SUFFOLK, SS. SUPERIOR COURT

MASSACHUSETTS CONVEYANCERS
ASSOCIATION, INC., MASSACHUSETTS
ASSOCIATION OF BANK COUNSEL, INC.,
BRISTOL COUNTY BAR ASSOCIATION,
FALL RIVER BAR ASSOCIATION, BAR
ASSOCIATION OF NORFOLK COUNTY,
PLYMOUTH COUNTY BAR ASSOCIATION,
TAUNTON BAR ASSOCIATION, and
WORCESTER COUNTY BAR ASSOCIATION, ) C.A. NO. 96-2746-C
Plaintiffs,
v.
COLONIAL TITLE & ESCROW, INC.,
a Massachusetts Corporation, and
COLONIAL TITLE & ESCROW, INC.,
a Rhode Island Corporation, and
Defendants.

PLAINTIFFS' REQUESTS FOR FINDINGS OF FACT

Douglas W. Salvesen (BBO# 550322)
Nancy Armitage (BBO# 636522)
YURKO & PERRY, P.C.
100 City Hall Plaza, 5th Floor
Boston, MA 02108
(617) 723-6900

Attorneys for Massachusetts Conveyancers
Association, Inc., et al.

Dated: April 19, 2000

The plaintiffs, Massachusetts Conveyancers Association, Inc., et al. (the "Bar Associations"), request that the Court find the following facts as set forth below.

Plaintiff Bar Associations
1. The plaintiff, Massachusetts Conveyancers Association, Inc. ("MCA"), is a corporation with a principal place of business at 294 Washington Street, Suite 440, Boston, MA. The MCA is a bar association duly organized and existing under the laws of the Commonwealth. Ex. 10.

2. The plaintiff, Massachusetts Association of Bank Counsel, Inc. ("MABC"), is a Massachusetts corporation with a principal place of business at 167 Milk Street, Boston, Massachusetts. The MABC is a bar association duly organized and existing under the laws of the Commonwealth. Ex. 11.

3. The plaintiff, Bar Association of Norfolk County, Inc., is a Massachusetts corporation with a principal place of business at 15 Cottage Avenue, Suite 206, Quincy, Massachusetts. The Bar Association of Norfolk County, Inc. is a bar association duly organized and existing under the laws of the Commonwealth.

4. The plaintiff, Bristol County Bar Association, Inc., is a Massachusetts corporation with a principal place of business at 488 County Street, New Bedford, Massachusetts. The Bristol County Bar Association, Inc. is a bar association duly organized and existing under the laws of the Commonwealth. Ex. 13.

5. The plaintiff, Fall River Bar Association, Inc., is a Massachusetts corporation with a principal place of business at 226 South Main Street, Fall River, Massachusetts. The MABC is a bar association duly organized and existing under the laws of the Commonwealth. Exs. 15(a) and 15(b).

6. The plaintiff, Plymouth County Bar Association, Inc., is a Massachusetts corporation with a principal place of business at 400 West Street, Brockton, Massachusetts. The Fall River Bar Association, Inc. is a bar association duly organized and existing under the laws of the Commonwealth. Ex. 14.

7. The plaintiff, Taunton Bar Association, is a bar association with a principal place of business at 41 Harrison Street, Taunton, Massachusetts. The Taunton Bar Association, is a bar association duly organized and existing under the laws of the Commonwealth.

8. The plaintiff, Worcester County Bar Association, Inc., is a Massachusetts corporation with a principal place of business at 19 Norwich Street, Worcester, Massachusetts. The Worcester County Bar Association, Inc. is a bar association duly organized and existing under the laws of the Commonwealth. Ex. 12.

Standing Under G.L. c. 221, § 46A

2. The plaintiffs MCA, MABC, the Bar Association of Norfolk County, Inc., Bristol County Bar Association, Inc., Fall River Bar Association, Inc., Plymouth County Bar Association, Inc., the Worcester County Bar Association, Inc., and the Taunton Bar Association. (collectively, the "Bar Associations") have standing to bring an action seeking a declaration under G.L. c. 221, § 46A.

The Colonial Title Defendants

3. The defendant, Colonial Title & Escrow, Inc. ("Colonial Title-Massachusetts"), is a Massachusetts corporation incorporated on March 16, 1994 as a for-profit corporation under the provisions of Chapter 156B of the General Laws. Its principal place of business is located at 132 Central Street, Foxboro, Massachusetts. Ex. 1.; Parente Test.

4. John S. Sweeny is the president of Colonial Title-Massachusetts and Joseph Parente is a vice president of the company. Ex 1; Parente Test.; Sweeny Test. Messrs. Sweeny and Parente are the only directors and stockholders of the company. Ex 1. The company's registered agent is David B. Carroll. Ex 1; Sweeny Test.

5. Colonial Title-Massachusetts is presently not operating though it may act as a title insurance agent in the future. Parente Test.; Sweeny Test.

6. The defendant, Colonial Title & Escrow, Inc. ("Colonial Title"), is a Rhode Island corporation with a principal place of business at 132 Central Street, Foxboro, Massachusetts. Exs. 3 and 4.

7. On or about September 23, 1992, Colonial Title was organized under the laws of Rhode Island for the purpose of conducting title examination, escrow, document retrieval, settlement recording and other services related to the closing of residential real estate transactions. Ex 4.

8. Mr. John S. Sweeny is the president of Colonial Title. Ex 1; Sweeny Test. Mr. Sweeny is also a director and a stockholder of the company. Ex 1; Sweeny Test. He is not an attorney. Sweeny Test.

9. Mr. Joseph Parente is a vice president of the Colonial Title. Ex 1; Parente Test. Mr. Parente is a director and a stockholder of the company. Ex 1; Parente Test. He is not an attorney. Parente Test.

10. David B. Carroll is the company's registered agent. Ex 1. Mr. Carroll is a 1981 graduate of New England School of Law. Carroll Dep. Test. He is a member of the Bar of Massachusetts since 1981. Carroll Dep. Test. Mr. Carroll is not a director or a stockholder of the company. Ex 1; Carroll Dep. Test.

11. On or about February 26, 1998, Colonial Title filed a certificate with the Secretary of State's Office authorizing it to do business in Massachusetts as required by G.L. c. 181, § 4. Ex. 3.

12. Colonial Title is not a title insurance company and is not incorporated under Chapter 175 of the General Laws. Ex. 1; Parente Test. Colonial Title is an Issuing Agent for First American Title Insurance Company and for Chicago Title Insurance Company. Parente Test.; Swanson Test.

Colonial Title's Activities with Respect to Residential Real Estate Transactions

13. Individuals who are buying or refinancing a home typically seek to borrow money from a mortgage broker or lender. Parente Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test. As security for its loan, the lender will usually receive a first mortgage in the property. Ex. 48-54; Parente Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.; Carroll Dep. Test.

14. After its incorporation, Colonial Title began providing services to mortgage lenders and brokers in connection with residential real estate transactions. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test. In general, Colonial Title reviews the title to the property to ensure that the seller (or the borrower, in the case of a refinance) has insurable title, i.e., good and clear title to the property, supervises the process by which any title issues are resolved, controls the settlement or "closing" of the transaction to ensure that the lender's interests in the transaction are protected and that the lender's obligations to the borrower are fulfilled, records the appropriate documents to create the lender's interest in the property, provides the lender and the borrower with title insurance, and provides a certificate of title where required under Massachusetts law. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

15. After a borrower's loan application has been approved, the lender contacts Colonial Title and employs Colonial Title to ensure that the lender's interests in the transaction are protected. Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test. The lender generally sends to Colonial Title certain closing instructions which articulate more precisely the services that are requested and the manner in which they should be provided. Parente Test; Sweeny Test; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

16. Although the closing instructions differ from lender to lender, the instructions provide that Colonial Title is the agent for the lender and is obligated to represent its interests. Exs. 46, 48-55; Parente Test. Most importantly, Colonial Title is instructed to take any necessary steps to ensure that the lender has a valid first lien on the property involved in the transaction and that the closing is conducted in accordance with RESPA, HUD Regulation X and all state and federal laws. Ex. 48, 54, 55, 57. Beyond that, Colonial Title has received instructions requiring Colonial Title to "review all loan instruments/ documents for accuracy and completeness," and "explain any loan instruments/ documents not understood by the mortgagor." Colonial Title is obligated by the instructions, among other things, to ensure that the legal description appearing on the deed and other documents is correct and that a valid title policy can be issued insuring the lender's lien. Ex. 48, 49, 50, 57; Parente Test.; Sweeny Test; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

17. Where the transaction involves the purchase of the home, the lender expects, and Colonial Title agrees, that Colonial Title will ensure that the legal interest in the property identified in the parties' purchase and sale agreement is properly and validly conveyed from the seller to the buyer, and that the obligations of the lender and the borrower under their agreements are satisfied. Exs. 46, 48-55. Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

18. Where the transaction involves the refinancing of an existing mortgage, and no purchase of real estate is involved, the lender expects, and Colonial Title agrees, that Colonial Title will ensure that the lender receives a proper and valid legal interest (a mortgage) in the property securing the loan and that the parties' obligations to one another are met. Exs. 46, 48-55. Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

Colonial Title's Assessment of Title to Property

19. In order to perform the services requested by the lender, Colonial Title conducts a review of the title to the property to identify any encumbrances which adversely affect title and which must be removed or cured. Parente Test.; Sweeny Test.

20. In connection with transactions involving the purchase of property, one of the purposes of Colonial Title's title review is to determine that the seller of the property can convey to the buyer with a valid first lien free of all other encumbrances or other quality of title as required by the parties' purchase and sale agreement. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

21. In connection with transactions involving the refinancing of property owned by the borrower, one of the purposes of Colonial Title's title review is ensure that the owner of the property has a valid first lien on the property, free of all other encumbrances, and that he or she can convey to the lender a valid security interest in the property. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test; Marchwicz Test.

22. To conduct its review, Colonial Title initially obtains a title abstract of the property. The title abstract, which is prepared either by employees of Colonial Title or by independent contractors, consists of a summary of matters of record pertaining to the title to the real estate that is the subject of the transaction. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.

23. In many instances, Colonial Title prepares or obtains a title abstract only for the time period going back to the date of a recent title insurance policy on the property that Colonial Title has obtained. Parente Test.; Sweeny Test.

24. Depending on the property, Colonial Title may be required to review and evaluate public documents recorded at the registry of deeds, documents filed at the probate court or at the town or city hall, documents prepared by registered land surveyors, and documents maintained by the tax assessor. Parente Test.; Sweeny Test.; Fitzsimmons Test.

25. The examination of these documents relating to the title to the property may uncover any number of clouds on the title or encumbrances, including those arising from a problem with a right of access to the property, adverse possession, attachments, bankruptcy filings, condominiums issues, inaccurate descriptions in a deed or other title documents, improper discharges of mortgage, the pendency of divorce proceedings, easements, executions, homesteads, leases, lis pendens, mechanics' liens, mortgage foreclosures, power of attorney, tax liens, or trusts, among others. Parente Test.; Sweeny Test.; Fitzsimmons Test.

26. In addition to reviewing title documents recorded at the registry of deeds and other public records, Colonial Title may be required to review off-record matters to ensure that the lender's interest in the property is protected. Specifically, Colonial Title may be required to evaluate and to ensure that (a) all conditions of the purchase and sale agreement and of the loan commitment are or can be satisfied; (b) the property is not located in a flood plain zone, or, if it is, flood insurance can be obtained; (c) all improvements are located within the boundary lines of the property and comply with zoning dimensional requirements; (d) the property complies with Title V; (e) orders of condition issued by a local conservation commission, if any, are complied with; (f) adequate casualty insurance is obtained; and (g) all real estate taxes and other municipal charges that are due and payable have been paid, and there are no other outstanding municipal charges. Hoffman Test.

27. In order to determine the quality of title to the property, and whether there are an existing title defects, title clouds, or encumbrances, Colonial Title must be familiar with Massachusetts case law and statutory law, as well as in rem federal law. In the course of its review, Colonial Title has occasion to refer to various reference works, title standards and statutes. Parente Test.; Sweeny Test.; Swanson Test.; Hoffman Test.; Fitzsimmons Test.

28. A number of title defects and encumbrances that are identified are routine, such as the identification of outstanding mortgages that need to be discharged, but many are more complex and require a substantive knowledge of real estate law. Hoffman Test.; Fitzsimmons Test.

29. When Colonial Title determines that there is an existing title defect, title cloud, or encumbrance with respect to the property, it notifies the lender of the title defect, title cloud or encumbrance that it has identified. Parente Test.; Hanson Test.; Flynn Test.; Gasbarro Test.

30. If the title defect, title cloud or encumbrance can be resolved by the payment of money (i.e., an unreleased mortgage, a judgment, at tax lien), Colonial Title will take affirmative steps to clear it. Parente Test. Other than notifying the lender, Colonial Title does not take any action to resolve other title defect, title cloud or encumbrances. Parente Test.; Sweeny Test.

31. If the buyer, seller, or other person acts to resolve the title defect, title cloud or encumbrance identified by Colonial Title, Colonial Title will review the steps taken by such party to ensure that it has been properly resolved. Parente Test.; Sweeny Test.

Colonial Title's Activities as a Title Insurance Agent

32. As part of its services, Colonial Title also provides lenders with title insurance policies on the property that is the subject of the transaction. Parente Test.; Sweeny Test.

33. The title insurance policy is designed to report and insure the status of record title of ownership of real property as of a specific moment in time, i.e, the time of recording the mortgage. Swanson Test.

34. The lender's title insurance policy ensures against (a) title to the property being vested otherwise than stated in the policy, (b) any defect in or lien or encumbrance on the title, (c) the title to the property being unmarketable, (d) lack of a right of access to and from the property, (e) the invalidity or unenforceability of the lien of the insured mortgage upon the title, (f) the priority of any lien or encumbrance over the lien of the insured mortgage, (g) lack of priority of the lien of the insured mortgage over any statutory lien for services. Exs. 30-32.

35. The borrower may also purchase owner's title insurance policy which ensures against (a) title to the property being vested otherwise than stated in the policy, (b) any defect in or lien or encumbrance on the title and explicitly excepted from coverage, (c) the title to the property being unmarketable, and (d) lack of a right of access to and from the property. Exs. 30-32.

36. In order to determine whether a lender's or an owner's title policy will issue, it is necessary for Colonial Title to ascertain the status of the title to the real estate, to determine what, if any, defects, liens or encumbrances exist as of the date that the policy issues. Parente Test.; Sweeny Test.

37. The determination of the status of title is made through a title examination. Colonial Title prepares and issues title insurance commitments and title insurance policies based on its examination of title. Parente Test.; Sweeny Test. The examination of title for purposes of issuing a title insurance commitment or title insurance policy is similar to the title examination made Colonial Title as the closing agent. Parente Test.; Sweeny Test.

38. Colonial Title analyzes the recorded instruments referenced in the title abstract in light of applicable law and makes a determination based on this review as to the "quality of title," that is whether there are any defects, liens or encumbrances that adversely affect the title. Parente Test.; Sweeny Test.

39. Colonial Title will review the purchase and sale agreement regarding the property to determine if there are any matters within the agreement that affect title to the property. Carroll Dep. Test.

40. The decision to issue or not to issue a particular title insurance policy is ordinarily made by Colonial Title based on this review and not by the title insurance company directly. Swanson Test.

41. Although the title insurer has underwriting guidelines, the title insurer does not control the manner in which Colonial Title or any other title insurance agent determines the quality of title. Swanson Test.

42. When Colonial Title determines that that the "quality of title" is acceptable, i.e, insurable, and that a legally valid interest in the property has been conveyed to the lender, it issues a policy. Parente Test.

43. Title insurance companies generally expect their agents who make decisions as the whether to issue title policies in Massachusetts to have a working knowledge of Massachusetts real estate law. Parente Test.; Sweeny Test.

44. Without a working knowledge of Massachusetts real estate law, it would be very difficult to determine the insurability and marketability of title to real estate in the Commonwealth. Parente Test.; Sweeny Test.

45. Colonial Title's involvement as a title insurance agent in the closing is to insure that the interest that the seller has in the property is validly conveyed to the buyer. Carroll Dep. Test.

46. Colonial Title acknowledges that in order to act as a title insurance agent, it is necessary that it have a current working knowledge of Massachusetts law. Parente Test.; Sweeny Test.; Carroll Dep. Test.

47. Colonial Title acknowledges that the tasks performed by a title insurance agent are essentially he same as those performed by a title insurance agent. Parente Test.; Sweeny Test.; Carroll Dep. Test.

Colonial Title's Activities at the Settlement

48. If Colonial Title determines that the title is satisfactory, it prepares to conduct the settlement of the real estate transaction, which is often referred to as the "closing," on behalf of the lender. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.

49. In advance of the closing, Colonial Title notifies the seller and the buyer that it is acting as a closing agent for the transaction and informs the parties what documents and other information they are to bring to the closing to ensure a smooth purchase. Exs. 17-19; Parente Test.

50. One of the documents that the seller must bring is a deed. In its correspondence to the seller, Colonial Title offers to have Attorney Carroll prepare a deed for the seller for a $75.00 charge. Ex 18; Parente Test.

51. Prior to 1996, Mr. Parente or Mr. Sweeny drafted deeds and homestead declarations and charged for these services. Exs. 22; 56b-56c; Parente Test; Sweeny Test.

52. In advance of the closing, Colonial Title prepares a complete and accurate settlement statement which identifies the collection and disbursement of the funds in conformity with the parties' obligations amongst one another. Parente Test.; Sweeny Test. In order to prepare the settlement statement accurately, Colonial Title may review and comprehend the purchase and sale agreement, in the case of a sale of property, and any other documents containing the parties agreements amongst one another. Parente Test.; Sweeny Test.

53. Prior to the closing, Colonial Title receives a myriad number of documents and forms from the lender, many of which are required by the secondary market for mortgages, and must be executed by the parties. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test. Colonial Title reviews these documents for accuracy and completeness in order to ensure that they will provide the lender with a valid interest in the property. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

54. At the closing, Colonial Title reviews all other documents provided by the parties, including the propose deed, to ensure their accuracy and legal sufficiency. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

55. In those cases where the seller has requested that the deed be prepared, he or she is charged a fee of $75.00. Ex 18; Parente Test. The statement given to the seller indicates that the fee is paid to David Carroll, Esq., though it appears that Attorney Carroll has no role in the actual preparation of the deed. Parente Test.; Sweeny Test.

56. At the closing, Colonial Title is expected to explain the documents to the parties so that they understand what they are signing. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test. Often, the parties have questions at the closing regarding the documents they are being asked to sign and about the availability of title insurance. Parente Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test. The lenders and the title insurers expect that Colonial Title will be able to, and will in fact, answer the questions that are asked at the closing. Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

57. Where the transaction involves a purchase of property, the seller delivers a deed for the property at the closing, the buyer pays the consideration stated in the parties' purchase and sale agreement, the other obligations of the parties' various agreements are complied with, and the mortgage loan is secured. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

58. At the closing, Colonial Title reviews and passes on all title documents and assures itself that all contractual obligations have been met to ensure that the seller's title to the property is being validly conveyed to the buyer and that the lender receives a valid interest as well in accordance with its instructions. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

Colonial Title's Activities following the Settlement

59. Following the settlement, Colonial Title performs a final run-down of the title at the registry of deeds to ensure that the status of the title has not changed. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

60. Also following the settlement, Colonial Title is also responsible for recording the appropriate documents to protect the lender's rights in the property as well as the rights of the buyer/borrower, for paying the real estate taxes due and any other encumbrances or prior mortgages with good funds, and for obtaining discharges or releases, consistent with the parties' obligations and the lender's instructions. Parente Test.; Sweeny Test.

61. Following these activities, Colonial Title reports and transmits all documents to the lender. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.

62. In order to act as a closing agent, it is necessary that Colonial Title have a current working knowledge of Massachusetts law. Ex. 19; Parente Test.; Sweeny Test.; Swanson Test.

Certification of Title pursuant to G.L. c. 93, § 70

63. In connection with most mortgages granted on residential real estate, G.L. c. 93, § 70 mandates that an attorney certify that the mortgagor holds goods and sufficient record title to the mortgaged premises free from all circumstances except for enumerated exceptions thereto. Carroll Depo. Test; Parente Test. Sweeny Test.

64. In all of the closings conducted by Colonial Title, Colonial Title provides no certification under G.L. c. 93, §70. Parente Test.; Sweeny Test. It contends that it is not required to provide a certification because it is no an attorney and, according to its interpretation of the statute only attorneys and not title insurers are required to provide certification. Parente Test.; Sweeny Test.

65. In all closing conducted by Colonial Title, Colonial Title, rather than the lender, has chosen that Attorney Carroll will provide the certification required by the statute. Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Gasbarro Test.; Marchwicz Test.

66. Pursuant to the statute, Attorney Carroll is to certify that, based on a title examination covering a period of fifty years, the mortgagor at the time the mortgage is recorded holds "good and sufficient title to the mortgaged premises free from all encumbrances" other than those identified. G.L. c. 93, § 70.

67. The certification provided by Attorney Carroll also includes a statement that the lender holds "a good and sufficient record first mortgage to the property" subject only to the matters explicitly excepted. Ex. 29.

68. Attorney Carroll does not perform his own title examination in connection with his certification of title, but instead reviews the title examination completed by Colonial Title. Carroll Dep. Test.

69. There was evidence that Attorney Carroll at times issued a certification on less than a fifty-year search. Exs. 56b-56c; Sweeny Test.

70. There was evidence that Colonial Title did not charge the lenders or borrowers separately for certifications of title provided by Attorney Carroll in accordance with G.L. c. 93, § 70. Ex. 56c; Parente Test.

Agency Relationship with First American Title Insurance Company
71. To become an agent of First American Title Insurance Company, one must (1) have been doing closings for at least five years, (2) be a member of the Massachusetts Conveyancing Association, Inc., (3) carry malpractice insurance, and (4) have proper accounting systems and maintain their files in good order. Swanson Test.

72. Virtually all of the title insurance agents of First American Title Insurance Company in Massachusetts are attorneys. Swanson Test.

73. In or about January 1994, Mr. Sweeny, as principal and on behalf of Colonial Title, submitted an application to become an Issuing Agent for First American Title Insurance Company. Ex. 5; Sweeny Test.

74. The First American Title Insurance Company application form seeks information regarding (1) the law school that the applicant attended; (2) the applicant's "legal experience in real estate law;" (3) whether and for what period of time the applicant has specialized in real property law; (4) the percentage of the applicant's practice that is devoted to real property law; (5) whether the applicant has experience preparing customary closing instruments; (6) whether any title opinion rendered by the applicant has been litigated or refused by court decision; (7) what bar associations the applicant belongs to; (8) whether the applicant has been the subject of disciplinary action by a state bar association; (9) the "attorney's office systems;" (10) the names of attorneys who have helped the applicant obtain experience in real property law; (11) the names of at least five practicing attorneys as references for the applicant. Exs. 5-6; Swanson Test.

75. For most of the information noted above that was requested by the First American Title Insurance Company application form, Mr. Sweeny provided information which referred, not to him personally, but to Attorney David Carroll. Ex 6; Sweeny Test.

76. On or about January 11, 1994, Attorney David B. Carroll, as principal and on behalf of Colonial Title, submitted an application to become an Issuing Agent for First American Title Insurance Company. Ex. 8; Sweeny Test.

77. On January 18, 1994, First American Title Insurance Company and Colonial Title entered into an Issuing Agent Contract whereby Colonial Title became and Issuing Agent for First American Title Insurance Company. Ex.7; Sweeny Test.

78. Under the terms of the Issuing Agent Contract, Colonial Title is authorized to issue title insurance policies provided that it excepts from coverage "all matters disclosed by the opinion of title, including by not limited to, easements, restrictions, taxes, conditions, limitations and encumbrances as well as any other matters which constitute a defect or question as to the validity and marketability of the title being insured." Ex 8; Parente Test.

79. In writing a title policy, a title insurance agent, such as Colonial Title, interprets the title and relates it to the exceptions in the policy and makes judgments about those exceptions. Parente Test.; Sweeny Test.; Swanson Test.

80. Mr. Parente wrote a letter to Mr. Norden in January 1996 in which he stated that Colonial Title "agree[d] to place loan closing operations under the direct supervision of an attorney and to provide services for same." Colonial Title also agreed "that the relationship with [a] mortgage lender would be one between an attorney and that lender." Mr. Parente went on to note that Colonial Title had "negotiated an arrangement with Attorney David Carroll to oversee all closing operations." Ex. 25; Parente Test.

81. Mr. Parente was not authorized to make the statements he did in the letter to Mr. Norden and, according to Mr. Parente, Colonial Title never made a firm commitment to make the changes referenced in the letter. Parente Test.

Revocation of Insured Closing Letter

82. In connection with the appointment of Colonial Title as an Issuing Agent, First American Title Insurance Company had issued an insured closing letter. Ex 23.; Parente Test.; Sweeny Test.

83. The insured closing letter constituted a promise by First American Title Insurance Company to lenders protecting them against specific losses from fraud on the part of Colonial Title or from its failure to follow the lenders' closing instructions. Ex. 23. Primarily, the insured closing letter protects the lender from any mishandling of the funds used in the transactions. Ex. 23; Parente Test.

84. In May 1996, First American Title Insurance Company notified Colonial Title and four other non-attorney title agents that First American Title Insurance Company would not issue an insured closing letter to any non-attorney agents. Ex 26; Parente Test.

85. Since May 1996, most insured closing letters that have been issued with respect to real estate transactions involving Colonial Title have been issued in the name of Attorney Carroll. Parente Test.

86. In order for the insured closing letter that have been issued since May 1996 to provide any protection to the lender, the closing must be controlled by Attorney Carroll. Swanson Test. This requires, among other things, that the funds for each closing must be controlled by Attorney Carroll and placed within his escrow trust account. Swanson Test.

87. At all times, the funds for every closing in which Colonial Title is involved are placed in the escrow trust account of Colonial Title and remain within its control. Parente Test.; Sweeny Test. The funds held in the escrow trust account of Colonial Title are not in the control of Attorney Carroll. Parente Test; Sweeny Test.

88. Colonial Title has responded to First American Title Insurance Company's revocation of the insured closing letter by asserting the fiction that it no longer has a direct relationship with any of its lenders. Parente Test.; Sweeny Test. Those lenders now have a relationship directly with Attorney Carroll and Colonial Title is provides its services to Attorney Carroll rather than to the lenders directly. Parente Test.; Sweeny Test.

89. Although the settlement statements after May 1996 identify Attorney Carroll as the Settlement Agent, the closing instructions issued by the various lenders are issued to Colonial Title and are executed by Colonial Title. Exs. 46, 48-55; Parente Test.; Sweeny Test

90. Introductory letters sent by Colonial Title to the borrower and the seller in advance of the closing identify Colonial Title as the closing agent. Exs. 16-18. These letters make no reference to David Carroll as the closing agent. Exs. 16-18.

91. Attorney Carroll does not receive compensation as a settlement agent unless he appears at the closing. Parente Test.; Sweeny Test. If Attorney Carroll does receive compensation, he bills Colonial Title for his services and Colonial Title pays him outside of the closing. Parente Test.; Sweeny Test.

92. Attorney Carroll does not attend every closing involving the purchase of real estate. Carroll Dep. Test.

Comparative Costs of Real Estate Settlement Services

93. There is no evidence that the flat-rate charged by Colonial Title for its settlement services is less expensive than the rates charged by attorneys generally for the same services. Exs. 33-43; Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Marchowicz Test.

94. There is inconclusive evidence that the flat-rate charged by Colonial Title for its settlement services is less expensive than the rates charged by attorneys generally for the same services. Exs. 33-43; Parente Test.; Sweeny Test.; Hanson Test.; Flynn Test.; Marchowicz Test.