Saturday, November 10, 2012

Lee v. Fidelity National Title Insurance Company

Fidelity National Title Company's legal description and erroneous references were resolved in favor of the reasonable expectations of coverage by the Insured.
The California Court of Appeal, First Appellate District, reversed an order granting summary judgment to a title insurer arising from a dispute in ownership of a parcel of land, where the title insurer provided a preliminary report that mistakenly referred to Plaintiffs’ land as comprising of two parcels, although the metes and bounds legal description of the land was accurately stated. 
Plaintiffs are purchasers of land who, at the time of the sale, believed they were buying two parcels of adjoining property, identified as Assessor’s Parcel Number (“APN”) 042-230-090 (“APN 9”) and 042-230-220 (“APN 22”). The purchase contract identified the property Plaintiffs were buying as APN 9 and APN 22.
In my case Parcels Two, Three, Four and Five were in not only the Preliminary Title Report but also in the Grant Deed and from a meeting with the Title Officer in Napa California I was lead to believe that I had two deeded easements from Mount Veeder Road to my property.
Years later, when Plaintiffs decided to sell their property, an investigation uncovered that APN 22 actually belonged to a neighboring property owner. The county assessor advised both Plaintiffs and the neighboring owner that taxes on APN 22 had been erroneously assessed to Plaintiffs, the error dated back to when title to Plaintiffs’ land was conveyed to Plaintiffs’ sellers, and thus title to APN 22 was held by the neighbor, not Plaintiffs.
Years later, when i decided to sell my property, an investigation uncovered that  Parcels Two, Three, Four and Five should not have been conveyed to me as the easement described did not go reach my property.
Plaintiffs’ counsel informed Fidelity of the county assessor’s determination and demanded Fidelity “obtain clear title in favor of [Plaintiffs].” Fidelity’s counsel sent Plaintiffs a letter denying coverage of Plaintiffs’ dispute over ownership of APN 22 because Plaintiffs held title to the legal description as set forth in their grant deed (echoed in the preliminary report) and were insured to hold title to no more than that which is described there. 
In my case I was not denied coverage as the claim was opened by the Fidelity National Title Company Title Officer but the loss of Parcels Two, Three, Four and Five where valued at $0 by an appraiser from Boise Idaho.
Plaintiffs subsequently filed suit against Fidelity for declaratory relief, breach of insurance contract, bad faith, and escrow negligence.
I, too, have filed suit against Fidelity National Title Insurance Company.
The Court of Appeal held that while the preliminary report shall not be construed as a representation as to the condition of title, it “shall constitute a statement of the terms and conditions upon which the issuer is willing to issue its title policy, if such offer is accepted.” The preliminary report, then, is an offer identifying the risk the insurer will agree to assume, which the insured accepts by buying the title policy, and the insured has the right to reasonably expect that the contract thus formed will be consistent with the terms of the offer. 

I not only had the Preliminary Title Report but I went to the Napa California office of Fidelity National Title Company and met with the Title Officer who showed me on the parcel map all six of the parcels listed in the Preliminary Title Report that were subsequently also in the legal description on the Grant Deed also prepared by Fidelity National Title Company.  I thought (reasonably expected) that I had two deeded legal easements from Mount Veeder Road to the property.

The Court of Appeal cautioned to determine if there is an ambiguity, it would look to the “ordinary reading” of words in the insurance policy that are to be interpreted according to the plain meaning which a layman (not an attorney or insurance expert) would ordinarily attach to the words. The Court of Appeal concluded the legal description in Fidelity’s preliminary report was ambiguous because laypersons like Plaintiffs would have no way of knowing from the surveyor’s metes and bounds description of the land in their title policy whether APN 22 was covered. In addition, further ambiguity was created in Fidelity’s report by the attachment of the assessor’s parcel map with an arrow pointing to APN 22 and listing APN 22 in the property’s address. The Court held Fidelity’s preliminary report can be reasonably construed as an offer to insure APN 22 and Plaintiffs could have reasonably expected, under the circumstances, that they were buying a title insurance policy on APN 22 that would conform to the preliminary report.
Although we are just at the discovery period I believed not only from my reading of Parcels Two, Three, Four, Five and Six that I had two legal easements from Mount Veeder Road to my parcel but also these parcels were all listed in my Grant Deed.  And I thought that these easement were not only deeded but also insured.
Needless to say there will be more to write about as this lawsuit continues on.
But I have so many questions.