In a recent ruling from Louisiana, a court made clear that even if a title insurance company pays out a claim, the title agent involved can still face legal trouble. This decision came down on November 19, 2025, shaking up how title agents and insurers think about liability after a property sale.
The case centers on Nicholas and Sara Gregory, who bought a home in Monroe, Louisiana, back in December 2017. Their title was handled by Landowners Title of Ouachita. Before the closing, there was a mortgage on the property held by Homeland Bank that needed to be cleared. According to Landowners, a bank employee told them over the phone that the mortgage would be canceled without any payment needed. Trusting that, the closing went ahead on December 19, 2017.
But the mortgage was never canceled. Landowners even sent a cancellation certificate to Homeland eight days later, but the bank ignored it. The sellers received their payment but did not use it to settle the $575,000 mortgage. No one realized this problem until two years later.
By 2019, Homeland Bank denied it ever agreed to cancel the mortgage and started threatening foreclosure. At this point, the Gregorys’ title insurance company, First American Title Insurance, stepped in and paid the full $575,000 claim. The Gregorys used that money to pay off the mortgage.
Here’s where things get tricky. Landowners Title argued they shouldn’t be held responsible because the Gregorys didn’t actually lose money—the insurance company covered the debt. The trial court agreed and dismissed the case. However, the Gregorys appealed. They said that even though insurance paid the mortgage, they lost the benefit of their full policy coverage. They also pointed out the “collateral source rule,” which means that receiving payment from insurance shouldn’t protect a negligent party from being held liable.
The appeals court looked at two main questions: whether the insurance company could seek compensation from Landowners, and if the Gregorys could recover damages without getting a double payout. This comes down to the idea of subrogation, where the insurer steps into the shoes of the policyholder to recover money from the party at fault.
The court decided that a full trial was needed to sort this out, ruling that dismissing the case early was too soon. This means the case will return to the lower court for further examination.
For title professionals, this is a big deal. It shows that just because insurance has resolved a claim, it doesn’t automatically clear the title agent of responsibility. The insurer may still have rights to pursue those who made mistakes, and the liability for agents can remain. Problems uncovered after closing can linger a lot longer than expected, and insurance payouts don’t always end the matter completely.