## Facts

- AGLA developed the Falconhurst subdivision, financed by Western Mortgage Loan Corporation with a first deed of trust on all lots.
- Commonwealth Land Title Insurance Company served as escrow agent/title company; it held legal title as trustee, kept escrow records, and disbursed sale proceeds under an escrow agreement.
- Lot sales generally involved a 60% cash down payment applied to Western Mortgage and a 40% note secured by a second deed of trust, with collections paid to AGLA or its assignees.
- AGLA relied on Commonwealth for bookkeeping regarding payoff status of the second-trust-deed interests.
- AGLA pledged/assigned beneficial interests in certain Falconhurst lots to creditors, including Capitol Thrift & Loan, and later sought to assign additional beneficial interests as security to Cape Trust (a pension/profit-sharing trust).
- At AGLA’s request, Commonwealth provided a list of lots in which AGLA allegedly still held assignable beneficial interests; the list mistakenly included five lots whose relevant interests had already been paid off.
- A Cape Trust trustee drafted an assignment including the five mistakenly listed lots; Commonwealth executed an acknowledgment stating, in substance, that it possessed the beneficial interests and related instruments for the listed properties.
- Before the transaction closed, a Cape Trust trustee informed a Commonwealth employee by phone that Cape Trust would rely on the accuracy of the lot-status information; Commonwealth provided assurances consistent with the erroneous list.
- The five disputed lots in fact provided no remaining beneficial interests to assign, leaving Cape Trust without the additional security it expected and causing financial loss.

## Issues

1. Whether an escrow/title company that supplies payoff/status information in the course of business owes a duty of reasonable care to a known, intended recipient under Restatement (Second) of Torts § 552.
2. Whether Commonwealth negligently misrepresented the existence of assignable beneficial interests by providing an erroneous list and acknowledging the assignment without verifying its records.
3. Whether Cape Trust’s reliance was justifiable despite potential access to public records and its sophistication as a financial actor.
4. Whether the misrepresentation was a legal cause of Cape Trust’s pecuniary loss.

## Decision

- The Utah Supreme Court affirmed the judgment for Christenson (as trustee for Cape Trust).
- The court held Commonwealth owed a duty to exercise reasonable care in supplying escrow/status information for Cape Trust’s guidance in a specific business transaction.
- The erroneous list and acknowledgment supported liability for negligent misrepresentation because Commonwealth failed to use reasonable care in obtaining/communicating information within its control.
- Cape Trust’s reliance was reasonable where Commonwealth knew reliance was intended and Commonwealth was in a superior position to know the true payoff status.
- The availability of other means of verification did not, on these facts, defeat justifiable reliance or bar recovery.

## Legal Principles

- Under Restatement (Second) of Torts § 552, a business that supplies information for others’ guidance in business transactions is liable for pecuniary loss caused by justifiable reliance if it fails to exercise reasonable care in obtaining or communicating the information.
- An escrow/title company that controls relevant records and represents the status of property-related interests has a duty to verify accuracy before making confirmations intended to induce reliance.
- Justifiable reliance may exist even when public records could be checked, particularly when the defendant holds special knowledge, provides specific assurances, and knows the recipient will rely in a defined transaction.
- A recipient’s sophistication does not categorically preclude reasonable reliance when the defendant’s role includes supplying accurate transactional information.

## Conclusion

The court held Commonwealth liable for negligent misrepresentation because, as a paid escrow/title service with superior access to the relevant records, it failed to use reasonable care when it confirmed that specific beneficial interests existed, and Cape Trust reasonably relied on those confirmations to its detriment.


Christenson v. Commonwealth Land Title Ins. Co., 666 P.2d 302 (Utah 1983)