A jury found in favor of Ryan J. Fischer (“Fischer”) on his claims against First American Title Insurance Co. (“First American”) for breach of the contractual terms of a title insurance policy and on his derivative claim for vexatious refusal to pay. First American filed a motion for a judgment notwithstanding the verdict, which was granted by the Circuit Court of Jackson County, Missouri. Fischer appeals.
We affirm.
Factual and Procedural Background
Fischer bought a house at 2141 Belle-view Avenue, in Kansas City, Missouri. The house located at 2141 Belleview was situated on Lots 9 and 10 in Block 1 of Thayer’s Addition (“Lots 9 and 10”). In 2009, Fischer bought a house at 2139 Belleview Avenue, which was located on Lot 8 (“Lot 8”), adjacent to Lot 9, also in Block 1 of Thayer’s Addition.
Fischer purchased title insurance for Lot 8 from First American (“the Title Policy”). The Title Policy covered any loss or damage for any “defect in or lien or
In pertinent part, the Schedule B exceptions to the Title Policy exclude coverage for losses or damages that arise by reason of “[rjights or claims of parties in possession not shown by the Public Record” (“parties in possession exception”).
Fischer’s plan for Lot 8 was to tear down the existing structures on Lot 8 and build a pool. As part of the project, Fischer tore down a chain link fence that had been built near the northern edge of Lot 8, which was closest to the boundary line of Lot 7 — owned by Teresa Rivera (“Rivera”). Fischer then hired a surveyor to mark the boundary lines of Lot 8, and the results of that survey suggested that the fence had been located approximately 3 feet and 7 inches inside the property line boundary for Lot 8 (“the Disputed Parcel”).
The fence was originally built in 1952 and was made of wood. Subsequently, Banks Stevenson, owner of Lot 8 at the time, converted the wood fence to a chain link fence, and he used the fence to grow grapevines.
Rivera’s grandparents owned Lot 7 beginning in the 1940s. Rivera’s father owned Lot 7 from 1958 until deeding Lot 7 to his daughter, Rivera, in 1992. Rivera’s father used the Disputed Parcel for “picnics and family gatherings” and mowed the Disputed Parcel. After Rivera acquired Lot 7 from her father, she would later testify in a separate lawsuit that she continued to visibly and openly possess, control, and use the Disputed Parcel in like fashion as her father had done at all times prior to Fischer’s purchase of Lot 8.
In the summer of 2009, Fischer began excavation for the pool and buried utility lines on Lot 8, including the Disputed Parcel.
In October 2009, Rivera filed a two-count petition against Fischer, asserting adverse possession and boundary by acquiescence claims relating to the Disputed Parcel (“the Rivera lawsuit”). Fischer tendered the defense of the Rivera lawsuit to First American and, in the event that he lost, to indemnify him under the Title Policy. First American rejected the tendered defense of the Rivera lawsuit, citing the parties in possession exception. Fischer then provided First American photos of the chain link fence on Lot 8 that were taken prior in time to him tearing the fence down and again tendered the defense of the Rivera lawsuit to First American. First American again rejected the tendered defense for, among other reasons, the parties in possession exception.
Fischer retained legal counsel and incurred legal fees in excess of $46,000 unsuccessfully defending the Rivera lawsuit.
The jury entered judgment in Fischer’s favor, awarding him $57,971.71 on his breach of insurance policy claim and $24,000 on his vexatious refusal to pay claim. First American filed a motion for a judgment notwithstanding the verdict (“JNOV”).
The trial court granted First American’s JNOV motion. In so doing, the trial court explained:
For Count I of his Petition, [Fischer] pleaded a written contract for title insurance with [First American] that he alleged should have entitled him to a legal defense of, and indemnification against, any judgment awarded in an underlying lawsuit styled Rivera v. Fischer then pending in the Jackson County Circuit Court as No. 0916-CV35127. However, the First Amended Petition in the underlying case, the Title Policy language, and information known by [First American] at the time coverage was denied, showed clearly that the pleaded claims in the underlying case were within the language of an unambiguous exception to coverage under the Title Policy because the plaintiff in the underlying case, [Teresa] Rivera, asserted an adverse title because of matters not in the Public Record. Thus Count I fails. Count II is dependent on Count I and therefore also fails.
The trial court vacated the jury’s verdict and entered judgment in First American’s favor.
Fischer appeals.
Standard of Review
We review the trial court’s grant of a JNOV motion in favor of the defendant de novo and will determine whether the plaintiff made a submissible case. Koppe v. Campbell,
Point I — The Title Policy JNOV Motion
In his first point, Fischer argues that the trial court erred in granting First American’s JNOV motion because he had established a prima facie case for breach of the Title Policy and it was a question of fact whether the parties in possession exception applied.
Parties in Possession Exception to Coverage
The Title Policy covers claims for “[a]ny defect in or lien or encumbrance on the [insured’s] title.” In the Rivera lawsuit, Rivera claimed she had ownership rights to the Disputed Parcel on Fischer’s property, which would be a defect or encumbrance on his title to Lot 8. While the insured bears the burden of proving coverage under an insurance policy, Truck Ins. Exch. v. Prairie Framing, LLC,
This policy does not insure against loss or damage, and [First American] will not pay costs, attorney’s fees or expenses that arise by reason of ... [r]ights or claims of parties in possession not shown by the Public Record.
Fischer argues that the parties in possession exception is ambiguous because it fails to define “parties in possession,” and the issue was thus properly submitted to the jury. However, “[t]he failure of a policy to define a term does not, in and of itself, render it ambiguous.” Trainwreck W. Inc. v. Burlington Ins. Co.,
Though no Missouri ease has previously discussed the “party in possession” exception, we have not found case precedent— nor has Fischer cited us to any such precedent — concluding that this policy exception to coverage is ambiguous. To the contrary, there are numerous cases across the country and treatises that conclude the opposite. Zimmerman v. Chicago Title Ins. Co.,
We will not create an ambiguity where one does not exist. Eldridge v. Columbia Mut. Ins. Co.,
The title insurance policy does not insure against rights or claimed rights of parties asserting possession to property via means outside of any public record denominating such possessory interest in the property.
Duty to Defend
First American’s duty to defend Fischer is distinct from First American’s duty to indemnify Fischer, and it is broader than its duty to indemnify him. Penn-Star Ins. Co. v. Griffey,
An insurer’s duty to defend is triggered when the insured is exposed to potential liability “based on the facts known at the outset of the case, no matter how unlikely it is that the insured will be found liable.”
Notably, though, “liability” is not the sole question; rather, the pertinent question is whether the insured is subject to liability from a claim(s) that falls under the coverage provisions of the insurance policy based on either the allegations in the petition or the known and ascertainable facts. Trainwreck W.,
First American’s duty to defend Fischer is determined (1) “initially by comparing the relevant policy provisions with the allegations of liability in the petition,” and then (2) by considering facts the insurer “knew or could reasonably have ascertained” at the time the action is commenced. Penn-Star Ins.,
Here, Rivera’s lawsuit claims were both based upon her allegations of possession that required no publicly recorded documentation of ownership. Both of Rivera’s claims relating to the Disputed Parcel were based upon unrecorded yet alleged “visible and exclusive possession, control and use of the Disputed Parcel.”
In the Rivera lawsuit, Rivera claimed possessory rights to the Disputed Parcel through adverse possession and/or boundary by acquiescence. The “rights” of each of these claims, however, are different. Adverse possession is a “title” claim; boundary by acquiescence is a “boundary” claim. In the context of “title” insurance, this is a distinction with a difference.
In an adverse possession lawsuit, once adverse possession is established, the record owner — whose ownership would be shown in the public record — is divested of ownership, and the adverse possessor— whose ownership would not be shown in the public record — is vested with “title” to the land. Kitterman v. Simrall,
Conversely, a boundary by acquiescence exists if there is an uncertain boundary and the landowners fix the boundary by an “agreement that is presumed as a result of long acquiescence.” Weiss v. Alford,
Thus, pursuant to these allegations, Rivera was claiming that she and her predecessors in interest had acquired “possession” of the Disputed Parcel via adverse possession either by way of an acquiescence over time by the previous owner of Lot 7 or by open and hostile adverse pos
Even considering the facts First American knew or could have ascertained outside the pleadings, the result is no different. The facts that First American knew or could have known included the fact that the chain link fence was built, shortly after 1952, for the purpose of growing grapes on the fence. When the fence’s original use is considered, its placement makes sense: Stevenson, who built the fence for his grapevines, would probably need access to both sides of the fence to successfully maintain the grapes. It would have made little sense for him to place the fence along the actual border between Lot 7 and Lot 8 — if he had done so, he would only have access to one side of his grape fence. By building the fence inside his own lot, he was able to access both sides of the fence and care for the grapes. But these facts change nothing. The only thing these facts demonstrate is that First American’s insured might have had a reasonable argument in response to Rivera’s possessory ownership claim. It does not change the fact that the basis of Rivera’s ownership claim to the Disputed Parcel still revolved around a possessory interest in land that was not recorded in public records.
Rivera’s claim of ownership to the Disputed Parcel was both based on a claim of possession to the Disputed Parcel and alleged legal theories (adverse possession and boundary by acquiescence) that would not appear in the public record; Rivera’s claims were not potentially or possibly covered by the Title Policy; Rivera’s claims were, as a matter of law, excepted from the Title Policy’s coverage through the parties in possession exception. As a matter of law, First American’s duty to defend was not triggered, and the trial court did not err in granting First American’s JNOV.
Point I is denied.
Point II — Vexatious Refusal to Pay
In his second point on appeal, Fischer argues the trial court erred in granting First American’s JNOV motion because he made a submissible case on his claim against First American for vexatious refusal to pay an insurance claim. To establish his claim for vexatious refusal to pay, Fischer would have to prove that: (1) he had an insurance policy with First American, (2) First American refused to pay under the policy, and (3) First American’s refusal was without reasonable cause or excuse. Dhyne v. State Farm Fire & Cas. Co.,
However, where an insurer had no duty to defend or indemnify under the insurance policy, there cannot be a claim for vexatious refusal to defend or indemnify. See Valentine-Radford, Inc. v. Am. Motorists Ins. Co.,
Because we have concluded that the trial court correctly concluded, as a matter of
Point II is denied.
Conclusion
The trial court did not err in granting First American’s JNOV motion and, accordingly, the judgment of the trial court is affirmed.
JOSEPH M. ELLIS, Presiding Judge, and ALOK AHUJA, Judge, concur.
Notes
. This may explain the placement of the fence as Stevenson may have wanted access to both sides of the fence — without the necessity of trespassing on his neighbor's property on Lot 7 — to maintain his grapevines and harvest his grapes.
. In the Rivera lawsuit, the circuit court concluded that, as of 1962, the Disputed Parcel had been adversely possessed by Rivera’s predecessors in interest through a hostile claim of ownership that was actual, open, exclusive, and continuous for the requisite ten-year period of time required for a claim of adverse possession and that Rivera had acquired ownership of the Disputed Parcel upon the conveyance of Lot 7 to her in 1992. Relying in part upon Rivera’s prayer for relief that sought “such other relief as this Court deems just and proper,” the circuit court exercised its equitable powers to divest Rivera of any ownership right in the Disputed Parcel by ordering Fischer to pay Rivera $10,000 in exchange for the Disputed Parcel. Of course, the prayer for relief in a lawsuit is not a
. The duty to indemnify, on the other hand, "is determined by the facts as they are established at trial or as they are finally determined by some other means, [such as] summary judgment.” Penn-Star Ins. Co. v. Griffey,
. An insurer has a duty to defend "even if that suit on its face was frivolous,” so long as the underlying suit alleges a claim that is "potentially covered by the policy, no matter how attenuated, frivolous, or illogical that allegation may be.” Sheets v. Brethren Mut. Ins. Co.,
. See Cheverly Terrace P'ship v. Ticor Title Ins. Co.,
. Notably, in Fischer’s appellate reply brief, Fischer concedes that he "does not contend in this appeal that the claim for adverse possession was covered or potentially covered.” We agree. And, as discussed in our ruling today, the only way in which a boundary by acquies
. The doctrine of boundary by acquiescence appears to be a relic from the days when, perhaps due to insufficient surveying or recording methods, the actual legal boundary between two adjacent properties was often unknown or unknowable. When the actual legal boundary is unknown, it makes perfect sense to determine the legal boundary between the two properties by referencing a physical boundary, either natural (stream, ditch, etc.) or artificial (commonly a fence or hedgerow), to which the neighboring landowners agree — or acquiesce. For example, in Kelley v. Prock,
. This appears to be the much more common use of claims for boundary by acquiescence— that is, pairing a boundary by acquiescence claim with an adverse possession claim — consistent with the procedural pattern of the boundary by acquiescence cases cited by Fischer in his appellate briefing to this court. However, as these cases point out, using a claim for boundary by acquiescence in this context does not, by itself, establish ownership rights; rather, from the point in time that the parties acquiesce to the boundary, possession is deemed to be adverse and the clock begins to run on the adverse possession claim. Tillman v. Hutcherson,
. Because there is no duty to defend, there is no duty to indemnify. Trainwreck W. Inc. v. Burlington Ins. Co.,
. First American had also denied coverage based upon a survey exception. However, since we have affirmed the trial court’s JNOV ruling based upon its reliance upon the parties in possession exception, it is not necessary for us to address First American's alternative theory of defense under the Title Policy.