The United States District Court, Western District of Washington recently held that a title insurer had no duty to defend against a third-party complaint alleging claims of trespass and relating to a private road which was excepted from its policy. Safeco Ins. Co. of Am. V. Fid. Nat’l Title Ins. Co., 2021 WL 252236 (W.D. Wash. Jan. 26, 2021). The Insureds were the owners of the northwest parcel of land in a group of four adjoining parcels, with a private road running between the Insureds’ parcel and the northeast parcel as well as between the other two parcels. Said private road was excepted from the land covered by the title insurance policy given to Insureds by their title insurance company. A dispute over the private road arose between the other three parcel owners in state court, and the Insureds alleged in an email to the Insurer that the defendants in that case were “hostilely taking over” their property. Those same defendants later filed a third-party complaint (“the TPC”) against the Insureds, alleging claims of trespass against the Insureds. The Insureds forwarded the TPC to the Insurer, and the claim was denied. During discovery, the defendant neighbors also made a claim regarding a private road across the properties in their interrogatory responses. Again, the Insureds made a claim and the Insurer denied based on the fact that the road was specifically excepted from coverage in the policy. This denial resulted in a declaratory judgment action by the provider of the Insureds’ homeowners insurance (“Co-Insurer”) seeking an order declaring that Insurer had a duty to defend the Insureds in the underlying litigation. The Magistrate Judge for the Western District of Washington at Tacoma issued a Report and Recommendation (“R&R”), recommending that the Co-Insurer’s motion for summary judgment be denied and the Insurer’s cross motion for summary judgment should be granted.
The District Court found that the R&R of the Magistrate Judge should be adopted, and that the Insurer’s cross-motion for summary judgment should be granted. The Court found that as to the trespass claim, the Insurer had no duty to defend the trespass claims given the fact that the private road was specifically “excluded from the definition of the land covered under the policy,” as well as because the policy had an exclusion for “defects, liens, encumbrances, adverse claims, or other matters resulting in no loss or damage to the insured.” The court held that because the private road was not a part of the “land” covered by the policy to begin with, “there would be no resulting loss or damage to [the insured’s] property interest” whether or not the trespass claims regarding the private road were ultimately successful. More precisely, “[i]f the [Insureds] were found to have trespassed on [their neighbor’s] property when they filled a drainage ditch, removed, trees, or removed stakes, the [Insureds] would not have suffered a loss or damage because they never owned the property. The same is true if the [Insureds] were found to have not trespassed; they continued to maintain ownership in the property wherein they filled the ditch, removed trees, or removed stakes.” The Court also found that there was no duty to defend the private road claims because the claims were related to the road that was excepted from coverage in the policy. Therefore, neither the TPC nor the subsequent interrogatory responses triggered Insurer’s duty to defend under the title policy.
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