Centennial Development Group, LLC v. Lawyer's Title Insurance
310 P.3d 23
Ariz. Ct. App.2013Background
- Centennial bought 75 acres, obtained a title commitment and policy from Lawyer’s Title, and later discovered an undisclosed roadway/utility easement.
- Centennial tried to sell, defaulted on carry-back financing, and reconveyed 74 acres back to the seller (retained 1 acre); the easement did not burden the retained acre.
- Centennial sued Lawyer’s Title for negligent misrepresentation (for omission in the title commitment) and breach of contract (title policy coverage for loss).
- The superior court granted summary judgment for Lawyer’s Title on both claims; Centennial appealed.
- The Court of Appeals affirmed dismissal of the negligence claim based on A.R.S. § 20-1562, but reversed dismissal of the contract claim and remanded for further proceedings on damages and other defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a negligence/ negligent misrepresentation claim can be based on omissions in a title commitment | Centennial: the commitment negligently omitted the easement and induced purchase | Lawyer’s Title: A.R.S. § 20-1562 treats commitments as non-representations, barring tort claims | Held: Affirmed for defendant — statute bars common-law negligence claim based on a title commitment |
| Whether the title policy covers losses discovered while insured owned the property but claimed after sale | Centennial: damages were sustained while it owned the land, so claim is covered even though asserted after conveyance | Lawyer’s Title: sale ended coverage; reconveyance bars post-sale recovery | Held: Reversed — policy covers losses sustained during ownership even if claim is asserted after conveyance (policy does not require ownership at time of claim) |
| Effect of the policy’s “continuation of insurance” clause when insured reconveys property | Centennial: clause preserves coverage for losses incurred during ownership; no requirement to claim before sale | Lawyer’s Title: clause ends coverage upon conveyance; loss becomes buyer’s problem | Held: Court adopts distinction — coverage exists for losses incurred during insured’s ownership; conveyance may end future coverage but does not bar recovery for prior losses |
| Whether statutory law or Restatement §552 governs duties of title insurers re: commitments | Centennial: Restatement §552 supports negligence liability for careless reports | Lawyer’s Title: A.R.S. §20-1562 controls and displaces common-law Restatement duties | Held: Statute controls; Restatement cannot be used to impose duties contrary to statute |
Key Cases Cited
- Brookover v. Roberts Enters., Inc., 215 Ariz. 52 (App. 2007) (summary-judgment standard and de novo review)
- First Am. Title Ins. Co. v. Action Acquisitions, LLC, 218 Ariz. 394 (App. 2008) (interpretation of title insurance contracts)
- Swanson v. Safeco Title Ins. Co., 186 Ariz. 637 (App. 1995) (title insurance indemnifies for defects not discovered in search)
- Moore v. Title Ins. Co. of Minn., 148 Ariz. 408 (App. 1985) (pre‑1992 law allowing tort liability for negligent commitments)
- Chicago Title Ins. Co. v. 100 Inv. Ltd. P’ship, 355 F.3d 759 (4th Cir. 2004) (treatment of “continuation of insurance” clause; loss date controls coverage)
- Point of Rocks Ranch, L.L.C. v. Sun Valley Title Ins. Co., 143 Idaho 411, 146 P.3d 677 (Idaho 2006) (conveyance and special warranty deed may end coverage for post-sale discoveries)