Real Property, Financial Services & Title Insurance Update: Weeks Ending December 12-26, 2014 & January 2, 2015

by Carlton Fields


  • Quiet Title: investor who pooled money with two other entities to purchase property could not quiet title after the two entities recorded second version of deed that omitted investor’s name where, although original unrecorded version included investor’s name as a grantee, it did not specify any percentage interest owned by investor whereas it specified that the two entities, collectively, owned 100% interest in the property; thus, alteration of deed to omit investor’s name not material since original version showed investor owned no interest in the property Lin v. Coronado, No. B248848 (Cal. App. Ct. Nov. 17, 2014) (affirming judgment sustaining demurrer without leave to amend)
  • Foreclosure; Amendments to Rules of Civil Procedure:  Amending Florida Rules of Civil Procedure and forms in response to legislation regarding mortgage foreclosure actions known as the Florida Fair Foreclosure Act In re Amendments to the Fla. Rules of Civil Procedure, Case No. SC13-2384 (Fla. Dec. 11, 2014) (providing sixty days to file comments on amendments).
  • Sinkhole; Disclosure of Report:  Homeowners’ failure to disclose to insurer an investigator’s report obtained pre-litigation that found sinkhole activity did not warrant summary judgment in insurer’s favor under policy language Diaz v. Tower Hill Prime Ins. Co., Case No. 2D14-468 (Fla. 2d DCA Dec. 12, 2014) (reversed and remanded).
  • Competing Liens; Equitable Subrogation & Doc Stamp Taxes:  In a case involving “three years of convoluted, dodgy transactions,” among other findings, a lender was precluded from utilizing equitable subrogation because it prejudiced a duly-recorded junior lienholder of an altered mortgage, but junior lienholder was only entitled to first priority for the lesser principal amount reflected in the altered recorded mortgage, as opposed to the full amount owed but not reflected in the recorded mortgage for which documentary stamp and intangible taxes were not paid Nikooie v. JPMorgan Chase Bank, N.A., et al., Case No. 3D10-3090 (Fla. 3d DCA Dec. 10, 2014) (affirming in part, reversing in part, and remanding with directions).
  • Foreclosure; Standing:  Bank failed to put on testimony at trial regarding when it became the owner of the note Sosa v. U.S. Bank, Nat’l Ass’n, Case No. 4D13-1657 (Fla. 4th DCA Dec. 10, 2014) (reversed and remanded for entry of order of involuntary dismissal of the action).
  • Foreclosure; Amendment of Final Judgment:  Quashing amended final judgment of foreclosure in favor of association because trial court lacked jurisdiction because of the pending appeal of the initial judgment – Jallali v. Knightsbridge Village Homeowners’ Ass’n, Inc., Case No. 4D14-64 (Fla. 4th DCA Dec. 10, 2014) (quashing amended judgment and reinstating initial judgment).
  • Sinkhole; Appraisal:  Affirming order compelling FIGA to participate in an appraisal and finding homeowners did not waive their right to appraisal Fla. Ins. Guar., Etc. v. Sill, Case No. 5D13-3363 (Fla. 5th DCA Dec. 12, 2014).


  • Consumer Protection/Class Action: home warranty customer’s putative class action alleging violation of California’s Consumer Legal Remedies Act dismissed as moot after finding that plaintiff lacked standing because he had settled his individual claims against the company – Campion v. Old Republic Home Protection Company, Inc., No. 12-56784 (9th Cir. Dec. 31, 2014) (dismissing appeal as moot)


  • Right of Access: title insurance policy is unambiguous and clear that the insured is entitled to a right of access, not “legal access,” and a recorded declaration of easement in favor of the insured constitutes such a right of access James v. Chicago Title Ins. Co., Case No. DA 13-0860 (Mt. Dec. 9, 2014)(affirming summary judgment).
  • Duty to Defend: title insurer who retains counsel two days prior to answer to complaint being due has not unreasonably delayed in providing a defense where insured can show no harm flowing from the alleged delay Ogden Plaza Garage Co., LLC v. First American Title Ins. Co., Case No. 1:14-cv-02442 (N.D. Ill. Nov. 21, 2014) (order granting motion to dismiss).
  • Duty to Defend: title insurance policy is clear that insurer is not responsible for attorney’s fees incurred by insured before or after title insurer retained counsel to defend insured Ogden Plaza Garage Co., LLC v. First American Title Ins. Co., Case No. 1:14-cv-02442 (N.D. Ill. Nov. 21, 2014) (order granting motion to dismiss).
  • Diminution in Value: insured’s attorney’s fees are not diminution in value to title to the property and are thus not covered under limitation on liability section of policy Ogden Plaza Garage Co., LLC v. First American Title Ins. Co., Case No. 1:14-cv-02442 (N.D. Ill. Nov. 21, 2014) (order granting motion to dismiss).
  • Statute of Limitations: the statute of limitations on a claim for breach of a title insurance policy begins to run when the insurer denies coverage Spalding v. Stewart Title Guaranty Co., Case no WD76369 (Mo. App. Sept. 23, 2014) (affirming judgment)
  • Measure of Damage: jury instruction allowing jury to consider highest and best use of property was not contrary to policy or error requiring reversal Spalding v. Stewart Title Guaranty Co., Case no WD76369 (Mo. App. Sept. 23, 2014) (affirming judgment)
  • Notary: under California statute, notaries are not absolute guarantors of an identification’s genuineness, and, unless an identification would put a notary exercising reasonable diligence on notice that it was fraudulent or altered, a notary may reasonably rely on authentic appearing identification Old Republic National Title Ins. Co. v. Thomas, Case No. 30-2012-00585122 (Cal. App. Dec. 19, 2014) (affirming judgment after trial)
  • Negligence: although an insurer may not misrepresent the state of the title or mislead the insured, it has no duty to point out any outstanding encumbrances and does not act negligently by failing to discover and disclose title defects. LJC Financial, LLC v. Alliant National Title Ins. Co., Case No. H-14-648 (S.D. Tex. Dec. 16, 2014) (memorandum and opinion granting in part motion to dismiss)
  • Exclusions: lien on a fixture to real property that is not recorded is excluded from coverage and title insurer owes no duty to defend or indemnify against claims of unrecorded lien holder Geo Finance LLC v. University Square 2751, LLC, Case No. 13-15299 (E.D. Mich. Dec. 29, 2014) (opinion and order granting third party defendant’s motion to dismiss)
  • Coverage: lien on personal property is not covered under title insurance policy and title insurer owes no duty to defend or indemnify against claims of lien holder – Geo Finance LLC v. University Square 2751, LLC, Case No. 13-15299 (E.D. Mich. Dec. 29, 2014) (opinion and order granting third party defendant’s motion to dismiss)
  • Reservation of Rights: title insurer who reserves its rights does not waive a defense to coverage that the source of insured’s claim is not recorded in the public records – Geo Finance LLC v. University Square 2751, LLC, Case No. 13-15299 (E.D. Mich. Dec. 29, 2014) (opinion and order granting third party defendant’s motion to dismiss)
  • Escrow Agent: exclusion in escrow agent’s professional liability policy for loss arising out of the failure to safeguard funds applied where agent disbursed $1.5 million before conditions to close were met and therefore agent’s claim was not covered St. Paul Fire & Marine Ins. Co. v. Llorente, Case No. 3D12-1101 (Fla. App. Dec. 24, 2014) (reversing summary judgment for insured and granting summary judgment for insurer)
  • Tort: claims of misrepresentation and violation of consumer protection statutes against title insurer based on a recorded deed of consolidation accrued on the date the plaintiff purchased the property when she was on constructive notice of the deed and were thus barred where the complaint was filed outside the applicable statute of limitations Shepard v. Holmes, Case No. 31740-4-III (Wash. App. Dec. 23, 2014) (affirming summary judgment)
  • Pre-Judgment Interest: damages due to diminution in value to title to property from an easement are unliquidated damages and, thus, the earliest date from which interest may run is the date the complaint was filed Gaviota Holdings, LLC v. Chicago Title Ins. Co., Case No. SB 1385804 (Cal. App. Dec. 23, 2014) (reversing award after trial of interest from the date of proof of loss)
  • Bad Faith: insurer’s in-house counsel’s communications with insurer protected by attorney-client privilege are not discoverable merely because a bad faith claim has been asserted Anastasi v. Fidelity National Title Ins. Co., Case No. 30557 (Hawai’i App. Dec. 30, 2014) (reversing summary judgment and remanding)
  • Bad Faith: insurer’s naming its in-house counsel as a witness does now waive the attorney-client privilege  Anastasi v. Fidelity National Title Ins. Co., Case No. 30557 (Hawai’i App. Dec. 30, 2014) (reversing summary judgment and remanding)
  • Bad Faith: documents prepared by insurer’s in-house counsel, not made to facilitate the rendition of legal services to the insurer, but instead as part of its ordinary business of handling claims may not be privileged or protected by the work-product doctrine and subject to production  Anastasi v. Fidelity National Title Ins. Co., Case No. 30557 (Hawai’i App. Dec. 30, 2014) (reversing summary judgment and remanding)
  • Bad Faith: whether insurer acted reasonably handling insured’s claims in light of the information available to it was fact intensive inquiry not susceptible of summary judgment Anastasi v. Fidelity National Title Ins. Co., Case No. 30557 (Hawai’i App. Dec. 30, 2014) (reversing summary judgment and remanding)


Written by:

Carlton Fields

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