A title insurer sought a court’s reconsideration in a breach of contract case. The U.S. District Court for the Eastern District of Virginia had found that the insured established the insurer’s breach of its title policy by failing to compensate the insured for losses incurred because of unmarketable title.
The case is Landfall Trust LLC v. Fidelity National Title Insurance Co. (U.S. District Court for the Eastern District of Virginia, No. 3:22CV194).
In its decision on Oct. 2, the court granted summary judgment to Landfall Trust LLC on its breach of contract claim and denied Fidelity’s cross-motion. Landfall Trust had raised three separate breach theories in its motion. First, it claimed Fidelity breached the parties’ insurance policy by failing to pay out under the policy when certain covered risks manifested, specifically: Covered Risk 1, “Title being vested other than as stated in Schedule A;” Covered Risk 2, “Any defect in or lien or encumbrance on the title;” and/or Covered Risk 3, “Unmarketable title.”
In its cross-motion, Fidelity argued that Exception 7 barred each of Landfall Trust’s breach theories because each theory was fully based on the existence of property interests created by the homeowners’ association (HOA) declaration; and, alternatively, Landfall Trust failed to show that any of the covered risks occurred.
The court ruled in favor of Fidelity on Covered Risks 1 and 2. It found that Fidelity had met its burden to prove that Landfall Trust’s theories under those two covered risks would have required a determination as to the existence of an easement vested in the Henry’s Island HOA.
However, on Covered Risk 3, the court found that Exception 7 did not block Landfall Trust’s claim because that theory was not based on the HOA declaration. The court found that Landfall Trust’s uncontroverted evidence established the occurrence of the policy’s Covered Risk 3. It specifically found that the evidence showed that Fidelity’s issuance of a title binder in 2021, the binder that first mentioned the HOA easement and which shortly followed Fidelity’s issuance of an earlier binder that did not mention the easement, to a prospective purchaser of Landfall Trust’s land, Jesse Crotty, played at least some role in Crotty’s subsequent cancellation of the land purchase due to doubts and questions about title.
Fidelity filed its motion for reconsideration on Nov. 8.
U.S. District Judge Roderick Young denied Fidelity’s motion for reconsideration.
“Fidelity seeks relief from this court’s ruling on Covered Risk 3 under Rule 60(b)(1) and Rule 60(b)(6),” he stated. “But Fidelity does not identify any error in this court’s Covered Risk 3 analysis. Instead, Fidelity only raises factual and legal issues it has never actively argued, pursued, or briefed before in this case. This cannot provide a basis for Rule 60(b)’s extraordinary remedy, and Fidelity’s motion will accordingly be denied.
“Instead of alleging any error in this court’s analysis of the Covered Risk 3 arguments Fidelity raised during summary judgment, Fidelity used this motion and oral argument to pursue new issues that Fidelity has previously overlooked during this litigation,” Young continued. “First, Fidelity advances a new factual line of argument. Fidelity argues that the two lots (Lots 9 and 10) that make up the 4.40 acres of plaintiff’s land that Fidelity insured in 2018 were shaped differently in 2018 (when the lots were referred to and described in the insurance policy) than they were in 2021 (when the lots were referred to and described in the context of the Second Binder) because the plaintiff reconfigured the lots in 2019. To be clear, though, Lots 9 and 10 (both in their 2018 and their 2021 form) cover the exact same 4.40 acres of land. In any event, Fidelity does not explain (because it cannot) how this fact alters in any way the court’s assessment of the legal arguments Fidelity presented to the court during summary judgment on the Covered Risk 3 issue. Fidelity does not explain how this would have changed the court’s Exception 7 conclusion. Nor does Fidelity explain how this impacts the evidence the plaintiff or Fidelity presented as to Crotty’s reasoning for withdrawing from the pending contract to purchase the plaintiff’s land. And even if this newly introduced fact did have any impact on the arguments Fidelity chose to pursue during summary judgment, it is well-settled that ‘[a] defeated litigant cannot set aside a judgment’ on a Rule 60(b) motion ‘because the litigant failed to present on a motion for summary judgment all of the facts known to him that might have been useful to the court.’ Because Fidelity was already in possession of the information upon which this new line of argument is predicated, the court finds the argument to be an untimely attempt to reopen summary judgment and therefore an improper basis for Rule 60(b) relief.
“Fidelity also raises three legal arguments in its reconsideration motion to explain why the Second Binder ‘cannot give rise to ‘unmarketable title’ within the meaning of the policy.’ It bears noting that counsel for Fidelity admitted at the Nov. 30 final pretrial conference that all three are arguments Fidelity did not advance in its renewed summary judgment motion. Fidelity’s first two arguments are grounded in two previously unrelied-upon contractual exclusions in the insurance policy, Exclusions 3(d) and 3(a),” he stated. “First, Fidelity argues that Exclusion 3(d) prevents the plaintiff from recovering for ‘loss or damage ... that arise by reason of ... matters [arising] subsequent to the Date of Policy,’ i.e., 2018, and therefore the plaintiff cannot recover under Covered Risk 3 for losses resulting from the issuance of the Second Binder in 2021. Second, Fidelity argues that Exclusion 3(a) bars the plaintiff’s breach claim because that provision excludes from coverage all ‘defects, liens, encumbrances ... or other matters created ... by the [plaintiff],’ and Fidelity asserts that the HOA easement mentioned in the Second Binder was created by plaintiff’s own reconfiguration of the lots. Finally, Fidelity raises a contractual standing defense, arguing that the plaintiff lacks standing to make any claims based on the second binder.
“Contrary to counsel for Fidelity’s intimations at the Nov. 30 final pretrial conference, it has been no secret that the plaintiff’s breach claim—its ‘unmarketable title’ covered risk theory included––stemmed from the Second Binder and its inclusion of the HOA easement,” Young concluded. “Fidelity has twice moved for summary judgment in this case, and neither time did it make the three legal arguments it wishes to make now. Accordingly, the court rejects Fidelity’s suggestion that the court’s opinion on the cross-motions for summary judgment constituted such a ‘surprise’ to Fidelity that reconsideration under Rule 60(b) is now warranted. Fidelity’s legal arguments in this Rule 60(b) motion––which could have been, but were not, argued and pressed before in this litigation––provide no basis for invoking Rule 60(b)’s extraordinary remedy.”