## Facts

- John Seigle (later joined by his wife Darlene) bought Lot 8 in a subdivision from the sellers under a contract for deed and later sought to buy Lot 13 from the same sellers.
- In 1979, the buyers obtained financing from a bank to purchase Lot 13 and pay off the balance on Lot 8.
- An attorney regularly used by the bank performed the title examination and prepared loan documents; the buyers paid his fee through closing costs.
- The sellers delivered general warranty deeds for Lot 8 and Lot 13 in 1979; the deeds contained language excepting “easements and restrictions of record” from the warranty coverage.
- The buyers later refinanced in 1984 with the same bank; the attorney issued another title letter. Earlier loan/title documents were destroyed pursuant to bank policy after payoff.
- Both lots were subject to a recorded pipeline easement benefiting an oil company; the easement was not disclosed to the buyers.
- Years later, the oil company notified the buyers that a portion of their house encroached on the easement.
- The buyers sued the sellers for breach of the general warranty and sued the attorney for negligence in failing to discover and disclose the recorded easement; the actions were consolidated.

## Issues

1. Whether sellers breach a covenant of general warranty by conveying property burdened by a recorded easement when the deed excepts easements “of record” from the warranty.
2. Whether summary judgment for the attorney was proper where evidence suggested the attorney’s title examination and opinion were intended to benefit the buyers and omitted a recorded easement.

## Decision

- The court affirmed summary judgment for the sellers on the breach-of-warranty claim.
- The court held the deeds’ exception for easements of record limited the scope of the general warranty and encompassed the pipeline easement.
- The court reversed summary judgment for the attorney on the negligence claim and remanded.
- The court held the record permitted a fact-finder to conclude the attorney owed the buyers a duty of ordinary care and may have breached it by failing to discover or disclose a recorded easement.
- The court applied the principle that summary judgment is inappropriate where material fact disputes exist on negligence and causation.

## Legal Principles

- A general warranty deed’s covenants are limited by express exceptions stated in the deed; an encumbrance within an exception (including recorded easements) is not covered by the warranty.
- A recorded easement may be excluded from warranty coverage by a deed clause excepting easements and restrictions “of record,” defeating a breach-of-warranty claim based on that easement.
- An attorney who conducts title work in connection with a lender’s closing may owe a duty of ordinary care to a purchaser who pays for and is an intended beneficiary of the title opinion, even absent a traditional direct retainer.
- Negligence claims based on failure to discover or disclose recorded encumbrances commonly present fact questions; summary judgment should not be used to resolve such disputes when the evidence would allow differing inferences.

## Conclusion

The court held that a deed’s exception for easements of record barred the buyers’ warranty claim against the sellers, but it allowed the buyers’ negligence claim against the closing/title attorney to proceed because a jury could find he owed the buyers a duty and failed to exercise ordinary care by omitting a recorded pipeline easement from his title work.


Seigle v. Jasper, 867 S.W.2d 476 (Ky. Ct. App. 1993)