Mfrs. & Traders Trust Co. v. Fid. Nat'l Title Ins. Co.
| Decision Date | 04 November 2012 |
| Docket Number | Case No. 3:12-cv-00744-AA |
| Parties | MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation, Plaintiff, v. FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California corporation, Defendant. |
| Court | U.S. District Court — District of Oregon |
Sanford R. Landress
Sherri D. Martinelli
Greene & Markley, PC
Attorneys for plaintiff
Nancy R. Walsh
Attorneys at Law
Attorneys for defendant
Plaintiff Manufacturers and Traders Trust Company moves for summary judgment pursuant to Fed. R. Civ. P. 56. In addition, plaintiff requests attorney fees and costs pursuant to Or. Rev. Stat. § 742.061. Defendant Fidelity National Title Insurance Company filed a cross-motion for summary judgment. For the reasons set forth below, plaintiff's motion is denied and defendant's motion is granted.
This case involves a dispute over whether the litigation initiated by Gloria Carter triggered coverage under the title insurance policy ("Policy") that plaintiff held with defendant. Ms. Carter owned a residential property ("Property") in Portland, Oregon; in the beginning of April 2006, Brian Campbell, who was an agent for Michael and Dolores Rossetti ("Rossettis"), contacted Ms. Carter and offered to assist her in avoiding the pending foreclosure of the Property through a favorable refinance transaction, wherein Mr. Campbell would purchase the Property for substantially less than its appraised value and Ms. Carter would be permitted to lease the Property back with an option to purchase. Ms. Carter agreed to these terms in order to avoid foreclosure; at the closing, however, Ms. Carter noticed that there was no lease or option provision in the sale contract, the purchase price had been reduced by over $50,000, and Mr. Rossetti was listed as the buyer. Nonetheless, Ms. Carter deeded the Property to the Rossettis.
On April 26, 2006, the Rossettis borrowed $307,500 fromplaintiff in order to refinance the Property. The loan was secured by a deed of trust ("DOT"), which lists plaintiff as the lender and Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary. In conjunction with the loan, plaintiff obtained the Policy from defendant, under which plaintiff agreed to pay a one time premium in exchange for protection from liability due to any defects in title.1
On April 30, 2007, Ms. Carter filed a complaint in Multnomah County Circuit Court against the Rossettis and Mr. Campbell, alleging that the sale of the Property should be rescinded due to fraud. On November 6, 2007, on behalf of plaintiff, MERS assigned its beneficial interest in the DOT to Deutsche Bank ("Deutsche"). On March 23, 2009, Ms. Carter filed a third-amended complaint, adding plaintiff and Deutsche as defendants. On March 26, 2010, Deutsche asserted a cross-claim against plaintiff for indemnification against any loss that it suffered as the result of the underlying lawsuit.
On January 5, 2010, plaintiff tendered its defense of Ms. Carter's claims to defendant; on June 23, 2010, plaintiff tendered its defense of Deutsche's cross-claim. Defendant denied plaintiff's tender as to both issues. Plaintiff ultimately settled the underlying litigation for $240,000. In defending against Mr. Carter's claims, plaintiff expended an additional $332,670.91 inattorney fees and costs.
On April 26, 2012, plaintiff filed the present action in this Court, alleging claims for breach of contract and breach of good faith and fair dealing, which are premised on defendant's refusal to indemnify and defend it against Ms. Carter's lawsuit.
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show "that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) . Substantive law on an issue determines the materiality of a fact. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Assoc., 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of a dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.
Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against themoving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
Plaintiff argues that it qualified as an "insured" at all relevant times under the Policy, such that defendant was required to indemnify and defend against Ms. Carter's claims. In the alternative, plaintiff contends that the Policy is ambiguous and should therefore be construed against defendant. Defendant asserts that plaintiff ceased to be qualified for coverage at the time it assigned its beneficial interest in the Property to Deutsche. As such, the resolution of this case turns on the interpretation of the Policy.
To support their cross-motions for summary judgment, the parties request that this Court take judicial notice of the following documents: (1) the warranty deed, dated April 5, 2006, conveying the Property from Ms. Carter to Mr. Rossetti; (2) the transfer of the warranty deed, dated April 26, 2006, conveying the Property from Mr. Rossetti to the Rossettis as co-owners; and (3) the assignment of the DOT, dated November 6, 2007, wherein plaintiff, through its agent MERS, assigned all of its beneficial interest in the Property to Deutsche.2
Judicial notice may be taken at any stage in the proceedings. Fed. R. Evid. 201(d). A judicially noticed fact must be one "that is not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). Accordingly, a "court may take judicial notice of matters of public record." Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001) (citation and internal quotations omitted).
The facts contained in the documents at issue are undisputed and capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned, as they are part of the public record. Therefore, the parties' requests for judicial notice are granted.
The Policy insures against "loss or damage" incurred by the "insured" due to "[a]ny defect in" or "[u]nmarketability of the title." Goldstein Decl. Ex. 1 ("Policy"), at 1. Section 1 of the Policy, which provides "Definitions of Terms," defines "insured" as Id. at 2. Schedule A lists plaintiff "and/or MERS" as the insured. Id. at 4.
Id. at 2. The Policy does not, however, define the term "title."
It is undisputed that the Policy, which was executed on April 26, 2006, covers any defects in title that arose prior to that date, including the claims emanating from the allegedly fraudulent sale of the Property from Ms. Carter to the Rossettis. It is also undisputed that plaintiff repeatedly tendered its defense in accordance with the procedures outlined in the Policy. Thus, this case hinges on whether the assignment of the DOT from plaintiff to Deutsche constituted a transfer of "title," such that plaintiff ceased to be insured under the Policy.
The interpretation of an insurance policy is a question of law to be determined by the court. Hoffman Constr. Co. v. Fred S. James & Co. of Or., 313 Or. 464, 469-71, 836 P.2d 703 (1992). In construing the meaning of an insurance policy, "[t]he primary and governing rule is to ascertain the intention of the parties." Id. at 470 (citation and internal quotations omitted).
In so doing, the court first examines the terms and conditions of the policy; undefined terms are given their ordinary and plainmeaning. Groshong v. Mut. of Enumclaw Ins. Co., 329 Or. 303, 307-08, 985 P.2d 1284 (1999); see also Or. Rev. Stat. § 42.250. Oregon courts refer to the dictionary when determining the ordinary and plain meaning of an undefined term in an insurance policy, except where that term has already been construed by a previous court; there, the court construes the disputed term consistent with relevant precedent. See Gonzales v. Farmers Ins. Co. of Or., 210 Or.App. 54, 60-65, 150 P.3d 20 (2006), aff'd, 345 Or. 382, 196 P.3d 1 (2008) . When the term in question has a plain meaning, the court "will apply that meaning and conduct no further analysis." Groshong, 329 Or. at 308.
Where the disputed term has no plain meaning, "that is, if the term is ambiguous [because it is capable of more than one reasonable interpretation, ...
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