The Court of Appeals of Michigan recently affirmed a decision finding that a title insurance company and title agent were not liable to an insured for negligent misrepresentation or breach of contract for an issue with a disputed portion of property that fell outside the policy’s legal description. See Shower Curtain Sols. Ltd., LLC v. First Am. Title Ins. Co., 2020 WL 3393467 (Mich. Ct. App. June 18, 2020). After purchasing the property at issue, plaintiff discovered that a neighbor had fenced off a portion of an alley that should have been part of the insured’s property. Plaintiff brought a quiet title suit against the neighbor, and included claims against the title insurance company and title agent for negligent misrepresentation and breach of contract. The trial court granted plaintiff summary disposition on the quiet title claim, but dismissed the claims against the title insurance company and the title agent. The trial court also dismissed the agent’s request for sanctions.
On appeal, the Court affirmed the dismissal of the claims against the two title entities. First, the Court found that the trial court properly dismissed the negligent misrepresentation claim because, under Michigan law, “an injured party must rely on its title insurance contract to bring suit against its title insurer or the insurer’s agent; there can be no action in tort.” Second, the Court found that the trial court properly dismissed the breach of contract claims. With regard to the title agent, the Court found that it was not a party to the policy and therefore could not be liable under it. “The act of countersigning the policy does not demonstrate an express intent by [the agent] to also be held liable on the contract.” With regard to the title insurer, the Court found that the legal description of the insured property did not include the alley at issue and that there therefore could not be coverage under the policy for land that was not part of the insured property. In doing so, the Court rejected plaintiff’s claim that the policy’s reference to the insured property’s street address—which plaintiff argued included the alley—created coverage for the alley, finding instead that the more specific legal description found in Schedule A controlled. Finally, the Court reversed the trial court’s decision not to award sanctions to the agent, finding that the breach of contract allegation against the agent was “so contrary to . . . precedent without citing any ground to overrule that precedent [that it] was frivolous.”