The case, Chicago Title Insurance Company v. Washington State Office of the Insurance Commissioner, dealt with probes by Washington and other states in 2005 into alleged illegal kickbacks and other activities by title insurers related to a super-heated housing market.

The OIC's probe identified a number of potential violators and honed in on Chicago Title and its agent, Land Title Insurance Company, for alleged violations of the state's insurance laws in 2006 and 2007.

The agent was found to have given real estate agents, builders and mortgage lenders free meals, donations for a golf tournament, monthly advertising and Seattle Seahawks playoff game tickets, according to the charges.

Shortly after the investigation was launched, Chicago Title agreed that its agent had violated anti-inducement statues, according to court records.

Then Kreidler's office went to Chicago Title with a consent order requiring the insurer to also agree to a fine of $114,500 and to enter into a compliance plan that required semi-annual audits and other corrective actions.

Various legal actions ensued in which Chicago Title argued that it was not responsible for its agent's actions.

The 7-2 decision written by Judge Charles Wiggins holds that the court was merely reaffirming an earlier decision.

The earlier decision, Pagni v. N.Y. Life Ins. Co held that “an insurance company is bound by all acts, contracts, or representations of its agent, whether general or special, which are within the scope of his real or apparent authority, notwithstanding they are in violation of private instructions or limitations upon his authority, of which the person dealing with him, acting in good faith, has neither actual nor constructive knowledge.”

Since the current case dealt with alleged illegal inducements to get business by a title insurance agent, the decision also stated, “Similarly, OIC enjoys broad authority to define unfair or deceptive trade practices.”

In a statement, Kreidler says, “Chicago Title's arguments were contrary to a century of insurance law.”

He adds, “In order to effectively regulate insurers and protect consumers, it's important to hold insurers responsible for the actions of their agents.”

OIC spokesman Roesler notes to PC360, “For most insurers, this is how they do business. It is unusual for a company not to accept responsibility.”

Roseler adds, “We have been regulating for a century. In terms of conventional insurance, this is how most insurers act. They stand behind by the actions of their agent. But in the case of Chicago title, they decided, and it is their right, that they wanted to litigate the issue.”

The argument, he explains, was not about the underlying violations, but who was responsible. “That was the issue.”

Judge James M. Johnson writes in a dissenting opinion that Chicago Title and Land Title entered into a contract that limited the agency relationship and “allocated the risk of regulatory noncompliance solely to Land Title.”

He writes, “Pursuant to the entities' agreement, CTIC has no right to control the marketing practices of its appointed agent, Land Title. For this reason, CTIC cannot be held vicariously liable for Land Title's violations of the illegal inducement regulation.”

Johnson adds in his dissent, “If OIC wishes to fine an entity for Land Title's noncompliance, it is free to do so. It must simply go after Land Title directly.”