02/27/2018
DA 17-0336
Case Number: DA 17-0336
IN THE SUPREME COURT OF THE STATE OF MONTANA
2018 MT 33N
LAURIE PARKS,
Plaintiff and Appellant,
v.
STEWART TITLE GUARANTY COMPANY,
Defendant and Appellee.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. BDV 16-697
Honorable Mike McMahon, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Michael S. Kakuk, Kakuk Law Offices, PC, Helena, Montana
For Appellee:
Dale R. Cockrell, Moore, Cockrell, Goicoechea & Johnson, P.C., Kalispell,
Montana
Submitted on Briefs: January 3, 2018
Decided: February 27, 2018
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating
Rules, this case is decided by memorandum opinion and shall not be cited and does not
serve as precedent. Its case title, cause number, and disposition shall be included in this
Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana
Reports.
¶2 Laurie Parks (Parks) appeals from the Summary Judgment Order dismissing her
claims against Stewart Title Guaranty Company (Stewart Title), entered in the First Judicial
District, Lewis and Clark County. We affirm. Parks states five issues, but we address
simply whether the District Court erred in granting summary judgment to Stewart Title.
¶3 Parks, Edward Parks, and Donald Tuschoff (Buyers) entered an agreement to
purchase the Lincoln Hotel, in Lincoln, Montana, in October 2010. Upon Buyers’ request,
Stewart Title issued to them a Title Insurance Policy Commitment (Commitment) for the
hotel real property (Property) in November 2010. The Property includes a road across its
southern portion, in front of the hotel. On February 13, 2011, two of the Buyers executed
a quitclaim deed transferring their interest in the Property to the Lincoln Hotel Limited, a
Montana Corporation held by two of the Buyers and one other individual. Neither Parks
nor the others had the Commitment updated or otherwise informed Stewart Title of the
transfer. On February 15, 2011, Stewart Title issued a Title Insurance Policy (Policy).
Schedule B of the Policy provided, in part:
This policy does not insure against loss or damage (and the Company will
not pay costs, attorneys’ fees, or expenses) that arise by reason of:
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. . .
14. Statement of Dedication of a Roadway, recorded Oct. 21, 1969 in Book
258 Deeds, page 131.
. . .
19. Reservations set forth in instrument recorded November 14, 1980 in M
Book 1 of Records, page 5521.
. . .
25. Agreement and Easement between [prior owners and neighbors],
recorded Sept. 16, 2002 in M Book 27 of Records, page 769.
Though numbered differently, the Commitment contained the same exceptions.1
¶4 The “Statement of Dedication of a Roadway” identified in Exception 14 of the
Policy was recorded by previous owners of the Property, and stated that they:
constructed and graveled a road into the Mulcare Addition to the Lambkin
Subdivision at Lincoln, Montana, for the use and benefit of all persons
residing in the Subdivision and using the road. That road will continue to
provide ingress and egress to all persons purchasing lots within the
Subdivision.
That we have heretofore dedicated the road, graded the same up, and graveled
the same, and it is a well-defined road now being used for ingress and egress
by all persons in the Subdivision, and the County has not agreed to accept
the road, but that it is available and will be available, will not be sold, but has
been dedicated by use to the residents of the Subdivision.
This document did not definitively identify the dedicated road as the road crossing the
southern portion of the Property, but Stewart Title presented uncontested affidavits from
the former owners indicating the road was the same one.
¶5 The recorded instrument identified in Exception 19 of the Policy was an “Abstract
of Document for Recording.” The document, recorded November 14, 1980, abstracts a
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The parties do not state, and the record does not indicate, the date of the closing of the transaction.
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“contract for deed” for the sale of two tracts of property, including what would become the
Property, and contains the following language within its description of the particular tract
that would become the subject Property:
RESERVING, however, unto grantor, his successors and assigns, an
easement for roadway over, along, and across the Northeasterly 40 feet of
said tract, as disclosed by said certificate of survey;
ALSO RESERVING, unto grantor, his successors and assigns, an easement
for roadway over, along, and across the previously established road in the
Southerly portion of said tract.
(Emphasis added.) The description also identified the tract as being designated on
“Certificate of Survey filed under No. 324435” (COS). The COS itself, recorded
October 9, 1980, does not indicate the existence of the southerly easement across the
Property, but attached to the COS was a schematic of a portion of the COS that indicated
such a roadway, which was labeled “access easement.” Stewart Title did not separately
notice the COS to the Buyers, either on the Commitment or the Policy, and the failure to
do so forms the basis of Parks’ claims.
¶6 The Abstract also stated as follows:
Parties hereto agree that upon recordation of a deed running from seller
[Hannah] to buyer [Malek] and covering the herein described property, all
persons may presume, conclusively, that all of the obligations undertaken by
either of the parties hereto have been fully paid and discharged to the
satisfaction of the other party.
¶7 A Warranty Deed for this transaction, using the identical language describing the
tract and the easement reservations as in the Abstract, running from Hannah to Malek, was
recorded on July 29, 1986.
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¶8 The recorded document identified in Exception 25 created an “easement” whereby
the previous owners of the hotel allowed a neighbor to access an encroaching garage and
shed. The agreement provided the easement could be voided at any time, and in 2013,
Parks voided the easement. Parks believed the voidable easement was the one running on
the southern end of the Property, and used by her neighbors. After she voided what she
believed to be that easement, Parks cut off access to the southerly road, leading to litigation.
¶9 In 2013, Parks requested Stewart Title defend a suit filed against the Lincoln Hotel
Limited alleging an express easement and adverse possession across the southerly road.
Stewart Title denied coverage on the grounds that the Policy terminated upon the transfer
of the Property to the Lincoln Hotel Limited, adverse possession claims were not covered
by the Policy, and the express easement was identified in Policy Exceptions 14 and 19.
That suit ended with a settlement, wherein the parties stipulated to the existence of the
southerly road easement. Parks then brought this action against Stewart Title, alleging
breach of contract, violations of the Montana Unfair Trade Practices Act (UTPA), actual
fraud, and constructive fraud. Parks alleged that Stewart Title was legally and contractually
required to disclose the COS to her and failed to do so, leading her to believe there was no
easement across the Property for the southerly road. Parks asserted had she known of the
easement, she would not have purchased the property.
¶10 Parks and Stewart Title filed cross motions for Summary Judgment, and the District
Court ruled in favor of Stewart Title, dismissing all of Park’s claims. With regard to the
contract claim, the District Court held that the Policy terminated upon transferring the
Policy to the corporation, given the policy language that provides coverage to a grantee of
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an insured only if the grantee is wholly-owned by the named insureds. The District Court
further held that while Exception 14 was not specific enough to unambiguously identify
the southerly road, Exception 19 expressly disclosed and excepted from coverage the
southern easement. The District Court held the contract did not require the disclosure of
every document reflecting a title defect or exception. The District Court also dismissed
Parks’ claim under the UTPA, holding there was no misrepresentation given the easement
had been disclosed. With regard to fraud, the District Court held the allegations were
insufficiently pled, and also failed because the easement was in fact disclosed. Parks now
appeals.
¶11 The gravamen of Parks’ claims is that Stewart Title had an obligation to either
expressly exclude or expressly cover the COS within the Commitment and Policy, and the
failure to do so left her without notice of the southerly road easement.
¶12 Title insurance is a contract to indemnify the insured against loss through defects in
the insured title or against liens or encumbrances that may affect the insured title at the
time the policy is issued. Malinak v. Safeco Title Ins. Co., 203 Mont. 69, 74,
661 P.2d 12,
14 (1983) (citations omitted). The interpretation of a title insurance policy is a question of
law. Meadow Brook, LLP v. First Am. Title Ins. Co.,
2014 MT 190, ¶ 14,
375 Mont. 509,
329 P.3d 608 (citations omitted). Title insurance agreements are contracts and are subject
to general rules of contract law. Meadow Brook, LLP, ¶ 14 (citations omitted). When a
title policy incorporates an instrument in an exclusion, the instrument is construed in favor
of coverage if it is ambiguous. Crossman v. Yacubovich,
290 S.W.3d 775, 780 (Mo. Ct.
App. 2009). There being no conflict in material facts, the question before us in this
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summary judgment matter is whether the District Court erred in holding that Stewart Title
was entitled to judgment as a matter of law. Harpole v. Powell Cty. Title Co., 2013 MT
257, ¶ 15,
371 Mont. 543,
309 P.3d 34.
¶13 Uncited by either party, the Montana Title Insurance Act sets requirements for title
insurers:
(1) A title insurer may not issue a title insurance policy unless it, its title
insurance producer, or an approved attorney has conducted a reasonable
search and examination of the title and made a determination of insurability
of title in accordance with sound underwriting practices . . . .
. . .
(3) Except as allowed by rules adopted by the commissioner, a title insurer
or title insurance producer may not knowingly issue any title insurance
product or commitment to insure unless all outstanding enforceable recorded
liens or other interests against the property title to be insured are shown.
(4) An insurer issuing a policy in violation of this section is estopped, as a
matter of law, to deny the validity of the policy as to any claim or demand of
the insured arising under the policy.
Section 33-25-214, MCA (emphasis added). Regulations promulgated by the State
Auditor, as Insurance Commissioner, to implement this statute, require that:
[A] title insurer show all outstanding enforceable recorded liens or other
interests against the property title to be insured under an owner’s title
insurance policy and make a determination of insurability as to possible liens
and encumbrances . . . .
Admin. R. M. 6.6.2201(3) (emphasis added). Thus, “all outstanding enforceable recorded
liens and other interests” against a property must be “shown” on a title commitment or
policy. If they are not, then the insurer would be estopped from denying coverage. Again,
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the requirement in both the statute and regulations is that the insurer show all of the stated
encumbrances.
¶14 Parks argues the Abstract noticed in Exception 19 was not sufficient to advise her
of the southern easement because the Abstract did not, and legally could not, create the
easement. Parks argues the District Court erred by its brief statement that the Abstract
“create[d] an easement for the southern road,” and, therefore, she was entitled to express
notice of the COS because it actually created the easement. However, while the District
Court’s brief statement about the Abstract “creating” the easement was an incorrect
statement of the law, that was not the true basis for its decision. Rather, the District Court
reasoned that, by listing the Abstract in the Policy, Stewart Title had adequately disclosed
and excepted the easement from the Policy’s coverage.
¶15 As the case is presented here, we conclude that the District Court correctly held that
Stewart Title had fulfilled its contractual obligation and, further, fulfilled the statutory and
regulatory requirements to “show” the easement. Stewart Title did show the southerly road
easement in the Abstract referenced in Exception 19, which unambiguously reserved “an
easement for roadway over, along and across the previously established road in the
Southerly portion of said tract.” Further, although the Policy and Commitment did not
separately list and except the COS, the Abstract expressly referenced the COS, which
would have provided further confirmation of the existence of the easement. Thus, Stewart
Title did notice and determine coverage for the southerly road easement, by excluding it.
Parks does not establish any requirement in the contract, statute, or regulations that
obligated Stewart Title to list and except all recorded documents that referenced or created
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a particular encumbrance. Upon this conclusion, all of Parks’ other claims or theories of
liability also fail.2
¶16 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our
Internal Operating Rules, which provides for memorandum opinions. In the opinion of the
Court, the District Court’s interpretation and application of the law were correct.
¶17 Affirmed.
/S/ JIM RICE
We Concur:
/S/ MIKE McGRATH
/S/ LAURIE McKINNON
/S/ JAMES JEREMIAH SHEA
/S/ BETH BAKER
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That is not to say that we have no reservations about Stewart Title’s performance in this case.
Though the point is not argued, the disclosure of the 1980 Abstract provided notice of a property
transfer that was merely contingent upon performance of a sales contract. The Abstract itself stated
that the contractual obligations could be conclusively presumed to have been discharged “upon
recordation of a deed” between the parties, which did not occur until the recording of the Warranty
Deed in 1986. While providing notice of the easement by description and by reference to the COS,
the Abstract, without more, did not disclose whether the contract had ultimately been fulfilled.
Contract fulfilment and property transfer could have been demonstrated by Stewart Title also
disclosing the Warranty Deed recorded in 1986, which would have been, at a minimum, a superior
satisfaction of the statutory and regulatory requirement to “show all outstanding” interests.
Admin. R. M. 6.6.2201(3) (emphasis added).
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