This is a declaratory judgment action. Plaintiff Title Insurance Corporation of Pennsylvania ("T.I.C.P.") insured the title to certain residential property purchased by defendant Marguerite Wagner ("Wagner"), who took title as trustee for her minor children. Her title has been challenged in a suit commenced by Manuel Battaglia, her grantor.
Battaglia owned two adjoining properties in Atlantic City, New Jersey. He claims that he agreed to sell only the front property to Marguerite Wagner for $25,000 and at settlement delivered an executed plain warranty deed to her describing that property. He alleges that the buyer, without his knowledge or consent, added the description of his rear property to the deed before it was recorded. He seeks to impose a constructive trust on the rear property, demands a reconveyance thereof and seeks compensatory and punitive damages. The first count of his complaint alleges fraud; the second count claims that the alteration of the deed was the result of a "unilateral negligent mistake" of Marguerite Wagner or was the "mutual mistake" of the seller and the buyer.
T.I.C.P.'s policy insures both of the adjoining properties described in the deed. It brings this action seeking a declaration that it has no obligation to defend Battaglia's suit or to pay any damages Wagner may suffer. It argues that the exclusions in the policy effectively deny the right of defendant to any coverage. A stay of the underlying suit was obtained before defendant in that action (Wagner) filed an answer. The pretrial order in this declaratory suit, however, reflects her contention that the deed was not altered.
The policy provides in part that it insures against
1. Title to the estate or interest described in Schedule A being vested otherwise than as stated therein;
2. Any defect in or lien or encumbrance on such title;
4. Unmarketability of such title.
It also contains the following promise:
The Company, at its own cost and without undue delay, shall provide for the defense of an insured in all litigation consisting of actions or proceedings commenced against such insured , or a defense interposed against an insured in an action to enforce a contract for a sale of the estate or interest in said land, to the extent that such litigation is founded upon an alleged defect, lien, encumbrance, or other matter insured against by this policy. [Emphasis supplied]
This provision of the policy would protect defendant, except for the company's contention that policy exclusions 3(a) and 3(c) both deny coverage. The first of these excludes from coverage "[d]efects . . . adverse claims, or other matters . . . created . . . by the insured claimant." T.I.C.P. contends that the title defect in question was created by Marguerite Wagner. The second exclusion denies coverage for claims "resulting in no loss or damage to the insured claimant." T.I.C.P. argues that the suit will result in no loss to its insured.
The company now moves for summary judgment. Some facts are in dispute, but those involving the central issues in this declaratory action are not. These issues may therefore be decided as a matter of law. Judson ...