Captiva Lake Investments v. Fidelity National Title Insurance, No. 16-1854 (8th Cir. 2018)
Annotate this CaseFidelity filed suit seeking a declaration that a title insurance policy did not cover mechanics' liens. Captiva filed counterclaims, which sought a declaration that the policy covered the mechanics' liens and which asserted claims against Fidelity for failing to diligently defend and resolve the mechanics' liens claims and for tortiously interfering with Captiva's relationship with the attorneys Fidelity had hired to defend Captiva. The Eighth Circuit held that the district court did not apply the correct legal standard in deciding that Title Insurance Policy Exclusion 3(a) did not apply to the mechanics' liens at issue in this case; Exclusion 3(a) can apply under Missouri law even if the insured did not engage in intentional misconduct or inequitable dealings; Captiva failed to show that the title was unmarketable on or before the effective date of the policy and thus failed to prove its claim that Fidelity breached the policy's unmarketability-of-title provision; and thus the court affirmed the dismissal of the tortious interference claim, vacated the judgment and remanded for further proceedings, and also vacated the order awarding attorneys' fees and costs.
Court Description: Wollman, Author, with Loken, Circuit Judge, and Rossiter, District Judge] Civil case - Insurance. Title Insurance Policy provision excluding coverage for any losses or damages that arise by reason of liens created, suffered or assumed or agreed to by the insured can apply under Missouri law even if the insured did not engage in intentional misconduct or inequitable dealings, and the district court erred when it required Fidelity to show that Captiva's predecessor engaged in intentional misconduct or inequitable dealings, and thus abused its discretion when it excluded evidence regarding Fidelity's defense under the exclusion; assuming, without deciding, that inchoate liens meets the policy's definition of "unmarketability of title," Captiva failed to establish that Fidelity breached its obligation to insure as of the Date of the Policy against loss or damage sustained or incurred by the insured by reason of unmarketability of title; Capitva cannot, therefore, show that it suffered damages caused by Fidelity's failure to resolve liens that were inchoate as of the date Fidelity increased the amount of coverage to account for a second loan made by Captiva's predecessor, and which were later filed against the project; Fidelity's actions in controlling the litigation defending Captiva against the liens did not constitute tortious interference with a business expectancy; in summary, the district court properly granted Fidelity's motion for summary judgment as a matter of law on the tortious interference claim and the jury's verdict for Captiva on its claim Fidelity breached the Title Insurance Policy is reversed and remanded.
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