Insurance paid $575,000. Title agent still got sued. A November appellate ruling raises new liability questions for title professionals.
It sounds like a paradox that has haunted title insurance professionals for years. Your company paid out the full claim. The homeowner got the money they needed. So why is anyone still talking about liability?
That question landed squarely on a Louisiana appeals court this month, and the judges did not provide a simple answer.
On November 19, 2025, the Court of Appeal for Louisiana's Second Circuit issued a decision that leaves title agents and underwriters grappling with an uncomfortable reality. Just because an insurance company settles a claim does not necessarily mean the title agent who caused the problem gets off the hook.
The case involves a straightforward closing gone wrong. Nicholas and Sara Gregory bought a house in Monroe, Louisiana in December 2017. Landowners Title of Ouachita handled the transaction and discovered an existing mortgage held by Homeland Bank that needed to be cancelled before closing. According to Landowners, a Homeland Bank employee said over the phone that the bank would cancel the mortgage without payment. Landowners proceeded with closing on December 19, 2017.
The mortgage was never cancelled.
Landowners emailed a cancellation certificate to Homeland eight days later. Homeland ignored it. The Wards, who were selling the property, got their money but did not use it to pay off the $575,000 mortgage. Two years passed before anyone discovered the problem.
By 2019, Homeland Bank denied ever promising to cancel the mortgage and began threatening foreclosure. Facing this threat, the Gregorys' title insurance company, First American Title Insurance, paid out the full policy limits of $575,000. The Gregorys used that money to pay off the Homeland mortgage.
Landowners argued it should not be held liable because the Gregorys had lost nothing. The insurance company paid the bill. The problem got fixed. The trial judge agreed and dismissed the case.
But the Gregorys appealed. They made an argument that resonates with anyone who has filed an insurance claim. Yes, the money came from insurance, but they are now out the full benefit of that policy. They would have had $575,000 in coverage if it had not been used to pay for someone else's mistake. They also invoked the collateral source rule, suggesting that insurance payments should not shield a negligent party from liability.
The appellate court took a different view on November 19.
The judges identified two critical disputed questions. Did the title insurance company have a right to pursue its own claim against Landowners? And if the Gregorys recovered, would that constitute prohibited double recovery?
These questions hinge on subrogation. When an insurance company pays a claim, it may step into the homeowner's shoes and pursue recovery from whoever caused the problem. If First American has subrogation rights, it could sue Landowners directly for the $575,000 it paid out. That changes everything about whether the Gregorys can also recover.
The appellate court concluded a trial was necessary. Summary judgment was premature. The case goes back to the trial court.
For title insurance professionals, the implications are significant. Settling a claim through insurance coverage does not necessarily resolve a title agent's liability exposure, particularly if the insurer might assert its own rights. The liability does not simply disappear because insurance paid.
The November 19 decision serves as a reminder that in title insurance, problems discovered after closing can create complications that linger for years, and insurance payments do not always provide the clean resolution that agents and companies might hope for.
