Most real estate solicitors know their title insurers have agreements with the Law Society of Ontario. Fewer have read them. Maniaci et al v. Chicago Title Insurance Company, 2026 ONSC 4906, released August 31, 2026, shows what one is worth when the lawyer is sued. Regional Senior Justice Edwards held that Chicago Title Insurance Company (“CTIC”) must defend a lawyer named in a series of mortgage actions, and refund his defence costs to date, wherever the pleadings raise a possibility of covered negligence. That holds even though many of those pleadings also allege gross negligence, wilful misconduct or fraud.

Fourteen actions, one practice

Between 2019 and 2022, Anthony Maniaci and his professional corporation were named in 14 actions arising from mortgage transactions in which he acted for the borrowers. In most of them, CTIC had issued the borrower’s title policy (para. 5). The actions span more than 60 properties, and the plaintiffs are mostly lenders holding second and third mortgages (para. 119). Several of the pleadings allege a scheme involving his real estate law clerk, her mother, and a real estate agent. The alleged scheme included inflated valuations, forged Forms 9D understating prior encumbrances, unauthorized registrations and postponements using Mr. Maniaci’s Teraview key, and forged signatures (para. 123). These are allegations, and nothing has been tried.

The LSO Agreement and the endorsement

CTIC’s agreement with the LSO is dated November 12, 2009. It provides that, where title insurance is issued in favour of all of the transferees and chargees in a transaction, CTIC will indemnify and save harmless the lawyer acting for them against claims arising under the policy, except for the lawyer’s gross negligence or wilful misconduct (para. 7). CTIC’s Transaction Protection Endorsement separately insures the lender against loss from the lawyer’s failures, including negligence in handling the lender’s funds or closing documents to the extent it relates to the status of the insured’s interest in the land or the validity, enforceability and priority of the insured mortgage (para. 9).

CTIC conceded that its agreement was not materially different from the one in Stewart Title Guarantee Co. v. Zeppieri, 2009 CanLII 2329, where Brown J. ordered the insurer to fund the law firm’s defence on an ongoing basis (paras. 20, 32).

Any possibility of coverage triggers the defence

CTIC argued that the gross negligence and wilful misconduct allegations were a full answer and that the claims were in truth about fraud. It also relied on the Schedule “B” exceptions for senior mortgages, the endorsement’s exclusion for inadequate collateral and the policy exclusion for matters arising after the policy date (paras. 21–24). The court applied the Court of Appeal’s duty-to-defend framework in Demme v. Healthcare Insurance Reciprocal of Canada, 2020 ONCA 503, and Ontario v. St. Paul Fire and Marine Insurance Company, 2023 ONCA 173. CTIC’s approach “has some appeal” but “flies in the face of” those decisions (para. 117). Most of the actions plead negligence alongside the excluded allegations. The court found that what underlies the actions is an allegation.   At their core it is alleged, explicitly or in some cases by implication, that the lawyer failed to follow his clients’ instructions and to supervise his staff. As the court put it,

These allegations go to the core of a lawyer’s solicitor client relationship which fundamentally requires a lawyer to exercise the standard of care expected – in this case the standard of care expected of a real estate lawyer. (para. 125)

The applicants conceded that the gross negligence allegations in some actions may relieve CTIC of its obligation to indemnify, depending on findings at trial; “However, this has no bearing on the duty to defend” (para. 126). The duty does not depend on the insurer’s view of the merits (para. 27). Any doubt is resolved in favour of the insured lawyer (para. 127).

In one action, the statement of claim pleaded gross negligence and wilful misconduct, but the earlier notice of action pleaded negligence. The court accepted that the negligence claim in the notice of action may survive, and that was enough (para. 131). In another action the notice of action described a failure to follow instructions without articulating a cause of action. The statement of claim then alleged only wilful misconduct by his employees and gross negligence by him. Negligence was never pleaded, so there was no duty to defend. “It is not for the court to infer what the drafter of the Statement of Claim intended” (para. 140).  In a third action the applicants conceded there was no indemnification for a homeowner-mortgagor’s claim after CTIC argued that its policies ran to the mortgagees (paras. 98, 100, 139). And where CTIC had issued no policy, there was nothing to defend (para. 138). In the result, the court found a duty to defend in 12 of the 14 actions, though not for the transactions CTIC never insured.

Allocation later, funding now

CTIC asked to pay only the costs of defending the claims pleaded in negligence (para. 25). The court followed Hanis v. Teevan, 2008 ONCA 678. It agreed with Perell J. in Distillery S.E. Development Corp. v. Temple Insurance Company, 2021 ONSC 1908, that allocation “cannot be made ex ante”, and held that allocation was premature (paras. 151–153). CTIC must defend, and refund the costs incurred to date, subject to reallocation once coverage is determined (paras. 154–155).

Key takeaways for transactional counsel

1. Read your title insurers’ LSO agreements. As the court described CTIC’s agreement, the indemnity applies where title insurance is issued in favour of all of the transferees and chargees (para. 7). Know that condition before a party on your file declines a policy.
2. Know whose policy it is. The LSO agreement covers claims arising under the policy (para. 7). When a homeowner sued, the applicants conceded there was no indemnification under policies CTIC said ran to the lenders (paras. 98, 100, 139). Confirm who the insured is on each file.
3. Put priority instructions in writing and report against them. The endorsement responds to the lawyer’s failure to follow the lender’s written closing instructions (para. 9). The court indicated that claims based only on the first mortgage and inadequate collateral would be excluded (paras. 136, 142).  What kept these actions within potential coverage was a negligence pleading that the lawyer failed to follow instructions on priority and the maximum permitted prior encumbrance (paras. 133, 136, 142).
4. Control your e-registration credentials and supervise your clerks. The alleged scheme ran through a law clerk and the lawyer’s own Teraview key (para. 123). Proven or not, those allegations appear in several of the 14 lawsuits. Unauthorized postponements carry a further risk because a postponement registered after the policy date may, standing alone, fall outside coverage (paras. 24, 134).
5. Tender every claim to the title insurer promptly. The defence turns on the pleading, not on the insurer’s view of the merits (paras. 27, 126). A negligence allegation in a notice of action can be enough (paras. 131). It may not be enough where the notice names no cause of action and the statement of claim pleads only gross negligence or wilful misconduct (para. 140).
6. Keep defence accounts itemized by issue. If the parties cannot agree, allocation may be decided at the end of the litigation on the value of the claims and the work actually spent. Costs incurred for both covered and uncovered claims generally stay with the insurer (paras. 152–154).