309 P.3d 799
Wyo.2013Background
- George and Wendy Sonnett purchased a 20-acre parcel and obtained a title insurance policy from First American before closing; the policy listed some easements but did not mention a recorded "Master Plan."
- The Master Plan had been prepared to secure Sublette County's approval of a zoning change (agricultural to recreational) and was incorporated into the county's resolution amending the zoning resolution and recorded with the county.
- Elk Ridge Lodge operated a resort on the property for years in ways that arguably conflicted with the Master Plan; the Sonnetts discovered the Master Plan in 2006 after county enforcement notices and closed the lodge in 2007.
- The Sonnetts submitted a notice of claim to First American asserting the Master Plan clouded title and alleging lack of legal access; First American denied coverage, citing a policy exclusion for the Sublette County Zoning Resolution and its amendments and a general exclusion for governmental regulations.
- The Sonnetts sued First American for breach of contract, negligence, and bad faith denial of coverage; the district court granted summary judgment for First American and the Sonnetts appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Master Plan is a title encumbrance covered by the policy | Sonnetts: Master Plan is a restrictive covenant (an encumbrance) that makes title unmarketable | First American: Master Plan is an amendment to the county zoning resolution and thus excluded by the policy's zoning/governmental regulation exclusions | Court: Master Plan is part of the zoning resolution and excluded; summary judgment for First American affirmed |
| Whether denial of coverage was in bad faith | Sonnetts: Denial was objectively unreasonable because Master Plan is an encumbrance and access claim was valid | First American: Denial was reasonable based on policy exclusions; it investigated claims before denying | Court: Denial was reasonably based and investigation was adequate; bad-faith claim fails |
| Whether First American was negligent in failing to disclose recorded interests | Sonnetts: Title insurer negligently failed to disclose recorded interests when issuing policy/commitment | First American: No independent tort duty beyond the insurance contract; Hulse precludes tort claims based solely on issuance of commitments/policy | Court: Wyoming law rejects such tort claims absent contractual duty; negligence claim dismissed |
| Procedural challenges re: judicial notice, affidavit strikes, and mediation timing | Sonnetts: District court improperly relied on prior order, struck affidavit material, and entered judgment before mediation completed | First American: Procedural rulings were within court's discretion; appellants failed to develop arguments | Court: Sonnetts’ arguments were conclusory and inadequately briefed; court declines to consider them |
Key Cases Cited
- Elk Ridge Lodge, Inc. v. Sonnett, 254 P.3d 957 (Wyo. 2011) (background case describing Master Plan and prior proceedings)
- Hulse v. First Am. Title Co. of Crook Cnty., 33 P.3d 122 (Wyo. 2001) (title insurer has no independent tort duty to search/disclose defects absent contractual commitment)
- Matlack v. Mountain West Farm Bureau Mut. Ins. Co., 44 P.3d 73 (Wyo. 2002) (objective test for insurance bad-faith: whether claim was "fairly debatable")
- Bear Fritz Land Co. v. Kachemak Bay Title Agency, Inc., 920 P.2d 759 (Alaska 1996) (zoning and governmental land-use restrictions are not title encumbrances covered by title insurance)
Disposition: Affirmed the district court’s summary judgment for First American on all claims.