On June 17, 2003, Mohamed Algabyali, the owner of property located at 7792 State Route 55, Naversink, Sullivan County, New York, obtained a loan in the amount of $135,000 from plaintiff Barry Crupi. In return, the plaintiff received a mortgage and a note from Algabyali. Defendant Lawyers Title Insurance Corporation [hereinafter Lawyers Title], through its agent defendant Newell and Talarico Title Agency [hereinafter Newell], issued a title insurance policy in the amount of $135,000 naming plaintiff as the insured. On August 27, 2003, the plaintiff's mortgage on the Sullivan County property was recorded with the Sullivan County Clerk's Office.

Algabyahi also owned property at 8704 Glenwood Road, Kings County, New York. At the closing on June 17, 2003, the plaintiff requested that Newell's agent record a Spreader Agreement [to include the Kings County property on the mortgage] and paid $175 for this service. The plaintiff contends, and Newell's "closer" [the agent at the closing] affirms, that the plaintiff's real estate attorney gave Newell's agent the Spreader Agreement at the closing.

Newell contends that the plaintiff's attorney did not provide the Spreader Agreement at the closing, but intended to mail Newell the Spreader Agreement. In a letter dated July 21, 2003, Newell requested that the plaintiff's attorney forward the Spreader Agreement, so that it could be recorded. Newell also indicated that the title policy would be amended to include an endorsement that the Spreader Agreement was recorded. Thereafter, the plaintiff's attorney mailed a copy of the Spreader Agreement, but Newell informed him that the Clerk's Office would only accept an original. After the plaintiff's attorney mailed Newell the original, Newell filed it, but the Clerk's office rejected it because it did not include a "Section 255 Affidavit [affirming that the tax was paid]". On April 20, 2004, the plaintiff's attorney faxed a letter from the Sullivan County Clerk's Office stating that the City tax for the Kings County property had to be paid in Sullivan County before the mortgage could be recorded in Kings County. On May 3, 2004, Newell paid the Sullivan County Clerk's Office $1,058.91 for the tax due. On May 24, [*2]2004, Newell filed the Spreader Agreement and proof of receipt of the tax. In December, 2004, the Kings County Clerk's office again rejected the Spreader Agreement for correction and a new Section 255 Affidavit.

Algabyahi defaulted on the mortgage, but instead of foreclosing on the property the plaintiff and Algabyahi entered into a consolidation, extension and modification agreement on January 31, 2005. Algabyahi transferred the deed to the Sullivan County property to the plaintiff in exchange for a $79,000 credit as to $135,000 loan. In return, the plaintiff received a mortgage on the Kings County property and a substitute note in the amount of $63,667.The plaintiff did not purchase a title insurance policy from Lawyers Title for this closing.

On March 3, 2005, Newell recorded the Spreader Agreement in the Kings County Clerk's Office.

In a letter dated March 16, 2005, the plaintiff's real estate attorney informed Newell that Algabyahi had defaulted under the consolidated mortgage. The plaintiff's attorney also stated that he had learned that the Spreader Agreement had not been recorded and that another mortgage had been filed on the Kings County property subsequent to the June 17, 2003 closing, but prior to January 31, 2005 closing. The plaintiff made "a claim against the title insurance company for the sum due of $64,000.00, on the second mortgage".

On September 28, 2005, the plaintiff commenced this action sounding in negligence based on the defendants' failure to timely file the Spreader Agreement. Issue was joined by service of an answer by both defendants. In July, 2006, Lawyers Title moved for summary judgment dismissing the complaint. In September, 2006, Newell also moved for summary judgment dismissing the complaint. In November, 2006, the plaintiff cross-moved for summary judgment.

Lawyers Title has established a prima facie case that it satisfied its obligations under the policy. It is well settled that "[a] title insurer's obligation to indemnify is defined by the policy itself and limited to the loss in value of the title as a result of title defects against which the policy insures" (Darbonne v. Goldberger, 31 AD3d 693 [2d Dept. 2006], quoting, Citibank v. Chicago Tit. Ins. Co, 214 AD2d 212 [1st Dept. 1995]). The kind of loss contemplated by the policy is a damage sustained when because of a defect in the title, the insured was bound to pay something to make it good (see, Darbonne v. Godberger, 31 AD3d 693 [2d Dept. 2006]; Grunberger v. Iseson, 75 AD2d 329 [1st Dept. 1980]). Such a policy entitles the insured to indemnity only to the extent that its security is impaired and to the extent of the resulting loss which it sustains (see, Brucha Mortgage Bankers Corp. v. Nations Title Ins. of New York, 275 AD2d 337 [2d Dept. 2000]; Halfmoon Professional Offs. v. American Tit. Ins. Co, 235 AD2d 801 [3d Dept. 1997]).

Inasmuch as a valid title was transferred, and the plaintiff received a valid and enforceable first mortgage lien on the Sullivan County property, as evidenced by his ability to successfully enter into a consolidated agreement, Lawyers Title satisfied its obligation under the policy (see, Brucha Mortgage Bankers Corp. v. Nations Title Ins. of New York, 275 AD2d 337 [2d Dept. 2000]; Citibank v. Chicago Tit. Ins. Co., 214 AD2d 212 [1st Dept. 1995]). The plaintiff has incurred no loss attributable to title defect, as it acquired title to the mortgaged premises (see, Citibank v. Chicago Title Inc. Co., 214 AD2d 212 [1st Dept. 1995]).

In fact, the complaint does not even state a claim for breach of the title insurance contract. Instead, the complaint alleges damages for the failure to timely record the Spreader [*3]Agreement. As Lawyers Title never agreed to perform this service and it was not within the contemplation of the title insurance policy, Lawyers Title, as the title insurance agency, cannot be held liable for any damages sustained by the failure to timely record the Spreader Agreement (see, Cruz v. Commonwealth Land Title Ins. Co., 157 AD2d 333 [1s Dept. 1990]).

However, Newell, as the party that undertook to perform this service, was under a duty to timely record the Spreader Agreement, as it admits that it customarily provides this service to all of its customers (see, Cruz v. Commonwealth Land Title Ins. Co, 157 AD2d 333, supra). It cannot be determined by way of a summary judgment motion whether Newell breached its duty as there are questions of fact as to when a recordable Spreader Agreement was provided to Newell. Additionally, there is no merit to Newell's argument that the plaintiff's claim for damages is premature because the plaintiff has not sought to foreclose on the Kings County property. A party who has not yet sustained actual loss may still assert an anticipatory claim for indemnification (see, Pennsylvania Gen. Ins. Co. v. Austin Powder Co., 68 NY2d 465, 479, n.2; Cruz v. Commonwealth Land Title Ins. Co, 157 AD2d 333, supra).

Accordingly, it is

ORDERED, that the motion for summary judgment by Lawyers Title is granted and the complaint is dismissed as to Lawyers Titled; and it is further

ORDERED, that the motion for summary judgment by Newell is denied; and it is further

ORDERED, that the cross-motion for summary judgment by the plaintiff is denied.

THIS IS THE DECISION AND ORDER OF THE COURT.

E N T E R,

Dated: January 31, 2007

J.S.C.