Sunday, April 21, 2013

Please Read this New Blog Reviewing Fidelity National

Another individual who was insured by Fidelity National Title Insurance Company is sharing his experience on his blog.  In order to give him more exposure I am going to copy some of his materials here but the blog is

"Fidelity National Title Denies Claim, Sues Home Owner, Judge Orders Fidelity to Pay Up

Published on: April 21, 2013 Author: admin Leave a comment

Home owners Troy and Susan McCassland purchased two lots a year a part from two different sellers in Kihei, Maui, Hawaii.   Fidelity Title insured both purchases.  In Nov of 2011 the county of Maui informed the home owner that their two lots were actually one big lot and had been combined in 1987.  The owners would be required to spend millions of dollars to subdivide the lots.

The owners filed a claim with Fidelity National Title.  Fidelity responded by denying the claim and suing the home owners for declaratory relief.   The home owners spent $60,000 in legal fees to defend their right to use a service they paid thousands of dollars for.  On Monday April 8th, 2013 a Honolulu Judge ruled in favor the insured ordering Fidelity to provide coverage.

Fidelity, grasping at straws, argued the claim was exempt from coverage because it fell in the policy exclusions.  They argued the lot consolidation was not in public records, did not impact marketability of title, and was the result of a government action.

The lot consolidation was filed in Public records maintained by the Dept of Public Works.  Fidelity acknowledged this but choose to define public records as those maintained by the Bureau of Conveniences, the only public records source they check.    They argued the claim didn’t impact marketability of title because the owners could still sell both lots.  All three of these arguments barely pass the laugh test, and courts agreed.

Not in public records – A letter from David Goode, Director of Public Works, stated the consolidation was filed in 1987 in his department which maintains public records, and is routinely searched by title companies.  Fidelity chose to ignore this evidence, deny the claim and file a law suit.

Marketability of Title – Everyone knows you can’s sell a lot that doesn’t exist.

Result of Government Action - This exclusion would normally include condemnation or some other form of government action.  The lot was consolidated by the owner in 1987, not by the county of Maui.

Fidelity’s  thinking goes something like this: We can spend $1,000,000 to pay this claim or we can take our chances in court, and hope the insured doesn’t have the money to defend a lawsuit. It costs $50,000 to go to court and if we lose it only costs us $1,000,000 plus our attorney fee and their attorney fees = $1,100,000. If this strategy works 9 times out of ten we’re still ahead of the game. They figure their maximum exposure is the policy limits so why not gamble.

Justice prevailed.  The Honolulu Judge ordered Fidelity to provide coverage.

Usually in these types of case Judges hear oral arguments, review the pleadings and make a ruling weeks or months later after careful deliberation.  In this case, an obvious no-brainer, the Judge ruled from the bench right then and there.  At the beginning of the trial he asked “who wants to go first?” Fidelity went first and said we think our pleadings speak for themselves and you should rule in our favor.  The Judge asked a couple of questions and then it was the insured’s turn to go.  Attorney Alan Van Etten argued eloquently for 10 minutes before the Judge said, “I have heard enough, you may sit down counselor – I”m ready to rule.”  The Judge went on for 5 minutes admonishing Fidelity, ruling they must provide coverage.  He was prepared to rule before even hearing the oral arguments."