UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-2227
THE FOUNTAINHEAD TITLE GROUP CORPORATION, a
Maryland corporation,
Plaintiff - Appellee,
versus
COURTHOUSE SEARCH OF NORTHERN VIRGINIA, a
Virginia corporation,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Leonie M. Brinkema, District
Judge. (CA-02-1838-A)
Argued: October 27, 2004 Decided: January 27, 2005
Before WIDENER, WILLIAMS, and MICHAEL, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Brian Timothy Fitzpatrick, SIDLEY, AUSTIN, BROWN & WOOD,
L.L.P., Washington, D.C., for Appellant. Stacey Ann Moffet,
ECCLESTON & WOLF, P.C., Baltimore, Maryland, for Appellee. ON
BRIEF: Eric Jensen, JENSEN & ASSOCIATES, P.C., Richmond, Virginia;
Frank R. Volpe, SIDLEY, AUSTIN, BROWN & WOOD, L.L.P., Washington,
D.C., for Appellant. Matthew W. Lee, ECCLESTON & WOLF, P.C.,
Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
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PER CURIAM:
In this diversity action, Courthouse Search of Northern
Virginia (Courthouse) appeals a jury verdict in favor of
Fountainhead Title Group Corp. (Fountainhead) for $200,000 on
negligence and breach of contract claims. Courthouse argues that
the evidence was insufficient to sustain the jury’s negligence
verdict and that Fountainhead waived its right to the collateral
source rule for both claims by introducing evidence that it
recovered $175,000 from its insurer. For the following reasons, we
affirm.
I.
Fountainhead is a mortgage settlement and title insurance
company with its headquarters in Maryland and offices in several
neighboring states, including Virginia. In 2000 Fountainhead was
hired as settlement agent for a $200,000 secondary mortgage loan
from Champion Mortgage (Champion) to Luis Quinonez. The loan was
secured by real property in Virginia owned by Quinonez.
Fountainhead contracted with Courthouse to perform a title and
judgment search and to record the deed of trust against Quinonez’s
property.
Courthouse conducted three searches of Quinonez’s
property. The first search, performed on August 23, 2000, revealed
no outstanding judgments against Quinonez as of July 31, 2000. On
October 16, 2000, a second search showed a judgment against
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Quinonez in favor of Bank of America for $1,039,007.43 that had
been entered on August 25, 2000. Fountainhead ignored the second
report, believing it to be a duplicate of the initial search, and
conducted settlement of the loan on October 16, 2000. Following
settlement Fountainhead asked Courthouse to conduct a “bring-to-
date” title search before the deed of trust was recorded. On
October 24, 2000, before the “bring-to-date” search, Fountainhead
disbursed the loan proceeds to Quinonez. The next day, October 25,
2000, Courthouse performed the final search and did not uncover or
report the Bank of America judgment or any other problems to
Fountainhead. Courthouse also recorded the deed of trust in favor
of Champion on October 25.
The following spring, Quinonez, who had not paid the Bank
of America judgment, defaulted on the secondary mortgage loan from
Champion. The value of the property was insufficient to pay both
creditors, and Champion had no recourse against the property
because Bank of America’s judgment was recorded prior to Champion’s
deed of trust. Fountainhead agreed to cover Champion’s $200,000
loss.
Fountainhead sued Courthouse for negligence and breach of
contract in connection with Courthouse’s failure to report the Bank
of America judgment before recording the deed of trust. During the
trial Fountainhead revealed that it had paid only $25,000 of the
$200,000 to Champion and that its errors and omissions insurance
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carrier had paid the remaining $175,000. The jury found in favor
of Fountainhead on both its negligence and contract claims and
awarded $200,000 in damages. Courthouse filed a motion for
judgment notwithstanding the verdict, which was denied. Courthouse
appeals.
II.
Courthouse argues it was entitled to a directed verdict
on the negligence claim either because Courthouse’s breach did not
cause Fountainhead’s damages or because Fountainhead committed
contributory negligence. In the alternative, Courthouse contends
that Fountainhead’s damages should have been limited to $25,000
because of the $175,000 payment Fountainhead received from its
insurance carrier. Courthouse also argues that the substantive law
of Virginia, rather than that of Maryland, governs the negligence
claim. A court may grant a directed verdict against a party on any
issue for which there is no legally sufficient evidentiary basis
for a reasonable jury to find in favor of that party. Fed. R. Civ.
P. 50. We review de novo a district court’s denial of a motion for
judgment as a matter of law. Konkel v. Bob Evans Farms, Inc., 165
F.3d 275, 279 (4th Cir. 1999).
A.
In a diversity action the choice of law rule of the forum
state, in this case Virginia, determines which state’s law governs
each claim. Quillen v. Int’l Playtex, Inc., 789 F.2d 1041, 1044
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(4th Cir. 1986). Under Virginia law the substantive law of the
state in which “the place of the wrong” occurred -- “defined as the
place where the last event necessary to make an act liable for an
alleged tort takes place” -- governs Fountainhead’s negligence
claim. Id. (internal quotation marks omitted). The district court
held that Maryland law applied to the negligence claim because the
last event necessary to make Courthouse liable to Fountainhead
occurred in Maryland. This event was Fountainhead’s reliance on
the bring-to-date search report that gave rise to Champion’s claim
against Fountainhead.
Courthouse does not dispute that Fountainhead’s injury
took place in Maryland, but argues that the termination of its
services, not the injury, was the last event necessary to give rise
to the cause of action. Courthouse performed all of its services
in Virginia, and its services concluded before Fountainhead
suffered any injury. Injury is an essential element to a
negligence cause of action, and there is no support for the
proposition that a cause of action for negligence can accrue before
there is an injury. The district court correctly determined that
“[h]ad [Fountainhead] not relied on the results of defendant’s
search, it would have no cause of action for negligence.” J.A. 50-
51. Because Fountainhead’s reliance and injury occurred in
Maryland, Maryland law governs the negligence claim.
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B.
Courthouse argues it was entitled to a directed verdict
on its claim of contributory negligence because Fountainhead
disbursed the funds before the deed of trust was recorded.
Similarly, Courthouse argues that Fountainhead’s premature
disbursement of the loan proceeds should have precluded a jury
finding that Courthouse’s breach was the proximate cause of
Fountainhead’s injury. For both arguments Courthouse primarily
relies on a single Fountainhead witness, who testified that the
company “should not have” disbursed the funds when it did. The
same witness also testified, however, that Fountainhead would have
taken action to reverse the disbursement of funds had Courthouse
notified Fountainhead of the Bank of America judgment. Courthouse
introduced no evidence on the question of whether the timing of
Fountainhead’s loan disbursement was a breach of any duty to
Champion. Nor did it introduce evidence to rebut Fountainhead’s
position that it would have been able to stop the disbursement had
it been notified of the Bank of America judgment by Courthouse.
While the testimony from Fountainhead’s witness could have provided
the jury with a basis for ruling in Courthouse’s favor on the
negligence claim under either theory, the jury was well within its
purview in holding that Courthouse’s negligence caused
Fountainhead’s injury and that Courthouse had not met its burden of
proof on the issue of contributory negligence.
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Courthouse argues in the alternative that damages should
be limited to $25,000 because Fountainhead waived the collateral
source rule by introducing evidence that it had received $175,000
from its insurer. The collateral source rule permits an injured
party to recover the full amount of provable damages regardless of
any compensation received from collateral sources such as
insurance. Kremen v. Maryland Automobile Insurance Fund, 770 A.2d
170, 174-75 (Md. 2001). Limiting Fountainhead’s recovery to
$25,000 would amount to a windfall for Courthouse because the jury
found Courthouse caused $200,000 worth of damages. Courthouse
concedes that a Maryland court has never held that a plaintiff
waives application of the collateral source rule by introducing
evidence of recovery for its damages from collateral sources. We
conclude that the district court correctly applied the collateral
source rule in this case.
III.
We affirm the judgment based on the jury’s verdict of
$200,000 in favor of Fountainhead on its negligence claim. Because
the jury’s award compensated Fountainhead for “either or both” of
its two claims, we need not reach Courthouse’s arguments on the
breach of contract claim.
AFFIRMED
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