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News & Press: Court Cases

Title Insurance

Monday, September 18, 2017  
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Hovannisian v. First American Title Insurance Company

Cal.App. 5th Dist. (F072789) 7/25/17 (Cert. for Pub. 8/11/17)

Plaintiffs purchased property from Wells Fargo Bank at a nonjudicial foreclosure sale and later discovered there was a prior deed of trust on the property that had not been extinguished by the foreclosure. They sued Wells Fargo for intentional and negligent misrepresentation based on a statement in Wells Fargo's deed of trust that it was a first deed of trust. Wells Fargo tendered defense of the action to its title insurer, First American Title Insurance Company, which refused to indemnify or defend. After Wells Fargo assigned any claim it had against First American to the plaintiffs, they sued First American for breach of contract and breach of the implied covenant of good faith and fair dealing.

The court upheld a motion for summary judgment in favor of First American, holding that there was no coverage under the policy after the property was foreclosed because 1) the trustee's deed stated that it was without warranty and the provisions in the policy allowing for continuation of insurance after a sale only apply to the extent the insured gives a warranty of title to the purchaser, 2) the statement in the deed of trust that it was a first deed of trust did not constitute a warranty, and 3) the insured lender does not suffer damages unless it fails to recoup the debt because of the undisclosed senior lien.

Docket

California Land Title Association


1215 K Street #1816 Sacramento, CA 95814-3905
Email: mail@clta.org  |  Phone: 916-444-2647  |   Fax: 916-444-2851