By Zi C. Lin and Edet Nsemo

A title insurer’s right of subrogation to seek recovery from third-party wrongdoers for losses incurred by its insureds is among the most important rights afforded under title policies.1Title insurers also have the right, but not the obligation, to act against third parties to prevent or reduce loss to insureds under a title policy’s defense and prosecution of actions pro-visions.2 (Schwartz v. Stewart Title Guar. Co., 134 Ohio App. 3d 601, 611–12, 731 N.E.2d 1159, 1166–67 (1999) [There is no duty to prosecute actions under a title policy.])

Obtaining recovery from third-party wrongdoers can often be difficult. Wrongdoers fraudulently convey their as-sets to spouses and family members. They file for bankruptcy protection. Or they fall off the face of the earth.

The U.S. Supreme Court issued a significant bankruptcy decision in Bartenwerfer v. Buckley, 598 U.S. 69 (2023) (Bartenwerfer), which should aid title insurers and others seeking recovery from wrongdoers who file for bankruptcy. In Bartenwerfer, the Court rejected the “innocent spouse” de-fense and held that the wrongdoer’s spouse, who was found liable on a partnership theory but was not aware of the mis-conduct, could not discharge a fraud judgment in bankruptcy. This article examines Bartenwerfer and the subsequent cases examining it.

Read the full article here.