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Security Title Guarantee Corporation of Baltimore v. 915 Decatur ST NW, LLC

United States District Court, District of Columbia

December 11, 2019

SECURITY TITLE GUARANTEE CORPORATION OF BALTIMORE, Plaintiff,
v.
915 DECATUR ST NW, LLC, Defendant.

          MEMORANDUM OPINION

          COLLEEN KOLLAR-KOTELLY, UNITED STATES DISTRICT JUDGE.

         Plaintiff The Security Title Guarantee Corporation of Baltimore (“Security Title”) and Defendant 915 Decatur St. N.W. LLC (“Decatur”) dispute whether, under a title insurance policy, Security Title must defend Decatur in a separate lawsuit brought against Decatur and other defendants in the District of Columbia Superior Court. The parties further dispute whether Security Title must indemnify Decatur for any losses stemming from that lawsuit. Pending before the Court are the parties' renewed cross-motions for summary judgment. See 915 Decatur St. N.W. LLC's Renewed Mot. for Summ. J. (“Decatur's Renewed Summ. J. Mot.”), ECF No. 22; Pl.'s Renewed Cross-Mot. for Summ. J. and Opp'n to Def.'s Mot. for Summ. J. (“Security Title's Combined Renewed Cross-Mot. and Opp'n”), ECF No. 23.

         In broad strokes, Decatur argues that the policy provisions governing Security Title's obligation to defend cover the underlying case. Security Title disagrees. It contends that the underlying litigation does not trigger its duty to defend for two reasons. First, it argues that the lawsuit does not qualify as a covered risk under the policy because the policy has a provision limiting coverage to only certain claims. The claims at issue here are not covered because Security Title has transferred its interest in the property and because the underlying losses did not occur while Decatur owned the property. Second, Security Title argues that the claims in the underlying lawsuit do not fall within the policy's coverage and/or are excluded under certain conditions in the relevant policy excepting matters created or agreed to by Decatur. Both parties' indemnification arguments hinge upon their above arguments regarding whether the underlying litigation is covered under the relevant title insurance policy.

         Upon consideration of the briefing, [1] the relevant legal authorities, and the record as a whole, the Court GRANTS IN PART and DENIES WITHOUT PREJUDICE IN PART Security Title's motion for summary judgment and DENIES IN PART and DENIES WITHOUT PREJUDICE IN PART Decatur's motion for summary judgment. In light of these rulings, the Court DENIES AS MOOT Decatur's Motion to Expedite. See Def. 915 Decatur St. N.W. LLC's Mot. to Expedite Ruling, ECF No. 28.

         I. BACKGROUND

         For purposes of summary judgment briefing, Security Title does not dispute Decatur's identification of certain facts underlying this case. Security Title's First Combined Cross-Summ. J. Mot. and Opp'n at 2; see Security Title's Mem. in Supp. of Combined Renewed Cross-Mot. and Opp'n at 2 (incorporating prior summary judgment briefing's statement of facts). In its original summary judgment briefing, which Security Title has incorporated into its renewed motion, Security Title simply discounts those facts' materiality to the pending motions, and supplies additional documents, including the insurance policy at issue. Security Title's First Combined Cross-Summ. J. Mot. and Opp'n at 2 at 2-3. Decatur does not object to those additional documents.

         Moreover, in its renewed motion, Security Title identifies a few additional facts, all of which relate to allegations in the amended complaint in the underlying litigation. Security Title's Mem. in Supp. of Combined Renewed Cross-Mot. and Opp'n at 2-3. While Decatur objects to the underlying allegations, it does not dispute that these allegations are in the amended complaint in the underlying suit. Decatur's Combined Opp'n and Reply at 2-3.

         The facts relevant to the present decision are quite few. Decatur's managing member, Frank Olaitan, toured and eventually purchased real property at 2022 1st Street, NW, Washington, DC from “a woman whom he believed to be Ms. Bridget Fordham.” Decatur's First Summ. J. Mot. ¶¶ 4-6, 8-12.[2] Although Ms. Fordham was not present at the closing, a deed transferring the property was purportedly signed by Ms. Fordham and notarized as of the date of the deed, December 7, 2016. Id. ¶¶ 12, 15; id. Ex. A (“December 7 Deed”). The deed was recorded on December 15, 2016 at 12:37 PM with the District of Columbia's Recorder of Deeds. Id. ¶ 14; id. Ex. A at 2. Upon concluding the December 7, 2016 purchase, Decatur sold the property to Claremont Management, LLC (“Claremont”), on December 8, 2016. Id. ¶ 13; id. Ex. B (“December 8 Deed”). That deed dated December 8, 2016 was also recorded on December 15, 2016, two minutes after the first deed at 12:39 PM. Id. ¶ 14; id. Ex. B.

         Separately, Decatur entered into a title insurance policy with Security Title to cover the property. See Security Title's First Combined Cross-Summ. J. Mot. and Opp'n Ex. 2 (“Title Insurance Policy” or “Policy”), ECF No. 11-3. The Policy lists the “Date of Settlement” as December 7, 2016, and the “Date of Policy” as December 15, 2016. Id. at 7.

         Then, in October 2017, Ms. Fordham filed suit against Decatur, Mr. Olaitan, Claremont, and others in the Superior Court for the District of Columbia. Decatur's First Summ. J. Mot. ¶ 18; id. Ex. F (Ms. Fordham's original complaint). Ms. Fordham alleged that her signature on the deed was forged and that the conveyance to Decatur, and consequently the conveyance to Claremont, were fraudulent. Id. ¶¶ 18-21; see generally Id. Ex. F. Security Title later declined Decatur's request for legal defense in Ms. Fordham's lawsuit. Id. ¶¶ 34-36; see Id. Ex. I (April 26, 2018 Letter from Security Title). Decatur and Security Title then filed separate lawsuits seeking declaratory judgments that Decatur was and was not, respectively, entitled to legal defense against Ms. Fordham under the Policy. See Id. ¶¶ 37-39. At this time, both suits are pending before this Court. See 915 Decatur St NW, LLC v. Sec. Title Guarantee Corp. of Baltimore, Inc., No. 18-cv-1569 (D.D.C.) (Kollar-Kotelly, J.) (other case related to present matter). Ms. Fordham later amended her complaint to include, among other things, a count for negligence. See Decatur's Suppl. Ex. 1 (“Fordham's Am. Compl.”).

         After Decatur and Security Title first moved for summary judgment in this case, the Court denied their motions without prejudice for two reasons. See November 15, 2018 Order, ECF No. 20. First, there had been developments in the underlying D.C. Superior Court case, including the filing of Ms. Fordham's Amended Complaint with new claims. Id. at 1. Second, the Court required additional briefing from the parties on a specific issue relating to the parties' dispute over whether Decatur's transfer of interest in the property meant that the Policy's coverage no longer applied. See Id. at 2-3. The Court now considers the parties' additional briefing and renewed cross-motions for summary judgment.

         II. LEGAL STANDARD

         Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In ruling on cross-motions for summary judgment, a court shall grant summary judgment only if one of the moving parties is entitled to judgment as a matter of law upon material facts that are not genuinely disputed. See Rhoads v. McFerran, 517 F.2d 66, 67 (2d Cir. 1975); Long v. Gaines, 167 F.Supp.2d 75, 84 (D.D.C. 2001). The mere existence of some factual dispute is insufficient on its own to bar summary judgment; the dispute must pertain to a “material” fact. Fed.R.Civ.P. 56(a). Accordingly, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Nor may summary judgment be avoided based on just any disagreement as to the relevant facts; the dispute must be “genuine, ” meaning that there must be sufficient admissible evidence for a reasonable trier of fact to find for the non-movant. Id.

         In order to establish that a fact is or cannot be genuinely disputed, a party must (A) cite to specific parts of the record-including deposition testimony, documentary evidence, affidavits or declarations, or other competent evidence-in support of its position, or (B) demonstrate that the materials relied upon by the opposing party do not actually establish the absence or presence of a genuine dispute. Fed.R.Civ.P. 56(c)(1). Conclusory assertions offered without any factual basis in the record cannot create a genuine dispute sufficient to survive summary judgment. See Ass'n of Flight Attendants-CWA, AFL-CIO v. U.S. Dep't of Transp., 564 F.3d 462, 465-66 (D.C. Cir. 2009). Moreover, where “a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact, ” the district court may “consider the fact undisputed for purposes of the motion.” Fed.R.Civ.P. 56(e).

         When faced with a motion for summary judgment, the district court may not make credibility determinations or weigh the evidence; instead, the evidence must be analyzed in the light most favorable to the non-movant, with all justifiable inferences drawn in her favor. Liberty Lobby, 477 U.S. at 255. If material facts are genuinely in dispute, or undisputed facts are susceptible to divergent yet justifiable inferences, summary judgment is inappropriate. Moore v. Hartman, 571 F.3d 62, 66 (D.C. Cir. 2009). In the end, the district court's task is to determine “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Liberty Lobby, 477 U.S. at 251- 52. In this regard, the non-movant must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Liberty Lobby, 477 U.S. at 249-50 (internal citations omitted).

         III. DISCUSSION

         The Title Insurance Policy at issue has a specific provision governing when and whether Security Title must provide a defense to Decatur. Section 5 of the Conditions portion of the Policy provides:

Upon written request by the Insured, and subject to the options contained in Section 7 of these Conditions, the Company, at its own cost and without unreasonable delay, shall provide for the defense of an Insured in litigation in which any third party asserts a claim covered by this policy adverse to the Insured. This obligation is limited to only those stated causes of action alleging matters insured against by this policy. The Company shall have the right to select counsel of its choice (subject to the right of the Insured to object for reasonable cause) to represent the Insured as to those stated causes of action. It shall not be liable for and will not pay the fees of any other counsel. The Company will not pay any fees, costs, or expenses incurred by the Insured in the defense of those causes of action that allege matters not insured against by this policy.

         Title Insurance Policy at 4 (emphases added). The Policy specifies that Security Title only has a duty to defend when the claims in the litigation are covered by the Policy. To determine whether the underlying claims brought by Ms. Fordham triggered Security Title's duty to defend Decatur, then, the Court must consider whether the claims she has brought are, or would be, covered risks. The Policy covers numerous risks, but the parties here focus on one principal area of coverage. The Covered Risks portion of the Policy explains that:

[Security Title] insures as of Date of Policy and, [in limited circumstances], after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of: . . .
Any defect in or lien or encumbrance on the Title. This Covered Risk includes but is not limited to insurance against loss from
(a) A defect in the Title caused by
(i) forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation[.]

Id. at 1. In other words, certain defects in the title are covered by the Policy, and this includes title defects due to forgery or fraud. Id. However, the Policy also furnishes a long list of exclusions from coverage in a separate portion. Chief among those exclusions are “[d]efects, liens, encumbrances, adverse claims, or other matters” that were “created, suffered, assumed or agreed to” by Decatur. Id. at 2.

         The parties also included in the Policy a temporal limitation on coverage. Section 2 of the Conditions limits the coverage period to while Decatur has an estate or interest in the property:

The coverage of this policy shall continue in force as of Date of Policy in favor of an Insured, but only so long as the Insured retains an estate or interest in the Land, or holds an obligation secured by a purchase money Mortgage given by a purchaser from the Insured, or only so long as the insured shall have liability by reason of warranties in any transfer or conveyance of the Title. This policy shall not continue in force in favor of any purchaser from the Insured of either (i) an estate or interest in the Land, or (ii) an obligation secured by a purchase money Mortgage given to the Insured.

Id. at 4. In short, coverage under the Policy only continues so long as Decatur has an interest in the property, has an obligation secured by a purchase money mortgage, or has an obligation due to warranties in any future transfer of Decatur's interest. However, the Policy imposes no temporal restriction on when Decatur must file claims. See id.

         Based on these provisions, the parties now dispute whether the claims in the underlying litigation are covered under the Policy. Security Title first argues that Decatur's transfer of its interest to Claremont signaled the end of coverage under the Policy. It further contends that all of the claims in the underlying litigation fall into the exception for defects or other matters created or agreed to by Decatur. Decatur disagrees on both points; it claims that the relevant losses related to the underlying claims occurred during the coverage period, that a special warranty in the deed to Claremont extended the coverage period, and that the exclusion is inapplicable here, especially with respect to the negligence claim in Ms. Fordham's amended complaint. Decatur also moves for summary judgment on the basis that Security Title breached the covenant of good faith and fair dealing.

         This Opinion first discusses the applicable District of Columbia insurance contract principles before addressing the parties' arguments with respect to the Policy's temporal and substantive scopes. Because the Court grants summary judgment on the duty to defend issue to Title Security based on the temporal and substantive scope of the Policy, and therefore finds that Security Title did not breach the Policy by refusing to defend Decatur, it does not address Decatur's breach of good faith and fair dealing argument.[3] Lastly, the Opinion addresses the parties' arguments with respect to Security Title's duty to indemnify.

         A. Applicable Insurance Contract Principles

         “Because an insurance policy constitutes a contract, ” it is construed “according to contract principles.” Stevens v. United Gen. Title Ins. Co., 801 A.2d 61, 66 (D.C. 2002). “Where insurance contract language is not ambiguous, summary judgment is appropriate because a written contract duly signed and executed speaks for itself and binds the parties without the necessity of extrinsic evidence.” Id. (internal quotation marks and alterations omitted) (quoting Travelers Indem. Co. of Ill. v. United Food & Commercial Workers ...


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