Fidelity National Title Insurance Company's New Attorney

I just found out that Fidelity has assigned a new attorney to my case.  After having gone through six at the Claims Counsel level - ask me if I am surprised????

I wonder if I am working up or down the proverbial ladder?

Why am I Writing this Blog about Fidelity National Title Insurance Company????

As a former licensed California Real Estate Broker and Architect, when I purchased this property I feel that I had more knowledge and experience than the normal purchaser of property.  I feel that I investigated all issues that were raised on the Preliminary Title Report issued by Fidelity National Title Company.  I trusted Fidelity National Title Insurance Group to protect my interests.

I was very surprised to learn:

• The company who handled title, escrow, prepared the prelim and the grant deed (Fidelity National Title Company) was not the same company that provided the title insurance (Fidelity National Title Insurance Company)
• How easily the claim was opened on my behalf by Fidelity's title officer - this made me very optimistic
• That Fidelity National Title Insurance Company would hire an appraiser from Boise Idaho to value the loss of the easement
• That no one from Fidelity National Title Insurance Company thought that it was unusual (until I pointed it out) that the appraiser from Boise Idaho determined a "cost to cure" value that to be honest is unrealistically low - but also to a different road to a different town in a different county.
• That then this same appraiser from Boise Idaho would value the loss of an almost mile long easement to an 80 acre parcel in the Napa Valley at $0.
• That for the most part none of the Claims Counsels who were, I thought, supposed to be representing my interests would even talk to me on the phone.  That indeed to get any response I had to contact the California Department of Insurance for assistance.
• That the attorney for Fidelity National Title Insurance Company is apparently by his affirmative defenses going to argue that it is my fault that they insured Parcels Two, Three, Four and Five ????   (I am not sure about this but as a lay person this is how I read their affirmative defenses.)

So the reason I am writing this blog about my experience with Fidelity National Title Company and Fidelity National Title Insurance Company.  Buyer beware.  Even if a claim is filed on your behalf by a title officer from Fidelity National Title Company, it appears that Fidelity National Title Insurance Company will do everything (move you from office to office, from Claims Counsel to Claims Counsel, present erroneous and misleading appraisals, etc.) to value the claim at $0 and wear you down.

And why would they do this?  Is it their job and/or loyalty to protect your interest in your property?  Or is it their job and/or loyalty to protect and/or insure their bottom line and by that I mean profit?  And as their [employee] "Stock ownership serves as a motivational force for Fidelity employees who recognize the Company's success is dependent upon their efforts and contributions,"  is this not a conflict in interest?  Does it not appear that it is beneficial to the stock holders that the less they pay in claims the higher the value of their stock will be?

The only thing I can say for certain is this entire situation is exhausting but if someone had to go through this horrible situation I am glad it is me and not one of my clients.  I have a different opinion and that is that my clients deserve the best representation and service and honesty and loyalty that I can possible provide for them.

So What Happens Next with Fidelity National Title Insurance Company?????

So where do we stand now and what happens next?

Fidelity National Title Insurance Company made an offer to settle a couple of months ago for $50,000 but this amount in my opinion does not even begin to cover the cost of the loss of the easement let alone all of the other costs now involved so we did not respond.

As the Title Officer from Fidelity National Title Insurance Company opened the claim on my behalf and as it was confirmed by their Claims Counsel - I believe that we are all in agreement that there is a valid claim - which means that it just comes down to how much?

First is the actual value of the lost easement.  Their appraiser from Boise Idaho valued the loss of an almost mile long easement to an 80 acre parcel at $0.  To show how subjective appraisals can be I, too, did a Property Valuation Report (formatted exactly like an appraisal) which valued the loss of the easement at substantially over $1,000,000.  I felt qualified to do this as a former Real Estate Broker having completed a college level course in Real Estate Appraisal.  And there are two other appraisers (my appraiser's fee is $6500) preparing two more appraisals.

I feel that other things need to also be included in this evaluation.  First and foremost the property was left with only a deeded entrance through a commercial and manufacturing facility which had a tremendous effect on the attempted sale of the property.  Next although the price the property would have sold for if it had the easements which I thought that I had when I purchased the property is hypothetical and needs to be based on comparable sales - the value of the property without the residential easement is a known value as the property was actively on the market the entire time.  And finally the effect that having this cloud exist during the prime selling time for this parcel - meaning during the fair weather months of June/July through October when Fidelity finally admitted that I should not have been granted Parcels Two, Three, Four and Five.

So determining this value is important.

But then there is the literally hundreds of hours that I have personally spent peacefully trying to convince Fidelity National Title Insurance Company that this loss was not $0.  No one would even speak to me.  So there is the cost of my time.  (And yes, this was extraordinarily stressful.)  And Fidelity National Title Insurance Company still has no respect for my time nor my attorney's time as they just chased us to Walnut Creek for depositions of a person employed by them who was not even there because the attorney for Fidelity forgot to communicate with my attorney.

And then as they would not discuss this situation with me peacefully I was forced to hire an attorney and file a lawsuit against them.  So now in addition to my attorney's time there is filing fees, court reporter and videographer fees, the appraiser's fee, and more of my time and energy involved.

And then there is the time I am spending writing this blog.

Obtaining the Easements from the Owners

When I was first assigned to the Claims Officer in Walnut Creek the first thing he was going to do was to try and obtain the easements again from their current owners.  After the claim was transferred first to Chicago and then the two Claims Counsels in Omaha no effort was made to obtain the lost easement again.

On June 25, 2009 the third Claims Counsel emailed the options for settling the claim:


1. Pay the insured his or her actual loss [Conditions and Stipulations 6].
2. Defend an insured who has been sued [Conditions and Stipulations 4(a)].
3. Prosecute an action on behalf of the insured to establish or clear title
[Conditions and Stipulations 4(b)).
4. Pay the insured policy limits [Conditions and Stipulations 6(a)].
5. Pay the party adverse to the insured [Conditions and Stipulations 4(b) and 6(b)].
6. Cure the insured's title by obtaining a deed, easement, release or other
instrument [Conditions and Stipulations 4(b) and 6(b)].

Looking at this list the first, fourth and sixth appear to be applicable to this claim.

To my knowledge no effort was made to cure the title by obtaining the easement.  A "cost to cure" appraisal was done by the appraiser from Boise Idaho and he determined that an 'equivalent' easement could be obtained with a value of purchase of $3500.  Today I was communicating with the owner who originally questioned this easement and as the easement across her property constituted approximately half of the lost easement - I thought I would ask her if she would have sold the easement across her property for $1750 and, if not, at what price.

"We have no interest in selling any easement through our property at any price," was her response.  I believe that this is understandable as both of the owners of this property are or have been public officials with the City of San Francisco and without my easement their property is very private.  They had purchased their property less than a year before the defect in the title was discovered for $2,500,000.

The Difference Between FNTG and FNTIC and FNTC again

Th mystery continues - at least I for one do not understand the difference between Fidelity National Title Group and Fidelity National Title Insurance Company and Fidelity National Title Company.  I thought the reason, for example, that Fidelity National Title Insurance Company denied that they employ escrow and title officers was because these individuals are employed by Fidelity National Title Company.  But then last night I noticed this:

And in it's Answer the attorney for Fidelity National Title Insurance Company wrote, "Defendant admits that its claim officer wrote a letter regarding payment of the claim".

So my new questions are as follows:

Why are escrow and title officers not employees of Fidelity National Title Insurance Company but it appears that the Claims Counsel is?

And even more importantly - why are claims not handled by Fidelity National Title Insurance Company????

Insurance Bad Faith Defined

Insurance Bad Faith Defined by Wikipedia:

"An insurance company has many duties to its policyholders. The kinds of applicable duties vary depending upon whether the claim is considered to be "first party" or "third party." A common first party context is when an insurance company writes insurance on property that becomes damaged, such as a house or an automobile. In that case, the company is required to investigate the damage, determine whether the damage is covered, and pay the proper value for the damaged property. Bad faith in first party contexts often involves the insurance carrier's improper investigation and valuation of the damaged property (or its refusal to even acknowledge the claim at all). "

So here is what I feel that Fidelity National Title Insurance Company did to fulfill it's responsibility:

1. Investigate the damage.  FNTIC hired an appraiser from Boise Idaho to do an appraisal of the loss of the ingress/egress easement in Napa County California.  His first appraisal was a "cost to cure" appraisal where he valued a prescriptive easement which the property already benefited from to Cavedale Road in Sonoma County for the lost easement to Mt. Veeder Road in Napa County.  The same appraiser from Boise Idaho presented an almost identical second appraisal which determined the loss of the almost mile long residential easement did not affect the value of the subject property.  So the resulting loss was valued at $0.
2. Determine whether the damage is covered.  It was determined to be covered by the second Claims Counsel in Chicago.
3. Pay the proper value for the damaged property.  The first appraisal determined the amount to secure, survey and record the easement to Cavedale Road in Sonoma County was $13,500.  The second appraisal determined that the diminution in value was $0.

Did Fidelity National Title Insurance Company properly investigate the loss of the easement by hiring an appraiser from Boise Idaho?  Was determining a "cost to cure" with an easement to another road in another County correct?  or should it have been determining a "cost to cure" of the actual lost easement?  And was an attempt made to obtain that easement from the current owners?  Were those owners asked what they would sell the easement for?  How did they determine that the loss of an almost mile long easement through residential and vineyard property leaving only an entrance through a commercial/manufacturing property caused no ($0) diminution in value?

For years I begged Fidelity National Title Insurance Company to talk to me and work with me on settling this claim before I was forced to hire an attorney.

Do Insurance Companies Represent the Insured or Their Stockholders??

Over that last four years the one thing that I did not understand was why I felt my insurance company was not representing my interests?

Why were they not attempting to regain the lost easements?  And if this was not possible, why were they not even willing to discuss with me the loss?

Needless to say I have spent hundreds of hours reading, writing and trying to understand this.  And as far as I can tell the ultimate question is do insurance companies have a responsibility to the insured or to their stock holders?  Here is my understanding and questions.

First, my relationship with my insurance company is not an agency relationship but a contractual relationship. The way I understand this they have to act in good faith but it is not a fiduciary duty.  

When I began researching on the Fidelity site (www.fntic.com) in 2009 I found this:

"The quality of Fidelity's customer service and the level of employee loyalty and commitment are enhanced by our employee stock ownership. Stock ownership serves as a motivational force for Fidelity employees who recognize the Company's success is dependent upon their efforts and contributions." 

So here is what I do not understand and it seems to me that it is a conflict of interest.  Per this statement the employees of Fidelity own the stock so therefore it is to the employee's benefit to increase the value of the company as it increases their own net worth.  So the income for the company comes from the premiums paid and I would assume also that this money is invested.  And then claims would be paid from these funds.  So wouldn't it be financially beneficial for the employees to not pay claims as it would increase the value of their stock?

It seems that  the basic equation would be:

Insurance premiums  -  Claims Paid  =  Profits

So if the claims are valued at $0 like mine then this would increase the profitability of the company which means that as Fidelity has employee stock ownership it would be beneficial to the employees to value claims at $0.  Right?????  Am I not understanding something here?  How are they defining "Company's success"???  The company's financial success?