First American Title Ins. Co. v. Spanish InnAnnotate this Case
Defendants Spanish Inn, Inc. (Spanish Inn), Hormoz Ramy, and Nejat Kohan owned or otherwise held an interest in the Spanish Inn Hotel property in Palm Springs. In order to renovate and rehabilitate the property, Spanish Inn borrowed $6 million from Nara Bank under a written construction loan agreement. To secure the loan, Nara Bank recorded a construction deed of trust against the property. To protect its construction deed of trust, Nara Bank required that Spanish Inn procure a lender's title insurance policy to protect against loss resulting from mechanic's liens. First American Title Insurance Company (First American) issued the policy. Before it would do so, however, First American required that defendants agree to indemnify it if any mechanic's liens were recorded against the property due to the contractor's or the owners' failure to pay for work furnished to the project. In this appeal, the project's developers challenged the trial court's grant of summary adjudication in favor of the title insurer, which sought contractual indemnity from the developers for legal expenses incurred in defending the project's construction lender against mechanic's lien foreclosure actions. The developers argued the trial court erred because triable issues of fact existed regarding whether the mechanic's lien claims were covered by the title policy and regarding the amount of the title insurer's damages. Finding no error, the Court of Appeal affirmed.