Chorches v. Stewart Title Guaranty Co
Filing
44
ORDER granting defendant's Motion to Dismiss 19 and Motion for Summary Judgment 20 . The complaint is dismissed with prejudice, and judgment shall enter in favor of defendant on all claims in the complaint. The Clerk shall close the case. Signed by Judge Jeffrey A. Meyer on 9/10/2014. (Ramesh, S)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
RONALD I. CHORCHES AS TRUSTEE OF
THE CHAPTER 7 BANKRUPTCY ESTATE
OF CHRISTOPHER M. COUGHLIN,
Plaintiff,
No. 3:13-cv-01182 (JAM)
v.
STEWART TITLE GUARANTY
COMPANY,
Defendant.
RULING GRANTING MOTIONS TO DISMISS AND FOR SUMMARY JUDGMENT
This is a case about property rights in Greenwich, Connecticut. When Christopher
Coughlin bought some residential property in Greenwich, neither he nor his title insurer—
defendant Stewart Title Guaranty Company—knew that the property was subject to a
subterranean utility easement for the benefit of neighboring land. Coughlin has spent the last 17
years litigating this easement in one manner or another. More recently, and apparently as a result
of the prolonged litigation, Coughlin has declared bankruptcy. In this latest round of litigation,
plaintiff Ronald Chorches—in his capacity as trustee of Coughlin‘s bankruptcy estate—brings
this federal diversity action, alleging that defendant breached its title insurance contract with
Coughlin and acted in bad faith by not adequately assisting Coughlin in his legal battles against
neighbors.
Defendant now moves to dismiss and also for summary judgment. I conclude that both
motions should be granted, principally on the grounds that plaintiff‘s claims stem from actions
outside the scope of the title insurance policy and as to which Coughlin has previously signed a
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valid release of liability in defendant‘s favor.
Background
The origins of this case stretch back to October 1996, when Coughlin purchased a piece
of property at One Random Road in Greenwich, Connecticut. Defendant issued a title insurance
policy to Coughlin, and an attorney performed a title search. The search, however, failed to
disclose the existence of an easement for the benefit of properties now known as Two Random
Road and Four Random Road; nor did Coughlin know that this easement had in fact been
exercised by means of the installation of three subsurface utility conduits. See Coughlin v.
Anderson, 270 Conn. 487, 490–92 & n.4, 853 A.2d 460, 464-65 & n.4 (2004) (describing details
of property purchase and easement).
Coughlin made a demand against defendant under the title policy, and defendant paid
Coughlin $15,000 in August 1997. At the time of this payment, Coughlin signed a ―Release‖ in
which he agreed, in return for this payment, to release defendant from future liability as follows:
I, Christopher M. Coughlin of 1 Random Road, in the Town of Greenwich,
County of Fairfield and State of Connecticut for the consideration of $15,000 do
hereby release and discharge Stewart Title Guaranty Company of Houston, Texas
from any further loss, damage or liability resulting from any claim made by any
party to rights reserved in a deed recorded in Volume 771 at Page 442. I
specifically release and discharge Stewart Title Guaranty Company from the
obligation to defend claims of others to easement rights across my property which
rights may be derivative from the rights reserved in the deed recorded in Volume
771 at Page 442 and further specifically release Stewart Title Guaranty Company
from any claim of diminution in value of may [sic] property at 1 Random Road, in
the Town of Greenwich, County of Fairfield and State of Connecticut due to
presence of the easement rights referred to herein.
Doc. #22-3 at 2 (emphasis added).
In addition to signing this release, Coughlin also agreed to a Change Endorsement
modification of his title policy to provide for the following exception from his title insurance
coverage:
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Reservation of Rights for the purposes of laying and maintaining one or more
pipes or conduits to carry water, sewerage, gas or electrical energy as contained in
a deed recorded in Volume 771 at Page 442 of the Greenwich Land Records.
Doc. #22-4 at 2. Coughlin signed the Change Endorsement document, stating that he ―agrees to
and accepts this additional exception to title and agrees to its inclusion in the above referenced
title insurance policy.‖ Id.
Beyond its payment to Coughlin of $15,000, defendant also filed suit on Coughlin‘s
behalf against both the previous owner/seller of One Random Road and the real estate attorney
who had performed the errant title search. After several years of litigation, the Connecticut
Supreme Court affirmed a trial court‘s entry of a directed verdict against Coughlin for his failure
to prove damages. See Coughlin v. Anderson, 270 Conn. 487, 853 A.2d 460 (2004). The
Connecticut Supreme Court agreed with the trial court that there was a valid fixed easement or
partial encumbrance on Coughlin‘s property corresponding to the subsurface utility conduits that
were already in use for the benefit of Coughlin‘s neighbors at Two and Four Random Road, but
the Connecticut Supreme Court further held that—contrary to Coughlin‘s claim—his neighbors
did not otherwise have a ―floating‖ easement that more broadly impaired his property rights. Id.
at 505–09. Because Coughlin had claimed damages only on a ―floating‖ easement and did not
present proof of damages from the more limited, fixed subsurface conduit easement that his
neighbors had actually exercised, the Connecticut Supreme Court ruled that the trial court had
properly entered judgment against him. Id. at 512.
Yet the Connecticut Supreme Court‘s decision was far from the end of the matter.
Coughlin soon filed another state court suit in 2005, this time against the owners of Two and
Four Random Road. Now precluded by the Connecticut Supreme Court‘s decision from
challenging the easement, he claimed that his neighbors‘ use of the easements to install new
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utility conduits in 1997 constituted a trespass. Doc. #22-7 at 7–12. The neighbors in turn claimed
that the conduits were not installed beyond the geographic scope of the easements as defined by
the Connecticut Supreme Court; alternatively, they claimed that Coughlin had consented to their
exceeding the scope of their easement. Id. at 39. This second suit allegedly went to trial in April
2011, resulting in a finding that Coughlin‘s claims regarding the easements were estopped by the
previous Connecticut Supreme Court ruling. Compl. ¶ 16; see also Doc. #22-7 at 77 (jury verdict
form finding that Coughlin was ―equitably estopped from pursuing a trespass claim against the
defendant‖). The Connecticut Appellate Court affirmed the decision of the trial court, and the
Connecticut Supreme Court allegedly denied Coughlin‘s petition for certification. Compl. ¶ 21–
23. That litigation returned to the Superior Court and, as of the filing of this case, allegedly
remains unresolved. Id. ¶ 27.
In late April 2011, Coughlin sent defendant a demand letter seeking financial assistance
with his suit against the owners of Two and Four Random Road, reimbursement of his legal
expenses thus far, relief from the foreclosure of his property, and two million dollars for
diminution of property value. Doc. #22-7 at 2–3. Another demand letter followed in November
2012, this time demanding that defendant ―initiate an action to clear the title to One Random
Road‖ and reimburse incurred costs. Doc. #22-8 at 3. Defendant declined the demand on the
ground that both the Release and Change Endorsement signed by Coughlin absolved it from
ongoing responsibility or liability. Doc. #22-9 at 2.
In August 2013, plaintiff filed the instant lawsuit against defendant, principally alleging
breach of contract and bad faith denial of insurance coverage.1 Defendant has now moved to
dismiss and also for summary judgment
1
Plaintiff also alleged a claim under the Connecticut Unfair Trade Practices Act, but abandoned this claim
in his briefing of the pending motions.
2
Nor is there any merit to plaintiff‘s argument that the easements referenced by the Change Endorsement
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Discussion
Because both of defendant‘s motions rely on documents beyond the complaint and as to
which plaintiff has had ample opportunity to respond, I address both motions under the single
standard that governs a motion for summary judgment, see Fed. R. Civ. P. 12(d), rather than
conducting separate inquiries and exploring which of the extrinsic documents, if any, may be
considered in connection with a motion to dismiss. See, e.g., Hernandez v. Coffey, 582 F.3d 303,
309 (2d Cir. 2009). The principles governing a motion for summary judgment are well
established. Summary judgment may be granted only if ―the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of
law.‖ Fed. R. Civ. P. 56(a); see also Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014). ―A genuine
dispute of material fact ‗exists for summary judgment purposes where the evidence, viewed in
the light most favorable to the nonmoving party, is such that a reasonable jury could decide in
that party‘s favor.‘‖ Zann Kwan v. Andalex Grp., LLC, 737 F.3d 834, 843 (2d Cir. 2013)
(quoting Guilbert v. Gardner, 480 F.3d 140, 145 (2d Cir. 2007)). The evidence adduced at the
summary judgment stage must be viewed in the light most favorable to the non-moving party
and with all ambiguities and reasonable inferences drawn against the moving party. See, e.g.,
Tolan, 134 S. Ct. at 1866; Caronia v. Phillip Morris USA, Inc., 715 F.3d 417, 427 (2d Cir. 2013).
All in all, ―a ‗judge‘s function‘ at summary judgment is not ‗to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for trial.‘‖
Tolan, 134 S. Ct. at 1866 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)).
Plaintiff‘s breach of contract claim plainly lacks merit for multiple reasons. First, the
Change Endorsement discontinued any continuing obligation of defendant with respect to the
easement claims at issue in this case. If a rider or endorsement to an insurance policy clearly and
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unambiguously indicates an exclusion from coverage, an insurer has no contractual obligation to
provide that coverage. See Liberty Mut. Ins. Co. v. Lone Star Indus., Inc., 290 Conn. 767, 807,
967 A.2d 1, 28 (2009) (noting that ―if the court concludes that the exclusion via endorsement is
clear and unambiguous, then the insurer will have carried its burden of proving an exclusion to a
risk otherwise generally insured against‖) (internal quotations omitted); Nat’l Grange Mut. Ins.
Co. v. Santaniello, 290 Conn. 81, 96, 961 A.2d 387, 397 (2009) (insurance company had no duty
to defend or indemnify when policy endorsement ―clearly and unambiguously effected a change
to the underlying policy by deleting the floating dealer plate coverage in its entirety‖); see also
Cont’l Ins. Co. v. Atl. Cas. Ins. Co., 603 F.3d 169, 181 (2d Cir. 2010) (applying New York law;
because endorsement to insurance policy ―effectively precludes coverage for ‗any operations
involving . . . any torch‘ as well as for ‗any operations involving . . . membrane roofing,‘ and the
‗operations‘ that started [a] fire involved both a torch and membrane roofing, losses arising out
of the fire were not within [the insured‘s] liability coverage‖). Here, given the immediate context
for defendant‘s Change Endorsement as it arose from discovery of the utility easement, there can
be no doubt that Coughlin understood its purpose and effect to exclude coverage for future
claims stemming from the very easement at issue in this case.
Even if the Change Endorsement were not dispositive, the Release plainly forecloses
plaintiff‘s breach of contract claim. ―In construing the scope and effect of a release, the intent
manifested by the parties must govern,‖ and those intentions ―may be determined by looking at
the specific language of the release and circumstances surrounding its execution.‖ Remington
Prods., Inc. v. N. Am. Philips Corp., 717 F. Supp. 36, 41–42 (D. Conn. 1989). Here, the
Release—signed by Coughlin at the time that he accepted $15,000 from defendant as
consideration—broadly and unambiguously provided that Coughlin would ―release and
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discharge Stewart Title Guaranty Company . . . from any further loss, damage or liability
resulting from any claim made by any party to rights reserved in a deed recorded in Volume 771
at Page 442,‖ and would ―specifically release and discharge Stewart Title Guaranty Company
from the obligation to defend claims of others to easement rights across my property . . . and
further specifically release Stewart Title Guaranty Company from any claim of diminution in
value . . . due to presence of the easement rights.‖ Doc. #22-3 at 2 (emphasis added).
Coughlin claims that ―I did not understand that Release to apply to all matters involving
rights for an easement in favor of neighboring properties for the purposes of laying or
maintaining utility pipes or conduits over One Random Road.‖ Doc. #34-1 at 2. But this ignores
the very broad language of the release quoted above. As the Connecticut Supreme Court has
explained, ―any ambiguity in a contract must emanate from the language used in the contract
rather than from one party‘s subjective perception of the terms.‖ Nat’l Grange, 290 Conn. at 89
(quoting Zulick v. Patrons Mut. Ins. Co., 287 Conn. 367, 373, 949 A.2d 1084, 1088 (2008)).
Nor does the fact that Coughlin chose not to avail himself of the advice of counsel before
deciding to sign the release create a genuine fact issue that the Release was ambiguous, much
less that he did not or could not understand its clear and broad terms. Advice of counsel is hardly
a prerequisite for a layperson to enter a binding contract. See Lexington Ins. Co. v. Lexington
Healthcare Grp., Inc., 311 Conn. 29, 70, 84 A.3d 1167, 1191 (2014) (―In determining whether
policy language is ambiguous, we read the policy from the perspective of a reasonable layperson
in the position of the purchaser of the policy.‖) (internal quotations omitted) (emphasis added);
see also Restatement (Second) of Contracts § 12(2) (―A natural person who manifests assent to a
transaction has full legal capacity to incur contractual duties thereby unless he is (a) under
guardianship, or (b) an infant, or (c) mentally ill or defective, or (d) intoxicated.‖).
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Moreover, even assuming that neither the Change Endorsement nor Release were
dispositive, plaintiff‘s claim would still fail, because the claims at issue in Coughlin‘s suit
against his neighbors for which he demanded defendant‘s recompense and assistance are outside
the base coverage scope of the title insurance policy. Coughlin sued his neighbors for trespass,
and the neighbors claimed that he had consented to any extent to which they had exceeded the
scope of their easement. Neither his claim nor the neighbors‘ defense called into question the
validity or scope of Coughlin‘s property title rights (and understandably so, as the validity of the
neighbors‘ easement had already been settled by the Connecticut Supreme Court in Coughlin v.
Anderson, supra).
Plaintiff nonetheless claims there is a question of fact as to whether the text of the
Release and Change Endorsement—which except from coverage easement rights ―contained‖ in
the deed (Endorsement), ―reserved‖ in the deed (Release), or ―derivative‖ of rights reserved in
the deed (Release)—covers disputes over rights plaintiff claims are not guaranteed by the deed.
But there is no evidence that the claimed rights of the neighbors at Two and Four Random Road
to install utility conduits are based on any other easement rights than those guaranteed by the
deed. If any conduits exist outside the geographic location of the easement, this is an issue of
trespass and is not covered by the title policy.2
In addition, to the extent that plaintiff claims that defendant should have brought or
bankrolled Coughlin‘s trespass suit against his neighbors, this claim ignores that the title policy
does not oblige defendant to bring suit on Coughlin‘s behalf, much less to compensate him years
after the fact for costs of litigation that he unilaterally chose to pursue. Apart from defendant‘s
obligation under the policy to defend against third-party claims that are adverse to an insured‘s
2
Nor is there any merit to plaintiff‘s argument that the easements referenced by the Change Endorsement
and Release pertain only to Four Random Road and not to Two Random Road. See Coughlin v. Anderson, 270
Conn. at 515 n.4 (rejecting same argument).
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title, the policy otherwise vests discretion in defendant whether to institute affirmative litigation:
(a) Upon written request by the insured and subject to the options contained
[elsewhere in the Title Policy], the Company . . . 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. . . . The
Company will not pay any fees, costs or expenses incurred by the insured in the
defense of those causes of action which allege matters not insured against by this
policy.
(b) The Company shall have the right . . . 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 hereunder,
and shall not hereby concede liability or waive any provision of this policy. . . .
Doc. #22-2 at 3 (emphasis added). Again, plaintiff has failed to show a breach of the title
insurance contract.
Because plaintiff‘s contract claim fails, so too does his claim of bad faith denial of
coverage. As the Connecticut Supreme Court has recently concluded, ―a bad faith action must
allege denial of the receipt of an express benefit under the [insurance] policy.‖ Capstone Bldg.
Corp. v. Am. Motorists Ins. Co., 308 Conn. 760, 794, 67 A.3d 961, 986 (2013). And the
underlying covenant of good faith and fair dealing in a contractual relationship ―is not implicated
by conduct that does not impair contractual rights.‖ Id. at 795 (no bad faith claim against insurer
for failure to investigate an insurance claim where the policy provided the insurer sole discretion
as to whether to investigate); see also Renaissance Mgmt. Co. v. Conn. Hous. Fin. Auth., 281
Conn. 227, 240–41, 915 A.2d 290, 297-98 (2007) (defendant housing authority‘s refusal to help
tenants by accepting mortgage prepayments did not violate the covenant of good faith and fair
dealing because the agency was not contractually obligated to accept prepayments). Here,
because plaintiff has failed to show that Coughlin did not receive any benefits to which he was
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entitled under the title policy, his bad faith claim fails by equal measure.3
Conclusion
For the reasons set forth above, defendant‘s Motion to Dismiss [Doc. #19] and Motion
for Summary Judgment [Doc. #20] are GRANTED. The complaint is dismissed with prejudice,
and judgment shall enter in favor of defendant on all the claims in the complaint.
The Clerk shall close this case.
It is so ordered.
Dated at Bridgeport this 10th day of September 2014.
/s/
Jeffrey Alker Meyer
United States District Judge
3
Because I conclude that plaintiff‘s contract and bad-faith claims fail on their merits, I need not consider
defendant‘s statute-of-limitations defense.
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