Wade v. Stewart Title Guaranty Company
2017 IL App (1st) 161765
Ill. App. Ct.2017Background
- Wade purchased a two-unit Chicago property in November 2006 and obtained a title policy from Stewart Title Guaranty (policy dated Dec. 6, 2006). Title commitment did not disclose a Deutsche Bank second mortgage or an existing City of Chicago housing-court action.
- After closing, Wade learned of (1) a recorded lis pendens/housing-court action (Sept. 29, 2006) and (2) a Deutsche Bank second mortgage/foreclosure (filed Oct. 3, 2007). She notified Stewart (written notice received Dec. 27, 2007).
- Stewart’s claims counsel investigated, retained counsel in housing court, asserted equitable subrogation, paid Amalgamated Bank and negotiated Deutsche Bank’s lien removal for $15,000; all title defects were removed by December 2009.
- Wade alleged Stewart unreasonably delayed curing defects (about 18–24 months after written notice), causing her inability to obtain rehabilitation financing and eventual demolition of the building; she sued for breach of the title policy (no §155 claim persisted).
- At bench trial the court found Wade failed to prove (1) breach of the policy’s "reasonably diligent" obligation, (2) proximate causation of recoverable title-policy damages, or (3) a basis for exemplary damages; judgment for Stewart affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stewart breached the policy by not removing title defects in a "reasonably diligent manner" | Wade: Stewart took ~18–36 months and litigated instead of immediately paying the full lien, thus breaching the policy | Stewart: Policy required written notice (received Dec. 27, 2007); it had discretion to litigate/settle and cured defects by Dec. 2009 | Trial court not against manifest weight: Wade failed to prove breach; 18 months not shown unreasonable as a matter of law |
| When Stewart's obligations were triggered (notice requirement) | Wade: Oral notice/visit in Dec. 2006 (claim number) triggered duty earlier | Stewart: Policy requires prompt written notice; first proper written notice was Dec. 27, 2007 | Court: Policy’s written-notice clause applied; plaintiff failed to prove earlier triggering; appeals court affirmed |
| Damages and proximate causation recoverable under title policy | Wade: Loss of property value, demolition costs, and outlays (windows, architect, etc.) were caused by Stewart’s delay | Stewart: Title insurance covers defects in title, not depreciation/repair costs; it cured defects and could have issued indemnity for financing; Wade failed to mitigate or show loan denials | Court: Most claimed costs are not recoverable under title policy; plaintiff failed to prove proximate cause and cognizable damages |
| Applicability of §155 / bad-faith remedies and implied covenant of good faith | Wade: (argued on appeal) Stewart’s delay was vexatious/unreasonable and breached implied covenant | Stewart: §155 does not apply to title insurers; implied-covenant claim not pleaded below (forfeited) | Court: §155 inapplicable to title insurers; implied-covenant/bad-faith theories were forfeited for belated appellate presentation |
Key Cases Cited
- Eychaner v. Gross, 202 Ill. 2d 228 (Ill. 2002) (defines manifest-weight-of-the-evidence review and deference to trial-court factfinding)
- First Midwest Bank, N.A. v. Stewart Title Guaranty Co., 218 Ill. 2d 326 (Ill. 2006) (scope of title insurer liability is contractually defined)
- Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352 (Ill. 2006) (insurance contract interpretation principles; give effect to parties' intent)
- Samour, Inc. v. Board of Election Commissioners, 224 Ill. 2d 530 (Ill. 2007) (clarifies limited application of "clearly erroneous" standard vs. manifest-weight review)