Wade v. Stewart Title Guaranty Co.
2017 IL App (1st) 161765
| Ill. App. Ct. | 2017Background
- In November 2006 Josephine Wade purchased a two-unit Chicago property and obtained a title policy from Stewart Title Guaranty Co.; the policy insured against title defects but required claimants to give written notice and allowed Stewart discretionary methods to cure defects.
- After closing Wade discovered two undisclosed title defects: (1) a Deutsche Bank second mortgage and (2) a City of Chicago housing-court action (code violations/lis pendens). Wade provided written notice (via counsel) on December 27, 2007; Stewart acknowledged and began handling the claim in January 2008.
- Stewart pursued litigation/subrogation and settlements, paid roughly $15,000 to remove the Deutsche Bank lien by July 2009 and completed removal of title defects (including payment to Amalgamated Bank) by December 2009; it also retained counsel in the housing-court matter.
- Wade alleges Stewart unreasonably delayed curing title defects (about 18–24 months after written notice), which prevented her from getting rehabilitation financing and ultimately led to the property’s demolition in 2012; she sued for breach of the title policy (recovering investment losses and demolition costs).
- At a one-day bench trial the court found Wade failed to prove (1) when Stewart’s obligations were triggered prior to the December 2007 written notice, (2) Stewart breached the policy’s duty to remove defects in a “reasonably diligent manner,” and (3) proximate causation and recoverable damages; judgment for Stewart was entered and Wade appealed.
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 ~3 years (or 18 months after her oral notice) and pursued slow litigation instead of immediately paying the liens, so it breached the contract. | Stewart: Policy required written notice to trigger claims; it acted within its contractual options and removed defects by litigation/settlement within a reasonable time. | Court: No breach—Wade failed to prove when duties were triggered and the 18–24 month cure period was not shown to be unreasonable as a matter of law. |
| Whether Wade provided notice that triggered Stewart’s obligations. | Wade: Oral notice and receiving a claim number in Dec 2006 sufficed to trigger Stewart’s duties. | Stewart: Policy required prompt written notice; written notice came Dec 27, 2007, so earlier oral contact did not trigger obligations. | Court: Held written notice was required and Wade did not prove notice earlier than Dec 27, 2007; obligations were not triggered in 2006. |
| Whether Wade proved proximate cause and recoverable damages from any delay. | Wade: Delay prevented rehabilitation financing, leading to demolition and >$100,000 in losses (demolition, rehab expenses, investments). | Stewart: Title insurance does not insure depreciation or property repair costs; once defects were cured Stewart had no liability for property deterioration; Wade produced no proof that denial of loans was caused by the title defects. | Court: Wade failed to prove cognizable title-policy damages or proximate causation; many claimed losses were nonrecoverable or unsupported. |
| Other theories: Section 155/Insurance Code and implied covenant of good faith and fair dealing. | Wade raised these on appeal (argued bad faith and statutory penalties). | Stewart: Section 155 does not apply to title insurers; the implied covenant was not pleaded or tried. | Court: Forfeited—section 155 claim was dismissed earlier and not pleaded on amendment; good-faith claim was raised for first time on appeal and is forfeited. |
Key Cases Cited
- Samour, Inc. v. Board of Election Commissioners, 224 Ill. 2d 530 (clarifies standards of review and when the clearly erroneous standard applies)
- Eychaner v. Gross, 202 Ill. 2d 228 (defines manifest-weight-of-the-evidence standard and deference to trial-court factfinding)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (policy interpretation—contract terms are reviewed de novo)
- Founders Insurance Co. v. Munoz, 237 Ill. 2d 424 (rules governing contract/insurance policy interpretation)
- First Midwest Bank, N.A. v. Stewart Title Guaranty Co., 218 Ill. 2d 326 (scope of a title insurer’s liability is defined by the insurance contract)
- Brown v. State Farm Fire & Casualty Corp., 33 Ill. App. 3d 889 (reasonableness of insurer’s delay is a factual question generally for the trier of fact)