of the policy negotiated by the parties.
The Court is satisfied that the step footing constitutes an encumbrance upon KayFirst's title to Parcel 4 within the coverage of its title insurance policy. That policy, by its own terms, insures "against loss or damage, not exceeding the amount of insurance stated in Schedule A" caused by
1. Title to the estate or interest described in Schedule A being vested otherwise than as stated therein;
2. Any defect in or lien or encumbrance on such title;
3. Lack of a right of access to and from the land; or
4. Unmarketability of such title.
Pl.'s Ex. A [hereinafter, "the Policy"] (emphasis added). This coverage is limited by exclusions not at issue here and by the exceptions set forth in Schedule B. See id. Schedule B provides in pertinent part:
This policy does not insure against loss or damage by reason of the following exceptions:
(1) Rights or claims of parties in possession not shown by the public records.
(2) Encroachments, overlaps, boundary line disputes, and any other matters which would be disclosed by an accurate survey and inspection of the premises.
(3) Easements or claims of easements not shown by the public records.
(4) Any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposed by law and not shown by the public records.
(5) Taxes or special assessments which are not shown as existing liens by the public records.
Id. (emphasis added).
The step footing, extending from the retaining wall on the WMATA property some 7 feet into the KayFirst property, is clearly an encroachment.
Because it was buried some four feet beneath the surface of the property and was in no way visible on the site, its existence would not be disclosed by an accurate survey and inspection of Parcel 4.
That the encroachment was unrecorded is irrelevant, since, unlike the other General Exceptions, General Exception 2 of the Policy contains no express limitation in regard to encroachments not shown by the public records. No other exception or exclusion applies to the step footing.
Because the Policy specifically covers loss from "Any " encumbrance on or unmarketability of KayFirst's title, subject only to the exceptions and exclusions as expressly set forth, the encroachment falls within the coverage of the Policy if it is an encumbrance on title or renders title unmarketable.
While an encumbrance has been defined as "every right to, or interest in the land granted, to the diminution of the value of the land, but consistent with the passing of the fee of it by the conveyance," Miller v. Schwinn, Inc., 72 App. D.C. 282, 113 F.2d 748, 751 (D.C. Cir. 1940); Sterling v. Blackwelder, 302 F. Supp. 1125, 1129 (E.D. Va. 1968), this definition is by no means all-inclusive. It has long been established that an encroachment may encumber title or render title unmarketable, particularly if the encroachment is substantial or interferes with the free development of the subject parcel. See Mid-State Homes, Inc. v. Brown, 47 Ala. App. 468, 256 So. 2d 894, 897-99 (Ala. Civ. App. 1972) (encroachment in the form of a fence rendered title unmarketable); Pasternack v. Alter, 95 N.J. Eq. 377, 123 A. 885, 885-86 (N.J. Ch. 1924) (encroachment of two inches of building on adjoining property rendered title unmarketable and "might well involve a suit in ejectment"); Glyn v. Title Guar. & Trust Co., 117 N.Y.S. 424, 427-28 (App. Div. 1909) (encroachment of a stoop, pilaster, and door cap some nine inches onto plaintiff's property held to be an encumbrance within the coverage of plaintiff's title insurance policy); Kaplan v. Bergmann, 122 A.D. 876, 107 N.Y.S. 423, 424 (App. Div. 1907) (encroachment of up to five inches by a building on the adjoining property held to render title unmarketable); Ziebarth v. Manion, 161 Wash. 201, 296 P. 561, 563 (Wash. 1931) (encroachment of a foundation footing of a concrete garage over 7 inches onto appellant's property held to burden title and render it unmarketable); 9 Appleman & Appleman, supra, § 5201 (summarizing the principle); 3 Thomas E. Atkinson, et al., American Law of Property § 11.49, at 140 (A. James Casner ed. 1952); Roger A. Cunningham, et al., The Law of Property § 10.12, at 694 (1984) ("Encroachments of significant dimensions are regarded as making title unmarketable, whether they involve an improvement on the subject property which encroaches on a neighboring parcel, or vice versa. This result follows whether or not the statute of limitations or prescriptive period has run on the trespass."); Annotation, Marketable Title, 57 A.L.R. 1253, 1444-45 (1928) (summarizing the older case law).
Even though the cases cited above are not recent, the Court has no reason to think that District of Columbia or Maryland law is inconsistent with the principles expressed therein. On the contrary, the Maryland Court of Appeals recently held, in a case involving an unrecorded, concealed pipeline encroachment across the back yards of some condominiums, that an amended complaint for breach of contract against the vendor for failure to convey good title to the condominiums stated a cause of action. See Sonnenberg v. Security Management, 325 Md. 117, 599 A.2d 820, 827 (Md. 1992). And while the most factually analogous cases from the District of Columbia involved easements, the Court discerns nothing in them to suggest that District of Columbia courts are hostile to the treatment of substantial encroachments such as the one at issue here as encumbrances upon title. See Miller v. Schwinn, 72 App. D.C. 282, 113 F.2d 748; Doonis v. Mutual Title Co., 196 A.2d 480 (D.C. 1964).
The undisputed facts make plain that the step footing is a substantial encroachment on Parcel 4 not merely because of its size but because it significantly interferes with KayFirst's commercial development of the site as well. See Glyn, 117 N.Y.S. at 428; 3 Atkinson, et al., supra, § 11.49, at 140. Even though WMATA has no present right to maintain the footing on the KayFirst property, therefore, the encroachment is of such a nature as to constitute a defect in or encumbrance on KayFirst's title to Parcel 4. At the very least, the footing renders KayFirst's title unmarketable, both because of the encroachment's substantial nature and because it has forced KayFirst -- and would force a subsequent buyer -- to purchase a lawsuit to protect its interest in Parcel 4. As the Maryland Court of Appeals has explained,
A marketable title is a title which is free from encumbrances and any reasonable doubt as to its validity, and such as a reasonably intelligent person, who is well informed as to the facts and their legal bearings, and ready and willing to perform his contract, would be willing to accept in the exercise of ordinary business prudence. Accordingly a marketable title must be so far free from defects as to enable the purchaser not only to hold the land in peace but also, if he wishes to sell it, to be reasonably sure that no flaw will appear to disturb its market value.
Sinclair v. Weber, 204 Md. 324, 104 A.2d 561, 565 (Md. 1954). As that court more recently reiterated, the "need for . . . litigation to hold or obtain good title is an essential element in determining marketability." Myerberg, Sawyer & Rue, P.A. v. Agee, 51 Md. App. 711, 446 A.2d 69, 71 (Md. 1982) (citing and discussing Berlin v. Caplan, 211 Md. 333, 127 A.2d 512 (Md. 1956)).
It follows from the foregoing discussion that the encroaching step footing constitutes a defect in or an encumbrance on KayFirst's title to Parcel 4 and, moreover, renders its title to that property unmarketable. Because the encroachment does not fall within the applicable General Exception to KayFirst's title policy, KayFirst's loss as a consequence of the encroachment is covered and Chicago Title is liable as a matter of law. Chicago Title's Motion for Summary Judgment as to Count III of KayFirst's Second Amended Complaint must, therefore, be denied.
Accordingly, for the reasons stated above it is
ORDERED, that KayFirst's Motion for Partial Summary Judgment is GRANTED; and, it is
ETHER ORDERED, that WMATA's Motion for Summary Judgment is DENIED; and, it is
FURTHER ORDERED, that Chicago Title's Motion for Summary Judgment is GRANTED IN PART, with respect to the status of the footing as a trespass, and DENIED IN PART, with respect to Chicago Title's liability for KayFirst's loss; and, it is
FURTHER ORDERED, that all parties in this litigation shall appear before the Court for a status conference on March 26, 1993, at 9:30 a.m.
GEORGE H. REVERCOMB
UNITED STATES DISTRICT JUDGE