United States District Court, D. Vermont
TIMOTHY C. JOHNSTON and ZAPATA COURAGE, Plaintiffs,
CONNECTICUT ATTORNEYS TITLE INSURANCE CO., JON S. SVITAVSKY, and CHERYL JIMMO, f/k/a SVITAVSKY, Defendants.
OPINION AND ORDER GRANTING DEFENDANT CONNECTICUT ATTORNEYS TITLE INSURANCE CO.'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT (Docs. 7, 12)
CHRISTINA REISS, Chief District Judge.
This matter comes before the court on the motion for summary judgment filed by Defendant Connecticut Attorneys Title Insurance Co. ("CATIC") and the cross-motion for partial summary judgment filed by Plaintiffs Timothy C. Johnston and Zapata Courage ("Plaintiffs"). Plaintiffs seek a declaration of coverage under a CATIC owner's title insurance policy #0P1413352 (the "Policy") which Plaintiff Johnston purchased in conjunction with his acquisition of certain real property located in Ripton, Vermont (the "Property"). Plaintiffs claim coverage is available under the Policy because the United States Forest Service ("USFS") issued them a letter, demanding the removal of certain structures on the Property that allegedly encroach on federal lands.
CATIC moves for summary judgment in its favor, arguing there has been no forced removal and that the Policy's survey exception applies and excludes coverage for any facts which an accurate survey or personal inspection of the land would disclose. CATIC seeks summary judgment on Plaintiffs' claim for breach of the implied covenant of good faith and fair dealing on the ground that no breach of the covenant may be found because CATIC was merely asserting its contractual rights when it advised Plaintiffs not to prompt the USFS to file suit. (Doc. 7.)
Plaintiffs cross-move for partial summary judgment in their favor. (Doc. 12.) They contend that there has been a forced removal under the Policy and the survey exception either does not exclude coverage, is unconscionable, or renders the forced removal provision illusory.
The court heard oral argument on January 21, 2014. Plaintiffs are represented by William L. Durrell, Esq. CATIC is represented by Michael J. Harris, Esq.
I. Procedural Background.
In Counts I-IV of their Complaint, Plaintiffs allege claims of breach of warranty, consumer fraud, fraud and deceit, and negligent misrepresentation against Defendants Jon S. Svitaysky and Cheryl Jimmo, f/k/a Svitaysky. In Count V of their Complaint, they seek a declaratory judgment that "CATIC has the duty to defend and indemnify Johnston against any claims made by the USFS and/or the United States of America for trespass, encroachment or similar claims under the terms of the title insurance policy at issue." (Doc. 1 ¶ 57.) In Counts VI, VII and VIII, Plaintiffs allege breach of contract, bad faith, and breach of the implied covenant of good faith and fair dealing against CATIC. On January 21, 2014, Plaintiffs withdrew their bad faith claim against CATIC. At issue in the cross motions are Plaintiffs' remaining claims against CATIC, each of which arises from either the Policy or CATIC's handling of Plaintiff Johnston's claim under the Policy.
II. The Undisputed Facts.
A. The Policy.
The Policy provides coverage to Plaintiff Johnston as follows:
OWNER'S COVERAGE STATEMENT
This Policy insures your title to the land described in Schedule A-if that land is a one-to-four family residential lot or condominium unit.
Your insurance as described in this Coverage Statement, is effective on the Policy Date shown in Schedule A.
Your insurance is limited by the following:
Exclusions on Page 2
Exceptions in Schedule B
Conditions on Pages 2 and 3
(Doc. 1-5 at 1.) The Policy defines "title" as "the ownership of your interest in the land, as shown in Schedule A." Id. at 2. Schedule A references the July 19, 2002 Svitaysky/Jimmo-to-Johnston deed and sets forth the property description contained therein.
Immediately following the "OWNER'S COVERAGE STATEMENT" is a list of "COVERED TITLE RISKS, " which provides coverage for certain identified title risks, including the following:
11. Your title is unmarketable, which allows another person to refuse to perform a contract to purchase, to lease or to make a mortgage loan.
12. You are forced to remove your existing structure-other than a boundary wall or fence-because:
a. it extends on to adjoining land or on to any easement
b. it violates a restriction shown in Schedule B
c. it violates an existing zoning law
d. any portion of it was built without obtaining a building permit from the proper government office or agency.
Id. at 1.
Schedule B of the Policy contains three general exceptions, identified as exceptions A, B and C, which apply by default unless the insured and CATIC negotiate their removal. Plaintiff Johnston and CATIC agreed to delete exceptions A and C, but retained exception B, the survey exception.
The survey exception provides: "This Policy does not insure against loss or damage (and the Company will not pay costs, attorney's fees or expenses) which arise by reason of... [a]ny facts which an accurate survey or personal inspection of the land would disclose." Id. at 5. The Policy defines "land" as "the land or condominium unit described in Schedule A and any improvements on the land which are real property." Id. at 2.
The Policy also excludes from coverage any "Title Risks... that are created, allowed or agreed ...