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

> District Court, W.D. Tennessee · August 26, 2025

URL: https://www.frixlaw.com/law-library/cases/11127781

## Case

- **Court:** District Court, W.D. Tennessee
- **Decided:** August 26, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11127781

## How later opinions describe it (automated extraction)

- holding that a document bearing trade inscription indicating its source may be self-authenticating under Fed. R. Evid. 902(7)
- holding that “notice that the encumbrance existed would not preclude the [plaintiff’s] reliance upon a covenant that [the encumbrance] did not exist.”
- holding that handwritten notes, certificates of indebtedness, and debt assignment notes are inadmissible hearsay when not authenticated as business records
- 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

## Opinion text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11127781. Public record. Not legal advice.