New York Court Holds Title Insurer Has No Duty to Defend Adverse Possession Action

The New York Appellate Division, Second Department, recently held that a title insurance company has no duty to defend or indemnify its insured for an adverse possession action brought against the insured, citing the title policy’s parties in possession exception. See Melamed v. First Am. Title Ins. Co., 190 A.D.3d 724 (2d Dept. 2021).  Plaintiffs purchased a property and obtained a title insurance policy from the defendant title insurance company.  Plaintiffs’ neighbor later brought an action against Plaintiffs, claiming that the neighbor owned a portion of plaintiffs’ property via adverse possession.  Plaintiffs then submitted a claim to defendant for coverage in the adverse possession action, which defendant denied.  After the denial, plaintiffs brought this action seeking a judgment that defendant is obligated to defend and indemnify them in the adverse possession action.  The parties cross-moved for summary judgment, and the trial court granted the defendant title insurer’s motion.

On appeal, the Court affirmed.  The Court found that “[t]he subject title insurance policy included an exception for claims arising from the rights of persons in possession. . . . [and the] claim for possession of a portion of the plaintiffs’ property by adverse possession was a claim arising from the rights of persons in possession.  Contrary to the plaintiffs’ contention, there was no other reasonable interpretation of this exception to the policy.”  Accordingly, it affirmed the dismissal of the complaint against defendant.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, Desiree McDonald at dmcdonald@riker.com, or Andrew Raimondi at araimondi@riker.com.