This case involves breach of contract and negligence claims arising from a title insurance policy issued to
A Superior Court judge allowed the defendant’s motion for summary judgment and dismissed the plaintiff’s complaint. The plaintiff filed a timely notice of appeal. The Appeals Court vacated the summary judgment and remanded the case for further proceedings after concluding that the issue whether there was coverage under the terms of the policy remained unresolved.
The following facts are undisputed. In 1986, the plaintiff agreed to finance the site acquisition and construction of a seventy-two unit condominium located at 190 North Shore Road in Revere. As security for its financing, the plaintiff became the holder of a note in the amount оf $9.5 million, secured by a mortgage on the land and any improvements.
In June of 1987, the city of Revere issued a building permit to the owner of 190 North Shore Road to construct the condominium project. On June 3, 1988, the Attorney Gеneral requested that Revere order a halt to the construction on the property because the Executive Office of Transportation and Construction (EOTC) had not consented to the issuance of the building permit as required by G. L. c. 40, § 54A (1992 ed.).
All or part of the property located at 190 North Shore Road was owned by the Boston and Maine Railroad in 1926. This information was apparent on the record at the registry of deeds.
The title insurance policy issued to the plaintiff, policy number 22-0468-02-000026, provides, in pertinent part:
“SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS CONTAINED IN SCHEDULE B AND THE PROVISIONS OF THECONDITIONS AND STIPULATIONS HEREOF, CHICAGO TITLE INSURANCE COMPANY . . . insures . . . against loss or damage . . . sustained or incurred by the insurеd by reason of:
“(1) Title to the estate or interest described in Schedule A being vested otherwise than as stated therein;
“(2) Any defect in or lien or encumbrance on such title . . .
“(4) Unmarketability of such title . . . .”
The policy contained an integration clause which provides:
“This instrument together with all endorsements and other instruments, if any, attached hereto by the Company is the entire policy and contract between the insured and the Company.
“Any claim of loss or damage, whether or not based on negligence, and which arises out of the status of the lien of the insured mortgage or of the title to the estate or interest covered hereby or any action asserting such claim, shall be restricted to the provisions and conditions and stipulations of this policy.”
The exclusions from coverage provides in pertinent рart as follows:
“(1) (a) Governmental police power.
“(b) Any law, ordinance or governmental regulation relating to environmental protection.
“(c) Any law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character, dimensions or location of any improvementnow or hereafter erected on the land, or prohibiting a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part.
“(d) The effect of any violation of the matters excluded under (a), (b) or (c) above, unless notice of a defect, lien or encumbrance resulting frоm a violation has been recorded at Date of Policy in those records in which under state statutes, deeds, mortgages, lis pendens, liens or other title encumbrances must be recorded in order to impart constructive notice to purchasers of the land for value and without knowledge; provided, however, that without limitation, such records shall not be construed to include records in any of the offices of federal, state or local environmental protection, zoning, building, health or public safety authorities.”
On November 16, 1990, the plaintiff gave the defendant notice of claims under the title insurance policy. The defendant denied coverage on the ground that the effect of G. L. c. 40, § 54A, was not an insured risk undеr the policy and further denied that it had any obligations or duties to the plaintiff beyond those specified in the policy. The plaintiff commenced this action against the defendant asserting claims for breach of contract (counts I and IV), negligence (counts II and III), and negligent misrepresentation (count V). The defendant moved for summary judgment on all claims.
Summаry judgment shall be granted where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law. Cassesso v. Commissioner of Correction,
The judge began her analysis of the contract claims with the observation that, in general, building and zoning laws are not treated as encumbrances. She went on to rule: “Even assuming, however, that the restriction on use created by G. L. c. 40, § 54A is an encumbrance on the property or renders title unmarketable, there is no coverage under the policy because the exclusions clearly apply.” The Appeals Court interpreted the judge’s action as an expression of doubt on whether coverage existed, and only discussed the applicability of the policy exclusions. We begin our discussion with consideration of the coverage issue.
CONTRACT CLAIMS
Count I. In support of its claim for breach of contract (count I), the plaintiff contends that the provision in G. L. c. 40, § 54A, which requires that EOTC consent to the owner’s intended use of the property, constitutes an encumbrance on or defect in the title to the property or that it renders title to the property unmarketable. As a general rule, a dispute concerning the proper interpretation of an insurance policy raises only a question of law. Massachusetts Bay Transp. Auth. v. Allianz Ins. Co.,
It is well established that building or zoning laws are not encumbrances or defects affecting title to property. See Dover Pool & Racquet Club, Inc. v. Brooking,
General Laws c. 40, § 54A, regulates land use. The requirement of EOTC approval, prior to the issuance of a building permit, is a restriction on the use of the property, but it does not affect the owner’s title to the property. It is a restriction that may affect the value of the property and the
The insurance policy provided coverage for losses sustained as the result of a defect in or lien or encumbrance on the title to the property and for unmarketability of the title. Although they may have impaired the property’s market value or caused a halt to construction on the property, the requirements of G. L. c. 40, § 54A, have no effect on the marketability of the title nor did they create a defect, lien, or encumbrance on the titlе. The existence of the statutory restriction, therefore, does not give rise to coverage under the policy.
In light of the unambiguous coverage terms of the policy, we do not look beyond the four corners of the policy concerning whether coverage is customarily available with respect to such right-of-way statutes. We also cоnclude that, to the extent it is material, there is no evidence the circumstances surrounding issuance of the policy created a reasonable expectation in the plaintiff that it acquired more extensive coverage than that stated in the policy.
Our conclusiоn renders it unnecessary to consider, as did the judge and the Appeals Court, whether the policy exclusions, particularly (c), excluding from coverage the effects of “[a]ny law, ordinance or governmental regulation (including but not limited to building and zoning ordinances) restricting or regulating or prohibiting the occupancy, use or enjoyment of the land,” and clаuse (d) withdrawing exclusions (a), (b), or (c) under certain circumstances, bar coverage of the plaintiff’s claim.
Count IV. The plaintiff also alleges that the defendant failed to examine, review, and analyze the title to the premises and to notify the plaintiff of any facts regarding title.
Negligence claims. The judge ruled that the defendant had no duty to disclose the prior use of the property as a railroad right-of-way or the applicability of G. L. c. 40, § 54A, and further ruled that the defendant had not voluntarily assumed such a duty. Therefore, the judge granted summary judgment for the defendant on the plaintiff’s negligence claims. The Appeals Court concluded that, whether the defendant had assumed an obligation, not cast on it by the terms of the policy, to disclose matters affecting the property that an examination of the registry would reveal is a matter for further development. We conclude that the granting of summary judgment was not appropriate on these claims because there is a factual dispute whether the defendant voluntarily assumed a duty to inform the plaintiff of these matters.
The plaintiff argues that the issuance of a policy places a duty on a title insurance company to search for, and to disclose to the insured, any reasonably discoverable information that would affect the insured’s decision to proceed with the purchase. As a general rule, we decline to impose such a duty. A title insurance company’s duty to the insured is governed by the terms of the policy. See Walker Rogge, Inc. v. Chelsea Title & Guar. Co.,
We reject the defendant’s argument that it cannot be liable for any loss or damage resulting from its negligence because of the language in the policy’s integration clause, which limits liability to the provisions and conditions set forth in the policy. In most instances, an insurance contract is not a negotiated agreement, rather its сonditions are predominantly dictated by the insurance company to the insured. Darcy v. Hartford Ins. Co.,
Summary judgment on the plaintiff’s contract claims (counts I and IV) is affirmed. Summary judgment is vacated, with respect to counts II, III and V, and the action is remanded for further proceedings consistent with this opinion.
So ordered.
Notes
The plaintiff gave two loans for the property. The first loan was given for the purchase of the property; the second loan, which was given in May of 1987, was a construction loan for $9.5 million.
General Laws c. 40, § 54A (1992 ed.), provides in pertinent part: “If a city or town or any other person purchases any lands formerly used as a railroad right-of-way or any property appurtenant thereto formerly used by any railroad cоmpany in the commonwealth, no permit to build a structure of any kind on land so purchased shall be issued by any city or town in the commonwealth without first obtaining, after public hearing, the consent in writing to the issuance of such permit from the secretary of the executive office of transportation and construction.”
The evidence presented by the plаintiff, with respect to its reasonable expectations, focuses on the belief that right-of-way statutes are normally delineated as an exception to coverage. However, even if such a practice was accepted, the failure to include such a statute as an exclusion does not mean that coverage is available, where the express policy terms do not provide for coverage.