C 1031 Properties, Inc. v. First American Title Insurance

301 P.3d 500, 175 Wash. App. 27
CourtCourt of Appeals of Washington
DecidedMay 23, 2013
DocketNo. 30849-9-III
StatusPublished
Cited by17 cases

This text of 301 P.3d 500 (C 1031 Properties, Inc. v. First American Title Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
C 1031 Properties, Inc. v. First American Title Insurance, 301 P.3d 500, 175 Wash. App. 27 (Wash. Ct. App. 2013).

Opinion

Brown, J.

¶1 Today, we discretionarity review the trial court’s summary judgment ruling denying outright liability and damages to C 1031 Properties Inc. in its suit against First American Title Insurance Company for a recorded electricity easement First American concedes it missed. C 1031 contends the trial court erred in failing to interpret and reject the title insurance contract’s “knowledge” exclusion on facts showing it saw power lines on the property before closing without reporting the lines to First American. First American agrees the trial court should have summarily resolved the knowledge exclusion but contends C 1031 had the requisite knowledge to invoke the knowledge exclusion. We hold C 1031 did not have the requisite “knowledge” of the recorded easement and reverse the trial court’s ruling that left this issue to the trier of fact. We affirm the trial court’s damages decision because material facts remain outstanding. Thus, we do not reach liability related evidentiary issues. We decline in this interlocutory review to intervene in the trial court’s pretrial discovery rulings. Finally, we leave C 103 l’s attorney fee request for fees incurred at trial for the trial court decision on remand, along with fees as the partly prevailing party here. Accordingly, we remand for proceedings consistent with this opinion.

FACTS

¶2 On August 3, 2007, Harlan Douglass, an agent of C 1031 and experienced developer, agreed to purchase property in Spokane where an old drive-in theater was located to construct storage units. The agreement required C 1031 to inspect the subject property. Mr. Douglass, on behalf of C 1031, initialed page 2 of the purchase and sale agreement, acknowledging he had sufficient time to inspect the property and approve the boundary line location and the physical conditions, including “electrical.” Clerk’s Papers (CP) at 287.

[30]*30¶3 On August 10, 2007, First American issued a preliminary commitment of title insurance to C 1031. This document contained a notice provision requiring C 1031 to notify First American of existing encumbrances that were not shown in schedule B of the preliminary commitment but known to C 1031. C 1031 did not notify First American about the existence of the power line and power poles on the property.

¶4 Before entering the purchase agreement, C 1031 hired Whipple Consulting Engineers Inc. to prepare a complete set of plans for the property, including a survey. This survey identified the power lines and power poles. C 1031 approved these plans and, in September 2007, submitted them to the city of Spokane Valley for permits.

¶5 In October 2007, the purchase and sale transaction closed and First American issued a title insurance policy. The policy states that “easements of record are covered.” CP at 88. Conversely, the policy specifically excludes from coverage “easements ... which are not shown by the public record.” CP at 92.

¶6 After closing, C 1031 contacted the power company, Avista,1 to remove the lines. C 1031 then learned for the first time an easement was recorded with the Spokane County auditor in 1949, granting Avista the right to erect and maintain “an electrical transmission and telephone system attached to the transmission line poles” across the subject property. CP at 543. Avista indicated it would bury the power lines at a cost of $5,489.96 each for the three offending poles.

¶7 On March 31, 2009, C 1031 sued First American for breach of title insurance coverage. On cross motions for summary judgment, the court ruled First American’s conceded omission was covered under the policy but the court found that material questions of fact still existed regarding

[31]*31• actual monetary loss or damage sustained or incurred by the plaintiff;

• whether or not plaintiff had, or should have had, actual knowledge of recorded easements;

• whether or not actual and/or knowledge that should have been known by the plaintiff would mitigate and/or bar damages.

CP at 838. C 1031 submitted an expert’s affidavit specifying damages of $60,000 based on a property value measure of damages. C 1031 did not mention Avista’s offer to bury the power lines. First American did not controvert the expert’s affidavit.

¶8 During trial preparation, C 1031 sought to include the testimony of Irving Paul, an attorney who frequently litigates title insurance cases, to address whether C 1031’s knowledge of the power lines would mitigate their damages. The court excluded this evidence. C 1031 asked First American to produce certain documents, including First American’s entire file prepared by underwriting, manuals detailing practices and procedures, all claims made within the last three years to the Spokane and Seattle offices, and advertising. The court partly denied C 103 l’s motion to compel discovery, ordering First American to solely produce documents relating to its assessment of damages. After C 1031 requested discretionary review and First American joined in their request, the trial court certified the matter for this court’s discretionary review.

ANALYSIS

A. Knowledge Exception to Liability

¶9 The issue is whether the trial court erred when denying summary judgment in not interpreting as a matter of law the meaning of the knowledge exception and applying that interpretation to the agreed material facts. C 1031 contends the issue of knowledge should not go to a trier of [32]*32fact but be decided by this court. First American agrees the knowledge issue should be decided by the court but contends it was not liable for a known easement under the case facts.

¶10 We review an order granting or denying summary judgment de novo, engaging in the same inquiry as the body that decided it. Quadrant Corp. v. Am. States Ins. Co., 154 Wn.2d 165, 171, 110 P.3d 733 (2005). Summary judgment is appropriate when no genuine issue of material fact remains and the moving party is entitled to judgment as a matter of law. CR 56(c). The interpretation of insurance policy language is a question of law, reviewed de novo. Butzberger v. Foster, 151 Wn.2d 396, 401, 89 P.3d 689 (2004).

¶11 The role of the title insurer is to insure title. Hu Hyun Kim v. Lee, 145 Wn.2d 79, 91, 31 P.3d 665 (2001). “Title insurance is a guaranty of the accuracy of a company search and record title on a specific property.” Kiniski v. Archway Motel, Inc., 21 Wn. App. 555, 560, 586 P.2d 502 (1978). By paying consideration to a title insurer for their expert services in uncovering defects in title, it is reasonable for the insured to believe and rely upon the fact that the insurer has discovered any encumbrances recorded in the public record. Kim, 145 Wn.2d at 91-92.

¶12 First American admits it missed the easement recorded by Avista’s predecessor. C 103 l’s policy states that “easements of record are covered.” CP at 88. The remaining dispute, then, is whether an exception or exclusion within the title insurance policy limits coverage for C 1031.

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Bluebook (online)
301 P.3d 500, 175 Wash. App. 27, Counsel Stack Legal Research, https://law.counselstack.com/opinion/c-1031-properties-inc-v-first-american-title-insurance-washctapp-2013.