Aubuchon Realty v. Fidelity Nat'l Title Ins.

• Decision Date: 13 June 2002
• Docket Number: 3,90838
• Parties: AUBUCHON REALTY COMPANY INC., Appellant, v FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK, Formerly Known as AMERICAN TITLE INSURANCE COMPANY, Respondent. 90838 SUPREME COURT OF THE STATE OF NEW YORK APPELLATE DIVISION: THIRD JUDICIAL DEPARTMENT Calendar Date:
• Court: New York Supreme Court — Appellate Division

AUBUCHON REALTY COMPANY INC., Appellant v FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK, Formerly Known as AMERICAN TITLE INSURANCE COMPANY, Respondent

90838

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION: THIRD JUDICIAL DEPARTMENT

Calendar Date: April 25, 2002

Decided and Entered: June 13, 2002

O'Connor, O'Connor, Mayberger & First P.C., Albany (Colleen D. Galligan of counsel), for appellant.

Phillips, Lytle, Hitchcock, Blaine & Huber L.L.P., Rochester (Edmund C. Baird of counsel), for respondent.

MEMORANDUM AND ORDER

Before: Crew III, J.P., Peters, Mugglin, Rose and Lahtinen, JJ.

Crew III, J.P.

Appeal from an order of the Supreme Court (Demarest, J.), entered April 12, 2001 in St. Lawrence County, which denied plaintiff's motion for summary judgment declaring that a policy of title insurance issued by defendant provided coverage for an easement over a parking lot adjacent to plaintiff's property.

In March 1987, plaintiff entered into a purchase and sale contract with Smith-Barnett Inc. regarding certain real property located at 21 Miner Street in the Village of Canton, St. Lawrence County. The acquisition consisted of three parcels of land (then vacant) and, purportedly, an easement over an adjoining parking lot. Smith-Barnett previously had acquired two of the three parcels at issue from 5-9 Miner Corporation (hereinafter Miner), a separate but apparently related entity.

In conjunction with the proposed transaction, plaintiff purchased a title insurance policy from defendant's predecessor in interest, American Title Insurance Company.(FN1) The actual title searches were conducted by defendant's agent, Seaway Abstract Company, and disclosed the existence of the parking lot easement. The record reflects that plaintiff's then counsel advised Seaway in August 1987 of an addition to the proposed deed with regard to the parking lot easement and indicated that further information on this point would be forthcoming. Thereafter, in September 1987, a deed memorializing the transaction was filed in the St. Lawrence County Clerk's office which, inter alia, granted plaintiff the right to use the parking area adjacent to and surrounding the conveyed premises and obligated plaintiff to pay its pro rata share of the corresponding maintenance charges in an amount not to exceed approximately nine percent. Plaintiff subsequently improved the parcel with a commercial establishment.

It thereafter came to light that Smith-Barnett had not actually owned the land over which it granted plaintiff an easement at the time of the underlying conveyance. Rather, the parking lot parcel was then owned by Miner which, in turn, conveyed such parcel to Garry Cohen in 1996. Following the conveyance to Cohen, a dispute arose between Cohen and plaintiff's representatives regarding plaintiff's pro rata share of maintenance expenses and, in June 1997, Cohen advised plaintiff to refrain from using the parking lot. Plaintiff then notified defendant of the dispute and asked that defendant establish title and/or defend it in any action brought by Cohen. Defendant declined, taking the position that the parking lot easement was not covered under the title insurance policy.

Plaintiff then commenced an action against Cohen, contending that it had acquired an easement by prescription over the parking lot, and a separate action against defendant seeking, inter alia, a declaration that the underlying policy provides coverage for the dispute over plaintiff's right to use the parking lot. Following joinder of issue and discovery in the action against Cohen, Cohen moved and plaintiff cross-moved for summary judgment. Supreme Court denied the parties' respective motions but, on appeal, we modified the underlying order, finding that plaintiff had failed to establish an easement by prescription and, therefore, defendant was entitled to summary judgment dismissing the complaint (Aubuchon Realty Co. v Cohen, ___ A.D.2d ___ [May 16, 2002]). Plaintiff also moved for summary judgment in the instant action and Supreme Court denied that motion, finding that the title insurance policy raised an ambiguity that could not be resolved without resort to extrinsic evidence. This appeal by plaintiff ensued.

"[A] policy of title insurance is a contract by which the title insurer agrees to indemnify its insured for loss occasioned by a defect in title" (Smirlock Realty Corp. v Title Guar. Co., 52 N.Y.2d 179, 188; see, Citibank v Chicago Tit. Ins. Co., 214 A.D.2d 212, 220-221, lv dismissed 87 N.Y.2d 896). The insurer's obligation in this regard is defined by the terms of the policy itself (see, Brucha Mtge. Bankers Corp. v Nations Tit. Ins. of N.Y., 275 A.D.2d 337; Corvetti v Fidelity Natl. Tit. Ins. Co., 258 A.D.2d 32, 34, lv denied 94 N.Y.2d 753) and...