Lawler v. Fidelity National Title Insurance Company
Filing
21
MEMORANDUM OPINION and ORDER granting 14 MOTION for Summary Judgment... all claims and causes of action brought by plaintiff against defendant are hereby dismissed with prejudice. See Order for further specifics. (Ordered by Judge John McBryde on 10/31/2011) (krg)
U.S. DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
IN THE UNITED STATES DISTRIC
NORTHERN DISTRICT OF TE
FORT WORTH DIVISION
ROBERTA T. LAWLER,
§
S
OCT 3 I 2011
CLERK, U.S. DISTRICT COURT
by
Deputy
§
Plaintiff,
COUR~ FILED
§
§
VS.
§
NO. 4:11-CV-477-A
§
FIDELITY NATIONAL TITLE
INSURANCE COMPANY,
§
§
§
Defendant.
§
MEMORANDUM OPINION
and
ORDER
Now before the court is the motion for summary judgment
filed in the above action by defendant, Fidelity National Title
Insurance Company.
Plaintiff, Roberta T. Lawler, filed a
response and appendix, and defendant filed its reply.
Having now
considered all of the parties' filings, the entire summary
judgment record, and applicable legal authorities, the court
concludes that the motion should be granted.
1.
Undisputed Facts and the Summary Judgment Motion
Plaintiff initiated this removed action by the filing on
June 2, 2011, of her original petition in County Court at Law
Number 2 in Tarrant County, Texas.
The litigation arises from
the following undisputed facts:
On or about April 13, 2007, plaintiff purchased property
located in Keller, Texas, from Deutche Bank National Trust
Company ("Deutche Bank") by special warranty deed.
On or about
May 7, 2007, defendant issued to plaintiff a Texas Residential
Owner Policy of Title Insurance, policy number 27-39-93-261891
jsg ("Policy") , insuring plaintiff's interest in the property.
Of pertinence to this action are the following Policy provisions:
4.
OUR CHOICES WHEN YOU NOTIFY US OF A CLAIM
a.
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:
(1)
Pay the claim against your title.
(2)
Negotiate a settlement.
(3)
Prosecute or defend a court case related
to the claim.
(4)
Pay you the amount required by this
Policy.
(5)
Take other action under Section 4b.
(6)
Cancel this policy by paying the Policy
Amount, then in force, and only those
costs, attorneys' fees and expenses
incurred up to that time that we are
obligated to pay.
We can choose which of these to do.
5.
HANDLING A CLAIM OR COURT CASE
You must cooperate with us in handling any claim or
court case and give us all relevant information. We
must repay you only for those settlement costs,
attorneys' fees and expenses that we approve in
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advance. When we defend or sue to clear your title, we
have a right to choose the attorney. You have the
right to disapprove our choice of attorney for
reasonable cause. We can appeal any decision to the
highest court. We do not have to pay your claim until
your case is finally decided. We do not agree that the
matter is a covered title risk by defending.
App. in Supp. of Def.'s Mot. for Summ. J.
("Def.'s App.") at 18-
19.
On or about July 6, 2010, plaintiff received a Notice to
Vacate, informing her that the property had been sold at
foreclosure to a new owner, and directing her to vacate the
property within three days.l
Plaintiff also learned that a suit
was pending in the 236th Judicial District Court of Tarrant
County ("state Court Action"), initiated by the purchaser of the
property, to resolve questions about funds paid into the state
court's registry from the foreclosure sale.
Defendant concedes
for purposes of the summary judgment motion that "issues
regarding title to [plaintiff's] Property [] are currently being
litigated in the Tarrant County state court lawsuit."
in Supp. of Mot. for Summ. J.
Def.'s Br.
("Def.' s Br.") at 4.
Upon receipt of the Notice to Vacate, plaintiff submitted a
claim to defendant under the Policy, whereupon defendant retained
the law firm of Law, Snakard and Gamble ("Law, Snakard") to
represent plaintiff under the policy.
Law, Snakard filed a
IThe record reflects that the foreclosure was related to a prior tax lien.
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petition in intervention in the state Court Action on plaintiff's
behalf, and continues to represent plaintiff in that proceeding
at this time.
Although the petition does not clearly delineate any claims
or causes of action, plaintiff appears to complain that the Law,
Snakard attorney hired by defendant has not pursued the strategy
suggested by plaintiff's counsel in the instant action, Virgil
Lowrie ("Lowrie"), nor has defendant acquiesced to plaintiff's
demand that it settle with plaintiff rather than proceed with the
state Court Action.
Defendant has interpreted plaintiff's petition as alleging
claims against it for breach of the duty of good faith and fair
dealing in handling plaintiff's claim under the Policy, as well
as for breach of the Policy.
Defendant contends that summary
judgment is proper on both of these claims because it has not
breached any duty of good faith and fair dealing; it has not
breached any terms of the Policy, but instead has performed in
accordance with the policy provisions; and plaintiff's claims are
not ripe for adjudication.
II.
Applicable Summary Judgment Principles
Rule 56{a) of the Federal Rules of civil Procedure provides
that the court shall grant summary judgment on a claim or defense
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if there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.
Fed. R. Civ.
P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986).
The movant bears the initial burden of pointing out to
the court that there is no genuine dispute as to any material
fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 325 (1986).
The movant can discharge this burden by pointing out the absence
of evidence supporting one or more essential elements of the
nonmoving party's claim, "since a complete failure of proof
concerning an essential element of the nonmoving party's case
necessarily renders all other facts immaterial."
Id. at 323.
Once the movant has carried its burden under Rule 56(a), the
nonmoving party must identify evidence in the record that creates
a genuine dispute as to each of the challenged elements of its
case.
Id. at 324.
See also Fed. R. civ. P. 56(c)
("A party
asserting that a fact . . . is genuinely disputed must support
the assertion by
the record
citing to particular parts of materials in
.").
If the evidence identified could not lead
a rational trier of fact to find in favor of the nonmoving party
as to each essential element of the nonmoving party's case, there
is no genuine dispute for trial and summary judgment is
appropriate.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587, 597 (1986).
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III.
Analysis
The court agrees that it is difficult to discern what, if
any, causes of action plaintiff has purportedly asserted against
defendant in the petition.
However, the court concludes that
summary judgment is warranted on the issues raised and briefed by
the parties:
whether defendant breached the contract or breached
its duty of good faith and fair dealing.
The summary judgment
evidence clearly establishes that defendant acted consistent with
the terms of the Policy, and no summary judgment evidence
establishes a breach of any obligation by defendant.
Under Texas law, insurance policies are "interpreted in
accordance with the rules of construction that apply to all
contracts generally."
Sharp v. State Farm Fire & Cas. Ins. Co.,
115 F.3d 1258, 1260-61 (5th Cir. 1997)
(citing Nat'l union Fire
Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517,
520 (Tex. 1995)).
To establish a breach of the Policy requires
plaintiff to show the existence of a valid contract, performance
by plaintiff, a breach by defendant, and damage to plaintiff.
Lewis v. Bank of Am. NA, 343 F.3d 540, 544-45 (5th Cir. 2003)
(citing Palmer v. Espey Huston & Assocs., Inc., 84 S.W.3d 345,
353 (Tex. App.--Corpus Christie 2002, pet. denied)).
When plaintiff submitted her claim to defendant, the
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applicable Policy language required defendant to take some
action:
pay the claim, negotiate a settlement, prosecute or
defend a court case on the claim, or pay the Policy amount, among
other options.
The Policy expressly authorized defendant to
determine which option to pursue.
It is undisputed that
defendant engaged counsel to prosecute a court case related to
the claim, as expressly authorized by the policy, and that
counsel continued to prosecute the case at the time defendant
filed its summary judgment motion.
Because defendant acted
pursuant to the terms of the Policy, no breach occurred.
In her response plaintiff relies on the following language
in paragraph five of the Policy to support her claim of
defendant's breach: "You have the right to disapprove our choice
of attorney for reasonable cause."
Def.'s App. at 19.
Plaintiff
refers the court generally to documents in the appendix submitted
with her response that purportedly show defendant "failed to
respond or confer" with her about this provision, with this
failure amounting to a breach of the Policy.
of the Resp. to Def.' s Mot. for Summ. J.
PI's Br. in Supp.
("Pl.' s Br.") at 6.
Plaintiff, however, has directed the court to nothing in the
summary judgment record that indicates she informed defendant
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that she disapproved of defendant's choice of attorney.2
The exhibits referred to by plaintiff are copies of letters
purportedly sent by Lowrie to defendant's in-house counselor the
Law, Snakard attorney retained on plaintiff's behalf.
Some of
the letters request copies of pleadings; other letters stress
that plaintiff is encountering financial difficulties and urge
settlement of the State Court Action; and some suggest possible
courses of action that could be taken, including urging defendant
to settle with plaintiff.
For example, a letter dated December
27, 2010, to the Law, Snakard attorney states that plaintiff may
lose her property if the State Court Action is not quickly
resolved and asks "to be advised of the basis upon which
[defendant] would agree to settle the case with [plaintiff]."
App. to PI.'s Resp. at 71.
Other letters urge Law, Snakard to
demand Deutche Bank rescind the purchase contract and follow such
demand with a motion for summary judgment.
It appears that the intent of the letters was to urge Law,
Snakard or defendant's in-house counsel to implement the strategy
suggested by Lowrie, namely, to dismiss plaintiff from the State
Court Action and negotiate some settlement on her behalf with
2To defeat summary judgment, plaintiff, as the nonmovant, must "identify specific evidence in the
record, and [] articulate the 'precise manner' in which that evidence support[s] [her] claim[s]." Forsyth v.
Barr, 19 F.3d 1527, 1537 (5th Cir. 1994) (internal citations omitted). Plaintiff referred the court
generally to her exhibits but failed to identify either the specific evidence in the record or precisely how
it supports her claims.
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Deutsche Bank.
However, none of the letters voices disapproval
of Law, Snakard, nor do they ask that defendant appoint new
counsel.
Plaintiff has adduced no summary judgment evidence to
raise a genuine issue of material fact concerning any alleged
breach by defendant of the Policy.
In the response plaintiff appears to argue that the fact
that a dispute arose over plaintiff's title to the property is
also evidence of defendant's breach.
If that is plaintiff's
argument, she misapprehends the purpose of the Policy.
insurance policy is a contract of indemnity."
"A title
Chicago Title Ins.
Co. v. McDaniel, 875 S.W.2d 310, 311 (Tex. 1994)
(per curiam) .
The duty of a title insurance company to its insured is to
indemnify the insured against a loss occasioned by a defect in
title.
Id.
Issuance of a title policy is not a representation
of the status of the property's title; the title insurance
company has no duty to point out to the insured any outstanding
encumbrances.
Martinka v. Commonwealth Land Title Ins. Co., 836
S.W.2d 773, 777 (Tex. App.--Houston [1st Dist.] 1992, writ
denied).
This is borne out by language in the Policy informing
plaintiff that the Policy "is not an opinion or report of your
title" but is "a contract of indemnity, meaning a promise to pay
you or to take other action" if a loss results from a covered
title risk.
Def.'s App. at 7, 9, 12.
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Thus, a breach of the
Policy does not arise because plaintiff filed a claim according
to its terms.
Defendant also contends it has not breached its duty of good
faith and fair dealing, which occurs when an insurer denies or
delays payment of a claim after its liability becomes reasonably
clear.
Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 56 {Tex.
1997).3
In the response plaintiff relies on the correspondence
included in her appendix to argue that defendant did indeed
breach its duty in a number of ways: by failing to make a demand
to Deutche Bank for rescission of the purchase, not following
that demand with a motion for summary judgment or otherwise
taking steps to end plaintiff's involvement in the State Court
Action, and failing to reimburse plaintiff the amount of the
Policy.
The difficulty for plaintiff is that under the terms of
the Policy, none of these acts or omissions constitute a breach
of defendant's duty of good faith and fair dealing.
Where a policy of title insurance gives the insurer the
right or duty to defend its insured against adverse claims to
title, the insurer may take the opportunity to prosecute the
action on the insured's behalf before paying the claim.
3Defendant states the test for a breach ofthe duty of good faith and fair dealing as "no reasonable
basis for denial of a claim, delay in payment, or failure on the part of the insurer to determine whether
there is any reasonable basis for denial or delay." Def.'s Br. at 6, citing Arnold v. Nat'l Cnty. Mut. Fire
Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987). However, the Texas Supreme Court modified Arnold in
Universe Life Ins. Co. v. Giles, 950 S.W.2d 48 (Tex. 1997). Defendant prevails under either test.
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Martinka, 836 S.W.2d at 776; S. Title Guar. Co., Inc. v.
Prendergast, 494 S.W.2d 154, 156 (Tex. 1973).
The exercise by a
title insurer of its contractual right to initiate or defend a
court action on its insured's behalf thus does not constitute a
breach of the duty of good faith and fair dealing.
Martinka, 836
S.W.2d at 776; First State Bank v. Am. Title Ins. Co., 1996 WL
400322 at *4 (5th Cir. June 19, 1996).
This is exactly the scenario before the court.
The Policy
afforded defendant a number of choices when plaintiff filed her
claim, including the choice to "[p]rosecute or defend a court
case related to the claim."
Def.'s App. at 18.
Defendant
exercised its contractual right to intervene in the State Court
Action on plaintiff's behalf before paying her claim under the
Policy.
Notably, under the Policy defendant is not required to
pay plaintiff's claim "until [her] case is finally decided."
Def.'s App. at 19.
Plaintiff has directed the court to no
summary judgment evidence showing any act or omission of
defendant that could be construed as a breach of its duty of good
faith and fair dealing.
Further, plaintiff has adduced no summary judgment evidence
that Deutche Bank would have acquiesced to any demand for
rescission had defendant made such a demand, nor is there any
evidence of the basis of any summary judgment motion that
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plaintiff contends Law, Snakard should have filed or that any of
these acts, if undertaken by defendant or Law, Snakard, would
have been successful.
In short, there is no summary judgment
evidence before the court of any breach by defendant of its duty
of good faith and fair dealing.
IV.
Order
Therefore,
The court ORDERS that defendant's motion for summary
judgment be, and is hereby, granted, and that all claims and
causes of action brought by plaintiff, Roberta T. Lawler, against
defendant, Fidelity National Title Insurance Company, be, and are
hereby, dismissed with prejudice.
SIGNED October 31, 2011.
States
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