OPY I, L.L.C. v. FIRST AMERICAN TITLE INSURANCE CO., INC.

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OPY I, L.L.C. v. FIRST AMERICAN TITLE INSURANCE CO., INC.

2015 OK CIV APP 49

350 P.3d 163

Case Number: 112098

Decided: 12/19/2014

Mandate Issued: 05/20/2015

DIVISION III

THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION III

Cite as: 2015 OK CIV APP 49 , 350 P.3d 163

OPY I, L.L.C., Plaintiff/Appellant,

v.

FIRST AMERICAN

TITLE INSURANCE COMPANY, INC., Defendant/Third-Party

Plaintiff/Appellee,

v.

ORHAN YAVUZ and 61 MM, LTD., Third-Party

Defendants.

APPEAL FROM THE DISTRICT COURT OF TULSA COUNTY, OKLAHOMA

HONORABLE DAMAN CANTRELL, JUDGE

AFFIRMED

Kort A. BeSore, Tulsa, Oklahoma, for Plaintiff/Appellant,

Mark W.

Kuehling, Charles B. Sexson, Oklahoma City, Oklahoma, for

Defendant/Appellee.

Bay Mitchell, Judge:

¶1 This case arises out of a title insurance coverage dispute between

Plaintiff/Appellant OPY I, L.L.C. ("Plaintiff") and Defendant/Appellee First

American Title Insurance Company, Inc. ("Defendant"). Plaintiff, an Oklahoma

limited liability company, appeals from summary judgment granted in Defendant's

favor.

¶2 On August 28, 2003 Plaintiff entered into a contract with Third-Party

Defendant 61 MM, Ltd. ("Seller") for the purchase of a vacant commercial lot

located in Tulsa, Oklahoma ("subject property"). At the time, Seller was being

sued by one of its investors, Third-Party Defendant Orhan Yavuz ("Yavuz") in

federal court. 1 Related to this litigation, Yavuz filed two lis

pendens notices against the subject property in Tulsa County. Defendant

issued a title insurance commitment which described the Yavuz litigation and

required the expungement of the lis pendens notices as a condition

precedent to issuing title insurance on the subject property. Prior to the

closing, the lis pendens notices were expunged.

¶3 On December 5, 2003, Defendant closed on a contract to purchase the

subject property. Plaintiff purchased title insurance from Defendant which

provided Defendant "insures ... against loss or damage ... sustained or incurred

by the insured by reason of ... [a]ny defect in or lien or encumbrance on the

title ... [or] [u]nmarketability of the title...." Both Plaintiff and Defendant

knew of the existence of the Yavuz litigation and the expunged lis

pendens notices. Neither the Yavuz litigation nor the lis pendens

notices were ultimately listed as exceptions on the title insurance policy.

¶4 After its purchase of the subject property, Plaintiff sought to secure a

construction loan to build commercial office space. Plaintiff claimed it had

signed a contract with a tenant who agreed to a five (5) year lease at $60,000

per year. However, Plaintiff alleged its chosen lender, Spirit Bank, refused to

fund a construction loan for Plaintiff causing the tenant to withdraw from its

rental agreement. Plaintiff claimed this was due to the uncertainty in its title

generated by the Yavuz litigation and demanded Defendant either intervene in the

suit to assert Plaintiff's title or file a separate quiet title action.

Defendant did not intervene in the Yavuz litigation nor did it file a quiet

title action at that time. The dispute between Plaintiff and Defendant continued

informally for some time, ultimately resulting in Plaintiff filing this case in

October 2007 against Defendant for breach of contract and for breach of the

implied covenant of good faith and fair dealing. Included with its answer to

Plaintiff's Petition, Defendant filed a third-party petition against Yavuz and

61 MM, LTD seeking to quiet title to the subject property in Plaintiff's name. 2

¶5 After the trial court denied its initial motion for summary judgment

against Defendant, Plaintiff filed a second motion for partial summary judgment

against Defendant asking the trial court to determine whether, as a matter of

law, a particular provision of the title insurance policy, specifically

paragraph 4(b), imposed an affirmative duty on Defendant to confirm Plaintiff's

title or whether it merely granted Defendant the option to confirm Plaintiff's

title. Defendant had previously filed its own motion for partial summary

judgment against Plaintiff which was still pending at that time. Defendant's

motion argued that Plaintiff did not have a valid claim under the title

insurance policy. Defendant maintained it did not have a duty to defend

Plaintiff in the Yavuz litigation because Defendant was not a party and because

the orders expunging the lis pendens notices eliminated any right, title,

or interest Yavuz may have claimed in the subject property. Defendant also

argued the title insurance policy did not require it to take affirmative action

to confirm Plaintiff's title by intervening in the Yavuz litigation or filing a

separate quiet title action. The trial court denied Plaintiff's motion but

granted Defendant's motion finding Defendant did not breach the title insurance

policy. Specifically, the trial court stated:

The orders expunging and discharging the two lis pendens

terminated any right, title, claim, lien or interest of Mr. Yavuz in the

property made the subject of this action. [Defendant] was not obligated to

take any additional action to quiet the title of the Plaintiff in relation

to the claims of Mr. Yavuz.

On appeal, Plaintiff argues the trial court erred in concluding the title

insurance policy did not impose an affirmative duty on Defendant to confirm

Plaintiff's title. Additionally, Plaintiff challenges the trial court's finding

the expungement of the lis pendens notices eliminated any cloud on

Plaintiff's title considering the continuing nature of the Yavuz litigation

after the closing.

STANDARD OF REVIEW

¶6 Whether the trial court's entry of summary judgment was proper is a

question of law we review de novo . See Manley v. Brown , 1999 OK 79, ¶22 , 989 P.2d 448, 455 . Summary judgment

is appropriate where the record establishes no genuine issue of material fact

and the prevailing party is entitled to judgment as a matter of law. Brown v.

Alliance Real Estate Group , 1999

OK 7, ¶7 , 976 P.2d 1043 .

Here, the parties agree on the relevant material facts, and the only question

before us is whether paragraph 4(b) imposes a duty on a title insurer to take

affirmative action to confirm an insured's title.

NATURE OF TITLE INSURANCE

¶7 Title insurance is "ordinarily considered a contract of indemnity." Steven

Plitt et al., 11 Couch on Insurance §159:8 (3d. 2013). "The importance of

the contract not being one of guaranty is primarily that the insurer's liability

to pay monetary compensation under the policy does not arise immediately upon

the existence of a covered defect being proved." Id. at §159:9. Rather,

the insurer has "a range of options by which it may fulfill its obligations

under the policy" including "paying the amount of the insured's loss, paying the

face amount of the policy ..., successfully defending the insured against an

adverse claim, instituting affirmative litigation to clear the title" or

settling with adverse title claimants. Id. The unique nature of title

insurance makes it somewhat different from other breach of contract disputes. 3

INSURER'S "RIGHT" TO TAKE AFFIRMATIVE ACTION

¶8 The relevant policy provisions come from a standard American Land Title

Association ("ALTA") policy. Paragraph 4(a) provides in pertinent part:

Upon written request by the insured and subject to the options contained

in Section 6 of these Conditions and Stipulations, 4 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 adverse to the title or

interest as insured, but only as to those stated causes of action alleging a

defect, lien or encumbrance or other matter insured against by this

policy.

Paragraph 4(b) states:

The Company shall have the right, at its own cost, to institute and

prosecute any action or proceeding or to do any other act which in its

opinion may be necessary or desirable to establish the title to the estate

or interest, as insured, or to prevent or reduce loss or damage to the

insured. The Company may take any appropriate action under the terms of this

policy, whether or not it shall be liable thereunder, and shall not thereby

concede liability or waive any provision of this policy. If the Company

shall exercise its rights under this paragraph, it shall do so

diligently.

Plaintiff framed the issue on appeal as being whether paragraph 4(b) imposes

a duty on Defendant to take affirmative action to confirm Plaintiff's title.

While many jurisdictions have analyzed the same uniform policy language,

Oklahoma has not. Thus, this is a question of first impression in this

jurisdiction.

¶9 "Oklahoma law governing insurance coverage disputes is well-established.

The foremost principle is that an insurance policy is a contract." Cranfill

v. Aetna Life Ins. Co. , 2002 OK

26, ¶5 , 49 P.3d 703 .

"Parties may contract for risk coverage and will be bound by policy terms. When

policy provisions are unambiguous and clear, the employed language is accorded

its ordinary, plain meaning, and the contract is enforced carrying out the

parties' intentions. The policy is read as a whole, giving the words and terms

their ordinary meaning, enforcing each part thereof. This Court may not rewrite

an insurance contract to benefit either party.... We will not impose coverage

where the policy language clearly does not intend that a particular individual

or risk should be covered." BP America, Inc. v. State Auto Property and

Casualty Ins. Co. , 2005 OK

65, ¶6 , 148 P.3d 832 .

(Footnotes omitted). "The interpretation of an insurance contract and whether it

is ambiguous is a matter of law that will be resolved by the court." Redcorn

v. State Farm Fire & Casualty Co. , 2002 OK 34, ¶4 , 55 P.3d 1017 . (Internal citation

omitted). "An insurance contract is ambiguous only if it is susceptible to two

constructions on its face from the standpoint of a reasonably prudent layperson,

not from that of a lawyer." Haworth v. Jantzen , 2006 OK 35, ¶13 , 172 P.3d 193 . This Court will not

indulge in strained interpretations to create such an ambiguity. Id.

¶10 Plaintiff has not argued the policy language is ambiguous in any way, and

the plain language of paragraph 4(b) clearly states Defendant shall have the

"right" to take whatever action "in its opinion may be necessary or desirable to

establish the title." The policy language does not impose a duty on the insurer

to take affirmative action to confirm the insured's title. Rather, such

affirmative action is an option the insurer may exercise should it so choose. 5 In addition to

the plain language of the policy and decisions from other jurisdictions, 6 this conclusion

is supported by numerous commentaries on the subject. E.g. Joyce D.

Palomar, 1 Title Insurance Law §11:11 (2013-2014); Steven Plitt et al. ,

11 Couch on Insurance §159:9 (3d. 2013). As summarized in a recent decision from

the U.S. District Court for the District of Colorado analyzing the same policy

language at issue here:

Paragraph 4(b) does not place an independent duty to act on [the

insurer]; rather, the paragraph mentions only [the insurer's] rights under

the policy and [the insurer's] option to take whatever action it deems

necessary. If the provision cited by [the insured] created as broad a duty

as [the insured] argues, Paragraph 4(b) would have been drafted differently

to capture the reasonable expectations of the insured, such as providing

that [the insurer] "shall institute" a defense of the insured ... or that

[the insurer has] "the obligation to institute" action to clear title.

Paragraph 4(b) contains no such mandatory language. Morever, the policy must

be interpreted as a whole. Were [the insurer] under the same obligation to

defend the insured and unilaterally cure title defects, the differences

between the language of paragraph 4(a) and paragraph 4(b) would be left

unexplained. U.S. Bank N.A. v. Stewart Title Guaranty Co. , No.

13-CV-00117, 2014 WL 1096961 , at *9 (D. Colo. March 20,

2014).

¶11 In support of its argument, Plaintiff cited three cases, Davis v.

Stewart Title Guaranty Co ., 726 S.W.2d 839 (Mo. App. 1987); Summonte v.

First American Title Ins. Co. , 436 A.2d 110 (N.J. Super. Ct. Ch. Div. 1981);

and Jarchow v. Transamerica Title Ins. Co. , 122 Cal.Rptr. 470 (Cal. Ct.

App. 1975) (overruled on other grounds by Soto v. Royal Globe Ins. Corp. ,

229 Cal.Rptr. 192 (Cal. Ct. App. 1986)). These cases are distinguishable from

the instant case. 7 First, Jarchow interpreted different policy

provisions than those at issue here. 8 The provisions at issue in that case provided:

The [Title] Company, at its own cost and without undue delay shall

provide (1) for the defense of the insured in all litigation

consisting of actions ... commenced against the insured ...;

or (2) for such actions as may be appropriate to establish the

title ... as insured, which litigation ... is founded upon an alleged

defect, lien or encumbrance insured against by this

policy...."

Jarchow , 122 Cal.Rptr. 470, 487 . (Emphasis added.) The California

appellate court found those provisions established two obligations of the

insurer:

(1) to defend the insured's title if a third party claims, in a judicial

proceeding, an interest insured against by the policy, and (2) in the event

that a third-party claimant chooses not to litigate his claim, to take

affirmative action (by filing an action to quiet title or by offering to

compromise the third party's claim) ... Id. 9

We note the Jarchow policy provisions included mandatory "shall"

language before both obligations as the two courses of action were connected

with the disjunctive conjunction "or." Id. While the word "shall" is used

in paragraph 4(b) of the ALTA policy at issue here, the terms "right" and "in

its option" included in that paragraph modify the action into options the

Defendant could take if it so chose. In contrast, paragraph 4(a) of the ALTA

policy indicates Defendant "shall provide" a defense for Plaintiff if a third

party brings a claim adverse to Plaintiff's title. The directive does not

include any qualifying or limiting language. "Were [Defendant] under the same

obligation to defend the insured and unilaterally cure title defects, the

differences between the language in paragraph 4(a) and paragraph 4(b) would be

left unexplained." U.S. Bank N.A. v. Stewart Title Guaranty Co. , 2014 WL

1096961 , at *9.

¶12 The Summonte court interpreted policy language nearly identical to

the policy language at issue here. Summonte, 436 A.2d 110, 115 . The court

noted the policy language in paragraph 4(b) seemed to require the insurer "to

establish title only at its option." Id. However, the court found:

When liberal and obligatory rules of construction are applied, the

reading is different ... and require[s] a construction of the policy in

favor of the insured and one which ... will give the insured the protection

which he reasonably had a right to expect. This requires paragraphs [4(a)

and 4(b)] ... to be read together so that the right to establish the title

is a mandatory alternative to the obligation to defend. Id. (Internal

quotations and citations omitted).

The analysis employed by the Summonte court is contra to Oklahoma

law. 10 In

Oklahoma, insurance policies, like all other contracts, are enforced according

to the express agreement of the parties, absent ambiguity." BP America,

Inc. , 2005 OK 65, ¶6 . See

also Max True Plastering Co. v. U.S. Fidelity and Guaranty Co. , 1996 OK 28 , 912 P.2d 861 . 11 Here, the terms of the

policy are not ambiguous and clearly establish Defendant has the right, but not

the duty, to take whatever affirmative action it may deem necessary to establish

Plaintiff's title.

¶13 Plaintiff also relied heavily on Davis v. Stewart Title Guaranty

Co. , 726 S.W.2d 839 (Mo. Ct. App. 1987) to support its claim Defendant had a

duty to take affirmative action. 12 The Davis court, citing specific policy

provisions at issue there, found the insurer had two alternatives "when

presented with a claim of an adverse interest to an insured property: (1) to

pursue a quiet title action without unreasonable delay ; or (2) to pay

damages within thirty days after determination." Davis , 726 S.W.2d at 845

(emphasis original) (footnotes omitted). The court further concluded the claim

was presented to the insurer when the plaintiff first requested the insurer to

take affirmative action to clear its title before plaintiff ever pursued

litigation on its own. Id. at 853 . First, we note we do not have all of

the relevant policy language from Davis necessary to compare it to the

ALTA policy language at issue here. The Davis policy language appears to

be substantially similar, see Davis , 726 S.W.2d at 845, n. 2 , but without

all the relevant portions available for comparison, we decline to blindly follow

the holding in Davis . Second, we recognize the insurer in Davis

completely denied liability under the policy even after the insured brought its

own unsuccessful unlawful detainer action against the adverse claimant. 13 Id.

at 843 . The insurer refused to participate in any appeal from the unlawful

detainer suit, refused to tender the policy limits, and only filed a quiet title

action after being sued by its insured. 14

¶14 Unlike the insurer in Davis , Defendant here had not refused to

take any action while also denying it was liable under the policy at all.

Rather, Defendant, while recognizing its option to pursue affirmative action,

chose to wait until the conclusion of the Yavuz litigation. This course of

action was permitted by the policy, which stated, in the event of litigation,

Defendant's liability under the policy did not arise until "there ha[d] been a

final determination by a court of competent jurisdiction, and disposition of all

appeals therefrom, adverse to the title as insured." 15 This course of action was also

supported by the fact title insurance is a policy of indemnity, not guaranty,

which gives the insurer options other than to pay upon the showing of an adverse

claim insured by the policy. See George K. Baum Properties, Inc. v. Columbian

Nat'l Title Ins. Co. , 763 S.W.2d 194, 200-02 (Mo. Ct. App. 1988) (reversing

and remanding suit brought for breach of title insurance policy when jury

instructions indicated the only option insurer had when presented with an

adverse claim was to tender the policy limits). 16

¶15 We hold, therefore, under the particular facts and circumstances

presented by this case, the uniform ALTA policy language, specifically paragraph

4(b), does not impose a duty on the insurer to take affirmative action to

confirm the title of an insured. Because we find Defendant did not have a duty

to take such affirmative action, the effect of the expungement of the lis

pendens notices is irrelevant. Even if the expungement failed to eliminate

any cloud on the title created by the Yavuz litigation, the insurer still was

not under a duty to take affirmative action and would not have been required to

perform under the policy, if at all, until the conclusion of the Yavuz

litigation.

¶16 As explained herein, the order granting summary judgment to Defendant is

AFFIRMED.

BELL, P.J., and GOREE, J., concur.

FOOTNOTES

1 Yavuz

originally filed suit against Seller and other defendants in the District Court

of Tulsa County, but the matter was later removed to the U.S. District Court for

the Northern District of Oklahoma. Among several causes of action, Yavuz, who is

a citizen of Turkey, claimed Seller defrauded him of money used to purchase real

property in Tulsa. Yavuz claimed to have a constructive trust against property

owned by Seller, including the subject property. The Northern District

originally dismissed the suit based on forum non conveniens , but the

Tenth Circuit reversed and remanded the matter back to the Northern District for

further litigation on the issues surrounding the forum non conveniens

ruling. The Northern District again dismissed Yavuz's suit based on forum

non conveniens concluding Switzerland was a more appropriate jurisdiction

for the litigation. The Tenth Circuit ultimately agreed and also found, despite

Yavuz's artful pleading, he had no claim on the real property owned by Seller.

Yavuz's claims sounded in contract and tort and arose out of his business

relationship with Seller. Additionally, none of the written agreements between

Yavuz and Seller granted Yavuz any interest in real property owned by

Seller.

2

Defendant also filed a third-party petition against Seller alleging Seller owed

Plaintiff a duty to defend the title because the subject property was conveyed

by Seller to Plaintiff via warranty deed. Seller then filed its own third-party

petition against Kenneth M. Smith and Riggs, Abney, Neal, Turpen, Orbison &

Lewis, Inc. claiming tortious interference with contract. Seller alleged Kenneth

M. Smith drafted a letter on his firm's letterhead (Riggs, Abney, Neal, Turpen,

Orbison & Lewis, Inc.) which was forwarded to Defendant, putting Defendant

on notice of the Yavuz litigation with the intention and result of interfering

with Seller's sales and contracts involving other property it owned in the

Woodland Valley Office Park. None of the third-party defendants are parties to

this appeal.

3 To

recover under a claim for breach of contract in Oklahoma, a plaintiff must show:

1) formation of a contract; 2) breach of the contract; and 3) damages as a

direct result of the breach. E.g. Digital Design Group, Inc. v. Information

Builders, Inc. , 2001 OK 21,

¶33 , 24 P.3d 834 .

4 Section

6 provides the insurer with options to perform under the policy including

tendering the policy limits along with any costs of litigation incurred by the

insured claimant which were authorized by the insurer. Section 6 also provides

"[i]n the event of litigation, including litigation by the Company or with the

Company's consent, the Company shall have no liability for loss or damage until

there has been a final determination by a court of competent jurisdiction, and

disposition of all appeals therefrom, adverse to the title as

insured."

5 As

Professor Palomar has noted, "[t]he unspoken qualification [with the insurer

having the option to take affirmative action] is that the insurer must consider

such affirmative action to be both necessary and wise. The title insurer is

unwilling to subject itself and its capital to an insured's judgment as to when

an affirmative act is required." Joyce D. Palomar, 1 Title Insurance Law §11:1

(2013-2014).

6 In

addition to the Northern District of Colorado, other jurisdictions have also

examined ALTA title insurance policy provisions and concluded the language does

not impose a duty on the insurer to take affirmative action to confirm the

insured's title. E.g. Willow Ridge Ltd. Partnership v. Stewart Title

Guaranty Co. , 706 F.Supp. 477 (S.D. Miss. 1988) (holding that "[w]hile a

suit to clear title was an option available to [the insurer], it was an option

and nothing more than that."); Securities Service, Inc. v. Transamerica Title

Ins. Co. , 583 P.2d 1217 (Wash. Ct. App. 1978) (finding the plain language of

the policy prohibited the court from "rewrit[ing] the insurance contract so as

to impose a broader duty to 'clear title'") (rejected on other grounds by

Hartman v. Shambaugh , 630 P.2d 758 (N.M. 1981); Childs v. Mississippi

Valley Title Ins. Co. , 359 So.2d 1146 (Ala. 1978) (declining to find an

affirmative duty to clear title and distinguishing Jarchow v. Transamerica

Title Ins. Co. , 122 Cal.Rptr. 470 (Cal. Ct. App. 1975) based on the

differences between the Jarchow policy language and uniform ALTA policy

language).

7 In

addition to the discussion below distinguishing these cases, we note that the

court in each case seemed to focus on the insurer's "complete denial of

liability or other failure to respond to the insured's claim." 1 Title Ins. Law

§11:11 (internal citations omitted).

8

Jarchow interpreted language from a California Land Title Association

("CLTA") form policy.

9 Even

after holding the policy language at issue imposed a duty on the insured to take

affirmative action, the Jarchow court noted:

It is an oversimplification to assert that the duties to defend and to

quiet title are precisely equivalent. The duty to defend arises only after a

third-party claimant has filed an action against the insured; in such

circumstances it is plain that the insured's title is subject to a real

cloud. However, the kindred duty to quiet title does not, and should not,

arise in every situation in which the insured requests his insurer to act:

there must be present in the facts and circumstances of the case some

indicia that the encumbrance with which the policy holder is concerned is a

genuine cloud upon his title. (Note, however, that should the insurer decide

that the alleged cloud is illusory, it must bear the risk of its decision,

and may, subsequently, be found to have acted in bad faith. Jarchow ,

122 Cal.Rptr. at 488, n. 18 .

It is also worth noting that the insured in Jarchow had no other

remedy available other than to sue the insurer demanding it take affirmative

action. "The claimant of the easement [adverse title interest] in Jarchow

would never have initiated legal action which could have evoked the insurer's

duty to defend because the plaintiff had persuaded local planning commissioners

to restrict the insured's development of the land in a way that assured he could

continue to use the portion of land allegedly encumbered by the easement." 1

Title Ins. Law §11:11.

10

Summonte also presented unique factual circumstances which limited the

insured's options under the contract. See note 7, supra . In that

case, the insured requested the insurer remove a judgment lien, which the

insurer negligently failed to discover and disclose, pursuant to the title

insurance policy. Summonte , 436 A.2d 110, 111 . Not only did the insurer

refuse to take action to remove the lien, but, contrary to the interests of its

insured, acquired the lien by a recorded assignment. Id. at 110 . The

insured was left without recourse under the contract because the insurer was

both lien holder and insurer. The insured could not voluntarily pay the judgment

as settlement was prohibited without the insurer's consent, and the insured

could not demand the insurer defend title as there was no litigation to defend

at that point. Id. at 116 . The Summonte court noted that, because

the insurer owned the lien, principles of equity mandated it remove the lien

rather than requiring the insured to pay the amount due to the insurer only to

have the insurer reimburse the insured. Id. at 116 .

11 In

Max True , the Oklahoma Supreme Court, in response to a certified question

from the U.S. District Court for the Northern District of Oklahoma, specifically

adopted the "reasonable expectations doctrine" in the interpretation of

insurance contracts, stating, "the reasonable expectations doctrine may be

applied in the construction of insurance contracts and that the doctrine may

apply to ambiguous contract language or to exclusions which are masked by

technical or obscure language or which are hidden in a policy's provisions."

Max True , 1996 OK 28 , ¶24.

"Under the doctrine, if the insurer or its agent creates a reasonable

expectation of coverage in the insured which is not supported by policy

language, the expectation will prevail over the language of the policy."

Id. at ¶8. There is no indication from the record Defendant or any of its

agents created an expectation Defendant would pursue affirmative action to

confirm Plaintiff's title. The plain language of the policy prevails, and

Defendant has no duty to take such affirmative action.

12 The

plaintiff in Davis discovered a neighboring church had a recorded

easement which gave it rights to use part of plaintiff's lot for parking.

Davis , 726 S.W.2d at 842 . Such easement had not been disclosed on

plaintiff's title opinion, and the title insurer did not except it from

coverage. Id. Plaintiff tried to sell the lot to the church for parking

purposes, but the church declined citing its recorded easement and current

enjoyment of parking rights. Id.

13 We

also note the plaintiff in Davis requested permission from the insurer to

pursue a quiet title action on its own with the insurer paying the attorneys

fees and costs under its policy of indemnity. Davis , 726 S.W.2d at 843 .

The insurer refused to give its permission. Id. Like the plaintiffs in

Jarchow and Summonte , supra , the plaintiff in Davis

was also left without any recourse. The church would never have brought its own

litigation to assert its easement because it was already enjoying the rights

guaranteed by such easement. Thus, the insurer's duty to defend the plaintiff in

litigation would never arise. The insurer also refused to take affirmative

action to stop the church's enjoyment of the easement and refused to give

plaintiff its permission to pursue litigation on its own, as required by the

policy. The Davis plaintiff had no choice but to bring an action against

the adverse claimant on its own, and then sue its insurer to perform under the

policy.

14 In

addition to a breach of contract claim, the plaintiff in Davis brought a

claim for "vexatious refusal to pay," which is a statutory claim available under

Missouri law.

15 The

current status of the Yavuz litigation is unclear from the record. However, it

is clear the Yavuz litigation continued throughout a significant portion of the

proceedings at the district court level.

16 The

insurer in George K. Baum did not totally deny liability as the insurer

in Davis did. Rather, it opted to wait to pursue affirmative action until

after the conclusion of a hearing to rezone the subject property. George K.

Baum , 763 S.W.2d at 201 . The title opinion had not disclosed a restrictive

covenant which the insured wanted removed. Id. However, it was the

insurer's opinion that, unless the subject property was successfully rezoned,

the restrictive covenant would not prohibit the insured's planned development.

Id. at 198-99 . Additionally, the insurer felt damages could not be

determined unless and until the rezoning process was completed. Id. at

201 . The decision of the insurer in George K. Baum is similar to the

choice of Defendant in the present case to wait until the conclusion of the

Yavuz litigation before taking any affirmative action or otherwise performing

under the policy.

Citationizer © Summary of Documents Citing This Document

Cite

Name

Level

None Found.

Citationizer: Table of Authority

Cite

Name

Level

Oklahoma Supreme Court Cases

Cite Name Level

2001 OK 21 , 24 P.3d 834 , 72 OBJ 640, DIGITAL DESIGN GROUP, INC. v. INFORMATION BUILDERS Discussed

2002 OK 15 , 55 P.3d 1017 , 73 OBJ 890, REDCORN v. STATE FARM FIRE & CAS. CO. Cited

2002 OK 26 , 49 P.3d 703 , CRANFILL v. AETNA LIFE INS. CO. Discussed

2005 OK 65 , 148 P.3d 832 , BP AMERICA, INC. v. STATE AUTO PROPERTY & CASUALTY INSURANCE CO. Discussed at Length

1996 OK 28 , 912 P.2d 861 , 67 OBJ 806, Max True Plastering Co. v. U.S. Fidelity and Guar. Co. Discussed at Length

2006 OK 35 , 172 P.3d 193 , HAWORTH v. JANTZEN Discussed

1999 OK 7 , 976 P.2d 1043 , 70 OBJ 530, Brown v. Alliance Real Estate Group Discussed

1999 OK 79 , 989 P.2d 448 , 70 OBJ 2752, Manley v. Brown Discussed