GRANELLI et al v. CHICAGO TITLE INSURANCE COMPANY et al
Filing
54
OPINION. Signed by Judge Jose L. Linares on 12/6/12. (dc, )
_____________________________________________________________________)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
BRYAN AND JACQUELINE
GRANELLI (&a JACQUELINE HOEY),
Plaintiffs,
v.
CHICAGO TITLE INSURANCE
COMPANY AKAJDBA
CHICAGO TITLE OF NEW JERSEY
INC. AND FIDELITY NATIONAL
TITLE OF NEW JERSEY, INC.,
Defendants.
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Civil Action No.: 10-2582 (iLL)
OPINION
LINARES, District Judge.
This matter comes before the Court by way of a Motion for Summary Judgment on
Liability filed by Defendant on October 12, 2012. The Court has considered the submissions of
both parties in support of and in opposition to the present motion and decides the matter without
oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons that
follow, Defendants’ motion is granted.
I.
BACKGROUND
Plaintiffs, Jacqueline Granelli and Bryan Granelli (collectively, “Plaintiffs”), owned real
property located at 221 Summit Drive, Boonton, New Jersey (“Boonton Property”).’ Dfs. SOF
at ¶ 1. Plaintiffs maintained a Residential Title Insurance Policy (“Policy”) on this property,
which Plaintiffs obtained through Defendants. Id. During the course of their ownership,
Plaintiffs discovered that the Boonton Property was subject to several boundary disputes with
adjacent properties. Id. at ¶ 2. Plaintiffs submitted a claim with Defendants in August 2008
seeking coverage under their Policy. Id.
After receiving Plaintiffs’ claim, Defendants promptly assigned a claims examiner. Id. at
¶ 3.
This claims examiner investigated the claim between August 2008 and February 2009 and
maintained “constant communications with a surveyor and with Plaintiffs.” Id. In February
2009, the claim was reassigned to another claims examiner who “continued the investigation by,
among other things, (a) consistently communicating with the surveyor, appraisers, Boonton
Township, and Plaintiffs (by e-mail, letter and telephone); (b) hiring an appraiser at Defendants’
expense; (c) pulling and reviewing maps and surveys; (d) reviewing memoranda prepared by
surveyors; and (e) learning the history of Plaintiffs’ neighborhood; (f) attempting to determine
the diminution in value, if any, of surrounding property; and (g) attempting to negotiate a
Local Civil Rule 56.1(a) requires parties moving for summary judgment to furnish a Statement
of Material Facts not in Dispute. See Local Rule 56.1(a). The rule then requires the non-moving
party to furnish, with his opposition papers, “a responsive Statement of Material Facts addressing
each paragraph of the movant’s statement, indicating agreement or disagreement. Yocham v.
Novartis Pharms. Corp., 736 F.Supp.2d 875, 879 (D.N.J. 2010). Plaintiffs did not comply with
their requirement under this rule but instead offered their own separate discussion of the facts.
See Pls. Br. at 3. Local Civil Rule 56.1(a) specifically provides that “any material fact not
disputed shall be deemed undisputed for purposes of the summary judgment motion.” See Local
Rule 56.1(a). Accordingly, the Court accepts Defendants’ recitation of facts as “undisputed” for
purposes of this motion. See Yocham, 736 F.Supp.2d at 879. However, even if the Court were to
read Defendants’ recitation in light of Plaintiffs’ statement of facts, the Court would still find that
there were no genuine issues of fact material to the present motion. The only facts contested by
Defendants are immaterial to the facts at issue here. See Pis. Br. at 1-3.
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resolution of the issues with Plaintiffs’ neighbors and Boonton Township.” Id. at ¶ 4. During
the course of this investigation, Defendants “offered to issue a letter of indemnification to any
potential purchasers’ title insurance companies, but none of those offers were accepted.” Id. at ¶
7.
In May 2009, the claims examiner concluded that it would be necessary to bring a quiet
title action to resolve the boundary disputes, and he immediately contacted Defendants’ in house
counsel, Brian Romanowsky. Id. at ¶5. Romanowsky maintained consistent communication
with the surveyor and attempted to contact all of Plaintiffs’ neighbors with boundary disputes.
Dfs. SOF at ¶ 6. Defendants were not required to “immediately commence the quiet title action
upon receipt of Plaintiffs’ claim,” and “had the right to investigate the claim and pursue nonlitigation resolutions of the claim before commencing the quiet title action.” Id. at ¶J 9-10. In
April 2010, when Romanowsky’s efforts to resolve the boundary disputes through non-legal
means failed, Romanowsky filed a quiet title action and provided Plaintiffs’ with legal
representation at Defendants’ expense. Id. at ¶ 8. The quiet title action was successful, and, in
August 2011, Plaintiffs’ legal representatives resolved all boundary disputes leaving the Boonton
Property free of encumbrances. Id. at ¶ 11.
On May 19, 2010, Plaintiffs brought the present action against Defendants seeking
damages allegedly caused by Defendants’ actions and/or inactions pursuant to the Policy.
Plaintiffs sought damages under the following theories: breach of contract, breach of the duty of
good faith and fair dealing, detrimental reliance, New Jersey Trade Practices Act, and the New
Jersey Consumer fraud Act. See Pls. Comp. at 3-8. On September 12, 2011, Defendants filed a
Motion for Partial Summary Judgment on Damages, which the Court granted in part and denied
in part. See Granelli v. Chicago Title Ins. Co., No. 10-2582, 2012 U.S. Dist. LEXIS 80019
3
(D.N.J. June 8, 2012). On October 10, 2012, Defendants filed the present Motion for Summary
Judgment on Liability.
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II.
LEGAL STANDARD
A court shall grant summary judgment under Rule 56(c) of the Federal Rules of Civil
Procedure “if the pleadings, the discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(c).
On a summary judgment motion, the moving party must show, first, that no genuine issue
of material fact exists. Celotex Corp. v. Catrett, 744 U.S. 317, 323 (1986). The burden then
shifts to the non-moving party to present evidence that a genuine issue of material fact compels a
trial. Id. at 324. In so presenting, the non-moving party must offer specific facts that establish a
genuine issue of material fact, not just “some metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Thus, the
non-moving party may not rest upon the mere allegations or denials in its pleadings. See
Celotex, 477 U.S. at 324. Further, the non-moving party cannot rely on unsupported assertions,
bare allegations, or speculation to defeat summary judgment. See Ridgewood Rd. ofEduc. v.
iME. ex. Rel. M,E., 172 F.3d 238, 252 (3d Cir. 1999). The Court must, however, consider all
facts and their reasonable inferences in the light most favorable to the non-moving party. See
Pennsylvania Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995).
IlL
DISCUSSION
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Plaintiffs allege that Defendants’ second Motion for Summary Judgment is barred because the
“Defendants’ previous request for filing a motion for summary judgment on liability issues was
denied via formal Order on September 7, 2011.” PIs. Br. at 8. Although the Court denied
Defendants’ request to file a combined motion for summary judgment on liability and damages,
the Court did not prohibit Defendants’ from filing bifurcated motions. See Order, Docket Entry
41 (Sept. 7, 2011). Accordingly, Plaintiffs’ argument is without merit.
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Plaintiffs seek damages under theories of breach of contract, breach of the duty of good
faith and fair dealing, detrimental reliance, New Jersey Insurance Trade Practices Act,
and New
Jersey Consumer Fraud Act. Pis. Comp. at 3-8. Defendants filed a motion for partial summa
ry
judgment as to the issue of damages, which the Court granted in part and denied in
part. See
Granelli, 2012 U.S. Dist. LEXIS 80019. Defendants now request summary judgm
ent as to the
issue of liability. For the reasons that follow, the Court grants this motion in
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its entirety.
A.
Breach of Contract
Title insurance is a contract of indemnity intended to protect the insured agains
t “loss or
damage suffered by reason of liens, encumbrances upon, defects in or umark
etability of the title
to said property.” N.J. Stat.
§ 17:46B-1. Under New Jersey law, an “insurer has three related
duties under a title policy: (1) to indemnify the loss upon payment of damag
es; (2) to cure the
title defects if feasible; and (3) to defend the insured in a judicial attack on its
title.” Enright v.
Lubow, 202 N.J. Super. 58, 73 (App. Div. 1985). The insurer’s primary duty
is to vindicate the
title. Costaglio v. Lawyers Title Ins. Corp., 234 N.J. Super. 400, 407 (Ch.
Div. 1988). If there is
a question as to the land guaranteed by the title, the company must defend the
policyholder’s
title. See id. If unsuccessful and the “the insured loses lands as a result, it
must pay [the insurer]
the value of the land lost.” Id.
Here, Plaintiffs do not have any valid arguments under the first or third catego
ries of
insurer responsibilities set forth in Enright. See Enright, 202 N.J. Super.
at 73. Plaintiffs’
As
3 an initial matter, Plaintiffs argue that the present motion is barred under
res judicata and
collateral estoppel. See Pis. Br. at 7-9. Specifically, Plaintiffs argue
that the “issues before [the
Court] are the same briefed by Defendants in September 2011.” Id. at
9. Defendants’ previous
motion was for judgment on the issue of damages, not liability as the
Defendants’ request here.
See Granelli, 2012 U.S. Dist. LEXIS 80019. Accordingly, Plaintiffs’
argument is without merit.
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Boonton Property was not the subject of “judicial attack on its title,” nor have Plaintiffs lost any
of their land thereby requiring Defendants to “pay the value of the land lost.” See id. Instead, as
Count Five of Plaintiffs’ complaint, Plaintiffs allege that Defendants breached the Policy by not
providing “good title” to the property at the time the Policy was issued and by failing to
promptly and diligently take action to quiet title. See Pls. Br. at 9.
Plaintiffs’ first argument reflects a fundamental misunderstanding of title insurance.
Insurance companies do not provide policyholders with a guarantee that there are no “non-record
defects in the title of a parcel of real estate.” See Ticor Title Ins. Co. v. FTC, 988 F.2d 1129,
1132 (3d Cir. 1993). Instead, they issue a policy to protect the policyholder against title defects
“not discoverable from a search of the public records on the parcel, as well as losses caused by
errors or mistakes in the search and examination.” See id. Here, Defendants provided Plaintiffs
with a policy protecting Plaintiffs’ fee simple interest in their Boonton Property. See Dfs.
Exhibit A. Any such breach must occur after this policy was issued and for a failure to comply
with one of an insurer’s three duties to policyholders. See generally Ticor Title Ins. Co., 988 F.2d
at 1132; see also Enright, 202 N.J. Super. at 73.
Plaintiffs’ second argument is premised on Defendants’ duty to “cure the title defects if
feasible.” See Enright, 202 N.J. Super. at 73. Plaintiffs’ do not allege that Defendants’ failed to
cure the defects, but instead argue that Defendants’ efforts to do so were not prompt and
reasonable. See Pls. Br. at 9. This argument is without merit. In its June 8, 2012 opinion, this
Court held that Defendants’ actions in curing the defect were:
reasonable, throughout the claim investigation. It hired all necessary parties,
exhausted all non-legal outlets for resolution of the issue, and when it became
clear the issue would have to be resolved in court, it went forward at its own
expense. Despite Plaintiffs’ desire for an immediate remedy the title insurance
company is not required to proceed immediately into litigation. It is within its
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right to assess the situation and pursue alternative resolutions to the dispute that
do not involve legal proceedings.
Granelli, 2012 U.S. Dist. LEXIS 80019, at * 18. Accordingly, Plaintiffs’ allegat
ions are not
supported by the facts before this Court. Defendants’ actions were prompt
and reasonable, and
Defendants are entitled to summary judgment on Plaintiffs’ breach of contrac
t claim. See
Granelli, 2012 U.S. Dist. LEXIS 80019, at *18.
B.
Breach of Duty of Good Faith and Fair Dealing
Every contract contains an implied covenant of good faith and fair dealing
. See Sons of
Thunder v. Borden, Inc., 148 N.J. 396, 420 (1997). To prevail on a claim for
breach of this duty,
a party must demonstrate, 1) the existence of a contract, 2) “some conduct
that denied the benefit
of the bargain originally intended by the parties,” and 3) bad faith. Brunsw
ick Hills Racquet
Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 225 (2005) (intern
al quotations
omitted). Bad faith is the “absence of a reasonable basis for denying the benefit
s of the policy
and the defendant’s knowledge or reckless disregard of the lack of a reason
able basis for denying
the claim.” Pickett v. Loyd ‘s, 131 N.J. 457, 473 (1992) (quoting Anderson
v. Continental Ins.
Co., 271 N.W.2d 368, 376-77 (1978)).
As Count Six of Plaintiffs’ complaint, Plaintiffs allege that Defendants violate
d this
covenant by “disput[ing] their duty and obligation to provide coverage
for the full amount of the
claims asserted against the property and to remove a title defects.” Pls.
Comp. at 5. This claim
fails for two reasons. First, as discussed above, Plaintiffs received
the benefit of the bargain they
contracted for. See Enright, 202 N.J. Super. at 73. Defendants compli
ed with the terms of the
Policy and took reasonable steps to quiet title when the land dispute
could not be resolved
through other means. Second, there is no evidence of bad faith. See
Brunswick Hills Racquet
Club, Inc.., 182 N.J. at 225. On the contrary, the Court already held that
Defendants acted
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“reasonable” throughout the claim investigation. See Granelli, 2012
U.S. Dist. LEXIS 80019, at
*
18. Accordingly, Plaintiffs do not provide any factual support for their
breach of duty of good
faith and fair dealing claim, and Defendants are entitled to summary
judgment.
C.
Detrimental Reliance
Detrimental reliance is an equitable doctrine founded in the “funda
mental duty of fair
dealing imposed by law.” Dent v. Cingular Wireless LLC, No. 07-055
2, 2007 U.S. Dist. LEXIS
44612, at *15 (D.N.J. 2007) (citing State v. Kouvatas, 292 N.J. Super.
417, 425 (App. Div.
1996)). A claim for detrimental reliance consists of three elemen
ts: 1) a representation; 2)
“knowledge that a second person is acting on the basis of that represe
ntation;” and 3) substantial
detrimental reliance by that person on the representation. See id. As
Count Seven of Plaintiffs’
complaint, Plaintiffs allege that they detrimentally relied on Defend
ants’ promise in the Policy to
“provide coverage for claims arising from defects in title.” Pis.
Comp. at 6. However, as
discussed above, Defendants complied with all of their obliga
tions under the Policy. See
Enright, 202 N.J. Super. at 73. Accordingly, Plaintiffs’ reliance
on the contract was not
detrimental, and Defendants are entitled to summary judgment.
D.
New Jersey Insurance Trade Practices Act
The New Jersey Insurance Trade Practices Act (“ITPA”) regulat
es “trade practices in the
business of insurance.” See Retail Clerks Weifare Fund v. Contin
ental &isualty Co., 71 N.J.
Super. 221, 226 (App. Div. 1961). As Count Eight of Plainti
ffs’ complaint, Plaintiffs allege that
Defendants violated the ITPA. See Pis. Comp. at 7. The ITPA
does not permit a private cause
of action. See Pierzga v. Ohio Casualty Group ofIns. Cos.,
208 N.J. Super. 40, 47 (App. Div.
1986) (stating that “violations of the statue do not create individ
ual or private causes of action”);
see also Retail Clerks Weifare Fund, 71 N.J. Super. at 226
(stating that the subject matter of the
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ITPA “deals with a wrong to the public rather than to the individua
l.”). Plaintiffs concede that
“there is no private cause of action under the New Jersey Insurance Trad
e Practices Act.” See
Pls. Br. at 14.
Plaintiffs contend that “Count VIII of its complaint asserts a
claim for common law bad
faith and fair dealing, and it simply references the ITPA beca
use the ACT provides guidelines for
determining whether an insurer has acted in bad faith.” Id.
This argument is without merit.
Count Eight is clearly captioned “New Jersey Insurance Trad
e Practices Act,” and it specifically
alleges that “Defendants claim handling practices with respe
ct to Plaintiffs [sic] claims
constitute a violation of the applicable standards.. estab
lished by the New Jersey Insurance
.
Trade Practices Act.” See Pis. Comp. at 7. Moreover,
on at least two occasions since—one
being Plaintiffs’ Brief in Opposition to Defendants Mot
ions for Summary Judgment on
Liability—Plaintiffs allege that Defendants violated the
ITPA. See Pis. Br. at 5; see also Pis.
at ¶ 5. The Court is not persuaded that Plaintiffs’ inten
ded to raise a common law claim,
and Defendants are entitled to summary judgment. See
Pierzga, 208 N.J. Super. at 47.
E.
New Jersey Consumer Fraud Act
The New Jersey Consumer Fraud Act (“CFA”) prohibits
“unconscionable commercial
practice[s]
.
.
.
in connection with the sale or advertisement of any
merchandise,” including
insurance policies. See N.J.S.A.
§
56:8-2; see also Kuhnel v. CAN ins. Companies, 322
N.J.
Super. 568, 582 (App. Div. 1999). The CFA does
not regulate the payment of insurance
benefits. See Fuscellaro v. Combined Ins. Group,
Ltd., No. 11-723, 2011 U.S. Dist. LEXIS
Plaintiffs filed this Statement of Facts, available
at docket number 37, in connection with
Defendants’ Motion for Summary Judgment on the
Issue of Liability. Plaintiffs incorporate their
previous Statement of Facts by reference in the pend
ing motion. See Pis. Br. at 3 (stating that
Plaintiffs “shall rely on Plaintiffs [sic] Statemen
t ofMaterial Facts and the Verification of
Exhibits by Peter J. Cresci, Esq.”)
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111470, at * 15 (D.N.J. Sept. 29, 2011). “A claim for failure to pay benefits is a claim
for breach
of contract, and the breach of an enforceable contract does not constitute a violati
on of the CFA.”
Id. at *15.46. Here, as Count Nine of Plaintiffs’ complaint, Plaintiffs allege that
Defendants
violated the CFA by misrepresenting the “coverage of {thej title insurance,” thereby
inducing
Plaintiffs to “purchase the title insurance on the mistaken belief that the title
policy would insure
good and marketable title.” See Pis. Br. at 18; see also Pls. Comp. at 8.
Plaintiffs’ allegation fails for two reasons. First, Plaintiffs’ argument cannot
fairly be
construed as anything more than a breach of contract claim. The Policy is intend
ed to “insure
good and marketable title.” There was no “mistaken belief.” Plaintiffs are
merely arguing again
that they did not receive the benefit of that bargain. See PIs. Br. at 18. And,
the “payment of
insurance benefits” is not subject to the CFA. See Fuscellaro, 2011 U.S. Dist.
LEXIS 111470, at
*
15. Second, to the extent that any of Plaintiffs’ arguments could be construed
as a claim that
Defendants committed an unconscionable practice in connection with the
sale or advertisement
of the Policy, those allegations would not be supported by the facts before
this Court. See
Kuhnel, 322 N.J. Super. at 582. There is no evidence in the recorded of any
“deception, fraud,
false pretenses, false promise, misrepresentation,” or any other unconscionab
le practice in
connection with the sale or advertisement of this Policy. See N.J.S.A.
§ 56:8-2. Accordingly,
Defendants are entitled to summary judgment.
V.
CONCLUSION
For the foregoing reasons, Defendants’ Motion for Summary Judgment
on Liability is
granted. An appropriate Order accompanies this opinion.
DATED: December
,
2011
ARES
STATES DISTRICT JUDGE
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