GC Finance, LLC v. Old Republic National Title In
OPINION filed : AFFIRMED, decision not for publication pursuant to local rule 206. Julia Smith Gibbons, Circuit Judge; Jeffrey S. Sutton, Authoring Circuit Judge and John R. Adams, U.S. District Judge for the Northern District of Ohio, sitting by designation.
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 11a0797n.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
GC FINANCE, LLC, a Delaware limited
OLD REPUBLIC NATIONAL TITLE
INSURANCE COMPANY, a Minnesota
Nov 29, 2011
LEONARD GREEN, Clerk
ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF TENNESSEE
Before: GIBBONS and SUTTON, Circuit Judges; ADAMS, District Judge.*
SUTTON, Circuit Judge. In this title-insurance dispute, the insured (GC Finance) challenges
the district court’s grant of summary judgment to the insurer (Old Republic National Title Insurance
Company). Because the underlying dispute concerns an easement that was excluded from the title
policy’s coverage, the district court properly rejected the claim as a matter of law. We affirm.
On July 1, 1998, Old Republic issued a title insurance policy to GC Finance covering
property in Brentwood, Tennessee, including a golf course. The policy applied to losses due to
The Honorable John R. Adams, United States District Judge for the Northern District of
Ohio, sitting by designation.
“[a]ny defect in or lien or encumbrance on the title” of the covered property, and it obligated Old
Republic to “pay the costs, attorneys’ fees and expenses incurred” in defending GC Finance against
“litigation in which any third party asserts a claim adverse to the title or interest as insured.” R.1-1
The policy contained several exclusions, as insurance policies often do. One exclusion
applied to a 1953 easement, known by the parties as the Edmondson easement, granted to Columbia
Gulf with respect to a stretch of land that runs over the golf course owned by GC Finance. The
Edmondson easement gave Columbia the right to “lay, construct, maintain, operate, alter, repair,
remove, change the size of, and replace” the pipeline on the property and to lay any additional
pipeline there. R.1-5. It also gave Columbia access to the property for all of these purposes.
In 1997, Columbia and a predecessor in interest of GC Finance altered the Edmondson
easement through a “Partial Release of Right-of-Way Agreement.” Through the partial release,
Columbia gave up its rights in the golf course property save for a strip of land 175 feet in width,
which ran across portions of the golf course (the “encumbered strip”). Other than releasing the land
outside the encumbered strip, the partial release says that it does not affect the validity of the
In 2004, Columbia tried to enter the encumbered strip to prepare for a pipeline upgrade. GC
Finance, LLC v. Old Republic Nat’l Title Ins. Co., No. 3:06-0913, 2008 WL 4525419 at *3 (M.D.
Tenn. Sept. 30, 2008) (facts incorporated by amended opinion, 2010 WL 1408823 at *1 (M.D. Tenn.
Mar. 31, 2010)). GC Finance denied access, complaining that the construction would disrupt the
peak golfing season. Id. Invoking its rights under the Edmondson easement, Columbia sued GC
Finance in Tennessee state court. GC Finance asked Old Republic to defend the lawsuit, and the title
company refused. Id. at *3.
GC Finance defended itself in the state court proceeding, arguing that Columbia needed to
schedule its repairs at a time that did not conflict with the golf season (though when that would be,
given the temperate climate of Nashville, Tennessee, is never disclosed). The trial court disagreed.
It ruled as a matter of law that the proposed delay interfered with Columbia’s unrestricted rights
under the easement. Id. at *4. The Tennessee Court of Appeals affirmed. Id.
GC Finance sued the title company in federal court, invoking diversity jurisdiction and
claiming that the title company had breached the insurance contract by refusing to defend GC
Finance and by failing to indemnify it for damages caused by Columbia’s work on the pipelines. Id.
The parties filed motions for summary judgment, and the court ruled for Old Republic. GC Finance
v. Old Republic Nat’l Title Ins. Co., No. 3:06-0913, 2010 WL 1408823 at *6 (M.D. Tenn. March 31,
This appeal presents one issue: Did the title policy obligate Old Republic to defend GC
Finance in the underlying state court litigation? Under Tennessee law, an insurer’s duty to provide
a defense turns on the allegations made in the third party’s complaint, not on the insured’s or for that
matter the insurer’s say-so. First Nat’l Bank in Bristol v. South Carolina Ins. Co., 341 S.W.2d 569,
570 (Tenn. 1960); Graves v. Liberty Mut. Fire Ins. Co., 745 S.W.2d 282, 283 (Tenn. Ct. App. 1987).
If a claim reasonably falls within the scope of the insurance policy’s coverage, the insurer must
defend. Travelers Indem. Co. of Am. v. Moore & Assocs., Inc., 216 S.W.3d 302, 305 (Tenn. 2007).
The problem for GC Finance, as the district court correctly recognized, is that the insurance
policy by its terms does not apply to this dispute. Columbia’s complaint pointed out, quite correctly,
that it had a right of access to the property under the Edmondson easement, which the title policy
excluded from coverage. The complaint added that GC Finance had informed Columbia that none
of its representatives would be permitted onto the golf course property “for any matter related to any
upgrade” of the pipeline. R.1-4 at 13. And it said that agents of GC Finance had denied access to
two of Columbia’s employees, who were attempting to review the property in preparation for the
upgrade. Columbia alleged that this conduct:
constitute[d] a breach of, and interference with, Columbia’s property and contractual
rights, including without limitation Columbia’s rights under the [Edmondson
Easement], as modified and amended by the Partial Release, to maintain, alter,
replace and upgrade Columbia’s Pipelines and have ingress to and egress from the
Subdivision Property for same.
Id. at 14. Columbia sought declaratory, injunctive and monetary relief arising from GC Finance’s
denial of access.
The state-court complaint turned on the Edmondson easement, the language of which leaves
little room for maneuver. In clear terms, the easement allows Columbia access to the golf course for
several reasons, including the one used here: upgrading the pipeline. In the words of the complaint,
the easement granted Columbia “a right-of-way and easement to construct, lay, . . . alter, . . . change
the size of, and replace [its] pipelines” on GC Finance’s property with the right of “ingress to and
egress from the premises for the purposes herein granted.” R.1-4 at 6–7. The easement does not
mention any restriction on timing, let alone timing relating to the golf season, and it does not require
the parties to reach an agreement before Columbia enters the property. GC Finance nonetheless
refused entry, a choice it was free to make but not one it could saddle the title company with
defending on this contract.
GC Finance tries to sidestep all of this by relying on the partial release. Yet the partial
release from the outset was an amendment to, and limitation on, the Edmondson easement, not an
elimination or expansion of it. As the partial release made clear, it otherwise remained subject to
the Edmondson easement, noting that the partial release “does not constitute . . . a release or
surrender . . . of any of [Columbia’s] right . . . to that portion of the land not expressly released
herein.” R.1-3 at 3. As relevant here, what was true before the partial release was true after it: The
Edmondson easement granted Columbia access to the encumbered strip for upgrading its pipelines,
and Old Republic excepted that easement from title coverage.
Nor does it make a difference that the title insurance policy mentions the Edmondson
easement by name but not the partial release. As its title suggests, the release partially cuts back on
the coverage of the Edmondson easement rather than expanding it, and the easement otherwise has
no effect on Columbia’s right to access the encumbered strip, as the release itself says. At the end
of the day, it is the Edmondson easement that furnishes Columbia with the right to access the golf
course and upgrade its pipelines, and the insurance policy excludes that easement from coverage.
GC Finance insists that the insurance policy is ambiguous about whether it excludes the
partial release and that this ambiguity should be construed against Old Republic, the drafter of the
policy. But this canon of interpretation applies when the provision is “susceptible of more than one
reasonable interpretation,” not when one party takes a litigation stance proposing another
construction that has no support in the contractual language. Memphis Hous. Auth. v. Thompson,
38 S.W.3d 504, 512 (Tenn. 2001) (emphasis added); see Simonton v. Huff, 60 S.W.3d 820, 825 n.3
(Tenn. Ct. App. 2000). The terms of the title policy in this instance permit just one interpretation:
The Edmondson easement, even after modification by the partial release, required GC Finance to
admit Columbia’s personnel onto the golf course in order to upgrade the pipeline. Because the title
policy excluded the Edmondson easement from coverage, Old Republic had no duty to defend GC
Finance in the underlying state court litigation.
For these reasons, we affirm.
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