interest defendant has in any real estate in Cumberland County." (Id. ¶ 29.) Defendant Silber was personally served with that writ on March 19, 2014. (Id. ¶ 30.) Also on March 19, the Silbers signed an affidavit of encumbrances attesting that only three liens existed on the property, and that these liens were in favor of Key Bank, TD Bank, and Bank of America. (Id. ¶ 24.) The affidavit of encumbrances further stated that, in the event any payoff to a lienholder was deficient, the Silbers would remit the difference to defendant Phenix within 48 hours. (Id.) The Silbers also signed a title insurance affidavit attesting that there were no other liens on the property. (Id. ¶ 26.)

The closing occurred on March 21, 2014. (Id. ¶ 33.) Sometime after the closing, defendant Phenix discovered that its file was short $39, 500.00 as a result of Mr. Langdon's alleged failure to deliver the buyers' premium at closing. (Id. ¶ 34.) As a result, only $47, 782.31 was available to pay approximately $81, 000.00 owed to plaintiff Champagne and Mr. Langdon. (Id. ¶ 35.) In response, defendant Phenix stopped payment on the following previously issued checks: $2, 468.76 to plaintiff Champagne; $35, 075.41 to plaintiff Champ, Inc.; $35, 075.42 to Mr. Langdon; and $7, 900.00 to Mr. Langdon's company. (Id. ¶¶ 25, 35-36.) Defendant Phenix stopped these payments because plaintiff Champagne, Mr. Langdon, and their respective companies were defendant Silber's only unsecured creditors. (Id. ¶ 35.) Defendant Phenix wrote to Mr. Langdon on March 25, 2014 to inform him that it had stopped payment until defendant Champagne and Mr. Langdon could agree how to divide the available funds. (Id. ¶ 37.)

On March 26, 2014, defendant Phenix recorded the deed to the property and discovered the Katahdin lien. (Id. ¶ 38.) In defendant Phenix's view, the Katahdin lien meant that Katahdin now had priority over the funds earmarked for unsecured creditors. (Id. ¶ 39.) That same day, defendant Phenix wrote to Mr. Langdon to inform him that the Katahdin lien "precludes all other claims" and that "there will be no proceeds of any kind left for you or the other creditors." (Id. ¶ 40.) Defendant Phenix wrote to plaintiff Champagne to inform her of its view the following day. (Id. ¶ 41.)

On June 5, 2014, defendant Phenix suggested to plaintiff Champagne that she could seek to intervene in Katahdin Trust Co. if she believed the funds had been wrongly attached. (Id. ¶ 48.) Plaintiff Champagne did not appear in the attachment proceedings, and on September 9, 2014, Katahdin, defendant Phenix, and the buyers agreed to discharge the Katahdin lien in favor of a $45, 000.00 payment to Katahdin from defendant Silber's trusteed funds. (Id. ¶ 49.) Katahdin then released defendant Phenix from all obligations under the attachment order. (Id.)


Plaintiffs filed a complaint against defendant Phenix on September 17, 2014, and alleged four causes of action: count I, declaratory judgment; count II, negligent misrepresentation; count III, conversion; and count IV, passing bad checks. Defendant Phenix filed a motion to dismiss pursuant to M.R. Civ. P. 12(b)(7) for failure to join necessary parties, or, in the alternative, to join those parties. On December 11, 2014, the court denied the motion to dismiss. The court also denied the motion to join as to Mr. ...

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