The plaintiff homeowners, Michael and Kimberly Crossman, appeal from summary judgment entered by the Circuit Court of St. Charles County against them and in favor of the defendant insurer, Lawyers Title Insurance Corporation. The homeowners filed three contract counts and one negligence count against the insurer, and the trial court granted summary judgment. At issue is an asserted exception to coverage contained in the title-insurance policy issued to the homeowners, who claim a loss based on petroleum pipelines and related easements that traverse their property. Because the subdivision plat, to which the exception in the title-insurance policy refers, does not clearly, precisely, and unambiguously show
The material facts are not in dispute. The homeowners contracted to purchase the home of the sellers, the defendants Peter and Sharon Yacubovich. Located in the Shadow Creek subdivision in the City of St. Peters, St. Charles County, Missouri, the homeowners chose the home because of its large backyard. They envisioned extending the deck, adding a pool, planting a garden, building a batting cage for their children, and fencing the yard for their dogs.
In connection with their home purchase, the homeowners hired Investors Title Company (the “title company”) to conduct a title search, order a survey, arrange for a title commitment and title insurance, and conduct the homeowners’ closing. The homeowners obtained their survey from Topos Surveying & Engineering Corporation (the “surveyor”) and their title commitment and policy for title insurance from the insurer, Lawyers Title. Schedule A of the homeowners’ title commitment described the insured property as “Lot 83 of Shadow Creek, Plat Two, a subdivision in St. Charles County, Missouri, according to the plat thereof recorded in Plat Book 21, Pages 55-56 of the St. Charles County Records.” Schedule B-II asserted an exception to coverage for “[bjuilding lines and easements according to the plat thereof recorded in Plat Book 21, Pages 55-56.” This exception refers to the Shadow Creek Plat Two subdivision plat. No mention whatsoever of a pipeline or pipeline easement appeared in the homeowners’ survey, title commitment, or title-insurance policy.
Having secured a title search, survey, and title commitment, the homeowners completed their home purchase, and their title commitment converted to a title-insurance policy. The exception for “easements according to the plat” remained in the policy. Shortly after the homeowners completed their purchase, Explorer Pipeline representatives came through the neighborhood to clear the Explorer easement of trees and structures, and to mark its pipeline. Explorer removed nine trees from the homeowners’ property, and the homeowners were alerted that their work shed would probably be removed eventually. Thus, the homeowners learned that an easement for a petroleum pipeline crosses their backyard, consuming roughly half of their property, and that as a result they cannot improve and use their backyard as hoped. The homeowners contend that neither the easement nor the pipeline was disclosed to them when they purchased their home. Discovery ultimately revealed the existence of three separate easements, owned by three separate companies, for multiple petroleum pipelines. 2
The trial court determined there was no just reason for delay, and the homeowners appeal the entry of summary judgment in favor of the insurer. 3 The homeowners claim the trial court erred in granting summary judgment because the insurer failed to establish that the policy exception at issue expressly and specifically excluded coverage.
Summary judgment allows a trial court to enter judgment for the moving party where the party demonstrates a right to judgment as a matter of law based on facts about which there is no genuine dispute.
ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp.,
Where the parties do not dispute the underlying facts, disputes arising from the interpretation and application of insurance contracts are matters of law for the court.
Watters v. Travel Guard Int’l,
The insurer receives one sum in consideration for its agreement to indemnify the insured, up to a specified amount, against loss caused by title defects or encumbrances on the subject property. Joyce D. Palomar, Title Insurance Law § 1:8, at 1-21 (2008). An exception is an uninsured interest in property, and is expressly eliminated from coverage via identification on a separate “Schedule B.” D. Barlow Burke, Law of Title Insurance § 16.1, at 16:1 (2d ed.1993). Title insurance policies use exceptions to eliminate from coverage title defects that actually affect the insured property. Palomar, § 1:8, at 1-23. Title insurers are not required to insure every title defect, and excepting existing defects from coverage does not violate public policy or constitute an unfair trade practice.
Id.,
§ 7:17, at 7-63. But “if a lien, encumbrance or other title defect is to be excepted from coverage, the title insurer must use clear, precise!,] and unambiguous language in the exception.”
Id. See also
Burke, § 4.1, at 4:4 (“[T]he insurer who wishes to exclude a claim from coverage must have done so in clear and unambiguous language.”);
Santos v. Sinclair,
“[Provisions limiting or cutting down, or avoiding liability in the coverage made in the policy are construed most strongly against the insurer.”
Foremost Const. Co. v. Killam,
In this case, the trial court granted summary judgment to the insurer based on an exception to coverage in the homeowners’ title-insurance policy for “[b]uilding lines and easements according to the plat thereof recorded in Plat Book 21, Pages 55-56.” The key question is whether the asserted exception in this case was stated in the requisite “clear, precise!,] and unambiguous language.” Palomar, § 7:17, at 7-63.
A title-insurance policy may except a matter from coverage by reference to the provisions of another instrument without setting forth in detail the content of those
Here, the plat, incorporated by reference and on which the policy exception relies for all meaning, fails to clearly, precisely, and unambiguously identify the petroleum-pipeline easements crossing the homeowners’ property. The first ambiguity is the number of easements. The record shows the existence of three easements for multiple petroleum pipelines, which traverse the homeowners’ property. The easements were granted over the course of 41 years, and all three pre-date recording of the subdivision plat. The insurer in its brief repeatedly refers to “easements,” in the plural. On the recorded plat, however, several lots east of the homeowners’ property, the subdivision boundary is identified as the center line of an “existing 140’ w. pipeline easement,” in the singular. Next to the homeowners’ property, the same subdivision boundary is identified as the center line of an “existing 106’ w. esm’t.,” in the singular. The plat does not clearly, precisely, and unambiguously show the existence of multiple easements on the insured property.
The second ambiguity is the nature of the pipeline easement. The plat makes no mention anywhere of “petroleum,” “oil,” “fuel,” or similar terms that would alert a reasonable person to the existence of petroleum-pipeline easements running through the subdivision. Note 2 on the plat exacerbates the ambiguity. It states, “Easements shown are for utility purposes unless noted otherwise.” The plat’s second page designates the subdivision’s public streets and roadways to the City of St. Peters and further designates the streets as easements for sanitary sewers and for gas, water, electric power, and telephone lines. The “easements shown on said plat” are granted to the city and the respective utility companies “for the purpose of installing and maintaining public utilities and for sewer drainage purposes.” Again, the plat contains no terms that would clearly, precisely, and unambiguously indicate to a reasonable person that the pipeline easements exist for petroleum-pipeline purposes rather than for ordinary utility purposes.
Finally, the insurer attached to its motion for summary judgment portions of the deposition given by the surveyor’s president. The surveyor’s president, who himself is a licensed land surveyor, testified that he could “see how the easement would not be clear upon a cursory review of the plat”; that upon a cursory review no easements appear to run across the back of the homeowners’ property; and that the plat
All of the foregoing demonstrate that the plat is ambiguous as to the existence of multiple petroleum-pipeline easements. An insurance policy is ambiguous if, when viewed in the meaning that would ordinarily be understood by the lay people who bought the policy, it is reasonably open to differing constructions.
Wat-ters,
When members of the public purchase policies of insurance[,] they are entitled to the broad measure of protection necessary to fulfill their reasonable expectations. They should not be subjected to technical encumbrances or to hidden pitfalls[,] and their policies should be construed liberally in their favor to the end that coverage is afforded “to the full extent that any fair interpretation will allow.”
Amidano,
The plat does not clearly, precisely, and unambiguously identify the three petroleum-pipeline easements and implies that all easements on the plat are for utility purposes. Further, even evidence submitted in support of the insurer’s summary-judgment motion, concedes that the plat shows the easement in a “substandard way.” Thus, the plat is ambiguous, which renders ambiguous the policy exception incorporating the plat. We hold that the title-insurance policy does not clearly, precisely, and unambiguously except the petroleum-pipeline easements from coverage.
The insurer has not established that it is entitled to judgment as a matter of law on the homeowners’ counts for breach of contract, vexatious refusal to pay, and declaratory judgment. We reverse and remand these counts to the trial court for further proceedings consistent with this opinion. 5
Notes
. We affirm the portion of the summary judgment entered on the negligence count because the homeowners did not brief this issue in their opening brief.
. The following three easements are involved in the homeowners’ suit. In 1930, John and Clara Schneider granted Ajax Pipe Line Company a thirty-foot-wide easement over the Schneiders' St. Charles County property for two pipelines for the transportation of oil, crude petroleum, gas, and similar products, along with accompanying telegraph and telephone lines. The easement granted Ajax the right to lay additional lines of pipe upon payment of further consideration. In 1966, Conrad Schneider granted Williams Brothers Pipe Line Company a thirty-foot-wide easement over his St. Charles County property for a pipeline for the transportation of liquids, gases, and/or solids. Shortly thereafter, Schneider agreed to widen the Williams
. The title insurer’s ability to incorporate by reference may be significantly affected by section 381.071.2 RSMo. (2000), which states, "Except when allowed by regulations promulgated by the director, no title insurer, title agent, or agency shall knowingly issue any owner's title insurance policy or commitment to insure without showing all outstanding, enforceable recorded liens or other interests against the title which is to be insured.” We have found no case interpreting section 381.071.2. We decline to consider the effect of this statute because it is not necessary for our decision, and the parties did not brief its effect.
. We affirm that portion of the summary judgment entered as to the count for negligent misrepresentation against the insurer. We grant the homeowners’ motion to file their second supplemental legal file, but deny all other pending motions.