First Am. Title Ins. Co. v. Lane Powell PC, No. 13-2012 (1st Cir. 2014)
Annotate this CaseDefendant, a law firm, contracted with Plaintiff for Plaintiff to provide title insurance on two mortgages that Defendant took as security from a client indebted to Defendant. Upon foreclosure of liens that were superior to those of Defendant, Defendant sought coverage from Plaintiff under the insurance policies, which seemingly provided coverage for priority liens. Defendant requested indemnification, and Plaintiff sought declaratory judgment, arguing that coverage for priority liens was not intended by either party. A federal district court granted summary judgment in favor of Plaintiff, concluding that because Defendant was aware of the prior mortgages, it could not expect to receive coverage it did not bargain for. The First Circuit affirmed, holding that Plaintiff had conclusively shown that Defendant was aware that its bargain with the client for security of its debt would result in junior mortgages, and the insurance policies clearly excluded such encumbrances from coverage.
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