Boel v. Stewart Title Guar. Co., 26267.

• Decision Date: 28 February 2002
• Docket Number: No. 26267.,26267.
• Citation: 137 Idaho 9,43 P.3d 768
• Parties: Neil F. BOEL and Karen S. Boel, husband and wife, Plaintiffs-Respondents-Cross Appellants, v. STEWART TITLE GUARANTY COMPANY, a Texas corporation, Defendant-Appellant-Cross Respondent.
• Court: Idaho Supreme Court

43 P.3d 768

137 Idaho 9

Neil F. BOEL and Karen S. Boel, husband and wife, Plaintiffs-Respondents-Cross Appellants, v. STEWART TITLE GUARANTY COMPANY, a Texas corporation, Defendant-Appellant-Cross Respondent.

No. 26267.

Supreme Court of Idaho, Boise, November 2001 Term.

February 28, 2002.

Spink, Butler, Clapp, LLP, Boise, for appellant. Michael T. Spink argued.

Davison, Copple, Copple & Copple, Boise, for respondents. Heather Anne Cunningham argued.

KIDWELL, Justice.

This case involves the interpretation of a title insurance policy issued by Stewart Title Company of Idaho (Stewart Title) to Neil and Karen Boel (the Boels). After learning that the federal government had an adverse claim of title to a portion of the land on which their house is situated, the Boels made a claim with Stewart Title under their policy. When Stewart Title did not pay the amount requested by the Boels as damages, the Boels filed this lawsuit. A jury found that the defect in the title to the Boel property was covered under the Boels' policy and awarded $70,000.00 in damages. Stewart Title appealed, arguing that the title defect was excepted from coverage under the policy provisions, that the Boels failed to provide an adequate proof of loss as required by the policy, that the district court erred in admitting the valuation testimony of several real estate agents or brokers, and that the district court erred in awarding attorney fees and costs to the Boels. The Boels cross-appealed, arguing that they were entitled to a larger award of costs and that the district court erred in declining to award pre-judgment interest. We affirm the decision of the district court.

I. FACTS AND PROCEDURAL BACKGROUND

In 1993 the Boels purchased a lot with a home in the Maple Ridge Estates subdivision in Ada County, Idaho (the Boel property). At that time, the Boels were aware of the existence of an underground ditch that crosses their property. The record indicates that the ditch enters the Boel property as an open ditch and then proceeds underground through a pipe or tile across the Boel property, the street leading to the Boel property, and other streets and lots in the subdivision. When the Boels purchased the property they received a title insurance policy from Stewart Title.

In 1997, the United States Bureau of Reclamation performed a survey in Maple Ridge Estates subdivision. On August 7, 1997, the Bureau sent a letter to the Boels and some of their neighbors, informing them that in 1910, the United States was the grantee of fee simple title to a thirty-foot strip of land through the Boel property and other parts of the subdivision (the fee strip) by a recorded deed. The letter further advised that the developer of the subdivision had relocated the ditch to its present location, which is not entirely within the fee strip. The parties do not currently dispute the existence of the recorded deed in favor of the United States; however, Stewart Title did not discover the existence of the deed prior to issuing the policy of title insurance to the Boels.

Immediately upon receiving the letter, the Boels contacted Stewart Title's successor, Alliance Title—hereafter referred to as Stewart Title, for convenience—regarding the letter's claims that the Boels did not own their entire lot. Over the next several months, the Boels exchanged telephone messages and conversations with various Stewart Title representatives, some of whom were located out of state. Throughout the process, the Boels were told that Stewart Title had initiated an investigation process and would be consulting appraisers and the company's local title agents. On January 20, 1998, Stewart Title informed the Boels that the appraiser it had hired could not quantify any damages resulting from the fee strip. In response, the Boels faxed a letter to Stewart Title that same day, outlining their claim. The Boels referenced the letter sent by the Bureau of Reclamation, noted that the Bureau's claims were backed by a recorded deed, indicated that they would never have purchased the property if they had known about the fee strip, indicated that the property constituted the perfectly unique property they desired absent the fee strip, claimed that any future sale of the property was in serious jeopardy, and demanded payment of the remainder of the mortgage on the property. Stewart Title responded by faxing a letter to the Boels on February 2, 1998. The letter indicated that the claim was excepted from coverage under the policy and that the appraisal had found no diminution in value. The letter offered $2500.00 to settle the issue in return for a signed release. The Boels then filed this lawsuit against Stewart Title, seeking recovery for the damages asserted in the claim they made with Stewart Title, as well as damages due to a lack of legal right of access to their property because of the strip's continuation across the streets leading to the property.

Finding the policy language ambiguous, the district court submitted the case to a jury for a determination of whether the policy provided coverage. On January 13, 2000, the district court entered judgment on the jury's special verdict, which found that the Boels' claim was covered under the title insurance policy and that the Boels had suffered $70,000.00 in damages. On March 15, 2000, the district court awarded the Boels $89,455.90 in attorney fees, $3,317.66 in costs as a matter of right, and $7,167.32 in discretionary costs, but denied the Boels' motion for an award of pre-judgment interest.

Stewart Title has appealed, arguing that, as a matter of law, the policy language clearly and unambiguously excepts coverage for the existence of the fee strip, that the Boels failed to file a proof of loss with Stewart Title and therefore cannot recover under the policy, that the district court erred in allowing the valuation testimony of three real estate agents or brokers, and that the district court erred in awarding costs and attorney fees to the Boels. The Boels have cross-appealed, arguing that the district court erred in denying their motion for pre-judgment interest and that they were entitled to a larger award of costs as a matter of right. The Boels also seek attorney fees on appeal.

II. STANDARD OF REVIEW

Issues of fact are questions for the jury, and the jury's verdict on such matters will not, in most instances, be disturbed on appeal. Garrett Freightlines, Inc. v. Bannock Paving Co., Inc., 112 Idaho 722, 726, 735 P.2d 1033, 1037 (1987). "[W]hen reviewing a jury verdict on appeal the evidence adduced at trial is construed in a light most favorable to the party who prevailed at trial." Id. However, when it appears to the reviewing court that the verdict is either not supported by substantial and competent evidence or is against the clear weight of the evidence—or, in other words, if upon its review of the evidence in the record the reviewing court determines that reasonable minds could not differ on issues of fact—then those issues become questions of law upon which the court may freely rule. Id.

When the issue is one of law, this Court has free review. Bouten Constr. Co. v. H.F. Magnuson Co., 133 Idaho 756, 760, 992 P.2d 751, 755 (1999).

III. ANALYSIS

A. The Boels' Claim Was Covered Under The Title Insurance Policy Issued By Stewart Title.

The title insurance policy issued to the Boels by Stewart Title provides, in relevant part:

SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, STEWART TITLE GUARANTY COMPANY ... insures ... against loss or damage ... 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 herein;

....

4. Lack of a right of access to and from the land.

Schedule A, paragraph 2, provides:

The estate or interest in the land described herein and which is covered by this Policy is:

FEE SIMPLE

Schedule A goes on to provide that fee simple title is vested in Neil and Karen Boel and that the land referred to is Lot 15, Block 1, the entire lot. "Schedule B—Part 1" then provides:

THIS POLICY DOES NOT INSURE AGAINST LOSS OR DAMAGE BY REASON OF THE FOLLOWING:

....

11. Any question which may arise or claim of loss which may result from the existence of an underground ditch, which does no[t] appear to affect improvements situated upon the land:

Disclosed by: ON SITE INSPECTION Dated: APRIL 12, 1993

Title insurance policies are contracts between insureds and insurers. As such, absent ambiguity, they are normally governed by the same rules as applied to contracts generally. Anderson v. Title Ins. Co., 103 Idaho 875, 878, 655 P.2d 82, 85 (1982).

The objective in interpreting contracts is to ascertain and give effect to the intent of the parties. The intent of the parties should, if possible, be ascertained from the language of the documents. The determination of a contract's meaning and legal effect is a question of law when the contract is clear and unambiguous.

Twin Lakes Village Prop. Ass'n, Inc. v. Crowley, 124 Idaho 132, 135, 857 P.2d 611, 614 (1993) (citations omitted). The question of whether a contract is ambiguous is itself a question of law. Terteling v. Payne, 131 Idaho 389, 391-92, 957 P.2d 1387, 1389-90 (1998).

Finding Exception 11 to be ambiguous, the district court left the question of its interpretation to the jury, with the instruction that the ambiguous language was to be strictly construed against Stewart Title. Exception 11 attempts, in broad-sweeping language, to except coverage for any class of problems that may arise from the existence of the ditch. The language—"[a]ny question which may arise or claim of loss which may result from the existence of an underground ditch"—is arguably ambiguous as it relates to the ditch itself. However, the Boels' claim does not arise from the existence of the ditch, but the existence of the deed to the...