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Lauritzen v. First American Title Insurance Co.

Court of Appeals of Utah

April 5, 2018

Bruce W. Lauritzen, Appellant,
v.
First American Title Insurance Company, Appellee.

          Fifth District Court, St. George Department The Honorable James L. Shumate No. 120500181

          Karra J. Porter and J.D. Lauritzen, Attorneys for Appellant

          Ronald G. Russell, Royce B. Covington, and Jeffery A. Balls Attorneys for Appellee

          Judge Ryan M. Harris authored this Opinion, in which Judges Gregory K. Orme and Diana Hagen concurred.

          HARRIS, Judge

         ¶1 Bruce W. Lauritzen purchased five lots of undeveloped real property in Hurricane, Utah based on a description in a recorded subdivision plat map. Lauritzen then purchased title insurance for these lots through First American Title Insurance Company (First American). Subsequently, Lauritzen learned that the plat map had a material defect: one of his lots partially overlapped with another parcel. Eventually, the plat was amended by shrinking the overlapping lot and by imposing additional development requirements on all of Lauritzen's lots. Lauritzen then made a claim on his title insurance policy, and filed this lawsuit after First American denied his claim. Eventually, the district court granted summary judgment to First American on all of Lauritzen's claims, and Lauritzen appeals. We affirm the bulk of the district court's ruling, but reverse the district court's decision to the extent it determined that no insurance coverage exists for damages caused by the lot overlap, and we remand for further proceedings.

         BACKGROUND

         ¶2 On April 2, 2007, the Sunset Ridge Phase 3 Subdivision Plat map (the Original Plat) was recorded with the Washington County Recorder's Office. At some point soon thereafter, the Washington County Recorder's Office issued a notice that the Original Plat was defective because at least one of the lots (Lot 54) depicted on the Original Plat overlapped with an adjacent parcel of land.

         ¶3 Later, on April 19, 2007, several lots depicted on the Original Plat were conveyed to a holding company (the Company) via warranty deed. The deed did not contain a metes and bounds description of the lots, but instead referred to the Original Plat, indicating that the lots were being conveyed as they were represented "according to the official plat thereof, recorded in the office of the Washington County Recorder." On June 7, 2007, Lauritzen purchased five lots (the Lots) from the Company, which conveyed the Lots to him by a warranty deed. Lauritzen's deed also did not describe the metes and bounds of the Lots, but instead conveyed "Lot 54, 64, 76, 77 & 80, Sunset Ridge Phase 3, according to the official plat thereof recorded in the office of the Washington County Recorder."

         ¶4 After acquiring the Lots, Lauritzen purchased title insurance from First American, effective April 19, 2007. The insurance policy (the Policy), in pertinent part, insured Lauritzen against loss or damage incurred by reason of "[a]ny defect in or lien or encumbrance on the title; [or] . . . [u]nmarketability of the title" to the Lots.

          ¶5 Sometime in 2008, Lauritzen learned that the Washington County Recorder's Office had rejected the Original Plat due to the presence of the overlap, and that "consent" would be required before development in the subdivision could proceed.[1]Indeed, because of the issues with the Original Plat, Hurricane municipal authorities refused to issue Lauritzen building permits for the Lots. After discovering the problem, Lauritzen contacted one of First American's insurance agents to obtain a copy of the Policy, and to see what needed to be done to rectify the problem with the plat. On one occasion, Lauritzen met in person with First American's agent, who assured Lauritzen that the problem would soon be resolved.

         ¶6 Eventually, a solution was reached that required making Lot 54 slightly smaller (by approximately 344 square feet) than it had been on the Original Plat. In addition, the solution included new setback requirements and restrictions on construction- none of which were included in the Original Plat-that affected all of Lauritzen's Lots. All of the affected landowners, including Lauritzen, eventually gave their consent to a new plat map (the Amended Plat) that reflected these changes, and in September 2008 the Amended Plat was recorded with the Washington County Recorder's Office.

         ¶7 On August 14, 2009, Lauritzen made a claim with First American alleging that the title to the Lots conveyed to him by the warranty deed was defective and unmarketable. First American denied the claim, and Lauritzen then filed this lawsuit against First American, alleging that there was a defect in his title to the Lots and seeking damages from First American pursuant to the Policy. As the litigation progressed, Lauritzen asserted that he had been damaged because: (1) the change from the Original Plat to the Amended Plat had decreased Lot 54 in size; (2) Lauritzen had been unable to receive a building permit on any of his lots until the Amended Plat was recorded; (3) the new setback and construction requirements that applied to all of the Lots had depressed their value; and (4) all of the Lots had been valueless for the period of time prior to the approval of the Amended Plat.

         ¶8 Eventually, both parties moved for summary judgment. In its motion, First American argued that it was entitled to judgment as a matter of law on several grounds. First, it argued that the Original Plat was merely a descriptive tool and was not a part of the warranty deed initially conveying the lots to Lauritzen. Second, First American argued that Lauritzen's title to the Lots was not unmarketable. Third, First American argued that Lauritzen's claim was not timely and that First American was thus absolved of any potential liability. Fourth, First American argued that Lauritzen had not proven any damages. The district court denied Lauritzen's motion and granted First American's.[2] Lauritzen appeals the district court's grant of First American's motion.

         ISSUE AND STANDARD OF REVIEW

         ¶9 Lauritzen raises one issue on appeal: whether the district court erred in granting summary judgment for First American. A district court "shall grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Utah R. Civ. P. 56(a). We review a district court's summary judgment ruling for correctness. Fire Ins. Exch. v. Oltmanns, 2018 UT 10, ¶ 7.

         ANALYSIS

         I. Coverage under the Title Insurance Policy

         ¶10 The first matter that we must address is whether, and to what extent, there is coverage under the terms of the Policy for the events described in Lauritzen's complaint. Pursuant to the terms of the Policy, First American insured Lauritzen against loss or damage incurred by reason of "[a]ny defect in or lien or encumbrance on the title; [or] . . . [u]nmarketability of the title" to the Lots. Lauritzen asserts that both of these phrases are implicated in this case and provide the basis for a determination that coverage exists. Lauritzen argues that the title to all of the Lots was "unmarketable" because, at the time the warranty deed was executed, the Original Plat had been rejected and the Amended Plat placed new restrictions on the Lots. Lauritzen also argues that ...


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