Michael, G. v. Stock, J.
162 A.3d 465
| Pa. Super. Ct. | 2017Background
- Stock purchased property at 4 Mill Street (two adjoining parcels: Lot A with hotel/restaurant, and unimproved Lot B) from the Pezzolas in 1999; deeds and title documents were not updated to merge the two lots, though tax mapping later showed them as one parcel (Tax Parcel/County Parcel 4-18-28).
- Stock procured a title commitment, deed, and owner’s title policy from Commonwealth Land Title Insurance Co. (Land Title); the Policy schedules contained metes-and-bounds language that, in fact, described only Lot A.
- In 2006 Stock entered an agreement to sell the combined parcel (tax parcel 4-18-28) to Michael; Michael later discovered that Stock had not received title to Lot B, withdrew, and sued Stock for his deposit and expenses.
- Stock submitted a claim to Land Title, which denied coverage in 2007; Pezzolas later (2008) executed a Deed of Confirmation stating their intent that the 1999 deed conveyed both Lots A and B.
- Stock sued Land Title asserting breach of the title commitment/policy, bad faith (42 Pa.C.S. § 8371), breach of contract for transactional services, negligence, and indemnification; cross-motions for summary judgment followed.
- The trial court granted summary judgment for Land Title (holding the Policy unambiguously covered only Lot A under the deed and UPIL) and denied Stock’s motion; the Superior Court vacated the award and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Stock) | Defendant's Argument (Land Title) | Held |
|---|---|---|---|
| 1) Does the Policy cover Lot B as well as Lot A? | Policy references to County/Tax Parcel 4-18-28 and the Policy definition of “land” mean Lot B was intended to be covered; insured’s reasonable expectations/supporting estoppel require coverage. | Schedules (metes-and-bounds) unambiguously describe only Lot A; Policy therefore does not cover Lot B. | Court: Trial court erred to enter summary judgment for Land Title; factual issues (including estoppel/reasonable expectations) remain and require remand. |
| 2) Does reference to the County Parcel/Tax Parcel identifier incorporate Lot B under UPIL? | Reference to parcel identifier should be read to include both lots; prior tax map merger supports that reading. | Under UPIL (21 P.S. § 10.1), instrument must contain metes-and-bounds or recorded-plan reference to change parcel size/description; the 1999 deed lacked required survey or plan reference, so parcel reference did not suffice to convey Lot B. | Court: Agreed with trial court that deed and policy descriptions matched and described only Lot A under UPIL; but this does not end the coverage question because estoppel and reasonable-expectation issues remain. |
| 3) Is Land Title estopped or liable for transactional errors (deed drafting, title search) causing the omission of Lot B? | Land Title prepared/handled transactional documents and failed to discover and insure Lot B; insurer is estopped from denying coverage based on its agent’s errors and may be liable in contract/negligence. | Denies drafting deed and limited liability under Policy; argues claims relating to transactional services are restricted to policy remedies (Paragraph 15(b)). | Court: Denied Land Title’s summary judgment on Counts III and IV (contract for services and negligence); material fact disputes exist about Land Title’s role and whether policy clause limits remedies. Remand required. |
| 4) Did Land Title act in bad faith or breach duty to defend? | Denial of coverage and claims-handling conduct over months, and refusal to defend Stock in Michael’s suit, show bad faith and breach of duty to defend. | Denial objectively reasonable because Policy covered only Lot A; no duty to defend or act in bad faith. | Court: Vacated summary judgment on bad-faith claim; factual issues remain about coverage, claims handling, and duty to defend. Bad-faith is separate from coverage and survives remand. |
Key Cases Cited
- Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006) (insurance-policy interpretation focuses on parties’ intent; ambiguous provisions construed for insured)
- Tonokovic v. State Farm Mut. Auto. Ins. Co., 521 A.2d 920 (Pa. 1987) (insurer cannot unilaterally limit coverage contrary to insured’s reasonable expectations)
- Presson v. Commonwealth Mut. Fire Ins. Co., 77 A.2d 353 (Pa. 1951) (erroneous descriptive references in policies may be disregarded when sufficient description remains to identify insured property)
- Litto v. Public Fire Ins. Co., 167 A. 603 (Pa. Super. 1933) (agent’s mistake in policy description can estop insurer and courts will enforce insured’s reasonable expectations)
- Pressley v. Travelers Prop. Cas. Corp., 817 A.2d 1131 (Pa. Super. 2003) (agent’s promise and insured’s reasonable expectation can give rise to coverage despite policy language)
- Rood v. Commonwealth Land Title Ins. Co., 936 A.2d 488 (Pa. Super. 2007) (title insurance policies are governed by general insurance contract construction rules)
- Am. & Foreign Ins. Co. v. Jerry's Sport Ctr., Inc., 2 A.3d 526 (Pa. 2010) (insurer’s duty to defend is broader than duty to indemnify; potential coverage triggers defense obligation)