424 P.3d 1043
Utah Ct. App.2018Background
- In 2007 Lauritzen purchased five undeveloped lots in Hurricane, Utah, conveyed by warranty deed that described the lots by reference to a recorded subdivision plat (the Original Plat).
- The county recorder rejected the Original Plat because Lot 54 overlapped an adjacent parcel; Lauritzen bought title insurance from First American effective the date of the deed.
- Because of the plat defect, Lauritzen could not obtain building permits; owners ultimately consented to an Amended Plat (2008) that shrank Lot 54 (~344 sq ft) and added new setbacks/restrictions affecting all five lots.
- Lauritzen filed a claim under the policy alleging defective and unmarketable title; First American denied coverage and moved for summary judgment.
- The district court granted summary judgment for First American without explanation. Lauritzen appealed. The Court of Appeals affirmed in part, reversed as to Lot 54, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether policy covers loss from “unmarketability of the title” due to plat problems | Lauritzen: title unmarketable because he couldn’t get permits and Amended Plat imposed restrictions that depressed value | First Am.: “unmarketability” limited to title/ownership issues; economic impairments not covered | Court: "Unmarketability of title" limited to ownership/possession defects; economic/development restrictions not covered (except Lot 54 overlap) |
| Whether there was a "defect in" title under the policy | Lauritzen: all five lots’ titles were defective because the Original Plat was incorporated into the deeds | First Am.: only Lot 54 was affected by the overlap; other lots’ descriptions were accurate | Court: Original Plat is incorporated by reference into deeds, but only Lot 54 had a true title defect; summary judgment reversed as to Lot 54 and affirmed as to the other lots |
| Whether Lauritzen’s claim was barred by untimely notice | First Am.: Lauritzen waited until after Amended Plat; insurer prejudiced and may deny coverage | Lauritzen: he contacted First Am. agent soon after discovering the problem, requested policy, and was told agent would address it | Court: factual dispute exists about notice and prejudice; untimeliness not a proper basis for summary judgment |
| Whether Lauritzen proved damages from the Lot 54 defect | First Am.: Lauritzen lacked competent evidence and did not isolate damages from Lot 54 | Lauritzen: as owner familiar with property, he is competent to testify to value and submitted before/after valuations | Court: owner testimony can be competent; factual disputes remain about amount and allocation of damages to Lot 54; summary judgment on damages improper |
Key Cases Cited
- Bailey v. Bayles, 52 P.3d 1158 (Utah 2002) (appellate affirmance may be sustained on any record ground)
- Woody Creek Ventures, LLC v. Fidelity Nat’l Title Ins. Co., 830 F.3d 1209 (10th Cir. 2016) ("unmarketability of title" refers to ownership/possession defects, not economic use restrictions)
- Mostrong v. Jackson, 866 P.2d 573 (Utah Ct. App. 1993) (access or use problems do not necessarily render title unmarketable)
- Hocking v. Title Ins. & Trust Co., 234 P.2d 625 (Cal. 1951) (distinguishing title marketability from impairment of property value/use)
- Ault v. Holden, 44 P.3d 781 (Utah 2002) (a warranty deed conveys title when property description is sufficiently definite)