New York Appellate Court Holds Insured Owner Not Entitled to Coverage Under Exclusion 3(a) of Title Insurance Policy

New York’s Second Department Appellate Division recently affirmed that an insured owner was not entitled to coverage under its title insurance policy for an action in which the insured was accused of fraudulently altering the deed.  See Queens Org., LLC v. First Am. Title Ins. Co., 2019 WL 2030322 (2nd Dept. May 8, 2019).  In the case, the plaintiff insured purchased a property and was issued a title insurance policy by the defendant title insurance company.  In 2013, a third party brought a lawsuit against the insured and its principal, alleging that they “recorded a deed that had been fraudulently altered, conveying a 50% interest in the property to the [insured].”  The insurer denied coverage.  The underlying action against the insured eventually was dismissed, and the insured brought this action against the insurer to recover damages for breach of the title insurance policy.  The trial court denied the insured’s motion for summary judgment and granted the insurer’s cross-motion for summary judgment.

On appeal the Court affirmed.  In doing so, the Court reaffirmed that an insurer’s duty to defend is “triggered by the allegations contained in the underlying complaint.”  In this case, the allegations were that the insured was involved in fraudulently altering the deed.  The insurer denied coverage under Exclusion 3(a), which excludes coverage for “(d)efects, liens, encumbrances, adverse claims, or other matters . . . created, suffered, assumed, or agreed to by the Insured Claimant.”  The Court found that “the allegations of the underlying complaint fell entirely within an exclusion of the policy, the exclusion is subject to no other reasonable interpretation, and there is no possible factual or legal basis upon which [the insurer] may eventually be held obligated to indemnify the [insured] under any policy provision.”  Accordingly, the Court affirmed the order granting the insurer’s summary judgment motion.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Dylan Goetsch at