January 12, 2011
MOSHE L. SINGER AND SHRAGA SCHORR, PLAINTIFFS-RESPONDENTS,
MICHAEL CRAIN, DEFENDANT-RESPONDENT, AND OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5503-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: December 15, 2010
Before Judges Fisher, Simonelli and Fasciale.
This case involves a dispute between a title insurer, an insured, and a potential purchaser of residential property. Defendant Old Republic National Title Insurance Company (Old Republic) appeals from a judgment entered against it. Old Republic does not dispute the amount of the judgment, but contends that the motion judge erred by disposing of liability summarily. We agree and reverse.
Plaintiffs Moshe L. Singer and Shraga Schoor (Singer) own property located in Highlands. Old Republic issued a title insurance policy for the property. Singer contracted to sell the property to Michael Crain. Crain refused to close title because his title search uncovered a riparian/tidelands claim in favor of the State of New Jersey. Singer allegedly*fn1 notified Old Republic of the potential defect in title.
Singer filed a complaint against Crain and Old Republic. Singer alleged that Crain breached the contract of sale, and that Old Republic failed to uncover the tidelands claim and quiet title. Singer moved for a declaratory judgment that Old Republic "is liable to [Singer] for actual damages [Singer] incurred pursuant to the parties' agreement." Crain cross-moved for summary judgment and argued that he properly canceled the contract of sale because title was defective.
The motion judge heard oral argument, dismissed the complaint against Crain, and issued an order declaring that Old Republic was liable to Singer "as a result of [Old Republic's] failure to disclose the existence [of] a . . . [t]idelands claim." After the judge disposed of the liability issues, Singer and Old Republic reached an agreement concerning the amount of damages.
On appeal, Old Republic argues that the judge erred by (1) declaring it liable to Singer under negligence principles, and (2) concluding it breached its contract of title insurance with Singer. Old Republic also contends that the judge misconstrued language in the contract of sale and erred by granting summary judgment to Crain.
When reviewing a grant of summary judgment, we employ the same legal standards used by the motion judge. Spring Creek Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super. 158, 180 (App. Div.), certif. denied, 196 N.J. 85 (2008); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated that there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). We view the evidence in the light most favorable to the non-moving party and analyze whether the moving party was entitled to judgment as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523, 529 (1995). We accord no deference to the motion judge's conclusions on issues of law, Manalapan Realty, L.P. v. Township Committee of Manalapan, 140 N.J. 366, 378 (1995), which we review de novo. Spring Creek, supra, 399 N.J. Super. at 180; Dep't of Envtl. Prot. v. Kafil, 395 N.J. Super. 597, 601 (App. Div. 2007).
We begin by addressing defendant's argument that the judge erred by granting summary judgment to Crain. The motion judge determined that Crain had the right to refuse to close title because paragraph 5(d) of the contract of sale provides in part that:
Buyer does not have to complete the purchase, however, if any easement, restriction or facts disclosed by an accurate survey would substantially interfere with the use of the Property for residential purposes.
The motion judge did not make findings of fact concerning whether the tidelands claim constituted substantial interference with the use of the property for residential purposes. Instead, the judge merely stated:
And I understand the distinction between having a substantial interference with the use of the property for residential purposes and interfering with the ownership of the property. But you know, use, it's easy to bandy the word about for all --[.]
Old Republic contends that the tidelands claim impacts a small percentage of the premises, does not touch the structure, and would not impede the issuance of a certificate of occupancy. It also contends that in determining whether the tidelands claim substantially interfered with the use of the property for residential purposes, the judge did not consider Crain's intention to "hold the property for only a short time, make some repairs, and then resell it." We conclude that genuine issues of material fact exist as to whether the tidelands claim interfered with the use of the property for residential purposes, thus precluding summary judgment as to Crain.
Next, we address Old Republic's argument that the judge erred by imposing liability under negligence principles. The motion judge declared Old Republic liable for the actual losses and damages incurred by Singer as a result of Old Republic's negligence in failing to disclose the existence of the tideland's claim. However, the Supreme Court held in Walker Rogge, Inc. v. Chelsea Title & Guaranty Co., 116 N.J. 517, 535 (1989), "that a title company's liability is limited to the policy and . . . the company is not liable in tort for negligence in searching records. Thus, there is a question of material fact as to whether Old Republic assumed duties other than those imposed by the title insurance policy.
Old Republic also challenges the judge's finding that it breached the contract of title insurance. Old Republic had several options after it received notice of a claim. Paragraph four of the insurance policy provides 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.
Old Republic chose options "c" and "e," contacted Singer, and attempted to obtain a riparian grant on behalf of Singer. Old Republic posits that if successful in obtaining the grant, it had no further liability to Singer pursuant to paragraph six of the policy, which provides as follows:
6. LIMITATION OF THE COMPANY'S LIABILITY
b. If we remove the claim against your title within a reasonable time after receiving notice of it, we will have no further liability for it.
Further, Old Republic claims it provided to Singer documents necessary for filing a riparian grant, but Singer failed to return executed copies. Thus, Singer failed to cooperate in violation of paragraph five of the policy, which provides:
You must cooperate with us in handling any claim or court case and give us all relevant information.
We are required to repay you only for those settlement costs, attorney's fees and expenses that we approve in advance.
When we defend your title, we have a right to choose the attorney.
We can appeal any decision to the highest court. We do not have to pay your claim until your case is finally decided.
Viewing theses facts in a light most favorable to Old Republic, we conclude that there is a genuine issue of material fact as to whether Old Republic breached the contract of title insurance.