941 F. Supp. 2d 1121
E.D. Mo.2013Background
- This diversity case involves a loan policy of title insurance issued by Lawyers Title to National City Bank for a Majestic Pointe condo project.
- Fidelity National Title Insurance Company, successor to Lawyers Title, defends against Captiva Lake Investments’ claim to coverage as National City Bank’s successor/assignee.
- Mechanics’ liens were filed beginning in 2008; several claims were decided in Captiva’s favor or resulted in judgments against Captiva.
- National City Bank sold the loan to Captiva in mid-2009 and Captiva eventually foreclosed; Captiva demanded defense and coverage under the policy.
- Captiva sought defense and indemnification for liens and unmarketability of title; Fidelity defended some liens while contending exclusions apply, and Captiva asserted additional breach/intentional tort theories.
- Judicial posture: cross motions for partial summary judgment denied; material factual disputes remain to determine coverage and defense obligations at trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unmarketability coverage due to mechanics’ liens. | Captiva—liens render title unmarketable and fall within policy. | Fidelity—liens recorded post-2007 are not covered; only pre-2007 issues or covered mechanics’ lien scope could apply. | Factual dispute; summary judgment denied; trial needed to determine marketability. |
| Exclusion 3(a) for created or suffered liens. | Fidelity must show insured’s intentional misconduct or inequitable dealings to deny coverage. | 3(a) excludes liens created by insured’s intentional actions or inequitable dealings; insurer bears burden to show applicability. | Ambiguity and factual questions; summary judgment denied; need trial to resolve applicability. |
| Duty to defend and reservation of rights. | Fidelity breached by defending under reservation and concealing noncoverage. | Insurer may defend under reservation of rights; acceptance of defense does not waive validity of policy; declaratory relief appropriate. | Questions of fact preclude summary judgment on whether Fidelity satisfied defense obligations. |
| Whether Fidelity satisfied defense scope for defeated liens; impact of limitations of liability. | Fidelity fully satisfied its duties by defeating some liens and limiting scope. | Status of remaining liens unclear; factual disputes persist over adequacy of defense. | Factual disputes preclude summary judgment on defense satisfaction. |
| Additional claims for concealment and tortious interference. | Captiva asserts Fidelity concealed policy determinations and interfered with SSB relationship. | Claims to be resolved at trial; not appropriate for summary disposition. | To be addressed at trial. |
Key Cases Cited
- Brown v. St. Paul Title Ins. Co., 634 F.2d 1103 (8th Cir.1980) (exclusion for created or suffered liens requires insured misconduct or inequitable dealings)
- Chicago Title Ins. Co. v. Resolution Trust Corp., 53 F.3d 899 (8th Cir.1995) (insurer not liable where insured’s actions were not inequitable; creation of liens may not be due to intentional misconduct)
- First Assembly Church of West Plains v. Ticor Title Ins. Co., 872 S.W.2d 577 (Mo.Ct.App.1994) (intentional, deliberate conduct may trigger exclusion 3(a))
- Goodner v. Mosher-Roe Abstract & Guaranty Co., 282 S.W. 698 (Mo.1926) (liens do not become encumbrances until properly filed; distinguishing scenarios)
- Realty Sav. & Inv. Co. v. Washington Sav. & Bldg. Ass'n., 63 S.W.2d 167 (Mo.Ct.App.1933) (potential liens not encumbrances absent proper filing)
- Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300 (Mo.1993) (ambiguous policy terms interpreted against insurer; plain terms preferred when unambiguous)
- Heringer v. American Family Mut. Ins. Co., 140 S.W.3d 100 (Mo.Ct.App.2004) (burden on insurer to prove applicability of exclusion)