Stahl Cowen Crowley Addis LLC | Title Insurance Litigation
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Practice Areas

Title Insurance Litigation

In Stahl Cowen’s title insurance litigation practice, we have over forty (40) years of combined experience representing title insurance companies and their insureds in all aspects of real estate litigation, including, but not limited to, resolving disputes involving lien priority, lien validity, title ownership, equitable and conventional subrogation, easements, property boundaries, mechanic’s lien claims, policy coverage (including rendering coverage opinions), defalcations, agent’s professional liability coverage, title and construction escrows, alleged mortgage fraud, revolving lines of credit, tax deeds, tenancies by the entireties, and bankruptcies. 

Representative Matters
 
Judgments/Motion to Dismiss:
 
Ogden Plaza Garage Co., LLC. v. First American Title Insurance Company,  U.S. District Court for the Northern District of Illinois, No. 14 CV 2442. Defeated insured’s claim to recover legal fees it incurred in connection with the litigation of a $6,000,000.00 title-related dispute based on the title insurer’s alleged breach of its duty to defend and unreasonable delay in assigning defense counsel. The Court granted our motion to dismiss the complaint, and held that plaintiff was not entitled to recover its pre-litigation attorney’s fees or litigation expenses incurred before the appointment of, or in assisting, title counsel, finding that (a) Policy Condition 4(a) limits a title insurance company’s liability to the legal fees incurred by retained counsel in defending title-related “litigation”; (b) under Policy Condition 4(b), the title insurance company had the discretion to initiate litigation prior to the filing of the plaintiff’s complaint, but was not liable for pre-litigation legal fees incurred by the insured in an effort to resolve the disputed title issue; and (c) the insurer’s retention of counsel in sufficient time to file the initial responsive pleading on behalf of the insured did not constitute unreasonable delay or proximately cause any damages to the insured.
 
Treuhold CH Realty Corp. v. First American Title Insurance Company, Circuit Court of Cook County, Illinois, No. 2015 L 3549.  Defeated insured’s claim for breach of title insurance policy based on denial of coverage where the insured conveyed its interest in the property after it submitted the title claim. The Court found that coverage terminated under Policy Condition 2 when the insured ceased to have an interest in, or liability with respect to, the land, notwithstanding that the claim was made before the insured conveyed its interest. 
 
Deutsche Bank v. Ralph Hansen, et al., Circuit Court of Lake County, Illinois, No. 2015 CH 1238. In a contested action for reformation of a legal description contained in the insured mortgage that omitted reference to the portion of the property on which the mortgagors’ house was located, the Court granted our Motion for Summary Judgment for reformation finding that, based on defendants’ deposition testimony, the loan documents, and other evidence, defendants intended to grant a mortgage on the entire property.
 
Randle v. First American Title Ins. Company, et al., United States District Court for the Northern District of Illinois, No. 2016 C 5148. After multiple motions to dismiss were granted with leave for the pro-se plaintiff to replead, the Court granted our motion to dismiss the complaint, with prejudice, finding the plaintiff failed to plead claims of defamation, negligence, civil conspiracy and violation of Section 1983 of the Civil Rights Act against the title insurance company based on the title insurer’s actions in a separate state court action brought by the insurer against plaintiff.
 
Deutsche Bank Nat’l Trust Co., as trustee v. Michelangelo Siracki, et al., Circuit Court of Cook County, Illinois, No. 09 CH 48044.  In a case involving a priority dispute between an insured mortgagee and a land trustee who recorded its interest in the property before the insured mortgage was recorded, but after the mortgage foreclosure was filed, the Court granted our motion for summary judgment on the insured’s complaint and the land trustee’s affirmative defenses and counterclaims, finding that the land trustee’s interest was junior to that of the insured mortgagee because (a) the beneficiaries knowledge of the mortgage and of the mortgage foreclosure proceedings when the land was conveyed into the land trust was imputed to the land trustee, and (b) the mortgage was effective when executed by the borrowers, notwithstanding that it was recorded after the property was conveyed into the land trust.
 
Bankruptcy:
 
In re: Residential Capital, LLC, United States Bankruptcy Court, Southern District of New York, No. 12-12020-mg.  We represented a national title insurance company and creditor of Home Connects Lending Services, LLC, a debtor in the bankruptcy case, in connection with three unsecured claims which included two claims for fixed damages totaling approximately $766,000.00, and a third claim asserting potential future damages claims on open policies. The Liquidating Trustee filed objections to the title insurer’s claims and initially took the position that the claims should be disallowed in their entirety. The nature of the claims concerned certain acts of negligence by the debtor in connection with the preparation of certain loan documents, exposing the title insurer to liability under title insurance policies issued in connection with the loan transactions. The key issues were whether Stewart actually and reasonably incurred damages, whether the future claims would come to fruition, and whether the Liquidating Trustee could limit or defeat the future claims through the estimation provisions of the Bankruptcy Code.
Through settlement negotiations, we quickly established the basis for the two fixed damage claims, and convinced the Liquidating Trustee of the potential viability of the future damage claims. A single unsecured claim in the amount of $790,000.00 was allowed, which was more than the combined amount of the two fixed damage claims. The allowed claim generated cash distributions and marketable securities from the liquidating trust in the approximate amount of 39% of the allowed unsecured claim. This was an excellent result given the nature of the claims and the facts of the case.
 
Appellate Advocacy:
 
We have obtained the following recent Appellate Court Rulings either on behalf of title insurance companies or as counsel to the Illinois Land Title Association, as Amicus Curiae:

Title Industry Assurance Co., R.R.G. v. First American Title Insurance Company, No. 15-3310 (7th Cir., April 10, 2017) (a liability insurer was estopped from invoking policy defenses to the indemnity claims of its insured, a title agent, because the liability carrier breached its duty to defend the insured, thus rendering the carrier liable for a judgment or reasonable settlement in favor of the third party claimants, including a title insurance company, and against the insured title agent). 

Borto v. First American Title Insurance Company, 2017 IL App (1st) 162266-U (complaint against closing agent for failing to obtain a release of a revolving home equity line of credit that was paid down to zero at closing almost 17 years prior to the commencement of the litigation was barred by the statute of limitations because the continued existence of, and the failure to release, the mortgage was apparent from the public real estate record).

Deutsche Bank National Trust Co. v. Payton, 2017 IL App (1st) 160305 (insured mortgagee that paid off its mortgagor’s sellers’ mortgages was equitably subrogated to the liens of the sellers’ mortgages notwithstanding sellers’ claim that the deed received by the mortgagors was forged).

In Re Application of County Collector (Stolat Financial, LLC), 2016 IL App (3d) 150712 (affirming dismissal of petition to set aside tax deed that challenged insured homeowner's title).

One West Bank v. Cielak, 2016 IL App (3d) 150224 (insured mortgage signed by wife enforceable against tenancy by the entireties property even though wife not obligated on note).

Amicus Curiae: 231 W. Scott LLC vs. Lakeside Bank, 2017 IL App (1st) 161131 (construction escrowee has a fiduciary duty to act only in accordance with the terms of the escrow agreement – reversing $525,000 judgment against construction escrowee).

Amicus Curiae: Philadelphia Indemnity Insurance Company v. Chicago Title Insurance Company, 771 F.3d 391 (7th Cir. 2014) (complete defense rule does not apply to title insurance policies, which seek to insure only limited range of losses related to title defects).

Amicus Curiae: In re Crane (Gifford State Bank v. Richardson), 487 B.R. 906 (C.D. Ill. 2013) (recorded mortgages provided constructive notice of insured mortgage liens under Illinois Conveyances Act even though they did not expressly set forth the interest rates and maturity dates of secured promissory notes), aff’d., 742 F.3d 702 (7th Cir. 2013).