Pioneer Nat. Title Ins. Co. v. Fourth Commerce Properties Corp.
| Decision Date | 24 April 1986 |
| Docket Number | No. 66712,66712 |
| Citation | 11 Fla. L. Weekly 183,487 So.2d 1051 |
| Parties | 11 Fla. L. Weekly 183 PIONEER NATIONAL TITLE INSURANCE CO., Petitioner, v. FOURTH COMMERCE PROPERTIES CORP., Respondent. |
| Court | Florida Supreme Court |
Robert T. Scott of Gunster, Yoakley, Criser & Stewart, Palm Beach, for petitioner.
J.A. Plisco, Palm Beach, and Larry Klein of Klein & Beranek, West Palm Beach, for respondent.
Paul J. Stichler, Orlando, amicus curiae for Attys.' Title Ins. Fund.
Peter Guarisco, Tallahassee, amicus curiae for Florida Land Title Ass'n, Inc.
In construing the mortgagee title insurance policy before it in Fourth Commerce Properties Corp. v. Pioneer National Title Insurance Co., 463 So.2d 307, 309 (Fla. 4th DCA 1984), the court found that the insurer's duty to defend "all litigation consisting of ... defenses ... interposed against a foreclosure of the insured mortgage" had been triggered by a junior lienor/defendant's general denial of that count of the complaint stating that the mortgage had been executed and delivered by the owner of the property. Upon petition, the court denied rehearing, but certified to this Court two questions of great public importance, each involving the existence of a duty to defend on the facts of the case. We have jurisdiction. Art. V, § 3(b)(4), Fla. Const. We answer both questions in the negative and quash the Fourth District's holding below.
The facts of the case are as follows. In August, 1975, Le Chalet, Inc. (Le Chalet), as owner of certain realty, executed and delivered a construction loan mortgage to Virginia National Bank (VNB). Petitioner Pioneer National Title Insurance Company (Pioneer) insured the initial priority of that mortgage, and through twelve subsequent endorsements updated the policy to January, 1979. Thereafter, in February, 1979, Steckmar National Realty Corp. (Steckmar) entered into an agreement to purchase the aforementioned realty from Le Chalet, and this agreement was recorded in the public records of Palm Beach County. While this agreement was never performed by the parties, and ended in litigation which Steckmar lost, the agreement remained of record.
On April 1, 1980, VNB assigned the insured mortgage to its subsidiary, respondent Fourth Commerce. Because Le Chalet was in default on the mortgage and the note, Fourth Commerce initiated foreclosure proceedings against Le Chalet. Fourth Commerce included Steckmar in the foreclosure suit as a defendant because of the Le Chalet-Steckmar purchase and sale agreement which was of public record.
Steckmar responded to the foreclosure complaint by answer, affirmative defenses and counterclaims. Because the latter two were concededly not directed to the validity of the original mortgage or any defect or lien superior to it, the controversy in the trial court focused upon the answer as activating the duty to defend. In its answer to paragraph thirteen of the complaint, in which Fourth Commerce alleged that the fee simple owner had executed the mortgage and that this mortgage had been recorded, Steckmar responded "Denied except as to the existence of public records." Counsel for Fourth Commerce informed Pioneer of the Steckmar answer and counterclaims, but did not demand that Pioneer enter the litigation. After Fourth Commerce successfully obtained a final judgment of foreclosure, Steckmar unsuccessfully appealed that judgment. Thereafter, Fourth Commerce notified Pioneer of its claim for costs and attorney's fees incurred in the foreclosure.
Fourth Commerce subsequently sued Pioneer, based on its refusal to undertake its "duty to defend" Fourth Commerce against Steckmar's answer, affirmative defenses and counterclaims in the foreclosure action. Both parties filed motions for summary judgment, and the trial court granted Pioneer's. It found no duty to defend for two reasons. First, because Steckmar had first contracted to purchase the property about one month after the final endorsement of the policy in January, 1979, the court reasoned that the case fell within the policy's exclusion of "adverse claims, or other matters ... attaching or created subsequent to the Effective Date of policy."
Second, it found that Steckmar's mere denial of paragraph thirteen, the execution and delivery of the mortgage by the fee simple owner, did not constitute a "defense." Therefore, the denial did not activate Pioneer's duty under the policy to "provide for a defense of an insured in all litigation consisting of ... defenses ... interposed against a foreclosure of the insured mortgage."
The Fourth District focused upon the latter issue in reversing and finding a duty to defend. In denying the execution of the mortgage by the owner, the court reasoned, Steckmar had attacked precisely that "validity or enforceability" insured by Pioneer. It was immaterial,...
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