## Facts

- Chemical Bank agreed to lend $3,560,000 to Mears Park Central Limited Partnership to develop Galtier Plaza in St. Paul, Minnesota.
- Part of the loan proceeds were intended to cover obligations of tenant Fitzgerald’s of St. Paul, Inc., secured by Fitzgerald’s restaurant equipment and related property.
- Fitzgerald’s executed a security agreement granting Chemical a security interest and represented it owned the collateral free of liens; Chemical had no other documentation proving Fitzgerald’s interest in the collateral.
- As a loan condition, Central (not Chemical) hired Title Services, Inc. (TSI) to obtain U.C.C. lien searches from the Minnesota Secretary of State.
- TSI submitted a U.C.C. Form 11 using a debtor name supplied for the search (“Boisclair”); the Secretary of State conducted the search and certified a single financing statement in favor of Aslesen Company.
- Chemical required Central to obtain a termination statement for that disclosed lien, which was filed.
- Aslesen had also filed a second financing statement affecting the collateral using a variant debtor name (“Bois Clair”); the certified search results did not disclose it.
- Aslesen later pursued foreclosure based on the second filing; Chemical intervened and settled by paying $120,000 for a lien release.
- Chemical sued TSI for breach of warranty and negligence, alleging TSI’s search and reporting caused the loss.

## Issues

1. Whether TSI made and breached an express or implied warranty to Chemical regarding the completeness or accuracy of the U.C.C. search results.
2. Whether, under Minnesota law, TSI owed Chemical a duty of care in conducting or reporting the U.C.C. search, and whether any breach caused Chemical’s damages.

## Decision

- The court granted TSI’s motion for summary judgment and dismissed Chemical’s claims.
- On warranty, the court held Chemical’s theory failed as a matter of law because the Secretary of State performed and certified the search results, and TSI merely requested and transmitted those certified results.
- On negligence, the court held Minnesota law did not support imposing a duty on TSI to Chemical on these facts, particularly where TSI was retained by Central and did not control the state’s search or certification process.
- The court also found Chemical’s loss depended on assumptions about the collateral’s ownership and lien status unsupported by independent documentation, and on a filing under a debtor-name variant not used in the request.

## Legal Principles

- When a public filing office performs and certifies a U.C.C. record search, an intermediary that follows standard request procedures and relays the certified results does not, without specific contractual undertakings, warrant the completeness of the public records or the search.
- Minnesota negligence liability requires a legal duty to the plaintiff; a third party to the service relationship is not automatically owed a duty where the alleged omission stems from the public office’s search/certification and the request used the debtor name provided.
- A lender’s reliance on a borrower’s representations and limited confirmation of ownership and lien status can defeat causation or otherwise prevent shifting loss to a search intermediary for an undisclosed filing made under a variant debtor name.

## Conclusion

The court entered summary judgment for TSI, holding that Chemical’s breach-of-warranty and negligence theories were not legally supportable where TSI was hired by the borrower, the Secretary of State conducted and certified the U.C.C. search, and the undisclosed lien was filed under a debtor-name variant not captured by the requested search.


Chemical Bank v. Title Servs., Inc., 708 F. Supp. 245 (D. Minn. 1989)