First American Title Insurance Company v. Patriot Bank
01-14-00170-CV
| Tex. App. | Jun 15, 2015Background
- Patriot Bank appeals from a Houston, Texas trial court ruling in Harris County, 61st Judicial District, Cause No. 2012–47633.
- The dispute concerns a title insurance policy issued by First American Title Insurance Company and related bad faith claims.
- Patriot seeks damages for a complete failure of title on multiple parcels secured by a loan, with a claimed loss of $1.5 million.
- Patriot argues damages should mirror breach-damages for covenants of seisin and warranty of good title.
- Patriot asserts the Texas Department of Insurance Manual fixes the insured-value at or above $1.5 million under the policy’s multiple security interests.
- First American has sought to defend on the basis of a alleged bona fide dispute supported by an appraisal dated June 19, 2012.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Damages measure for complete failure of title | Patriot: measure equals breach-damages for covenants of seisin and title | First American: different measure applies | Not addressed in opinion |
| Property value under TDI Manual | Value must be at least $1.5 million per TDI manual | Value determined by policy terms and collateral | Not addressed in opinion |
| Date to measure Patriot’s loss | Loss measured as of date of loss (April 29, 2009) | Potentially later appraisal dates could affect value | Not addressed in opinion |
| Reliance on Shelkey’s appraisal as bona fide dispute | Appraisal dated June 19, 2012 cannot establish a bona fide dispute | Appraisal supports dispute | Not addressed in opinion |
Key Cases Cited
- Sun Exp. and Prod. Co. v. Benton, 728 S.W.2d 35 (Tex. 1987) (damages for title defects tied to consideration paid)
- Boatright, 790 S.W.2d 722 (Tex. 1989) ((Tex. Supreme Court) title damages considerations)
- Johns, 381 S.W.2d 934 (Tex. 1964) (limitations on title-related remedies)
- Childress v. Siler, 272 S.W.2d 417 (Tex. Civ. App.—Waco 1954) (covenant of seisin implied in conveyances)
- Miga v. Jensen, 96 S.W.3d 207 (Tex. 2002) (contract damages measured at breach time)
- Prendergast v. Southern Title, 494 S.W.2d 154 (Tex. 1973) (valuation tied to date of policy or breach)
- Stewart Title Guar. Co. v. Cheatham, 764 S.W.2d 315 (Tex. App.—Texarkana 1988) (damages and title issues in title insurance context)
- Chicago Title Ins. Co. v. McDaniel, 875 S.W.2d 310 (Tex. 1994) (title insurance contract of indemnity)
- Citicorp Sav. of Ill. v. Stewart Title Guar. Co., 840 F.2d 526 (7th Cir. 1988) (economic-loss style damages in title-insurance context)