Peck v. Title USA Ins. Corp.

• Decision Date: 14 December 1988
• Docket Number: No. 17689,17689
• Citation: 766 P.2d 290,108 N.M. 30,1988 NMSC 95
• Parties: Gordon PECK and Ann Peck, husband and wife, Elizabeth A. Hoffman and William D. Hoffman, husband and wife, and Murray L. Bruder, M.D., P.A., Pension Trust Account, Plaintiffs-Appellants, v. TITLE USA INSURANCE CORP., formerly U.S. Life Title Insurance Company of Dallas, Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 290

766 P.2d 290

108 N.M. 30

Gordon PECK and Ann Peck, husband and wife, Elizabeth A.

Hoffman and William D. Hoffman, husband and wife, and Murray L. Bruder, M.D., P.A., Pension Trust Account, Plaintiffs-Appellants, v. TITLE USA INSURANCE CORP., formerly U.S. Life Title

Insurance Company of Dallas, Defendant-Appellee.

No. 17689.

Supreme Court of New Mexico.

Dec. 14, 1988.

[108 NM 30] Lloyd O. Bates, Jr., Kelly P. Albers, Las Cruces, for appellants.

[108 NM 31] Walter R. Parr, Las Cruces, Miller, Stratvert, Torgerson & Schlender, Barbara Schneider, Dean G. Constantine, Albuquerque, for appellee.

OPINION

STOWERS, Justice.

Gordon and Ann Peck (Pecks), plaintiffs-appellants, appeal from the judgment of the district court granting summary judgment in favor of Title U.S.A. Insurance Company (Title U.S.A.), defendant-appellee. We affirm.

On February 21, 1984, William H. Seelbach, Sr., entered into a real estate contract with Bill Seelbach's Sportman's Realty Inc. (Sportsman's). The contract provided for the conveyance of certain real property located in Ruidoso, New Mexico to Sportsman's for $154,878.05; $100,000 was to be paid in 180 monthly installments at 1,399.59 plus 15 percent interest per annum. The remaining balance of $54,878.05 plus 18 percent interest per annum was to be paid in two payments: $9,878.05 upon the execution of the real estate contract and $45,000.00, a year later, on February 21, 1985.

Seelbach, Sr. owed Capitan Financial, Inc. $100,000 on a promissory note, which was secured by a deed of trust dated February 21, 1984, and which covered the property in Ruidoso. The real estate contract stated that it was inferior to the deed of trust. Subsequently, also on February 21, 1984, Seelbach, Sr. assigned his interest in the real estate contract, to the extent of his right to receive payments from Sportsman's totalling $54,878.05, to the Pecks. The record does not indicate whether the Pecks received the initial payment of $9,878.05 on the date of execution of the contract.

On May 23, 1984, Title U.S.A. issued the Pecks a title insurance policy for their interest in the property. In paragraph 12 it stated that the policy did not insure against loss or damage of the property if the loss occurred for the following exception "Deed of Trust dated February 21, 1984, executed by William H. Seelbach, Sr., * * * in favor of Capitan Financial, Inc., securing payment of the sum of $100,000.00 and being filed for record on March 23, 1984, * * * and being assigned unto Republic Funding Incorporated * * *." In other words, their interest was subject to this exclusionary clause in the policy.

William H. Seelbach, Sr., eventually defaulted on payments secured by the deed of trust. The first lienholder, Republic Funding, Inc., successor in interest to Capitan Financial, filed suit to foreclose the lien of the deed of trust on the property, and was granted a judgment and decree of foreclosure on April 18, 1986. The Pecks were named defendants in that foreclosure action and appealed an order of the trial court that determined they had no security interest in the property. In the meantime, on June 27, 1986, the property was sold at foreclosure to Republic Funding. On March 5, 1987, in the Pecks' appeal, we affirmed the trial court and held that the assignment to the Pecks of a single installment payment did not convey to them a security interest in the real property, and since they were not assignees of the note itself, the Pecks were not entitled to an equitable mortgage in the real property. See Rocky Mountain Escrow v. Seelbach, No. 16,618 (N.M.Sup.Ct. Mar. 5, 1987).

Thereafter, the Pecks brought the present lawsuit against Title U.S.A. for breach of contract and negligence in issuing a title policy for a nonexistent interest and for collecting premiums on the policy. Title U.S.A. moved to dismiss for failure to state a cause of action upon which relief can be granted. In this proceeding Title U.S.A. presented matters outside the pleadings; the trial court treated the motion to dismiss as one for summary judgment and set a time for a hearing on the motion. No materials outside the pleadings were presented by the Pecks. On March 10, 1988, the trial court issued an order entitled, "Order Granting Summary Judgment To Defendant Title U.S.A.," and stated therein "the First Amended complaint as to defendant Title U.S.A. be and hereby is dismissed with prejudice." The Pecks appeal that judgment of the district court. We affirm.

Arguments made by the Pecks on appeal are: (1) The trial court erred in granting Title U.S.A. a dismissal with prejudice for failure to state a claim upon which relief can be granted and (2) the trial court erred in granting Title U.S.A. summary judgment. We find both issues devoid of any merit.

The Pecks in their first argument claim that a motion to dismiss cannot be converted to a motion for summary judgment unless an answer to the complaint has been filed. And the Pecks claim that after they amended their complaint, Title U.S.A. never filed an amended answer.

Our Rules of Civil Procedure, SCRA 1986, 1-012(B) specifically identify the method by which a motion to dismiss is converted to a motion for summary judgment.

If, on a motion asserting the defense in Subparagraph (6) of this paragraph to dismiss for failure to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed...