Pennsylvania Appellate Court Affirms Dismissal of Claim Against Title Insurer

The Superior Court of Pennsylvania recently affirmed a trial court’s grant of summary judgment for a title insurance company and found that there was no coverage under the policy because the alleged title defect did not affect the insured property.  See Krajewski v. Fid. Nat. Title Ins. Co., 2016 WL 2754435 (Pa. Super. Ct. May 11, 2016).  In 1960, the owners of two properties executed a subdivision agreement stating that their properties “shall hereinafter be joined . . . and shall never be severed[.]”  In 1961, the owners of the second lot sold it to the owners of the first lot.  Although the legal description only described the metes and bounds of the second lot, the deed nonetheless reiterated that the two lots “are hereby joined and shall never be severed.”  One week later, the owners of the first lot conveyed the first lot to themselves and created a tenancy in the entirety.  This second deed did not reference the subdivision agreement or the other property.  In 1989, the first lot was sold through a foreclosure, and the purchaser at the foreclosure sale then sold it to the insureds.  In the legal description on both the deed and the title policy, there was no mention of the second lot.  Shortly thereafter, the second lot, which was not part of the foreclosure, was sold to a third party.  The insureds then filed a claim with the title insurer, claiming that the language of the 1961 deed conveying the second lot ensured that the properties had been joined as one and that the third parties’ purchase of the second lot was a title defect insured by their policy.  The insurer rejected the claim, and the insureds sued.  They claimed that the 1961 deed ensured that the properties should not be separated, and that the 1960 subdivision agreement created a restrictive covenant that prohibited this separation.  The trial court granted summary judgment for the insurer.  It found that the legal description of the policy controlled and that it only insured the first lot, and not the second lot, from title defects.  On appeal, the appellate court affirmed.  In addition to upholding the plain language of the policy, it noted that, even if the original property owners had created a restrictive covenant, it was abandoned when the owners conveyed them separately and treated them as separate properties.  Therefore, the properties were separate and the insureds were only entitled to coverage for title defects on the first lot.

For a copy of the decision, please contact Michael O’Donnell at