The Maryland Court of Special Appeals recently held that an insured lender’s breach of contract claim against a title insurance company was untimely under Maryland three-year statute of limitations. See Pennymac Holdings, LLC v. First Am. Title Ins. Co., 2020 WL 7024845 (Md. Ct. Spec. App. Nov. 30, 2020). In 2006, a property owner refinanced the existing loans on his property with a $480,000 loan from a lender. In connection with the loan, the defendant title insurance company issued a closing protection letter and a title insurance policy to the lender. Although the loan was secured by a deed of trust on the property, the deed of trust was never recorded. The loan eventually was transferred to plaintiff’s predecessor, who filed a claim with defendant in 2012. Defendant denied the claim. After the loan was transferred to plaintiff, plaintiff made another claim in 2013, which defendant again denied. In 2014, plaintiff filed another claim, but this time under the CPL. Defendant also denied this claim, stating that the party who handled the closing was not the party named in the CPL. In 2016, plaintiff brought this action against defendant claiming breach of contract. Defendant filed a motion for summary judgment, arguing, among other things, that plaintiff’s complaint was outside the three-year limitations period for breach of contract. The trial court agreed and granted defendant’s motion for summary judgment.
On appeal, the Court affirmed in part and reversed in part. First, the Court found that a title insurance policy is an “ordinary contract” under Maryland law, which is subject to a three-year limitations period. Despite plaintiff’s claims, the Court found that it is not a specialty “contract under seal,” that would be subject to a twelve-year period. Second, the Court found that the three-year period began when defendant denied the claim, which was more than three years before plaintiff filed this action. In doing so, the Court rejected plaintiff’s claim that it did not suffer a loss until it suffered an adverse judgment in an action trying to enforce the deed of trust against the property. Finally, the Court reversed the trial court’s order to the extent it granted summary judgment on plaintiff’s breach of contract claim regarding the CPL. The Court found that the claim under the CPL was different from the claim under the policy and that the trial court needed to address that argument separately.