A Tennessee appellate court recently ruled on a case involving a homeowner whose property was fraudulently sold while she was living abroad. The court's decision impacts how title companies may be held liable for negligence and fraud in property transactions. Barbara Chesnut, the plaintiff, discovered her home had been sold without her consent and sought damages against Rudy Title and Escrow, LLC, the title company involved in the transaction.

The case, Barbara Chestnut v. Rudy Title and Escrow, LLC (docket number M2025-00525-COA-R3-CV), began in the Circuit Court for Sumner County. Chesnut inherited the property from her brother, James Upchurch, and had allowed others to reside there while she lived in the United Arab Emirates. Upon returning to the U.S. in 2021, she found her home had been sold fraudulently by someone impersonating her.

In January 2020, a person named “Dorothy Chestnut” sold the property to Ultra Home Solutions, LLC, with Rudy Title acting as the closing attorney. The court found that the documents used in the sale were fake, and the individual was not a legitimate heir. After reporting the theft to the police, Chesnut filed a petition for declaratory judgment against Rudy Title and others involved in the fraudulent sale, claiming negligence and fraud.

Initially, the trial court dismissed most of Chesnut's claims but allowed her case against Rudy Title to proceed. The title company then filed a motion for summary judgment, arguing it owed no duty of care to Chesnut. The trial court agreed and dismissed the case, leading Chesnut to appeal the decision.

The Court of Appeals of Tennessee, led by Judge Carma Dennis McGee, ruled on the appeal. The court affirmed the trial court's decision regarding the negligence claim but reversed the dismissal of Chesnut's fraud claims. The court noted that the trial court had not addressed the fraud claims in its ruling, which warranted a remand for further proceedings.

The court stated, "the dismissal of [an] entire case was not warranted where the defendants’ motions for summary judgment did not raise any issue regarding certain causes of action."

Chesnut's claims were based on the assertion that Rudy Title had a duty of care, even without a direct contractual relationship. The appellate court examined whether the title company owed a duty to Chesnut under the principles of negligence. The court ultimately found that Chesnut had not demonstrated that she relied on Rudy Title’s actions, which was necessary to establish a duty of care under the relevant legal standards.

The court explained that for a negligence claim to succeed, a plaintiff must show that the defendant owed a duty of care, which was not established in this case. However, the court acknowledged that Chesnut's fraud claims had not been adequately addressed by the trial court, leading to the decision to reverse that portion of the ruling.

This ruling has significant implications for future cases involving title companies and their responsibilities in property transactions. It highlights the importance of due diligence in verifying ownership and the potential liability for negligence and fraud in cases of fraudulent property sales. Title companies may need to reassess their practices to ensure they are adequately protecting property owners from fraudulent transactions.

As a result of this ruling, Chesnut's case will return to the Circuit Court for further proceedings regarding her fraud claims against Rudy Title. The outcome of this case could influence how similar cases are handled in the future, particularly in establishing the duty of care owed by title companies to property owners.

Looking ahead, it remains to be seen whether Rudy Title will appeal the court's decision regarding the fraud claims. The court's ruling sets a precedent for how negligence and fraud are treated in the context of property transactions, potentially impacting future legal interpretations and the responsibilities of title companies.