249 P.3d 625
Wash. Ct. App.2010Background
- DRC purchased five Green Valley Estates lots and obtained preliminary title commitments from First American.
- After purchase, three lots received stop-work orders requiring archeological surveys due to historical district designation.
- Surveys uncovered artifacts on one lot, delaying development on all three affected lots.
- DRC sued First American for breach of contract and bad faith, alleging failure to identify the district and resulting unmarketable title.
- The trial court granted CR 12(b)(6) dismissal; on appeal, the court affirmatively held no duty to investigate the historical register and no breach due to unmarketable title or coverage gaps.
- Key issue is whether First American’s policies cover unmarketable title and stop-work-order damages, given policy forms and notice requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did First American have a duty to identify the historical district? | DRC argues failure to disclose violates contract. | First American had no statutory duty to disclose prior to issuance. | No duty; preliminary commitments are not abstracts and do not guarantee disclosure. |
| Does coverage extend to unmarketable title? | Unmarketable title due to district designation should be covered. | Unmarketability is economic, not title defect, and policy forms do not guarantee such coverage in this context. | No coverage for unmarketable title under the policies issued. |
| Does coverage extend to stop-work order damages under the policy provision 5? | Stop-work orders caused by district designation are covered. | Only Lot 6's 2006-form policy includes provision 5 and no notice-recorded enforcement occurred. | No coverage; no recordable public notice of enforcement and policy language not applicable to these facts. |
Key Cases Cited
- Barstad v. Stewart Title Guar. Co. Inc., 145 Wash.2d 528 (Wash. 2002) (preliminary commitment is not an abstract of title; determines scope of policy)
- Barstad, 145 Wash.2d 528, 39 P.3d 984 (Wash. 2002) (Barstad discusses purpose of preliminary commitments)
- Hebb v. Severson, 32 Wash.2d 159 (Wash. 1948) (title must be free from reasonable objection; easement issues)
- Ellingsen v. Franklin County, 117 Wash.2d 24 (Wash. 1991) (constructive notice requires explicit statutory declaration)
- Halvorson v. Dahl, 89 Wash.2d 673 (Wash. 1978) (standard for CR 12(b)(6) de novo review)
- McCurry v. Chevy Chase Bank, F.S.B., 169 Wash.2d 96 (Wash. 2010) (crucial for analyzing adequacy of claims under 12(b)(6))
- Burton v. Lehman, 153 Wash.2d 416 (Wash. 2005) (supports de novo review on 12(b)(6) dismissals)