463 S.W.3d 770
Mo.2015Background
- In 2003 Spalding (via Spalding Land Company, SLC) purchased ~419 acres; Stewart Title issued a title insurance policy insuring fee simple title up to $1.7M and defining recovery as indemnity for "actual monetary loss" or the difference in value between the estate "as insured" and the estate subject to the defect.
- A 1-acre competing claim by Estes arose in 2006; Stewart Title investigated and on June 16, 2006 concluded Estes owned the acre and SLC did not. SLC then made a claim under the policy.
- Stewart Title elected under the policy to measure loss by appraisal, obtained a $10,000 appraisal, and tendered a $10,000 check on July 3, 2007; SLC (and later Spalding) rejected the amount and demanded acquisition of the acre instead.
- SLC ceased operations, assigned the claim to Spalding, and Spalding sued Stewart Title on June 9, 2011 for breach of contract and vexatious refusal to pay. A jury awarded damages of $1,100,000 plus statutory penalties and fees; Stewart Title appealed.
- On appeal Stewart Title argued (1) statute of limitations barred the suit (5-year vs. 10-year), (2) insufficient admissible evidence of damages (expert appraisal speculative), and (3) Instruction No. 7 misstated measure of damages by permitting highest-and-best-use valuation; the trial court judgment was affirmed.
Issues
| Issue | Plaintiff's Argument (Spalding) | Defendant's Argument (Stewart Title) | Held |
|---|---|---|---|
| Time bar / accrual of breach | Claim accrued when insurer refused adequate payment (July 3, 2007); suit filed within 5 years | Accrual occurred when SLC learned of the possible defect (early 2006); statute began earlier and suit is time‑barred | Court: accrual was when insurer elected appraisal and tendered inadequate payment (July 3, 2007); suit timely |
| Which SOL applies (5-yr v. 10-yr) | (Alternative) 10‑year may apply to written promises to pay | Policy is an indemnity contract without unconditional promise to pay; assume 5‑year applies | Court assumed 5‑year for purposes of decision but found claim timely under that period |
| Admissibility and sufficiency of expert damages evidence | Reardon's appraisal (highest-and-best-use lake development) established provable damages | Appraisal speculative: based on abandoned plan, non‑insured parcels, permit/financing assumptions | Court: trial court did not abuse discretion admitting Reardon; weaknesses go to weight; evidence was submissible |
| Measure of damages / Instruction No. 7 | Damages measured as difference in fair market value before/after defect; jury may consider highest-and-best use | Policy limits recovery to "actual monetary loss" "as insured" and excludes basing damages on hypothetical development | Court: Instruction No.7 (MAI-modified) correctly stated difference-in-value measure and permissibly allowed consideration of highest-and-best use; did not mislead jury |
Key Cases Cited
- Powel v. Chaminade College Preparatory, 197 S.W.3d 576 (Mo. banc 2006) (party pleading statute‑of‑limitations defense bears burden to prove it)
- Burns & McDonnell Eng'g Co. v. Torson Const. Co., 834 S.W.2d 755 (Mo. Ct. App. 1992) (in indemnity contracts, claim accrues when indemnitee sustains actual loss)
- Kivland v. Columbia Orthopaedic Grp. LLP, 331 S.W.3d 299 (Mo. banc 2011) (standard for admission/exclusion of expert testimony under §490.065 and abuse‑of‑discretion review)
- Fohn v. Title Ins. Corp. of St. Louis, 529 S.W.2d 1 (Mo. banc 1975) (endorsing use of eminent‑domain difference‑in‑value approach for damages in title insurance cases)
- Hopmeirer v. First Am. Title Ins. Co., 856 S.W.2d 387 (Mo. Ct. App. 1993) (policy that guarantees good title is breached when insured discovers title defect)
- Stewart Title Guar. Co. v. West, 676 A.2d 953 (Md. Ct. Spec. App. 1996) (title insurer breaches only after notice and failure to cure or obtain title within a reasonable time)