935 N.W.2d 245
Neb. Ct. App.2019Background
- In 2006 FoGe purchased three Council Bluffs, Iowa tracts from Legacy Group; the seller (Ryan Barry) had an existing 2002 mortgage in favor of First National Bank of Wahoo disclosed in the sales contract.
- First American issued a title commitment and a 2007 title insurance policy to FoGe that specifically excepted the August 7, 2002 mortgage in Schedule B.
- Barry took a separate December 2006 promissory note (about $31,469) that by its terms was secured by life insurance, not the property; he later defaulted and First National foreclosed the 2002 mortgage in 2016.
- FoGe notified First American of its claim in July 2017 and sued in October 2017 for breach of contract, bad faith denial, and negligence for allegedly failing to discover the 2006 loan.
- First American moved for summary judgment; the district court granted it in June 2018, finding no genuine issue of material fact; FoGe appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2007 title policy obligated First American to cover losses from the foreclosure | FoGe: foreclosure resulted from default on the 2006 note via a cross-default clause in the 2002 mortgage, which was not excepted in Schedule B | First Am.: policy expressly excepted the 2002 mortgage foreclosed—policy excludes loss from that mortgage | Court: exception applied; foreclosure proceeded on the 2002 mortgage, so no coverage under the policy |
| Whether FoGe’s notice (timing/adequacy) defeated First American’s defenses | FoGe: timely enough / not prejudicial | First Am.: lack of prompt notice could bar recovery and prejudice defense | Court: unnecessary to decide because contract exclusion resolved coverage issue |
| Bad-faith denial of coverage | FoGe: insurer denied defense/indemnity in bad faith | First Am.: denial was reasonable given policy exclusions and facts | Court: FoGe failed to show absence of reasonable basis for denial; bad-faith claim fails |
| Negligence for failing to discover/report the 2006 loan | FoGe: First American negligently failed to discover the second loan and advise FoGe | First Am.: duty is one of reasonable care; the 2006 note was not secured by the property and FoGe knew of it | Court: no material fact showing breach of reasonable care; negligence claim fails |
| Whether summary judgment was premature (need for title/escrow files and expert) | FoGe: needed more time to obtain files and retain standard-of-care expert | First Am.: matter resolvable on the record; additional discovery would not create a triable issue | Court: FoGe’s affidavit failed to explain what essential facts would be obtained; court didn’t abuse discretion in denying continuance and entering summary judgment |
Key Cases Cited
- Wintroub v. Nationstar Mortgage, 303 Neb. 15 (summary-judgment standard)
- Allstate Ins. Co. v. Farmers Mut. Ins. Co., 233 Neb. 248 (clear policy terms are enforced according to plain meaning)
- Williams v. Allstate Indemnity Co., 266 Neb. 794 (bad-faith requires absence of reasonable basis and insurer’s knowledge or reckless disregard)
- Tess v. Lawyers Title Ins. Corp., 251 Neb. 501 (title insurers owe reasonable-care standard in transmitting preliminary title information)
- City of Sidney v. Municipal Energy Agency of Neb., 301 Neb. 147 (courts need not decide issues unnecessary to disposition)
- Gaytan v. Wal-Mart, 289 Neb. 49 (requirements for affidavits seeking continuance under summary-judgment rules)
- Lombardo v. Sedlacek, 299 Neb. 400 (affidavit for continuance must identify relevant information sought and basis for believing it exists)