Insured Titles, Inc. v. McDonald
| Citation | 275 Mont. 111,911 P.2d 209 |
| Decision Date | 30 January 1996 |
| Docket Number | No. 95-099,95-099 |
| Parties | INSURED TITLES, INC., now doing business as TRW, Plaintiff and Respondent, v. Lee McDONALD, Defendant and Appellant. |
| Court | United States State Supreme Court of Montana |
District Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable John S. Henson, Judge presiding.
Nancy K. Moe; Ellingson & Moe, Harold V. Dye; Dye Law Office, Missoula, for Appellant.
Gregory W. Duncan; Harrison, Loendorf & Poston, Helena, for Respondent.
Lee McDonald appeals from the Opinion and Order of the Montana Fourth Judicial District Court, Missoula County, granting TRW's motion for summary judgment determining that the exclusions to the title insurance policy applied. We affirm.
We consider the following issues on appeal:
1. Did the District Court err in granting TRW's motion for summary judgment?
2. Did the District Court err in determining that Exclusion No. 1 eliminated coverage in light of this Court's holding in McDonald v. Jones ?
This is McDonald's second appeal arising out of his interest in certain real property located in the Seeley Swan Valley, McDonald v. Jones (1993), 258 Mont. 211, 852 P.2d 588. Irene H. Jones owned 12.63 acres of land in the Seeley Swan Valley. In 1981, Jones conveyed two acres of her land to Ownership of America (Ownership). However, there was no agreement as to which two acres of the 12.63 acre tract were to be conveyed. On April 13, 1981, Jones executed a warranty deed conveying two acres to Ownership. The deed contained the following land description:
That portion of Lot numbered Seven (7) of Section Six (6) in Township Twenty (20) North of Range Sixteen (16) West of Montana Principal Meridian, Montana, lying West of Federal Aid Secondary 209 right-of-way and containing two acres more or less and further accurately described by plat on file with the party of the first part and party of the second part. Party of the first part herein reserves all minerals under the above description.
No plat was ever filed with the Missoula County Clerk and Recorder, and the Clerk's office erroneously treated the conveyance as a transfer of the entire 12.63 acre tract. The Missoula County Treasurer changed the tax records upon recordation of the deed and sent all further tax notices for the entire 12.63 acre tract to Ownership. Ownership failed to pay any of the real property taxes. Consequently, on July 20, 1983, Missoula County took a tax sale certificate on the entire tract due to nonpayment of taxes. Jones received no notice of the pending tax sale. On August 13, 1985, prior to taking a tax deed to the entire tract, Missoula County assigned its interest in the tax certificate to McDonald for $738.92, which represented the unpaid taxes, interest and penalties. On April 28, 1986 and on May 5, 1986, McDonald published a notice for application for tax deed in the local newspaper. The notice contained the following legal description "[a]ll of Gov't Lot 7 lying West of Federal Aid Secondary # 209 R/W in SW4 (Plat E) of 6-20N-16W, M.P.M." On August 27, 1986, the Missoula County Treasurer executed a tax deed to McDonald as grantee which contained the following legal description:
Book 163 page 228 SUID # 1078409
That portion of Lot numbered Seven (7) of Section Six (6) in Township Twenty (20) North of Range Sixteen (16) West of Montana Principal Meridian, Montana, lying West of Federal Aid Secondary 209 Right-of-Way and containing two acres more or less and further accurately described by Plat on file with the party of the first part and party of the second part. Party of the first part herein reserves all minerals under the above description.
McDonald filed a Notice of Claim of Tax Title in the Missoula newspaper on August 25, 1986 and September 1, 1986. The legal description in this notice was the same as in the application for tax deed.
Ownership contacted McDonald and agreed to give him a quit claim deed to the property. McDonald prepared the quit claim deed and it contained a different legal description than that used in the warranty deed from Jones to Ownership. The deed McDonald prepared deleted all reference to the two acre limitation contained in the Jones to Ownership warranty deed and the word "all" was inserted at the beginning of the legal description. McDonald had actual notice of the two acre limitation contained in the Jones to Ownership deed but chose to ignore the limitation. McDonald obtained a policy of title insurance from Insured Titles (now TRW). Although TRW's "chain of title sheet" references the Jones to Ownership two acre sale, the policy purported to cover the entire 12.63 acre tract. McDonald asserted that under the policy TRW was required to defend the entire 12.63 acre tract. In 1990, TRW filed a complaint against McDonald for declaratory judgment seeking to determine its duties under the title insurance policy. Motions for summary judgment were submitted by both McDonald and TRW. McDonald asserted that TRW had breached its title insurance policy and had acted in bad faith. TRW contended that it had satisfied its duties of defense and indemnity in negotiating a settlement in which it agreed to secure a two acre parcel for McDonald. At that time, however, the District Court did not rule on the motions due to the pending appeal to this Court in the underlying case of McDonald v. Jones. In McDonald v. Jones, McDonald was attempting to quiet title in the entire 12.63 acre parcel. The district court granted summary judgment in favor of Jones finding that the Jones to Ownership deed was void. McDonald was unsuccessful in his bid to quiet title in the 12.63 acre tract. We affirmed the district court's determination that the Jones to Ownership deed was void and that McDonald was entitled to none of the property.
Following our opinion in McDonald, the District Court determined that the summary judgment motions were properly before the court and that judicial notice could be taken of the underlying case. The District Court determined that the exclusions of the title insurance policy applied and, further, that McDonald knowingly altered the legal description of the property thus defeating coverage under the policy. Pursuant to Rule 59, M.R.Civ.P., McDonald filed a motion to amend this ruling. Although the District Court ruled that the motion was time barred, the District Court addressed the merits of his argument. McDonald appeals from this determination. In his motion, McDonald asserted that the issue of whether TRW breached its duty to defend was not addressed in the District Court's order. McDonald argued that TRW's voluntary filing of a quiet title action against Jones acted as a judicial admission regarding TRW's duty to defend. TRW countered that it undertook the quiet title action under a reservation of rights and, upon later investigation, determined that the policy exclusions had been triggered and, therefore, that TRW was justified in withdrawing from the quiet title action.
In reviewing a district court's grant of summary judgment we use the same criteria as that used by the district court; we are guided by Rule 56, M.R.Civ.P. Chilberg v. Rose (1995), 258 Mont. 211, 212, 903 P.2d 1377, 1378-79, (citing Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849 P.2d 212, 214). Thus, we determine whether a genuine issue of material fact exists and whether the moving party is entitled to judgment as matter of law. Chilberg, 903 P.2d at 1378-79. In the instant case, the facts of this dispute regarding the transactions and the chain of title were fully resolved in the underlying case of McDonald v. Jones.
McDonald asserts that even assuming the District Court was correct in its determination regarding Exclusion No. 1 of the title insurance policy, which would exclude coverage because of the violation of the subdivision and platting act, genuine issues of material fact regarding TRW's alleged breach of its independent duty to defend title should have precluded the grant of summary judgment. We note that if the asserted claim is not covered by the policy, then the insurer has no duty to defend the insured. City of Bozeman v. AIU Ins. Co. (1993), 262 Mont. 370, 376, 865 P.2d 268, 272-73; New Hampshire Ins. Group v....
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