Green Tree Servicing, LLC v. Chicago Title Insurance Company, Defendant/Respondent, and Title Pro, LLC, 2016 Mo. App. LEXIS 971

In 2005 America’s Wholesale Lender (Predecessor) received a loan secured by a refinance deed of trust on property at 407 Sun Field Lane; Ticor/Chicago Title issued a loan title insurance policy insuring the lien’s validity and priority.
Predecessor and Citibank (holder of an existing home equity deed of trust) executed a subordination agreement; Title Pro failed to record that subordination before a 2011 foreclosure sale by Citibank.
Citibank foreclosed in Sept. 2011; the foreclosure purchaser later conveyed the property to a bona fide purchaser, extinguishing Predecessor’s refinance lien as of the sale.
Predecessor discovered the lien had been extinguished when it obtained a title report on March 7, 2012, and filed a claim with Chicago Title on March 14, 2012; Chicago Title denied the claim for failure to give prompt notice under the policy.
Predecessor later assigned the loan to Green Tree (Appellant), which sued Chicago Title for vexatious refusal to pay and breach of contract; the trial court dismissed those counts as time-barred for failure to give prompt notice.
The Missouri Court of Appeals reversed, holding the trial court erred in deciding as a matter of law that notice was untimely and remanded for further proceedings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Predecessor failed, as a matter of law, to give "prompt" notice under the policy	Notice was given promptly after Predecessor obtained actual knowledge (title report, Mar. 7, 2012); policy requires actual, not constructive, knowledge	Notice obligation arose when Citibank gave foreclosure notice in 2011; a prudent senior lienholder must investigate and thus had notice before the sale	Reversed trial court: cannot decide as matter of law that notice was untimely; timeliness is typically a fact question and reasonable persons could differ
Whether insurer was prejudiced as a matter of law by late notice	N/A at this stage — plaintiff contends no prejudice shown	Insurer asserted prejudice from lack of timely notice	Court did not decide prejudice (insurer bears burden); remanded for fact development

In re Estate of Austin, 389 S.W.3d 168 (Mo. banc 2013) (standard of review for dismissal)
Otte v. Edwards, 370 S.W.3d 898 (Mo. App. E.D. 2012) (pleading rules and reasonable inferences)
Coons v. Berry, 304 S.W.3d 215 (Mo. App. W.D. 2009) (pleading standard applied to motions to dismiss)
State ex rel. Henley v. Bickel, 285 S.W.3d 327 (Mo. banc 2009) (examining pleadings without weighing credibility)
Tresner v. State Farm Ins. Co., 913 S.W.2d 7 (Mo. banc 1995) (notice-timeliness ordinarily a fact question; can be decided as matter of law when all reasonable persons would agree)
Dhyne v. State Farm Fire and Cas. Co., 188 S.W.3d 454 (Mo. 2006) (elements of vexatious-refusal claim)
Shirley's Realty, Inc. v. Hunt, 160 S.W.3d 804 (Mo. App. W.D. 2005) (elements of breach of contract claim)
Western Sur. Co. v. Intrust Bank, N.A., 20 S.W.3d 566 (Mo. App. W.D. 2000) (contract breach elements)
Pleasant Hollow Homeowners Ass'n v. Webster, 285 S.W.3d 421 (Mo. App. E.D. 2009) (bona fide purchaser doctrine and constructive notice)