Martin v. Fid. Nat'l Title Ins. Co.

Decision Date05 August 2013
Docket NumberNo. 13-30013,13-30013
PartiesLLOYD RAYMOND MARTIN, III; NICOLE EASTERWOOD MARTIN, Plaintiffs-Appellants v. FIDELITY NATIONAL TITLE INSURANCE COMPANY, Defendant-Appellee
CourtU.S. Court of Appeals — Fifth Circuit

Summary Calendar

Appeal from the United States District Court

for the Eastern District of Louisiana

USDC No. 2:09-CV-4195

Before KING, CLEMENT, and HIGGINSON, Circuit Judges.

PER CURIAM:*

Plaintiffs-Appellants Lloyd and Nicole Martin filed suit against Defendant-Appellant Fidelity National Title Insurance Co., asserting claims for breach of title insurance policy and bad faith. The district court granted Fidelity's motion for summary judgment on the Martins' claims, and the Martins appealed. For the following reasons, we AFFIRM the district court's judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

Central to this case is the chain of title to property owned by Lloyd and Nicole Martin (the "Martins") in St. Tammany Parish, Louisiana. The property originally appears to have been owned by Herbert Nill. It then was acquired by Herbert Nill's son, William C. Nill, in 1959, and redeemed by him from a tax sale in 1988. On February 14, 2001, Hickory Glade, Inc. ("Hickory Glade"), despite holding no recorded interest, conveyed its interest in the property by quitclaim deed to William Magee, one of Hickory Glade's directors and officers. Magee proceeded to file a petition for declaratory judgment in Louisiana state court against Herbert and William C. Nill, their spouses, heirs, and assigns (the "Nills") on April 9, 2002, seeking recognition of ownership of the property. Because the attorney appointed by the state court to represent the Nills appears never to have contacted them, the Nills did not respond to Magee's suit. As a result, the state court entered a default judgment declaring Magee the owner of the property.

Magee then donated part of the property to the Great Commission Foundation of Campus Crusade for Christ, Inc. ("Great Commission Foundation"). Shortly thereafter, Magee and the Great Commission Foundation sold the property to Buddy Coate Homes, LLC ("Buddy Coate"). On August 16, 2005, Buddy Coate filed a petition for declaratory judgment in state court to quiet title against the Nills. Perhaps not coincidentally, Magee represented Buddy Coate in this action. As before, a default judgment was entered against the Nills.

Buddy Coate then sold the property to Mark and Kristen Graziani. The Grazianis, in turn, sold the property to the Martins. However, when the Martins tried to sell the property to Adam and India Sachitano, the Sachitanos' closing agent identified a problem with the Martins' title. After the attempted sale to the Sachitanos failed, the Martins filed a claim with their title insuranceprovider, Fidelity National Title Insurance Co. ("Fidelity"). The claim alleged a defect in title created by Magee's acquisition of the property from Hickory Glade. Fidelity proceeded to conduct an investigation and identified two surviving descendants of William C. Nill—Pamela Cummings and Paula Windham. A third descendant, William P. Nill, previously had died intestate without a spouse or dependants. Cummings and Windham executed quitclaim deeds in the Martins' favor for the sum of $16,000. They also executed Affidavits of Death, Domicile and Heirship as to their father, William C. Nill, and their brother, William P. Nill.

Fidelity presented the quitclaim deeds to the Martins, who refused to accept them in satisfaction of Fidelity's obligation under the title insurance policy. Fidelity nevertheless recorded the deeds in St. Tammany Parish's conveyance records. Later, Fidelity also obtained quitclaim deeds and affidavits from other heirs of Herbert Nill for $16,500.

On June 29, 2009, the Martins filed suit against Fidelity in district court for alleged breach of the title insurance policy and bad faith. Fidelity filed a third-party complaint in subrogration against the Martins' predecessors-in-title, including, inter alia, Magee, Buddy Coate, and the Grazianis. Magee and Buddy Coate moved for summary judgment on Fidelity's claims, which the district court denied on September 26, 2011. Then, on May 8, 2012, Fidelity filed motions for summary judgment against the Martins, Magee, and Buddy Coate. The district court granted Fidelity's motions on September 11. The court found that Fidelity had the right under the title insurance policy to attempt to cure the defect in the Martins' title, and did so by procuring quitclaim deeds from William C. Nill's only heirs. Accordingly, the court concluded that the Martins now held merchantable title. Finally, the district court rejected the Martins' argument that they were entitled to statutory penalties resulting from damages theysuffered as a result of being unable to sell their home, refinance it, or use it as collateral.

The Martins, Magee, and Buddy Coate filed motions to alter or amend the district court's order. The district court denied the Martins' motion. It granted Magee and Buddy Coate's motion to reduce the damages award against them to $16,000—the amount Fidelity paid to William C. Nill's daughters for the quitclaim deeds. The Martins then timely appealed the district court's dismissal of their claims.

II. STANDARD OF REVIEW

We review a district court's grant of summary judgment de novo, applying the same standards as the district court. Lindquist v. City of Pasadena Tex., 669 F.3d 225, 232 (5th Cir. 2012). The district court's judgment should be affirmed "if, viewing the evidence in the light most favorable to the non-moving party, there is no genuine dispute [as] to any material fact and the movant is entitled to judgment as a matter of law." United States ex rel. Jamison v. McKesson Corp., 649 F.3d 322, 326 (5th Cir. 2011); see Fed. R. Civ. P. 56(a).

III. DISCUSSION

At the outset we note that the majority of the Martins' arguments are raised for the first time on appeal. Although the Martins present several reasons why these arguments were not raised below, none of them constitutes the kind of "extraordinary circumstances" we have required to deviate from our "general rule [that] arguments not raised before the district court are waived and will not be considered on appeal." AG Acceptance Corp. v. Veigel, 564 F.3d 695, 700 (5th Cir. 2009) (citation omitted); see also N. Alamo Water Supply Corp. v. City of San Juan, Tex., 90 F.3d 910, 916 (5th Cir. 1996) ("Extraordinary circumstances exist when the issue involved is a pure question of law and a miscarriage of justice would result from our failure to consider it."). Thus, the Martins argue that their "trial counsel did a poor job of exposing the deficienciesof Fidelity's arguments," effectively leaving the Martins as pro se litigants. But mere dissatisfaction with counsel's representation does not entitle the Martins to raise what they perceive as better arguments on appeal. See Pryor v. U.S. Postal Serv., 769 F.2d 281, 288-89 (5th Cir. 1985) (remedy for counsel's mistakes or omissions resulting in dismissal of suit is to seek malpractice damages); cf. Price v. Hous. Auth. of New Orleans, 453 F. App'x 446, 448-49 (5th Cir. 2011) (per curiam) (unpublished) (finding claims of error waived even where waiver was the result of poor briefing by newly-obtained counsel). Similarly, the fact that the case was transferred three times within the district court and that Fidelity purportedly misdirected the district judge's attention does not excuse the Martins' failure to challenge Fidelity's arguments below. Fruge v. Amerisure Mut. Ins. Co., 663 F.3d 743, 747 (5th Cir. 2011) (per curiam) ("Failure to raise an argument before the district court waives that argument . . . .").

Limited to those arguments that were raised in the district court and are renewed on appeal, the Martins essentially present two questions for consideration: first, did Fidelity cure the title defect such that the Martins were left with merchantable title; and second, did Fidelity breach its obligation of dealing in good faith.1 We consider each question below.

I. Merchantability of Title

Under Louisiana law, a title to property is merchantable when the title "can be readily sold or mortgaged in the ordinary course of business by reasonable persons familiar with the facts and apprised of the questions involved." Deleon v. WSIS, Inc., 728 So. 2d 1046, 1049 (La. Ct. App. 1999). Although the title need not be free from every technical defect, suspicion, or possibility of litigation, it must be "free of rational substantial doubt to theextent that a purchaser should feel that he can hold his purchase in peace without the probability of attack and with reasonable assurance that it will be readily salable on the open market." Id. "Title does not become unmerchantable merely because litigation is possible, but only when the title is reasonably suggestive of future litigation." Bart v. Wysocki, 558 So. 2d 1326, 1328-29 (La. Ct. App. 1990).

The district court concluded that the Martins' title was merchantable after considering the two chains through which title to the property may have passed. The first chain traced the title from William C. Nill to his daughters, Cummings and Windham, and his son, William P. Nill. The second chain originated with Hickory Glade, which manufactured an interest in the property that it then conveyed to Magee. Magee in turn conveyed part of the property to the Great Commission Foundation. Magee and the Great Commission Foundation then sold their interests in the property to Buddy Coate, which sold the property to the Grazianis. According to the district court, Fidelity successfully cured the defect because the Martins ended up in possession of the property regardless of which chain of title prevailed. If title flowed through Magee, then the Martins' purchase of the property from the Grazianis was valid. Alternatively, if title remained with the Nills, Fidelity's recording of William C. Nill's daughters' quitclaim...

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