Houston Specialty Insurance Company v. Titleworks of Southwest Florida, Inc. et al
Filing
31
OPINION AND ORDER denying 29 Defendant Westcor Land Title Insurance Company's Motion for Limited Stay of Proceedings. See Opinion and Order for details. Signed by Judge John E. Steele on 11/10/2015. (MAW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
HOUSTON SPECIALTY INSURANCE
COMPANY,
Plaintiff,
v.
Case No: 2:15-cv-219-FtM-29MRM
TITLEWORKS
OF
SOUTHWEST
FLORIDA,
INC.,
MIKHAIL
TRAKHTENBERG, and WESTCOR
LAND
TITLE
INSURANCE
COMPANY,
Defendants.
OPINION AND ORDER
This matter comes before the Court on Defendant Westcor Land
Title Insurance Company’s Motion for Limited Stay of Proceedings
(Doc. #29) filed on October 7, 2015.
(Doc. #30) on October 21, 2015.
Plaintiff filed a Response
For the reasons set forth below,
the motion is denied.
I.
Plaintiff Houston Specialty Insurance Company (Plaintiff or
HSIC) has filed a single-count Amended Complaint (Doc. #24) against
Defendants Titleworks of Southwest Florida, Inc. (Titleworks),
Mikhail
Trakhtenberg
(Trakhtenberg),
and
Westcor
Land
Title
Insurance Company (Westcor) seeking declaratory relief regarding
coverage under an insurance policy.
The underlying facts, as set
forth in the Amended Complaint, are as follows:
In
2014,
HSIC
issued
a
professional
liability
policy (the Liability Policy) to Titleworks.
insurance
(Id. at ¶ 9.)
The
Liability Policy is effective from August 2, 2014 through August
2, 2015 with a “Retroactive Date” of August 2, 2005 and “Prior and
Pending Litigation Date” of August 2, 2014.
On
August
22,
2014,
Trakhtenberg
Titleworks in Florida state court.
suit
(the
Underlying
Action),
(Id. at ¶ 10.)
filed
suit
against
(Id. at ¶¶ 11-12.)
In that
Trakhtenberg
alleges
that
he
retained Titleworks as his closing agent and title examiner for
the purchase of real property and that Titleworks failed to uncover
certain defects in title.
purchased
the
property
(Id.)
(the
As a result, Trakhtenberg
Property)
encumbered by over $2 million in liens.
unaware
(Id.)
that
it
was
Pursuant to the
Liability Policy, Titleworks requested that HSIC provide a defense
against Trakhtenberg’s lawsuit, and HSIC did so.
(Id. at ¶ 13.)
Trakhtenberg also had purchased a title insurance policy (the
Title Insurance Policy) from Westcor.
The Title Insurance Policy
affords coverage for certain claims of clouded title on the
Property.
(Id. at ¶ 16.)
Pursuant to the Title Insurance Policy,
Westcor has attempted to clear title to the Property by filing a
separate state court lawsuit (the Equitable Lien Action) which, in
essence,
seeks
Trakhtenberg.
to
quiet
title
to
(Id. at ¶ 19.)
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the
Property
in
favor
of
Titleworks
relationship
and
whereby
Westcor
have
Titleworks
is
a
separate
permitted
contractual
to
issue
title
insurance policies on behalf of Westcor, including the Title
Insurance Policy at issue here.
(Id. at ¶ 22.)
In exchange,
Titleworks executed an agency agreement which allows Westcor to
recover from Titleworks any losses Westcor incurs as a result of
its obligations to clear title.
(Id.)
As a result, Westcor has
requested that Titleworks put HSIC on notice of a claim stemming
from Titleworks’ alleged negligence and breach of fiduciary duty
in connection with the Property.
(Id. at ¶ 24.)
In response to an interrogatory served by Titleworks in the
Underlying
Action,
Titleworks
representative
defects.
Trakhtenberg
(Id. at ¶ 14.)
in
stated
July
2014
that
he
spoke
concerning
with
the
a
title
During that conversation, the Titleworks
representative told Trakhtenberg that Titleworks had “missed” the
clouded title and, as a result, Trakhtenberg could “go after
[Titleworks] or go after his title insurance.”
According
to
HSIC,
Trakhtenberg’s
(Id.)
interrogatory
response
demonstrates that Titleworks knew of Trakhtenberg’s claims against
it (e.g., its failure to uncover title defects) prior to the
Liability Policy’s August 2, 2014 inception date.
31.)
(Id. at ¶¶ 26-
As a result, HSIC alleges that the Liability Policy does not
cover Trakhtenberg’s claims against Titleworks in the Underlying
Action.
(Id.)
HSIC further alleges that any amounts paid by
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Titleworks to Westcor would be part of the same “Claim” (as defined
in the Liability Policy) made by Trakhtenberg against Titleworks.
(Id.)
Thus, HSIC contends that the Liability Policy also does not
cover any claims brought by Westcor against Titleworks.
(Id.)
Based on these allegations, HSIC seeks a declaratory judgment that
it has no duty to defend Titleworks in the Underlying Action and/or
any related claims brought against Titleworks by Westcor.
(Id.)
Westcor now moves to stay these proceedings until January 1,
2016 to allow for the potential resolution of the Equitable Lien
Action, arguing that these proceedings would be substantially
impacted by the outcome.
HSIC opposes the stay because it would
not relieve HSIC of its continuing obligation to defend Titleworks
in the Underlying Action, which is the basis of the coverage
dispute at issue here.
II.
A district court “has broad discretion to stay proceedings as
an incident to its power to control its own docket.”
Jones, 520 U.S. 681, 706 (1997).
Clinton v.
In cases seeking a declaratory
judgment, a district court may exercise its discretion to stay
proceedings “in the face of parallel litigation in the state
courts.”
Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328,
1331 (11th Cir. 2005).
“The party moving for a stay bears the
burden of demonstrating that it is appropriate.”
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Harris Corp. v.
Rembrandt Technologies, LP, No. 07-CV-796, 2007 WL 2757372, at *1
(M.D. Fla. Sept. 20, 2007).
The ultimate issue here is HSIC’s coverage obligation under
the
Title
Insurance
Policy.
Specifically,
HSIC
seeks
a
determination that it need not defend or indemnify Titleworks in
the Underlying Action, and a determination that it need not provide
coverage
for
Titleworks.
any
related
claims
brought
by
Westcor
against
Westcor is correct that if the Equitable Lien Action
succeeds and Trakhtenberg obtains clear title to the Property, it
will substantially impact, and potentially resolve, the Underlying
Action.
However, a resolution of the Underlying Action would not
resolve the coverage dispute here because HSIC would nevertheless
seek a determination of its coverage obligations.
See Indem. Ins.
Co. of N. Am. v. Ridenour, 629 So. 2d 1053, 1054 (Fla. 2d DCA 1993)
(reversing
pending
trial
court’s
resolution
of
decision
to
underlying
stay
declaratory
liability
action
action
because
“providing a defense where no obligation to do so exists has been
recognized as ‘irreparable injury’”).
Likewise, even if the Equitable Lien Action is resolved in
Trakhtenberg’s favor, it is alleged that Westcor may seek to
recover
from
Titleworks
its
expenses
in
connection
with
the
Equitable Lien action and, in turn, that Titleworks may seek
coverage for those expenses from HSIC under the Title Insurance
Policy.
In sum, the coverage disputes at issue now will remain
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in some form even if the Equitable Lien Action succeeds.
Moreover,
a stay would unfairly prejudice HSIC, who is continuing to defend
Titleworks
in
the
Underlying
Action.
Therefore,
the
Court
concludes that Westcor has not met its burden of demonstrating
that a stay is appropriate.
Accordingly, it is hereby
ORDERED:
Defendant's Motion for Limited Stay of Proceedings (Doc. #29)
is DENIED.
DONE and ORDERED at Fort Myers, Florida, this
of November, 2015.
Copies:
Counsel of Record
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10th
day
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