Desjardins et al v. Fidelity National Title Insurance Company

Filing 23

///ORDER denying 12 Fidelity's Motion for Summary Judgment; and granting 14 Desjardins' Motion for Summary Judgment. So Ordered by Judge Steven J. McAuliffe.(lat)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Douglas Desjardins and
Stephanie Desjardins,
Plaintiffs
v.

Case No. 12-cv-272-SM
Opinion No. 2013 DNH 086

Fidelity National Title
Insurance Company,
Defendant
O R D E R
Douglas and Stephanie Desjardins bring this action seeking a
judicial declaration that they are entitled to coverage under
their homeowners’ title insurance policy.

The policy was issued

by the predecessor in interest to the defendant, Fidelity
National Title Insurance Company (“Fidelity”).

The Desjardins

also seek damages for Fidelity’s alleged breach of contract.
Fidelity denies that the Desjardins’ policy provides coverage
under the circumstances presented in this case.

Pending before the court are the parties’ cross-motions for
summary judgment.

For the reasons stated, plaintiffs’ motion is

granted, and defendant’s motion is denied.

Standard of Review
A.

Summary Judgment Standard.
When ruling on a motion for summary judgment, the court must

“view the entire record in the light most hospitable to the party
opposing summary judgment, indulging all reasonable inferences in
that party’s favor.”
(1st Cir. 1990).

Griggs-Ryan v. Smith, 904 F.2d 112, 115

Summary judgment is appropriate when the record

reveals “no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
P. 56(a).

Fed. R. Civ.

In this context, “a fact is ‘material’ if it

potentially affects the outcome of the suit and a dispute over it
is ‘genuine’ if the parties’ positions on the issue are supported
by conflicting evidence.”

Int’l Ass’n of Machinists & Aerospace

Workers v. Winship Green Nursing Ctr., 103 F.3d 196, 199-200 (1st
Cir. 1996) (citations omitted).

B.

Interpretation of Insurance Policies.
Construing the meaning and scope of language used in an

insurance policy presents questions of law for the court to
resolve.

Under New Hampshire’s rules of construction:

Where disputed terms are not defined in a policy or by
State judicial precedent, we apply an objective
standard, construing the terms in context and as would
a reasonable person in the position of the insured,
based upon more than a casual reading of the policy as
a whole. If the policy language may reasonably be
interpreted in more than one way and one interpretation
2

supports coverage, any ambiguity is construed in favor
of the insured and against the insurer. Absent
ambiguity, however, our search for the parties’ intent
is limited to the words of the policy.
Panciocco v. Lawyers Title Ins. Corp., 147 N.H. 610, 613 (2002)
(citations omitted).

It bears noting that, at least with respect to the first
count in the Desjardins’ complaint (seeking a declaratory
judgment that they are entitled to coverage), Fidelity bears the
burden of proof under applicable New Hampshire law.

See N.H.

Rev. Stat. Ann. (“RSA”) 491:22-a (“In any petition under RSA
491:22 to determine the coverage of a liability insurance policy,
the burden of proof concerning the coverage shall be upon the
insurer whether he institutes the petition or whether the
claimant asserting the coverage institutes the petition.”).
Moreover, should the Desjardins prevail on that claim, they will
be entitled to an award of “court costs and reasonable attorneys’
fees from the insurer.”

RSA 491:22-b.

Background
In May of 2008, the Desjardins purchased a home at 15
Grappone Road, in Moultonborough, New Hampshire, also known as
Lot 3 (the “Property”).

The Property is part of a subdivision

near Lake Winnipesaukee and includes an appurtenant easement to

3

use a waterfront lot known as Lot 12 for, among other things,
swimming and boating.1

At the closing, the Desjardins purchased a title insurance
policy from Fidelity’s predecessor in interest.

Subject to

various conditions, exceptions, and exclusions, the “Policy
insures [the Desjardins’] title to the land described in Schedule
A.”

Exhibit 1 to Plaintiffs’ Reply Memorandum (document no. 18-

2) (the “Policy”), “Owner’s Coverage Statement.”

The Policy

defines the insured “land” to include both the lot on which the
Desjardins’ home is located (Lot 3), as well as their easement
over Lot 12, which is described as follows:
[T]he right to use, in common with Grappone, Inc., its
successors and assigns, Lot #12 as shown on [Plan
#27059, recorded in the Carroll County Registry of
Deeds at Book 27, Page 59] for purposes of bathing,

1

“An easement is a nonpossessory interest in real
property that can be created by written conveyance, prescription
or implication. An appurtenant easement is an incorporeal right
generally created for the purpose of benefitting the owner of the
dominant estate and that runs with the land, is incapable of
existence separate and apart from the dominant tenement, and is
inheritable.” Cricklewood on the Bellamy Condo. Ass’n v.
Cricklewood on the Bellamy Trust, 147 N.H. 733, 737 (2002)
(citations and internal punctuation omitted).
Moreover, an appurtenant easement is such an integral part
of an interest in real property, that it automatically passes
with that property, even if it is not specifically referenced in
the deed by which title is transferred. See RSA 477:26. See
also Mansur v. Muskopf, 159 N.H. 216, 222 (2009) (“[E]asements
automatically pass with the transfer of property to which they
are appurtenant, even when absent from the face of the deed.”).
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boating and all such other purposes as may be permitted
by the said Grappone, Inc.
The Policy, Schedule A, Exhibit A.

According to plaintiffs, the

plan referenced in both their deed and the Policy shows Lot 12
with 200 feet of shore frontage on Lake Winnipesaukee.
Plaintiffs’ memorandum (document no. 14-1) at 2.

In April of 2010, the owner of property adjacent to Lot 12
brought a quiet title action in the New Hampshire Superior Court,
claiming title to approximately 35 feet of Lot 12’s shoreline
frontage (the “Cooper Litigation”).

In that state proceeding,

Ms. Cooper asserts that she holds title to the disputed shoreline
property by virtue of: (a) adverse possession; and (b) the
placement of an iron pin survey marker.

If she were to prevail,

Lot 12 would obviously have less shoreline and beachfront than is
shown on the plan referenced in both the Desjardins’ deed and
their title insurance policy.

So, rather than enjoying an

easement affording them access to some 200 feet of waterfront and
beach area, the Desjardins would have a right to use only 165
feet of waterfront and beach area on Lot 12.

Upon learning of the Cooper Litigation, the Desjardins made
demand upon Fidelity, asserting that they were entitled to
coverage under the Policy.

While the Desjardins do not assert

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that the Policy provides coverage for Ms. Cooper’s adverse
possession claim, they do say it provides coverage for her claim
to a portion of Lot 12 by virtue of the placement of a boundary
monument.
3.

See Plaintiffs’ Reply Memorandum (document no. 18) at

Fidelity denied the Desjardins’ claim, concluding that the

Policy provides coverage for neither Ms. Cooper’s adverse
possession claim, nor her survey claim.

This litigation ensued.

Invoking the provisions of Chapter 491, New Hampshire
Revised Statutes Annotated, the Desjardins seek a declaration
that Fidelity owes them coverage under the Policy, in particular,
an obligation to intervene in the Cooper Litigation and defend
their title interests (count one).

They also assert that

Fidelity is liable to them for breach of contract (count two).
As noted above, the parties have filed cross-motions for summary
judgment, in which each side claims entitlement to judgment as a
matter of law.

Discussion
I.

The Insurance Policy.
A.

General Provisions.

The relevant language provides that, “This Policy insures
your title to the land described in Schedule A.”

6

The Policy,

“Owner’s Coverage Statement” (emphasis supplied).

The Policy

defines the terms “land” and “title” as follows:
Land - the land or condominium unit described in
Schedule A and any improvements on the land which are
real property.
* * *
Title - the ownership of your interest in the land, as
shown in Schedule A.
Id., “Definitions.”

As noted above, the Policy’s detailed (i.e.,

metes and bounds) description of the insured “land” includes both
the lot on which the Desjardins’ home is located (Lot 3), as well
as their easement over Lot 12.

Two of the Policy’s “Covered Title Risks” are directly
implicated in this proceeding and the relevant Policy provisions
are as follows:
This Policy covers the following title risks, if they
affect your title on the Policy Date.
1.

Someone else owns an interest in your title.
* * *

14.

Other defects, liens, or encumbrances.

Id., “Covered Title Risks.”

The coverage provided by the Policy

is, however, subject to certain standard exceptions.

7

Those

exceptions state, in relevant part, that the Policy does not
provide coverage:
against loss or damage (and the Company will not pay
costs, attorneys’ fees or expenses) which arise by
reason of the following:
* * *
1.

Rights or claims of persons and/or parties in
possession [e.g., those claiming title by adverse
possession].

2.

Easements or claims of easements not shown by the
public records, boundary line disputes, overlaps,
encroachments, title to filled lands (if any), and
any matters not of record which would be disclosed
by an accurate survey and inspection of the
premises.

Id., Schedule B (emphasis supplied).

If that were the extent of

the relevant Policy language, plaintiffs’ claims related to the
Cooper Litigation would not be covered.

The exceptions set forth

above plainly disclaim coverage for the types of claims Ms.
Cooper is advancing in the state court quiet title action:
adverse possession and a boundary dispute based upon the
placement of a surveyor’s monument.

Critically, however, Schedule B of the Policy concludes with
the following language:
Exception numbered 3 [dealing with mechanic’s liens and
not relevant to this proceeding] is hereby deleted from
the Owner’s Policy. Exceptions Numbered 1 and 2 of the
Owner’s Policy [dealing with adverse possession and
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boundary disputes] do not limit the coverages described
by the Covered Title Risks set forth in the Cover of
the Owner’s Policy.
Id.

That language apparently negates the exception carving out

boundary disputes and, at best, is confusing.

Plainly, its

author knew how to simply “delete” an exception to the Policy, as
was done with respect to Exception 3.

Construing the precise

meaning of the qualifying language used to modify Exceptions 1
and 2, and discerning its effect on the scope of coverage
provided by the Policy is central to resolving the parties’
dispute.

B.

Standard Title Policy Exceptions.

The noted exceptions for “parties in possession” and
“boundary disputes” are fairly typical of title insurance
policies.

See, e.g., Panciocco, 147 N.H. at 615.

See generally

C. Szypszak, 17 New Hampshire Practice, § 7.04[A] (1st ed. 2003)
(“Standard Exceptions”).

The purpose of such exceptions is to

protect the insurance company from potential liability that could
not be foreseen by simply reviewing public records, like those
maintained at the registry of deeds.

So, for example, with

regard to the exception for “parties in possession,” the New
Hampshire Supreme Court has observed:
When a person, who does not appear in the chain of
title, is found in possession of property it may
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indicate, for example, that he is making claim to the
property by adverse possession, or that he is claiming
under an unrecorded deed. A title examiner, however,
seldom visits the land the title to which he is
concerned with. Thus, both to protect themselves and
to put their client on notice of this state of affairs,
title examiners and title insurance companies generally
exclude from their title opinions and policies claims
of parties in actual possession of the land insured.
Id. (quoting Cheverly Terrace P’ship v. Ticor Title Ins. Co., 642
A.2d 285, 289 (Md. App. 1994)).

See generally B. Burke, Law of

Title Insurance, § 9.03 (“Exception for Acreage, Boundaries, and
‘What an Accurate Survey Would Disclose’”) (3d. ed. 2000).

The same is true with regard to the standard exception for
boundary disputes (typically known as “the survey exception”).
Because the precise location of boundary-defining monuments can
only be determined by an examination of the property and an
accurate survey, title insurance policies frequently except
coverage for boundary disputes.

As the New Jersey Supreme Court

has noted:
The purpose of the survey exception is to exclude
coverage when the insured fails to provide the insurer
with a survey. From a search of relevant public
records, a title company cannot ascertain the risks
that an accurate survey would disclose. It is for this
reason that the title company puts that risk on the
insured, who can control it either by obtaining a
survey or arranging for the elimination of the survey
exception. Thus, the very purpose of a survey
exception is to exclude from coverage errors that would
be revealed not by a search of public records, but by
an accurate survey.
10

Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517,
533-34, 562 A.2d 208, 217 (N.J. 1989) (citations omitted).

See

also Stull v. First Am. Title Ins. Co., 745 A.2d 975, 978 n.5
(Me. 2000) (“Experts at trial testified that the survey exception
is designed to prevent a title insurer from becoming involved in
disputes over where the land described in the policy is actually
located on the face of the earth.

It is normally waived when the

insured conducts a survey, but no survey had been performed in
the present case.”).

The existence of those exceptions to coverage gives rise to
the following logical implication: absent such exceptions, the
typical title insurance policy does provide coverage when an
abutter claims title to a portion of the insured’s property,
whether by adverse possession or, as in this case, by virtue of
the placement of a disputed boundary marker.

In other words, the

exceptions exist to disavow coverage that the typical title
insurance policy would otherwise provide.

Consequently, insureds

can often obtain coverage under a title insurance policy for
boundary disputes simply by having the relevant exceptions
deleted.

See, e.g., Walker Rogge, 116 N.J. at 533-534, 562 A.2d

at 217 (noting that an insured can obtain coverage for risks
excepted from the policy by “arranging for the elimination of the

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survey exception.”).

See also C. Szypszak, 17 New Hampshire

Practice, § 7.04[A] (“Coverage for the parties in possession,
mechanics’ lien, and survey exceptions are typically available on
loan policies, and sometimes on owner’s policies, based on
certain additional assurances . . . . The term of art is
‘deleting’ the exception, which by operation of the double
negative means the matter is covered.”).

C.

The Qualifying Language.

As noted above, Exceptions 1 and 2 were not “deleted” from
the Policy.

Rather, their application was qualified: “Exceptions

Number 1 and 2 of the Owner’s Policy do not limit the coverages
described by the Covered Title Risks set forth in the Cover of
the Owner’s Policy.”

The Policy, Schedule B (emphasis supplied).

Although it is unclear from the record, it is not unreasonable to
presume that the qualifying language was employed to make clear
that, by negating application of the standard exceptions, the
insurance company was not in any way augmenting coverage
otherwise provided by the Policy.

See, e.g., B. Burke, Law of

Title Insurance, § 9.03 (noting that an “exception is not the
opposite of coverage and so eliminating it does not automatically
provide coverage”).

To obtain coverage under the Policy, the

insureds would still have to point to a covered risk specifically
identified in the Policy.

And, says Fidelity, because none of

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the Policy’s “Covered Title Risks” is implicated by the claims
advanced in the Cooper Litigation, the Policy does not provide
coverage.

I.

The court disagrees.

Count One - Declaratory Judgment.
The Policy describes the insured “land” to which the

Desjardins hold “title” as including both the lot on which their
home stands and the appurtenant easement over Lot 12 for bathing
and boating.

Plainly, then, the Policy insures the Desjardins’

interest in the easement.

And, even if one could plausibly argue

that the Policy’s language is ambiguous on that score, under
applicable New Hampshire law, that ambiguity must be construed in
favor of the insureds and against the insurer.
147 N.H. at 613.

See Panciocco,

If, as Fidelity suggests, the Policy was not

intended to provide title insurance coverage for the easement, it
should not have included the easement in Exhibit A’s description
of the “land” covered by the Policy.

See, e.g., Havstad v.

Fidelity Nat’l Title Ins. Co., 58 Cal. App. 4th 654, 660 (1997)
(involving a title insurance policy issued by Fidelity, expressly
providing that “the term ‘land’ does not include any property
beyond the lines of the area described or referred to in Schedule

13

A, nor any right, title, interest, estate or easement in abutting
streets, roads, avenues, alleys, lanes, ways or waterways.”).2

Alternatively, if Fidelity wished to clearly express its
intention to disavow coverage for the easement over Lot 12, it
could have listed that recorded easement along with all the other
easements affecting the Property that are expressly disclaimed
from coverage under the Policy.

See The Policy, Schedule B

(“This Policy does not insure against loss or damage (and the
Company will not pay costs, attorney’s fees or expenses) which
arise by reasons of the following: [listing a number of easements
and encumbrances affecting the Property, such as an easement for
“flowage and drainage,” various utility easements, and an
easement “to obtain water from a certain well located on Lot
3.”]).3

2

Of course, to be fair, Liberty did not draft the policy
language at issue in this case; that was done by its predecessor
in interest. Still, the concept of specifically excluding
appurtenant easements on or over the property of others (i.e.,
servient estates) from insurance coverage provided to the
dominant estate is not one that is foreign to Liberty.
3

The court recognizes that the easements excepted from
coverage burden the Desjardins’ estate, whereas the easement at
issue in this case benefits their estate. Still, the point
remains the same: if Fidelity did not wish to extend coverage to
the easement affording use of Lot 12, it could have unambiguously
excepted such coverage in the Policy’s language. It did not.
Instead, it did just the opposite: it defined the insured land to
include the easement over Lot 12, and then negated application of
exceptions that would have otherwise disclaimed coverage.
14

So, having determined that the Policy insures the
Desjardins’ interest in the easement over Lot 12, the next
question is whether Ms. Cooper’s claim in the state court
litigation implicates one (or more) of the Policy’s Covered
Risks.

It does.

Ms. Cooper asserts that she owns a portion of

Lot 12 - a claim which, if successful, would substantially
diminish the Desjardins’ existing easement rights.

It follows

that “someone else [is claiming she] owns an interest in [the
Desjardins’] title.”

The Policy, “Covered Title Risks.”

Additionally, Ms. Cooper’s asserted title to a portion of Lot 12
also falls into the category of “other defects, liens, or
encumbrances” upon the Desjardins’ title to “the land,” as
defined - that is, Lot 3 and the inseparable easement to use Lot
12 for swimming and boating.

Id.

Because Ms. Cooper’s boundary monument claim is a “Covered
Title Risk” with respect to plaintiffs’ title to their land (as
defined), and because the survey exception does not limit the
Policy’s coverage for that risk, the Desjardins are entitled to
coverage.

II.

Count 2 - Breach of Contract.
In count two of their complaint, the Desjardins assert that

Fidelity breached the terms of the parties’ contract “[b]y their

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failure to provide coverage, and denying the Desjardins’ claim.”
Complaint (document no. 1) at para. 22.

Having determined that

the Desjardins’ are entitled to coverage under the Policy, the
court must next address Fidelity’s obligations when coverage is
implicated.

Not surprisingly, the Policy is quite clear on that

point:
We will defend your title in any court case as to that
part of the case that is based on a Covered Title Risk
insured against by this Policy. We will pay the costs,
attorneys’ fees, and expenses we incur in that defense.
We can end this duty to defend your title by exercising
any of our options list in Item 4 of the Conditions.
The Policy, “Company’s Duty to Defend Against Court Cases.”

Item

4 of the Conditions states that:
After we receive your claim notice or in any other way
learn of a matter for which we are liable, we can do
one or more of the following:
a.

Pay the claim against your title.

b.

Negotiate a settlement.

c.

Prosecute or defend a court case
related to the claim.

d.

Pay you the amount required by this Policy.

e.

Take other action which will protect you.

f.

Cancel this Policy by paying the Policy Amount,
then in force, and only those costs, attorneys’
fees, and expenses incurred up to that time which
we are obligated to pay.

g.

Cancel the coverage described in Items 15 or 19 of
the Covered Title Risks by paying our maximum
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dollar limit of liability referred to in those
items and only those costs, attorneys’ fees and
expenses incurred up to that time which we are
obligated to pay.
Id., “Our Choices When You Notify Us of a Claim.”

Here, in response to the Desjardins’ notice of claim,
Fidelity denied coverage.

Not only did it refuse to represent

the Desjardins’ interests in the Cooper Litigation, but it also
refused (or neglected) to invoke any of its other options set
forth under item 4 of the Policy’s “Conditions.”

That was

plainly in breach of its obligations under the Policy.

As a

consequence, the Desjardins were forced to provide their own
legal representation, presumably incurring costs and, perhaps,
legal fees for which Fidelity should have been responsible.
Going forward, Fidelity can obviously decide which of the options
set forth above it wishes to pursue (e.g., attempt to negotiate a
settlement with Ms. Cooper, step in and represent the Desjardins’
interests in the litigation, etc.).

But, that does not render

moot the Desjardins’ claim that they have already suffered
consequential damages - in the form of costs and perhaps
attorney’s fees - as a result of Fidelity’s breach.

17

As to count two of their complaint alleging that Fidelity
breached the terms of the Policy, the Desjardins are entitled to
judgment as a matter of law.

Conclusion
The Policy, properly construed, provides the Desjardins with
coverage for Ms. Cooper’s claim that she holds title to the
disputed 35 feet of shore frontage on Lot 12 by virtue of the
placement of a boundary marker.

But, even if one could plausibly

argue that the relevant language is ambiguous on that point, it
must be construed in favor of coverage, since the Policy may be
reasonably interpreted to provide coverage by a reasonable person
in the position of the insureds, based upon more than a casual
reading of the Policy as a whole.

It necessarily follows that

Fidelity improperly denied the Desjardins’ request for coverage.
Accordingly, the Desjardins’ motion for summary judgment as to
both counts in their complaint (document no. 14) is granted and
Fidelity’s motion (document no. 12) is denied.

The Desjardins are entitled to an award of damages
consisting of the costs and attorney’s fees reasonably incurred
in representing their interests in the Cooper Litigation.

They

are also entitled to an award of costs and attorney’s fees
reasonably incurred in successfully prosecuting this declaratory

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judgment suit.

See RSA 491:22-b.

Those sums should be easily

calculated and the court will assume that the parties are capable
of coming to an agreement on that issue.

If, however, they are

not able to agree on the sums to which the Desjardins are
entitled, the parties shall notify the court, which will either
schedule a damages hearing or, if plaintiffs believe they are
entitled to a jury trial on their contract damages, it will issue
an appropriate briefing order.4

SO ORDERED.
____________________________
Steven J. McAuliffe
United States District Judge
June 14, 2013
cc:

Christopher T. Meier, Esq.
Lisa S. Wade, Esq.

4

Although plaintiffs have requested a jury trial,
neither party has addressed whether they are actually entitled to
one on the issue of damages for their breach of contract claim,
when those consequential damages appear to consist entirely of
court costs and attorney’s fees. The court will require
additional legal briefing on the issue.
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