Fidelity National Title Insurance Company v. Worldwide Property Hub, LLC

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

FIDELITY NATIONAL TITLE

INSURANCE COMPANY, as subrogee

of RS RENTAL II, LLC, and in

its own right,

Plaintiff,

v. No. 2:23-cv-02210-SHM-cgc

WORLDWIDE PROPERTY HUB, LLC,

Defendant.

ORDER DENYING PLAINTIFF’S SECOND MOTION FOR SUMMARY JUDGMENT

Plaintiff Fidelity National Title Insurance Company

(“Fidelity”), as subrogee of RS Rental II, LLC (“RS Rental”) and

in its own right, sues Defendant Worldwide Property Hub, LLC

(“Worldwide”) for negligent misrepresentation, breach of contract,

and breach of warranty of title, all arising from a sale of real

property in 2021. (ECF No. 1). On May 22, 2024, Plaintiff moved

for summary judgment, which the Court denied as premature on August

28, 2024. (ECF Nos. 25, 36). Before the Court is Plaintiff’s

Second Motion for Summary Judgment (“Motion”), filed on May 4,

2025. (ECF No. 53). For the reasons set forth below, the Motion

is DENIED.

I. BACKGROUND

A. Undisputed Facts

On October 4, 2021, Worldwide entered into a Purchase and

Sale Agreement (the “Sale Agreement”) to sell real property located

at 7245 Butterfly Drive, Memphis, Tennessee (the “Property”) to RS

Rental. (ECF No. 1, ¶ 6). On November 8, 2021, Worldwide conveyed

the Property to RS Rental by warranty deed, providing full warranty

of title. (Id. at ¶ 7). In connection with the sale, Worldwide

executed an owner’s affidavit, representing that there was no

“outstanding contract of sale, conveyance, or encumbrance

affecting said property” and agreeing to “indemnify and hold

harmless” any assignees or successors in interest “against all

loss or expense of enforcing” the Sale Agreement. (Id. at ¶¶ 9-

10, 13).

Fidelity simultaneously issued a title insurance policy to RS

Rental, insuring the Property against “[a]ny defect in or lien

encumbrance on the Title.” (Id. at ¶ 14). The policy also granted

Fidelity subrogation rights, allowing it to pursue claims against

third parties for covered losses sustained by RS Rental. (Id. at

¶ 17).

After the sale, RS Rental received notice that the Property

was scheduled for foreclosure due to a default on a 2005 deed of

trust executed by a prior owner, in the amount of $81,920.00. (Id.

at ¶¶ 17-20). Both RS Rental and Fidelity assert that they were

unaware of the deed of trust at the time of the sale. (Id.) RS

Rental subsequently submitted a claim under its title insurance

policy, which Fidelity accepted. (Id. at ¶¶ 20-22).

To prevent foreclosure, Fidelity paid $77,162.71 to satisfy

the outstanding debt and incurred an additional $5,815.00 in

attorney’s fees. (Id. at ¶¶ 22-23). The deed of trust was formally

released on November 1, 2022. (Id. at ¶ 23). Acting as subrogee

of RS Rental, Fidelity demanded indemnity from Worldwide in the

amount of $82,977.71, representing the total paid to satisfy the

debt and prevent foreclosure. (ECF No. 55, ¶ 16). Worldwide

refused to pay. (Id. at ¶ 17).

On April 11, 2023, Fidelity filed suit against Worldwide,

asserting claims for negligent misrepresentation (Count I), breach

of contract (Count II), and breach of warranty of title (Count

III), based on Worldwide’s alleged failure to disclose the 2005

deed of trust. (ECF No. 1, ¶¶ 25-48). On May 22, 2024, Fidelity

filed the instant Motion, seeking summary judgment on its claims

for negligent misrepresentation and breach of warranty of title,

but not on its breach of contract claim. (ECF No. 53). The Motion

also seeks damages in the amount of $82,977.71. (Id.)

B. Disputed Facts

On June 13, 2025, Worldwide filed a response opposing

Fidelity’s Motion. (ECF No. 67). In its response, Worldwide

raises several factual disputes that it argues preclude summary

judgment.

First, Worldwide asserts that Fidelity, not Worldwide, was

responsible for identifying any encumbrances affecting the

Property’s title. Worldwide cites an agency contract executed on

October 19, 2017, under which Fidelity retained Spruce Land

Services, LLC (“Spruce”) as its policy issuing agent. (Id. at ¶

1, Exhibit 2). Under that contract, Spruce was responsible for

issuing title insurance policies on Fidelity’s behalf, including

conducting “complete title search[es]” and identifying “all liens,

mortgages, and other encumbrances” affecting title to the

Property. (Id. at ¶¶ 3, 9-10). Worldwide further asserts that

“it is industry standard” for the policy issuing agent to provide

search results to the seller. (Id. at ¶ 27).

Second, Worldwide contends that Fidelity had actual knowledge

of the 2005 deed of trust at the time of the sale. Worldwide

claims that Spruce discovered the deed of trust during its title

search and transmitted two “Title Commitments” to Fidelity

identifying the encumbrance. (Id. at ¶¶ 14, 18, 22, Exhibits 5

and 7). According to Worldwide, the Title Commitments were

internal documents shared between Spruce and Fidelity. (Id.)

Worldwide describes the Title Commitments as documents outlining

the terms, conditions, and exclusions of a title insurance policy,

including any requirements to be resolved before closing. (Id. at

¶ 11). Both Title Commitments identified, as a condition of

closing, the need for a “record satisfactory release for the [d]eed

of [t]rust” executed by the prior owner. (Id. ¶¶ 15, 19).

Worldwide asserts that those documents were never provided to it

before closing.

Third, Worldwide asserts that it lacked knowledge of the deed

of trust during its ownership of the Property. Worldwide purchased

the Property from its prior owner through a Substitute Trustee’s

Deed, recorded on October 14, 2021. (Id. at ¶ 6). At the time,

Worldwide had already executed the Sale Agreement with RS Rental.

(Id. at ¶ 7). Worldwide represents that it relied on Spruce to

perform a complete title search and share the results. (Id. ¶

27). Spruce allegedly “refused to send [the] title search” results

to Worldwide, despite having discovered the deed of trust. (Id.)

Fourth, Worldwide disputes the validity of the owner’s

affidavit. Although Worldwide concedes the affidavit contains

language warranting that the Property was unencumbered, it

contends that the affidavit was drafted entirely by Fidelity and

executed solely at Fidelity’s insistence as a condition of closing.

(Id. at ¶ 32). Worldwide asserts that it had no part in drafting

the affidavit and argues that Fidelity cannot reasonably rely on

the statements it contains. (Id.)

Finally, Worldwide alleges that Fidelity “obtained the

warranty deed through fraud and misrepresentation.” (Id., pp. 14-

16). It contends that both Spruce and Fidelity were aware of the

2005 deed of trust and that Spruce withheld the title search

results despite Worldwide’s request. (Id.) According to

Worldwide, on October 15, 2021, Spruce transmitted a third Title

Commitment that had been altered to omit any reference to the 2005

deed of trust. (Id., Exhibit 8). Worldwide argues that this

omission was deliberate, intended to mislead Worldwide into

believing the Property was unencumbered and to induce Worldwide to

execute the owner’s affidavit warranting against encumbrance.

(Id.)

On June 27, 2025, Fidelity filed a reply disputing all of the

new factual allegations raised in Worldwide’s response. (ECF Nos.

68-70). Fidelity argues that the Title Commitments are

unauthenticated and thus inadmissible at summary judgment. (ECF

No. 70). Fidelity also denies having knowledge of the 2005 deed

of trust. (Id.) Fidelity contends that, even if it had prior

knowledge of the encumbrance, its knowledge is irrelevant to a

claim for breach of warranty of title. (Id.) Fidelity asserts

that, to the extent Spruce transmitted any documents to Worldwide,

Spruce acted outside the scope of its agency and without Fidelity’s

authorization. (ECF Nos. 68-69).

The matter is now fully briefed and ripe for adjudication.

II. JURISDICTION

The Court has subject matter jurisdiction under 28 U.S.C. §

1332 because there is complete diversity of citizenship between

the parties, and the amount in controversy exceeds $75,000. See

28 U.S.C. § 1332. Plaintiff Fidelity is a Florida corporation

with its principal place of business in Florida. (ECF No. 1).

Defendant Worldwide is a Tennessee limited liability company whose

sole member resides in Memphis, Tennessee. (Id.) The amount in

controversy is $82,977.71. (Id.)

Venue is proper in the Western District of Tennessee because

Worldwide is subject to the Court’s personal jurisdiction. See 28

U.S.C. § 1391(b)(3).

Because Fidelity’s claims arise under Tennessee law and the

events giving rise to the dispute occurred in Tennessee, the Court

applies Tennessee substantive law and federal procedural law. See

Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).

III. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 56(a), a court may grant

summary judgment “if the movant shows that there is no genuine

issue as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); La Pointe

v. United Autoworkers Local 600, 8 F.3d 376, 378 (6th Cir. 1993).

A fact is “material” if “proof of that fact would have the effect

of establishing or refuting an essential element of the cause of

action or a defense advanced by the parties.” Westfield Ins. Co.

v. Enterprise 522, LLC, 34 F.Supp.3d 737, 743 (E.D. Mich. 2014)

(citing Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984)).

There is “genuine dispute of material fact” if a reasonable jury

could return a verdict for the non-movant by a preponderance of

the evidence. See Anderson v. Liberty Lobby, 477 U.S. 242, 252

(1986).

In evaluating a motion for summary judgment, a court must

view the evidence in the light most favorable to the non-movant

and draw all reasonable inferences in that party’s favor. See

U.S. Sec. & Exch. Comm’n v. Sierra Brokerage Servs., Inc., 712

F.3d 321, 327 (6th Cir. 2013). The central inquiry is “whether

the evidence presents a sufficient disagreement to require

submission to a jury or whether it is so one-sided that one party

must prevail as a matter of law.” Patton v. Bearden, 8 F.3d 343,

346 (6th Cir. 1993) (quoting Anderson, 477 U.S. at 251-52)

(internal quotations omitted). “The mere existence of a scintilla

of evidence in support of the [non-movant’s] position will be

insufficient” to defeat summary judgment. Anderson, 477 U.S. at

252. Evidence that is “merely colorable” or “not significantly

probative” likewise fails to create a genuine dispute of material

fact. Id. at 249-50.

The movant bears the initial burden of showing the absence of

a genuine dispute of material fact. See Malkamaki v. Sea Ray

Boats, Inc., 411 F.Supp.2d 737, 742 (N.D. Ohio 2005); see also

Celotex, 477 U.S. at 323 (quoting Fed. R. Civ. P. 56) (“[A] party

seeking summary judgment always bears the initial responsibility

of … identifying those portions of ‘the pleadings, depositions,

answers to interrogatories, and admissions on file, together with

the affidavits, if any,’ which it believes demonstrates the absence

of a genuine issue of material fact.”). “This initial burden

remains with the movant, even when the issue is one on which the

non-movant will bear the burden of proof at trial, such as a

defendant’s affirmative defenses.” Books A Million, Inc. v. H&N

Enterprises, Inc., 140 F.Supp.2d 846, 851 (S.D. Ohio 2001) (citing

Stillman v. Travelers Ins. Co., 88 F.3d 911, 913-914 (11th Cir.

1996)). Once the movant satisfies its burden, the burden shifts

to the non-movant to identify specific facts demonstrating that a

genuine dispute of material fact remains for trial. See Fed. R.

Civ. P. 56(e); see also Cox v. Kentucky Dept. of Transp., 53 F.3d

146, 150 (6th Cir. 1995).

The Court “is not required to speculate on which portion of

the record the nonmoving party relies, nor is it obligated to wade

through and search the entire record for some specific facts that

might support the nonmoving party’s claim.” InterRoyal Corp. v.

Sponseller, 889 F.2d 108, 111 (6th Cir. 1989). “Summary judgment

is ‘an integral part of the Federal Rules as a whole, which are

designed to secure the just, speedy, and inexpensive determination

of every action’ rather than a ‘disfavored procedural shortcut.’”

F.D.I.C. v. Jeff Miller Stables, 573 F.3d 289, 294 (6th Cir. 2009)

(quoting Celotex, 477 U.S. at 327).

IV. ANALYSIS

Fidelity moves for summary judgment on its claims for

negligent misrepresentation and breach of warranty of title. Both

claims arise from the covenant against encumbrances in the owner’s

affidavit, in which Worldwide represented that the Property was

conveyed without any “outstanding contract of sale, conveyance, or

encumbrance affecting said property.” (ECF No. 1, ¶ 10).

Although Worldwide does not dispute the contents of the

affidavit, it raises the affirmative defense of fraud. 1

Specifically, Worldwide argues that Fidelity and its agent,

Spruce, intentionally concealed the title defect, thereby inducing

Worldwide to execute the affidavit without knowledge of the

encumbrance. (ECF No. 67). That defense relies primarily on the

exhibits attached to Worldwide’s response. (Id., Exhibits 2, 5,

6, 7, and 8). Fidelity responds that the exhibits are inadmissible

because they have “not [been] properly authenticated by a business

record custodian or any other person with the knowledge that [the

evidence] is what it purports to be.” (ECF No. 69).

A. Admissibility of Worldwide’s Exhibits

1. Legal Standard Governing Unauthenticated Materials

The Court must decide whether the exhibits attached to

Worldwide’s response are admissible at the summary judgment stage.

1 In its answer to the complaint filed on January 12, 2024 (ECF No. 17),

Worldwide raised several affirmative defenses, including the equitable

doctrines of unclean hands, laches, waiver, mistake, and estoppel.

Worldwide has not made any legal arguments to support those defenses or

referred to them in its responses to Fidelity’s motion for summary

judgment. The Court deems those defenses abandoned. See Tennessee

Valley Authority v. Fire Star Energy Resources, LLC, No. 3:23-CV-424-

TAV-DCP, 2025 WL 1727957, at *4 (E.D. Tenn. Jun. 13, 2025) (“[F]ailure

to respond to … arguments regarding certain defenses … constitutes a

waiver of those defenses for purposes of summary judgment.”); see also

Brown v. VHS of Michigan, Inc., 545 Fed. Appx. 368, 372 (6th Cir. 2013)

(“a [party] is deemed to have abandoned a claim when [it] fails to

address it in response to a motion for summary judgment.”).

Federal Rule of Civil Procedure 56(c) governs the admissibility of

materials cited to support or oppose a factual assertion in a

motion for summary judgment. Under Rule 56(c)(2), “[a] party may

object that the material cited to support or dispute a fact cannot

be presented in a form that would be admissible in evidence.” Fed.

R. Civ. P. 56(c)(2). Courts must “disregard any inadmissible

portions from the evidence[.]” Weisblat v. John Carroll Univ.,

748 F.Supp.3d 517, 527 (N.D. Ohio 2024); see also Wiley v. United

States, 20 F.3d 222, 226 (6th Cir. 1994) (“It is well settled that

only admissible evidence may be considered by the trial court in

ruling on a motion for summary judgment.”). Courts “cannot

consider evidence at summary judgment that a jury could not

consider at trial.” Thomas v. Abercombie & Fitch Co., 301

F.Supp.3d 749, 755 (E.D. Mich. 2018) (citing Gohl v. Livonia Pub.

Schs. Sch. Dist., 836 F.3d 672, 681 (6th Cir. 2016)).

Evidence submitted at summary judgment “do[es] not

necessarily need to be in a form that is admissible at trial.”

Hurick v. McKee, No. 17-1396, 2018 WL 4908138, at *3 (6th Cir.

Apr. 30, 2018) (citing Celotex, 477 U.S. at 324). However, the

non-movant must present evidence that is capable of being presented

in admissible form at trial and sufficient to establish a genuine

dispute of material fact. See Alexander v. CareSource, 576 F.3d

551, 558 (6th Cir. 2009).

Before the 2010 amendments to Rule 56, the Sixth Circuit

consistently held that unauthenticated evidence was inadmissible

at the summary judgment stage. See Sigler v. Am. Honda Motor Co.,

532 F.3d 469, 480-81 (6th Cir. 2008); see also Pack v. Damon Corp.,

434 F.3d 810, 815 (6th Cir. 2006). The amended rule now permits

parties to cite a broader range of materials, including

“depositions, documents, electronically stored information,

affidavits or declarations,” regardless of whether they are

authenticated at the time of submission. Fed. R. Civ. P.

56(c)(1)(A). Unauthenticated evidence may be considered at

summary judgment so long as it is capable of being authenticated

at trial. See Derrick v. Friar, No. 2:17-cv-2741-SHL-cgc, 2022 WL

20746520, at *3 (W.D. Tenn. Feb. 9, 2022) (citing Davis v. United

States, 302 F.Supp.3d 951, 956 (S.D. Ohio 2017)); see also Allen

v. Shawney, No. 11-10942, 2014 WL 1089618, at *9-10 (E.D. Mich.

Mar. 18, 2014).

Under current Rule 56(c), unauthenticated evidence is not

inadmissible per se. Rather, the absence of authentication is

grounds for objection. See Forward Magazine, Inc. v. OverDrive,

Inc., No. 1:10-cv-1144, 2011 WL 5169384, at *2 (W.D. Mich. Oct.

31, 2011). Once an objection is raised, the burden shifts to the

proponent “to show that the material is admissible as presented or

to explain the admissible form that is anticipated” at trial. Id.

(citing Fed. R. Civ. P. 56 advisory committee’s note to 2010

amendment); see also Mangum v. Repp, 674 Fed. Appx. 531, 536-37

(6th Cir. 2017).

Authentication of evidence is governed by Federal Rule of

Evidence 104(b). Under that rule, courts must determine whether

the proponent “has offered a satisfactory foundation from which

the jury could reasonably find that the evidence is authentic.”

Forward Magazine, 2011 WL 5169384, at *3 (quoting United States v.

Branch, 970 F.2d 1368, 1370 (4th Cir. 1992)). Because

authentication is “a question of conditional relevancy,” the jury

ultimately determines whether the evidence is what its proponent

claims it to be. Id. At summary judgment, a prima facie showing

of authenticity suffices. Id. (citing Fed. R. Evid. 901(a));

accord United States v. Harvey, 117 F.3d 1044, 1049 (7th Cir.

1997).

2. Application of Rule 56(c) to the Exhibits

Fidelity objects to the following exhibits submitted by

Worldwide: (1) the agency contract between Fidelity and Spruce,

attached as Exhibit 2; (2) Spurce’s title search report, attached

as Exhibit 6; and (3) the Title Commitments, attached as Exhibits

5, 7 and 8. (ECF No. 67). None of those exhibits is accompanied

by an authenticating affidavit. Under the pre-amendment version

of Rule 56, the exhibits would have been inadmissible. See Moore

v. Holbrook, 2 F.3d 697, 698-99 (6th Cir. 1993); see also Fed. R.

Civ. P. 56(e)(1) (2009 version). Under the amended rule, the

absence of a sworn or certified copy does not render an exhibit

inadmissible. Rule 56(c) currently expressly “omit[s] as

unnecessary” the prior requirement “that a sworn or certified copy

of a paper referred to in an affidavit or declaration be attached

to the affidavit or declaration.” Ganesh v. United States, 658

Fed. Appx. 217, 220 (6th Cir. 2016) (quoting Fed R. Civ. P. 56(c)).

Although Worldwide has not submitted authenticating

affidavits or explained how it plans to authenticate the exhibits

at trial, the exhibits are admissible at this stage. Courts have

routinely held that unauthenticated documents may be considered at

summary judgment if they are capable of authentication and if

personal knowledge can reasonably be inferred from the context.

See Peirano v. Momentive Specialty Chems., Inc., No. 2:11-cv-

00281, 2012 WL 4959429, at *7 (S.D. Ohio Oct. 17, 2012); see also

Phinnessee v. Young Touchstone Co., No. 09-1084, 2011 WL 184017,

at *3 (W.D. Tenn. Jan. 20, 2011). Courts have admitted

unauthenticated evidence where the proponent’s personal knowledge

and competence may be inferred from their professional role or

direct involvement in the underlying transactions, and where the

documents are described with sufficient particularity. See CBR

Funding, LLC v. Jones, No. 13-1280, 2014 WL 11456080, at *4 (W.D.

Tenn. Nov. 4, 2014).

Here, the exhibits at issue – the agency contract, the title

search report, and the Title Commitments – bear sufficient indicia

of reliability and appear on their face to be what Worldwide

purports them to be. The documents are printed on Spruce’s and

Fidelity’s corporate letterheads, contain verified signatures of

the relevant parties, and refer to the Property sale with

sufficient particularity. Those characteristics support their

authenticity. See Alexander, 576 F.3d at 561 (holding that a

document bearing trade inscription indicating its source may be

self-authenticating under Fed. R. Evid. 902(7)); see also Pass &

Syemour, Inc. v. Hubbell Inc., 532 F.Supp.2d 418, 438 (S.D.N.Y.

2007) (holding corporate marketing materials and reports bearing

company logos may be self-authenticating). Worldwide has

submitted a sworn affidavit from its closing agent, Pamela Webster,

who attests to having received the documents from Spruce in

connection with the transaction and describes their contents in

detail. (ECF No. 67, Exhibit 4). A reasonable juror could

conclude that the exhibits are what they purport to be.

The exhibits at issue are distinguishable from the types of

unauthenticated materials that courts have excluded at summary

judgment, such as unverified handwritten notes, screenshots of

commercial websites, and hearsay statements lacking any indicia of

reliability. See, e.g., Jacqueline Prado v. Mazeika, No. 3:16-

cv-320, 2019 WL 1301729, at *4 (S.D. Ohio Mar. 21, 2019) (excluding

an affidavit containing hearsay statements); United States v.

Rhodes, 788 F.Supp. 339, 342 (E.D. Mich. 1992) (holding that

handwritten notes, certificates of indebtedness, and debt

assignment notes are inadmissible hearsay when not authenticated

as business records); Forward Magazine, 2011 WL 5169384, at *3

(holding that commercial website information must be authenticated

to be considered at summary judgment).

Fidelity has failed to demonstrate that the challenged

exhibits cannot be authenticated at trial. In the absence of any

specific showing that the exhibits are inherently unreliable or

incapable of authentication, they may be properly considered at

the summary judgment stage. See Martin v. Performance Boat

Brokerage.com, LLC, 973 F.Supp.2d 820, 822 (W.D. Tenn. 2013)

(quoting Harden v. AlliedBarton Sec. Service, No. 3:10-00779, 2013

WL 2467714, at *8 (M.D. Tenn. Jun. 7, 2013)) (“[W]here there was

no indication [that] proffered evidence was not what it was

purported to be or that it could not be authenticated, [the] court

could consider it when ruling on [a] motion for summary

judgment.”).

B. Negligent Misrepresentation

In the instant Motion, Fidelity argues that Worldwide failed

to exercise reasonable care in executing the owner’s affidavit.

(ECF No. 1). Fidelity contends that the affidavit was made “for

the purpose of inducing Fidelity to issue the [title insurance]

policy,” and that Fidelity justifiably relied on the affidavit in

doing so. (ECF No. 1, ¶¶ 25-32).

Tennessee courts “recognize the common-law tort of negligent

misrepresentation and have adopted the Restatement (Second) of

Torts § 552 (1977) as the guiding principle with regard to these

claims.” Fidelity Nat. Title Ins. Co. v. 1st Trust Title, Inc.,

No. 3:11-00253, 2014 WL 234205, at *5 (M.D. Tenn. Jan. 22, 2014)

(citing Hodge v. Craig, 382 S.W.3d 325, 343 (Tenn. 2012)) (citation

modified). The Restatement provides:

“One who, in the course of his business, profession or

employment, or in any other transaction in which he has

a pecuniary interest, supplies false information for the

guidance of others in their business transactions, is

subject to liability for pecuniary loss caused to them

by their justifiable reliance upon the information, if

he fails to exercise reasonable care or competence in

obtaining communicating the information.” Restatement

(Second) of Torts § 552 (1977).

To establish negligent misrepresentation, a plaintiff must

show: “(1) the defendant was acting in the course of a transaction

in which he had a pecuniary interest; (2) the defendant supplied

faulty information meant to guide others in their business

transaction; (3) the defendant failed to exercise reasonable care

in obtaining or communicating the information; and (4) the

plaintiff justifiably relied upon the information.” Apollo Hair

Sys. of Nashville, Inc. v. Micromode Med. Ltd., No. M2011-01480-

COA-R3-CV, 2012 WL 5991779, at *8 (Tenn. Ct. App. Nov. 29, 2012)

(citing John Martin Co. v. Morse/Diesel Co., 819 S.W.2d 428, 431

(Tenn. 1991)).

Here, it is undisputed that Worldwide had a pecuniary interest

in the Property sale. It is also undisputed that the owner’s

affidavit falsely stated that the Property was unencumbered, and

that the affidavit was intended to guide Fidelity in issuing the

title insurance policy. Thus, the analysis focuses on the two

remaining elements: (3) whether Worldwide failed to exercise

reasonable care in representing that the Property was

unencumbered, and (4) whether Fidelity justifiably relied on that

representation.

1. Reasonable Care

“[B]efore a seller makes a representation, he is required to

exercise reasonable care to make sure that it is correct.” Akbari

v. Horn, 641 S.W.2d 506, 508 (Tenn. Ct. App. 1982). Whether that

care is reasonable depends on the foreseeability and magnitude of

the potential harm in relation to the burden of avoiding it. See

Satterfield v. Breeding Insulation Co., 266 S.W.3d 347, 365 (Tenn.

2008) (citing Turner v. Jordan, 957 S.W.2d 815, 818 (Tenn. 1997)).

Tennessee courts define reasonable care as care “commensurate with

the risk of injury.” See West v. East Tenn. Pioneer Oil Co., 172

S.W.3d 545, 550 (Tenn. 2005) (citing Doe v. Linder Const. Co., 845

S.W.2d 173, 178 (Tenn. 1992)). A party’s conduct is deemed

unreasonable “if the foreseeable probability and gravity of harm

posed … outweigh the burden … to engage in alternative conduct

that would have prevented the harm.” Id. at 551 (citing Burroughs

v. Magee, 118 S.W.3d 323, 329 (Tenn. 2003)); see also Staples v.

CBL & Assoc., Inc., 15 S.W.3d 83, 89 (Tenn. 2000); McCall v.

Wilder, 913 S.W.2d 150,153 (Tenn. 1995).

Worldwide failed to exercise reasonable care. The risk that

Fidelity would insure title to encumbered property was both

substantial and foreseeable. (ECF No. 54). As Worldwide

acknowledged, it knew that the owner’s affidavit was a condition

for issuing title insurance and closing the sale. (ECF No. 67,

Exhibit 1). To avoid that risk, Worldwide could have conducted a

title search in the Shelby County Register’s Office, which would

have revealed the outstanding 2005 deed of trust. The burden of

doing so was minimal in comparison to the foreseeable economic

harm, that is, Fidelity’s $81,920.00 loss resulting from

foreclosure. (ECF No. 54). Worldwide failed to take that

precaution.

A reasonably prudent seller in Worldwide’s position would

have independently verified title. See Mayes v. LeMonte, 122

S.W.3d 142, 145 (Tenn. Ct. App. 2003); see also Dooley v. Everett,

805 S.W.2d 380, 384 (Tenn. Ct. App. 1990) (defining negligence as

“doing what a reasonable and prudent person would not do under the

given circumstances.”). Although Spruce conducted a title search,

it did so as Fidelity’s agent; its duties ran to Fidelity, not

Worldwide. Nothing prevented Worldwide from verifying title on

its own or through its agent. If, as Worldwide contends, Spruce

refused to share the title search results, that refusal should

have heightened, not diminished, a reasonable seller’s concerns.

A reasonably prudent seller would have viewed that refusal as a

red flag and taken additional steps to verify title independently.

See Menuskin v. Williams, 145 F.3d 755, 769-70 (6th Cir. 1998)

(citing Winstead v. First Tennessee Bank N.A., Memphis, 709 S.W.2d

627, 631 (Tenn. Ct. App. 1986)) (finding a plaintiff acted

unreasonably when it “could have simply performed [its] own title

search to discover if the titles were encumbered, but [it] instead

chose to rely on the [defendant’s] assurances[.]”).

To the extent Worldwide argues it could not have acted

unreasonably because Fidelity drafted the owner’s affidavit, that

argument is unavailing. Even if Fidelity drafted the owner’s

affidavit, Worldwide had a duty to verify the truth of its

contents. See Stanfill v. Mountain, 301 S.W.3d 179, 195 (Tenn.

2009) (holding that a “realtor representing the sellers” has a

duty to “ensure that his representations regarding the property

were correct or to make a good-faith inquiry” to verify the

property’s conditions); see also Staggs v. Sells, 86 S.W.3d 219,

223 (Tenn. Ct. App. 2001) (holding that a party must exercise

“reasonable care in determining that all representations made in

the contract were true and correct,” regardless of who drafted the

document). By failing to take reasonable steps to confirm the

accuracy of its representations, Worldwide fell below the standard

of care expected of a prudent seller.

2. Justifiable Reliance

In addition to showing that the defendant failed to exercise

reasonable care, the plaintiff must demonstrate that it

justifiably relied on the defendant’s false representation to its

detriment. See William v. Berube & Assoc., 26 S.W.3d 640, 645

(Tenn. Ct. App. 2000). The burden lies with the plaintiff “to

show that its reliance upon any statements defendants may have

made was reasonable.” Id. “A false representation alone” is

insufficient; there must be a “showing by [the] plaintiff that the

representation was relied [upon], and that the reliance was

reasonable under the circumstances.” Homestead Grp., LLC v. Bank

of Tenn., 307 S.W.3d 746, 752 (Tenn. Ct. App. 2009). “Justifiable

reliance is not blind faith and there is no duty to disclose a

fact if ordinary diligence would have revealed it.” Id.

Here, there is a genuine dispute of material fact about

whether Fidelity’s reliance on the owner’s affidavit was

justified. Fidelity claims it relied on Worldwide’s

representation that the Property was unencumbered when issuing the

title insurance policy. Worldwide counters that Fidelity could

not have relied on that representation because Fidelity had prior

knowledge of the 2005 deed of trust. Worldwide cites the two Title

Commitments prepared by Fidelity’s agent Spruce, which identified

a need for “satisfactory release for the [d]eed of [t]rust” as a

condition of closing. (ECF No. 67, Exhibits 5 and 7). If credible,

that evidence suggests that Fidelity was aware, or should have

been aware, of the encumbrance before Worldwide executed the

owner’s affidavit. See Marin v. Washmaster Auto Center, U.S.A.,

946 S.W.2d 314, 318 (Tenn. Ct. App. 1996) (citing Simmons v. Sears,

Roebuck & Co., 713 S.W.2d 640, 641 (Tenn. 1986) (“Constructive

knowledge can be shown by proving … that the defendant, in the

exercise of reasonable care, should have become aware of [the

defective] condition.”).

“Generally, a party dealing on equal terms with another is

not justified in relying upon representations where the means of

knowledge are readily within his reach.” Metropolitan Gov’t of

Nashville and Davidson County v. McKinney, 852 S.W.2d 233, 239

(Tenn. Ct. App. 1992) (quoting Solomon v. First Am. Nat’l Bank of

Nashville, 774 S.W.2d 935 (Tenn. Ct. App. 1989)). Viewing the

record in the light most favorable to Worldwide as the non-movant,

a reasonable juror could conclude that Fidelity’s reliance on the

affidavit was not justified if Fidelity had actual or constructive

knowledge of the encumbrance through its agent.

Considering the record as a whole, Fidelity has satisfied the

first three elements of negligent representation – namely, that

Worldwide had a pecuniary interest in the sale, supplied false

information through the owner’s affidavit, and failed to exercise

reasonable care. However, Fidelity has not established the fourth

element, justifiable reliance. The evidence presented by

Worldwide creates a genuine issue of material fact about whether

Fidelity’s alleged prior knowledge of the 2005 deed of trust

undermines its reliance on the affidavit. Because resolving that

dispute requires credibility determinations and weighing of

evidence – functions reserved for the jury – it is inappropriate

for judicial resolution at the summary judgment stage. See Bobo

v. United States Parcel Serv., Inc., 665 F.3d 741, 748 (6th Cir.

2012) (“[C]redibility determinations, the weighing of the

evidence, and the drawing of legitimate inferences from the facts

are jury functions, not those of a judge.”).

C. Breach of Warranty of Title

Fidelity also seeks summary judgment on its claim for breach

of warranty of title. It argues that Worldwide conveyed the

encumbered Property in violation of the express covenant against

encumbrances found in both the owner’s affidavit and the warranty

deed. In the owner’s affidavit, Worldwide represents that the

Property was conveyed without any “outstanding contract of sale,

conveyance, or encumbrance[.]” (ECF No. 1, ¶ 10).

Similarly, the warranty deed provides:

“[Worldwide Property Hub, LLC] does hereby covenant with

[RS Rental II, LLC] that it is lawfully seized in fee of

the aforedescribed real estate; that it has a good right

to sell and convey the same; that same is unencumbered

except: 2022 City of Memphis and 2022 Shelby County real

property taxes, [b]eing liens not yet due and payable …

all being of record in said Shelby County Register’s

Office and that title and quiet possession thereto it

will warrant and forever defend against the lawful

claims of all persons.” (ECF No. 1, ¶ 9, Exhibit 1).

Both the warranty deed and the owner’s affidavit

unequivocally covenant against encumbrances. Under Tennessee law,

“[t]he covenant against encumbrances, if untrue, is broken as soon

as it is made.” Erwin v. Greater River Road Supercross, LLC, No.

W2019-01005-COA-R3-CV, 2020 WL 7055351, at *3 (Tenn. Ct. App. Dec.

1. 2020) (citing Amos v. Carson, 210 S.W.2d 677, 679 (Tenn. 1948)).

That covenant protects the grantee from third-party interests that

diminish the property’s value, even if those interests do not

prevent the transfer of legal title. See Amos, 210 S.W.3d at 679.

By delivering a warranty deed, the grantor assumes the risk of any

undisclosed encumbrances. See id. “The grantee’s actual or

constructive knowledge of the encumbrance is irrelevant.” Erwin,

2020 WL 7055351, at *3 (citing Murdock Acceptance Corp. v. Aaron,

230 S.W.2d 401, 405 (Tenn. 1950)).

Absent fraud or mutual mistake, a covenant expressly stated

in a deed will not be overturned if the terms are unambiguous on

its face. See Continental Land Co., Inc. v. Investment Properties

Co., No. M1998-00431-COA-R3-CV, 1999 WL 1129025, at *4 (Tenn. Ct.

App. Dec. 10, 1999) (citing City of Memphis v. Moore, 818 S.W.2d

13, 16 (Tenn. Ct. App. 1991)). Once the deed is delivered and

accepted without qualification, it functions as the final contract

the governs the parties’ rights. See Archer v. The Home Team,

Inc., No. M2019-01898-COA-R3-CV, 2020 WL 6075705, at *8 (Tenn. Ct.

App. Oct 15, 2020); see also McRae v. Hagaman, No. E2004-00852-

COA-R3-CV, 2004 WL 2378109, at *6 (Tenn. Ct. App. Oct. 25, 2004)

(citing Fuller v. McCallum & Robinson, 118 S.W.2d 1028, 1037 (Tenn.

Ct. App. 1937)); see also Gurley v. Hickory Withe Partners, L.P.,

No. W2002-02050-COA-R3-CV, 2003 WL 22204520, at *3 (Tenn. Ct. App.

Sept. 10, 2003).

Here, the record establishes that Worldwide conveyed the

Property to RS Rental by warranty deed dated November 8, 2021,

which was recorded in the Shelby County Register’s Office. (ECF

No. 1 ¶ 7). Worldwide does not dispute that the deed was properly

delivered and accepted. However, Worldwide claims that “Fidelity

obtained the warranty deed through fraud and misrepresentation.”

(ECF No. 67). The Court construes that claim as an affirmative

defense of fraud, which Worldwide raises for the first time in its

response to Fidelity’s motion for summary judgment.

1. Timeliness of the Fraud Defense

The threshold issue is whether Worldwide’s fraud defense is

timely. Ordinarily, affirmative defenses must be raised in a

responsive pleading, or they are deemed waived. See Horton v.

Potter, 369 F.3d 906, 911 (6th Cir. 2004) (citing Fed. R. Civ. P.

8(c)). However, the Sixth Circuit permits a defendant to raise an

affirmative defense later in the litigation, including at summary

judgment, so long as doing so “does not result in surprise or

unfair prejudice to the plaintiff.” Wallace v. Coffee County,

Tenn., 852 Fed. Appx. 871, 875 (6th Cir. 2021) (citing Stupak-

Thrall v. Glickman, 346 F.3d 579, 585 (6th Cir. 2003)). Courts

have allowed affirmative defenses to be raised for the first time

in response to a summary judgment motion. See Can IV Packard

Square LLC v. Schubiner, No. 19-CV-12360, 2021 WL 3621324, at *7

(E.D. Mich. Aug. 16, 2021) (citing Westwood Chem. Co. v. Kulick,

656 F.2d 1224, 1227 (6th Cir. 1981)); see also Moore, Owen, Thomas

& Co. v. Coffey, 992 F.2d 1439, 1445 (6th Cir. 1993). Whether to

permit a party to raise an affirmative defense at summary judgment

lies within the district court’s discretion. See Rogers v. I.R.S.,

822 F.3d 854, 856 (6th Cir. 2016) (citing Lauderdale v. Wells Fargo

Home Mortg., 552 Fed. Appx. 566, 573 (6th Cir. 2014)).

Although raised late, Worldwide’s fraud defense does not

cause surprise or unfair prejudice to Fidelity. Fidelity had a

full opportunity to respond to Worldwide’s fraud defense and did

so by challenging the admissibility of Worldwide’s supporting

evidence as unauthenticated business records. (ECF No. 70).

Courts generally find no prejudice where the opposing party can

address the defense in its briefing and where its late assertion

does not delay discovery or trial. See Phelps v. McClellan, 30

F.3d 658, 662 (6th Cir. 1994) (finding no prejudice where raising

a new defense did not “require the opponent to expend significant

additional resources to conduct discovery and prepare for trial[,]

significantly delay the resolution of the dispute[,] or prevent

the plaintiff from bringing a timely action in another

jurisdiction.”); ATSCO Holding Corp. v. Air Tool Services Co., 799

Fed. Appx. 310, 312 (6th Cir. 2019) (“A defendant does not waive

an affirmative defense if he raised the issue at a pragmatically

sufficient time and the plaintiff was not prejudiced in its ability

to respond.”) (internal quotations omitted). Worldwide’s late

assertion of fraud does not constitute a waiver of that defense.

The Court will consider it on the merits.

2. Merits of the Fraud Defense

A defendant raising an affirmative defense bears the burden

of proving each of its elements. See Martin v. Ohio, 480 U.S.

228, 235 (1987) (“[T]he common-law rule was that affirmative

defenses … were matters for the defendant to prove.”). That burden

applies even at the summary judgment stage, where courts must

evaluate the evidence and draw all reasonable inferences in the

light most favorable to the non-movant. See Rodgers v. Banks, 344

F.3d 587, 595 (6th Cir. 2003); see also Davis v. McCourt, 226 F.3d

506, 511 (6th Cir. 2000).

In Tennessee, the elements of fraud are: “(1) an intentional

misrepresentation of a material fact; (2) knowledge of the

representation’s falsity; (3) an injury caused by reasonable

reliance on the representation; and (4) the requirement that the

misrepresentation involve a past or existing fact.”2 Mid-South

Industries, Inc. v. Martin Mach. & Tool, Inc., 342 S.W.3d 19, 28

(Tenn. Ct. App. 2010) (citing Dobbs v. Guenther, 846 S.W.2d 270,

274 (Tenn. Ct. App. 1992)); see also Kincaid v. SouthTrust Bank,

221 S.W.3d 32, 40 (Tenn. Ct. App. 2006). Where fraud is raised as

an affirmative defense at summary judgment, the defendant must

produce evidence sufficient to establish each element by a

preponderance of the evidence. See Anderson, 477 U.S. at 252.

Here, neither Fidelity nor Worldwide disputes the existence

of the 2005 deed of trust at the time of closing, which satisfies

the fourth element of the fraud defense. The analysis therefore

turns on the first three elements: (1) intentional

misrepresentation; (2) knowledge of falsity; and (3) injury caused

by reasonable reliance.

a. Intentional Misrepresentation

2 In Tennessee, fraud, fraudulent misrepresentation, and intentional

misrepresentation “are different names for the same cause of action.”

Hodge v. Craig, 382 S.W.3d 325, 342 (Tenn. 2012) (citing Concrete Spaces,

Inc. v. Sender, 2 S.W.3d 901, 904 n.1 (Tenn. 1999)).

“A person acts intentionally when it is the person’s conscious

objective or desire to engage in the conduct or cause the result.”

Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901 (Tenn. 1992).

Tennessee courts recognize that “fraud[,] by its nature[,] is often

difficult to prove and thus may be properly proved by wholly

circumstantial evidence.” Brown v. Birman Managed Care, Inc., 42

S.W.3d 62, 67 (Tenn. 2001) (citing Parrott v. Parrott, 48 Tenn.

681, 687 (Tenn. 1870)). Fraudulent intent may be inferred from

the totality of the circumstances. See PNC Multifamily Capital

Inst. Fund XXVI Ltd. Partnership v. Bluff City Community Dev.

Corp., 387 S.W.3d 525, 547 (Tenn Ct. App. 2012).

Worldwide claims that Fidelity, acting through its agent

Spruce, intentionally mispresented the condition of title by

withholding title search results. Worldwide relies on the two

Title Commitments that explicitly required a “record satisfactory

release” of the 2005 deed of trust as a condition of closing. (ECF

No. 67 ¶¶ 14-19, Exhibits 5 and 7). Worldwide argues that Spruce

later transmitted a third Title Commitment that omitted any

reference to the deed of trust. (Id. at ¶ 22, Exhibit 8). It

asserts that the altered document was sent to induce Worldwide to

execute the owner’s affidavit. (Id.)

Fidelity disputes those allegations. It denies that it or

Spruce transmitted any documents misrepresenting the status of

title to Worldwide. (ECF No. 70). Fidelity also argues that, to

the extent Spruce sent any documents directly to Worldwide, it

acted outside the scope of its agency authority. (Id.) Neither

party, however, has presented evidence detailing the scope of

Spruce’s agency at the time of the sale. Determining the existence

and scope of an agency relationship is a fact-intensive inquiry

that often turns on witness credibility and the parties’ conduct.

See White v. Revco Discount Drug Centers, Inc., 33 S.W.3d 713, 723

(Tenn. 2000); see also McCay v. Mitchell, 463 S.W.2d 710, 715

(Tenn. 1970) (noting that determining the scope of agency “is a

question of fact under the circumstances of the particular case …

[and] determined by the relation of the parties as they in fact

exist under their agreements or acts.”). Given the parties’

directly conflicting accounts, whether Fidelity intentionally

misrepresented the title condition is a question for the jury.

There is a genuine dispute of material fact.

b. Knowledge of Falsity

To prove knowledge of falsity, the party alleging fraud must

show that the misrepresentation “was made ‘knowingly[,]’ or

‘without belief in its truth[,]’ or ‘recklessly’ without regard to

its truth or falsity.’” Oak Ridge Precision Indus., Inc. v. First

Tennessee Bank Nat’l Ass’n, 835 S.W.2d 25, 29 (Tenn. Ct. App. 1992)

(quoting Stacks v. Saunders, 812 S.W.2d 587 (Tenn. Ct. App. 1986)).

Fraud may also arise from “concealment or nondisclosure” when the

party “has knowledge of an existing fact or condition and a duty

to disclose.” Hill v. John Banks Buick, Inc., 875 S.W.2d 667, 670

(Tenn. Ct. App. 1993) (citing Lonning v. Jim Walter Homes, Inc.,

725 S.W.2d 682, 685 (Tenn. Ct. App. 1986)).

Worldwide offers circumstantial evidence that both Spruce and

Fidelity were aware of the 2005 deed of trust prior to closing.

The two initial Title Commitments explicitly referred to the deed

of trust. (ECF No. 67 ¶ 14-19, Exhibits 5 and 7). Both documents

were printed on Fidelity’s corporate letterhead and signed by

Fidelity’s president. (Id.) According to Worldwide, Fidelity’s

review of those documents demonstrates actual knowledge of the

encumbrance. (Id.) That knowledge renders the third Title

Commitment knowingly false or, at a minimum, recklessly

indifferent to the truth.

Fidelity responds that its knowledge of the encumbrance,

whether actual or constructive, is irrelevant to a breach of

warranty of title claim. Under Tennessee law, a grantee’s

knowledge of an encumbrance does not preclude recovery for breach

of the covenant of encumbrances. See Murdock, 230 S.W.2d at 405

(holding that “notice that the encumbrance existed would not

preclude the [plaintiff’s] reliance upon a covenant that [the

encumbrance] did not exist.”); see also Brown v. Taylor, 88 S.W.

933, 934 (Tenn. 1905) (“Knowledge on the part of the purchaser of

the existence of [e]ncumbrances on the land will not prevent him

from recovering damages on account of it, where he protects himself

by proper covenants in his deed.”). Although Fidelity is correct

that a grantee’s knowledge is immaterial to a breach-of-warranty

claim, that principle does not apply when fraud is raised as an

affirmative defense. A party’s awareness of facts contradicting

its own representations is central to establishing fraudulent

intent. See McKinney, 852 S.W.2d at 239.

Here, whether Fidelity and Spruce knew of the 2005 deed of

trust and deliberately concealed that fact from Worldwide is a

disputed issue of material fact. Those facts turn on credibility

and the inferences a reasonable juror could draw from Fidelity’s

review and use of the Title Commitments, making them unsuitable

for resolution at summary judgement.

c. Injury Caused by Reasonable Reliance

Generally, whether reliance is reasonable is “a question of

fact” and thus “inappropriate for summary judgment.” City State

Bank v. Dean Witter Reynolds, Inc., 948 S.W.2d 729, 737 (Tenn. Ct.

App. 1996). Tennessee courts have granted summary judgment on the

reasonable reliance element only when “[the] evidence in the record

could lead a reasonable jury to only one conclusion[.]” Beard v.

Odom, No. E2024-00737-COA-R3-CV, 2025 WL 2017474, at *5 (Tenn. Ct.

App. Jul. 18, 2025) (citing Annaco, Inc. v. Corbin, No. 02A01-

9804-CH-00111, 1998 WL 929637, at *4 (Tenn. Ct. App. Dec. 31,

1998).

Here, there is a genuine issue of material fact. Fidelity

and Worldwide claim that they relied on the other party’s

misrepresentations in completing the transaction. Neither side

has presented conclusive evidence that its reliance was reasonable

under the circumstances. (ECF Nos. 67, 70). Although Worldwide

asserts that “it is industry standard” for sellers to rely on the

buyer’s title agent in property transactions, it has produced no

evidence to support that assertion, and Fidelity has not offered

evidence to the contrary. (ECF No. 67, ¶ 27). Based on the

current record, the Court cannot determine as a matter of law

whether Worldwide’s reliance on the Title Commitments was

reasonable. That determination must be left to the jury.

Because fraud, if established, constitutes a complete defense

to Fidelity’s breach of warranty of title claim, genuine disputes

of material fact remain for trial. Summary judgment is

inappropriate.

V. CONCLUSION

For the reasons stated above, Plaintiff Fidelity’s Second

Motion for Summary Judgment, filed on May 4, 2025 (ECF No. 53), is

DENIED.

SO ORDERED this 26th day of August, 2025.

/s/ Samuel H. Mays, Jr.

SAMUEL H. MAYS, JR.

UNITED STATES DISTRICT JUDGE