Stull v. First American Title Ins. Co.

• Decision Date: 08 February 2000
• Citation: 745 A.2d 975,2000 ME 21
• Parties: Russell B. STULL v. FIRST AMERICAN TITLE INSURANCE CO.
• Court: Maine Supreme Court

745 A.2d 975

2000 ME 21

Russell B. STULL¹ v. FIRST AMERICAN TITLE INSURANCE CO.

Supreme Judicial Court of Maine.

Argued December 8, 1999.

Decided February 8, 2000.

Raymond C. Hurley, Hurley & Mina, Portland, for plaintiff.

William J. Kayatta Jr., Christopher T. Roach., Pierce Atwood, Portland, for defendant.

Before WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, and CALKINS, JJ.

WATHEN, C.J.

[¶ 1] First American Title Insurance Co. (First American) appeals from a judgment entered in the Superior Court (Kennebec County, Hjelm, J.) following a jury verdict in favor of Russell Stull on his claim for intentional infliction of emotional distress. First American claims that the court erred in denying its motion for judgment as a matter of law because, even taking as true all facts and inferences supporting the jury's verdict, First American's conduct did not satisfy the requirements for tort recovery. We agree and vacate the judgment.

[¶ 2] The historical facts in this case, though not in dispute, are complex. In 1992, Russell Stull purchased a trash collection business located on Bog Road in Augusta. The business, Mid Maine Services, was owned by Ed Betit and was renamed Capitol City Transfer (Capitol City) when Stull purchased it.² The primary asset of Capitol City was its location. The Bog Road property was the central office for the business, where trucks were maintained and empty trash containers were stored. Moreover, the property was grandfathered for trash collection and was ideal for servicing Capitol City's customers. The zoning status was particularly important as it was difficult to find a piece of property zoned for trash collection.

[¶ 3] Even though the land was of principal importance for Capitol City, it remained in Betit's hands and was leased to Capitol City until late 1993. At that time, Betit and Capitol City agreed that Capitol City would purchase the land. The present dispute arises out of that transaction. The Capitol City property is the landlocked southern half of a larger, nearly rectangular parcel that had, at one time, been owned entirely by Betit. The northern half of the property is owned by Albert and Linda Penney; there is a deeded right of way over the Penney property providing access to Capitol City's land. The Penneys purchased their property from Betit's father in 1972 through an outconveyance from the larger rectangular parcel. Capitol City knew generally that the Penneys owned the northern plot, but it did not take any action to discover the boundaries of the two lots. Capitol City, however, unequivocally did not intend to purchase the Penney property, and no part of its payment was intended to compensate Betit for that property.

[¶ 4] Unfortunately for Capitol City, it was mistaken about the boundaries of its property. At the time of purchase, Capitol City believed that a tree line marked the northern boundary between its property and that of the Penneys. The tree line, however, was not the boundary between the two lots: Although the northern boundary began at the tree line, it sloped away from the tree line to the south at an angle, passing within 15 feet of Capitol City's building before intersecting the eastern boundary of the property. The tree line, the actual boundary, and the northeastern and undisputed boundary form a triangle that is the basis of the present dispute. The triangle constitutes approximately 20% of the property that Capitol City believed it had been purchasing. The triangle had been used by Capitol City and its predecessor to store trucks and containers and to access the rear of the building. Stull stated that he had seen it used by Betit's business as long ago as 1982. Without this triangle, Capitol City would not have been able to conduct its business at the Bog Road location.

[¶ 5] Capitol City's misunderstanding was not the only mistake involved in this transaction. Capitol City financed the purchase with a loan from Cushnoc Bank.³ Cushnoc advised Capitol City to purchase title insurance; Capitol City contacted First American, which agreed to provide coverage.⁴ First American's agent, Keith Varner, prepared a commitment letter outlining the scope of coverage. Varner was also Cushnoc's attorney, and, in that capacity, he performed a title search on the property. In this search, Varner missed the 1972 outconveyance to the Penneys. As a result, both the commitment letter and the deed described the entire parcel that had been owned by Betit prior to 1972, or, in other words, both the Penney and Capitol City lots. There is no dispute that these mistaken descriptions do not reflect the intent of Betit, Capitol City, or First American; no one intended to convey, purchase, or insure the entire parcel.

[¶ 6] By November of 1994, the Penneys had discovered that the true boundary line was not the tree line and informed Capitol City that it was using some of their land, an allegation that Capitol City denied. As between the Penneys and Capitol City, the conflict over the triangle can only be characterized as a boundary dispute. The commitment letter — and later the title policy — contained an exception excluding coverage for boundary disputes (the survey exception).⁵ Nonetheless, Capitol City informed Varner, as agent for First American, that it believed there was a problem with title to the land. Varner visited the property, and then sent Capitol City a corrected deed he had sent to Betit for Betit's signature. This deed description excepted the Penneys' property, as described in the 1972 outconveyance and thus contained the exact description that would have been in the original deed but for Varner's mistake. Capitol City, however, now refused to accept this deed.

[¶ 7] The dispute between Capitol City and the Penneys continued for several months until the Penneys demanded that Capitol City purchase their entire property or vacate the disputed triangle. At the same time that the Penneys made their demand, Capitol City, through its attorney, sent First American a notice of claim, and then followed that letter with several telephone calls and letters requesting that the insurer both indemnify and defend Capitol City from the Penneys' claims. Meanwhile, Capitol City was unable to purchase the Penney lot and could not vacate the triangle without incurring large economic losses. The Penneys therefore served Capitol City with the summons and complaint that began the present action.⁶

[¶ 8] A day or two after the complaint was filed, First American, through its state counsel Joseph Attura, indicated that it would be denying Capitol City's claim. Up until this point, the contract between Capitol City and First American was based on the commitment letter, as the policy had not yet been issued.⁷ On the same day that First American denied the claim, Attura told Varner to issue a policy that conformed with the commitment letter. A day later, however, Attura sent Varner another letter specifically countermanding his previous orders; Varner was instead to issue a policy with an additional exception that excluded all claims "resulting from lack of title" to the Penney's land.⁸ Varner delayed the issuance of the policy because he was concerned about a possible malpractice claim. It was only after Attura advised Varner that First American would not pursue a malpractice claim that Varner issued the policy. As issued, the policy contained the additional exception requested by Attura, thus creating a discrepancy between the commitment letter and the policy.

[¶ 9] As a result of First American's denial of coverage, Capitol City and Stull filed a third party complaint against First American and others.⁹ The third party complaint had four counts against First American: breach of contract, breach of an implied covenant of good faith and fair dealing, unlawful claims practice, and intentional infliction of emotional distress.¹⁰ Stull's individual claim for intentional infliction of emotional distress was predicated upon First American's refusal to defend Capitol City; Stull maintained that this action was extreme and outrageous and had caused him severe emotional distress. Approximately a week before trial, the Penneys settled their claim with Capitol City, requiring it to relinquish its claim to the triangle. The case was tried to the jury on the counterclaim against First American alone. The jury found for Capitol City on the breach of contract claim,¹¹ and for Stull on his claim for intentional infliction of emotional distress. The jury awarded Stull $85,000 in compensatory damages and, concluding that First American had acted with malice, $1,500,000 in punitive damages.

[¶ 10] At the close of evidence, First American moved for judgment as a matter of law pursuant to M.R. Civ. P. 50. The Superior Court denied the motion after the verdict and entered judgment for Capitol City. Following the entry of judgment, First American again moved for judgment as a matter of law, for a new trial pursuant to M.R. Civ. P. 59, and for remittitur of the punitive damages award. The court denied that motion as well. First American now appeals from the judgment.

[¶ 11] On appeal First American initially argues that because Stull was not the insured, he lacked standing to bring the contract claim; his claim was solely derivative and could therefore not be maintained. The issue of whether Stull has standing to bring his claim is jurisdictional. See Singal v. City of Bangor, 440 A.2d 1048, 1050 (Me.1982)

("Even though the issue of standing was not raised by the parties, the matter is jurisdictional ...."). Litigants normally may not assert the rights of third parties but must demonstrate that they have received some particularized injury in order to have standing to raise their claim. See Guardianship of Cardner, 1998 ME 80, ¶ 8 n. 1, 709 A.2d 731, 732 n. 1; Common Cause v. State, 455 A.2d 1, 6 (Me.1983). This requirement is met when the defendant's actions have adversely and...