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Schram v. Fidelity National Title Insurance Co.

United States District Court, N.D. Indiana, Fort Wayne Division

January 17, 2017

BETH C. SCHRAM, et al., Plaintiffs,
v.
FIDELITY NATIONAL TITLE INSURANCE COMPANY, successor by merger to Lawyers Title Insurance Corporation, Defendant.

          OPINION AND ORDER

          Susan Collins, United States Magistrate Judge.

         Plaintiffs Beth C. Schram and P.T. Schram (together, “the Schrams”) filed this suit against Defendant Fidelity National Title Insurance Company, successor by merger to Lawyers Title Insurance Corporation (“FNTIC”), concerning a title insurance policy issued to the Schrams by Lawyers Title Insurance Corporation (“Lawyers Title”).[1] (DE 38). The Schrams assert that FNTIC had a duty to defend them in a suit filed by their neighbor, who asserted the existence of an easement on the Schrams' land. The Schrams seek a declaratory judgment concerning FNTIC's duty to defend and advance claims for breach of contract and breach of the duty of good faith and fair dealing against FNTIC.

         Now before the Court are the parties' cross motions for partial summary judgment (DE 54; DE 68), each seeking judgment as a matter of law on the Schrams' claims for breach of contract and declaratory judgment. The motions are ripe for ruling.[2] (DE 55; DE 65; DE 69; DE 70; DE 71; DE 72; DE 76). For the following reasons, the Schrams' motion for partial summary judgment will be GRANTED, and FNTIC's motion for partial summary judgment will be DENIED.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. The Policy

         On or about May 2, 2007, the Schrams obtained a policy of title insurance, No. 700702177 (the “Policy”), from Lawyers Title for certain real property owned by the Schrams in Churubusco, Indiana. (DE 55-1 at 4-11; DE 70-1 at 29-36). The parties do not dispute that FNTIC is the successor in interest to Lawyers Title for purposes of the Policy and this suit.

         The Policy generally indemnifies against losses sustained by reason of defects in title. (DE 55 at 9). Specifically, the Policy states, in relevant part:

SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, LAWYERS TITLE INSURANCE CORPORATION, a Virginia corporation, herein called the Company, insures, as of the Date of Policy shown in Schedule A, against loss or damage, not exceeding the Amount of Insurance stated in Schedule A, sustained or incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land.
The Company will also pay the costs, attorneys' fees and expenses incurred in defense of the title, as insured, but only to the extent provided in the Conditions and Stipulations.

(DE 55-1 at 5; DE 70-1 at 30).

         With respect to the “Exclusions from Coverage” portion of the Policy, that section reads, in relevant part:

         The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of:

. . . .
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) created, suffered, assumed or agreed to by the insured claimant;
(b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to Date of Policy; or
(e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy.

(DE 55-1 at 5; DE 70-1 at 30).

         Additionally, the “Schedule B Exceptions from Coverage” portion of the Policy identifies 19 exceptions from coverage. Relevant to this dispute is Exception No. 2, “Easements or claims of easements not shown by the public records[, ]” and Exception No. 4:

Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the Proposed Insured acquires for the value of record the ...

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