Court Report

The First U.S. Circuit Court of Appeals recently heard a case brought by a developer against its title insurer for breach of coverage after the insurer denied coverage of the loss or damage to developer’s right, title and interest in property In Newport, R.I., as a result of the Rhode Island Supreme Court’s decision in a related case.

After a property owner filed suit against its title insurer and escrow agent in Missouri state court, the title insurer removed the case to federal court. It argued that the property owner fraudulently joined the escrow agent as a party to defeat diversity jurisdiction and failed to state a negligence claim against the escrow agent.

A title company filed suit against the city of Baltimore, Md., challenging the city’s alleged construction holdback policy, whereby it charged a recordation tax on any construction holdback identified in purchase money deeds of trust. It argued the practice is unlawful and not supported by the language of state law.

A homebuyer in New York City filed suit against her title insurer and title agent for failing to timely record her deed, failing to use escrow funds to pay off existing mortgages on the property and breaching their duty to defend her in two separate actions regarding her purchase. The case eventually went to the Supreme Court of the State of New York Appellate Division: Second Judicial Department.

The 4th U.S. Circuit Court of Appeals recently addressed the question of whether a creditor’s failure to comply with its Section 1635(b) obligations following a borrower’s notice of rescission relieves a borrower of their obligation to tender the loan proceeds back to the creditor.

A title insurer, as subrogee for a buyer, sued the seller for breach of a warranty of title. After purchasing the property, the buyer discovered that two previously undisclosed easements impaired its ability to construct a Dairy Queen on the property. The insurer resolved its insured’s claim and sued the seller.

A California appellate court recently determined whether a title insurer or an escrow agent owes a duty of care to the spouse of a purchaser of real estate when the spouse and the purchaser expressly agreed the purchaser would procure the property in the purchaser’s name alone.

When the sellers of property sold property in Martin County, Texas, they reserved all mineral rights. They later consolidated the tracts from six to three and issued a correction deed to address the failure to reserve all mineral rights and interests to the sellers in the original deed. The buyers eventually filed suit, alleging the correction deed was not valid. The case eventually went before the Eleventh Court of Appeals of Texas.

A title insurer filed a complaint alleging one of its contractors failed to comply with all the contractual obligations it owed the insurer. The title insurer felt the contractor’s discovery responses were insufficiently particular and filed a motion to compel responses to its interrogatories and requests for the production of documents.

After purchasing property in Tacoma, Wash., the new owner learned of an undisclosed title encumbrance and filed a claim with his title insurer. While the title insurer did provide coverage and secure counsel, the owner was dissatisfied with the insurer’s actions on his behalf. He filed suit against the insurer for breach of contract, violation of Washington’s Insurance Fair Conduct and Consumer Protection Acts, and insurance bad faith.