A company that owned unimproved land in Florence Ariz. discovered a restrictive easement on its property after transferring the property to its wholly owned limited liability company and filed a claim with its title company to cover its loss. When the title company denied its claim, the insured sued. The case eventually made its way to the 9th U.S. Circuit Court of Appeals.
The case is Londen Land Co. LLC v. Title Resources Guaranty Co. (9th U.S. Circuit Court of Appeals, No. 10-16917).
On Jan. 7, 2010, Londen Land Co. LLC filed suit against Title Resources Guaranty Co., (TRGC) alleging one count of breach of contract for TRGC’s failure to pay the diminution in value to approximately 142.23 acres of unimproved real property located northwest of the northwest corner of Hoghway 79 and the Hunt Highway in Florence, Ariz., as a result of a restrictive easement, recorded in favor of Salt River Project, which encumbered approximately 2.64 acres of the property.
TRGC filed a motion for summary judgment on Jan. 26, 2010, asserting that it was only contractually obligated to cover losses in accordance with the terms and conditions set forth in the title insurance policy and that at the time Londen made its claims under the policy, it was not afforded any coverage. On Aug. 3, 2010, the U.S. District Court for the District of Arizona granted TRGC’s motion for summary judgment.
Thereafter, Londen appealed both the motion for summary judgment as well as the court’s denial of the company’s motion for relief from judgment.
The 9th U.S. Circuit Court of Appeals affirmed the trial court’s decision, finding that Londen’s title insurance terminated because Londen did not retain an estate or interest in the land, as the term is used in Londen’s policy.
“When Londen conveyed the land to its wholly owned limited liability company, Florence Ventures LLC, Londen’s policy terminated because Londen conveyed the entirety of its estate or interest,” the court stated. “Londen did not raise a genuine issue of fact under the reasonable expectations doctrine because the evidence submitted does not show that TRGC had reason to believe that Londen would not have assented policy if Londen had known of the continuation of coverage provision.
“Londen also failed to raise a genuine issue of fact as to whether there was a non-written agreement between Londen and Florence that amounted to a general warranty deed, which would have allowed coverage to continue under the policy,” the court continued. “Londen’s supporting declaration is conclusory, and the clear language of the special warranty deed does not support a conclusion that there was an agreement that the property was actually conveyed with a general warranty deed.”
The court said that Londen’s argument that the district court erred by not ordering Florence to be substituted as the real party in interest lacks merit because the district court entered summary judgment on the merits.