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The Docket is a monthly TitleNews Online feature provided by ALTA’s Title Counsel Committee, which reviews significant court rulings and other legal developments, and explains the relevance to the title insurance industry.
March 4, 2025
Michael R. O’Donnell, co-managing partner of the law firm Riker Danzig LLP, and Matthews Florez, an associate at the firm, provided today’s review of a decision by a district court in Vermont addressing a title insurer's duty to provide defense and/or coverage to an insured. O’Donnell can be reached at modonnell@riker.com. Florez can be reached at mflorez@riker.com.
Citation: Grabowski-Shaikh v. Conn. Atts. Title Ins. Co., 2025 WL 35522 (Vt. Dist. Ct. Jan. 6, 2025)
Facts: Asim and Cara Grabowski-Shaikh (Plaintiffs) purchased real property located at 4 Pleasant St., in Woodstock, Vt., in 2017. Before purchasing the Property, Plaintiffs ordered a title report, which was completed by attorney Steven Saunders, an agent of Connecticut Attorneys Title Insurance Company (CATIC). The title report did not identify any encumbrances on title or disputes over property boundaries. Plaintiffs, however, did not commission a survey of the Property.
With respect to an abutting parcel of land at 2 Pleasant St., Plaintiffs claimed ownership of said parcel through use, possession and maintenance by themselves and their predecessors. When Plaintiffs moved into their 4 Pleasant St. home, they maintained the disputed area west of the driveway and parked their car in that space. The owners at 2 Pleasant St. did not object to their use.
In 2021, James Zilian purchased 2 Pleasant St., disputed Plaintiffs’ claims to the abutting area, and no longer permitted them to park their cars in the disputed area. Plaintiffs’ and Zilian’s attorneys exchanged correspondence regarding the boundary dispute. The correspondence from Zilian’s attorney included a copy of Zilian’s warranty deed and a 1979 survey, which showed that Zilian owned the disputed parcel of land. In May 2023, Zilian’s attorney informed Plaintiffs that Zilian intended to improve his property up to the boundary line, including the disputed parcel of land. Plaintiffs’ attorney responded that the parcel belonged to Plaintiffs based on decades of use and maintenance. Zilian’s attorney responded with a cease-and-desist letter.
In October 2023, Plaintiffs sent a notice of claim letter to CATIC seeking defense and indemnification. CATIC ultimately denied coverage since nothing indicated that Plaintiffs had tried to quiet title or otherwise adjudicate their alleged claim to the property. In doing so, CATIC cited Covered Risk One of the Policy, which insures “against a situation where someone else owns an interest in the title to the land insured” and two exceptions to same: the parties in possession exception and the survey exception. The former removed from coverage claims of adverse possession of the insured land, and the latter removed from coverage any “facts which an accurate survey and inspection of the land would disclose and which are not shown by the Public Records.”
In June 2024, Zilian filed a declaratory judgment action seeking to establish the boundary line. The action alleged that Plaintiffs claimed the boundary line was 10 feet west of the boundary line set forth in Zilian’s deed, and that Plaintiffs were parking their vehicles over the boundary line, essentially asserting an adverse possession claim.
That same month, Plaintiffs filed a complaint in the U.S. District Court for the District of Vermont seeking a declaratory judgment requiring CATIC to provide coverage. CATIC filed a motion for a judgment on the pleadings and/or summary judgment.
Holding: In deciding CATIC’s motion, the district court engaged in a methodical and thorough analysis of the policy’s language and applicable provisions. It first agreed with CATIC that Zilian’s declaratory judgment action did not assert a claim against Plaintiffs’ title as reflected in the public records as neither Plaintiffs nor their predecessors ever formally established title to the disputed area. Moreover, the disputed strip was not identified in the description of the property insured under Schedule A of the property. Thus, CATIC had no duty to defend or indemnify Plaintiffs.
The district court also rejected Plaintiffs’ argument that CATIC conceded in its denial letter that defense of the Zilian action was covered since the denial of claim letter identified two exceptions to coverage without stating that the action was not covered. As stated by the district court, the denial letter expressly reserved the right to raise other grounds for denial. Thus, CATIC was permitted to raise that it had no duty to defend or indemnify.
Additionally, the district court considered CATIC’s arguments regarding the aforementioned exceptions to coverage. The district court held that the “parties in possession” exception would apply if Zilian was claiming title through adverse possession, not where Plaintiffs were alleged to be claiming title through adverse possession. On the other hand, the district court found that the “survey” exception would apply since the 1979 survey did not show a boundary dispute. Finally, the district court also held that CATIC was not required to provide coverage since Plaintiff would suffer no loss with respect to their title, even if Zilian was to prevail with his action, since the policy expressly excluded coverage from risks “that result in no loss to [Plaintiffs].”
Importance to the Title Industry: This case is important because the district court’s focus on the language in the policy as to Covered Risks, Exclusions and Exceptions led to a decision that clearly adheres to controlling principles in title insurance law. In that vein, the court’s ruling that Covered Risk One was not at issue as the disputed property was not described in the policy is an elemental principle of title insurance, but one that deserves attention. That principle was emphasized by the court’s even-handed approach in finding the parties in possession exception did not apply as the party adverse to the Insureds was claiming title based solely on its deed, not adverse possession. The decision also reinforces the validity of the survey exception and the well-established principle that a title policy only covers insureds if they suffer a loss. Finally, it emphasizes the importance to insurers that in issuing denials of coverage or reservation of rights letters to include language that preserves the right to raise other grounds for denying coverage to avoid waiver arguments later on if additional grounds for denial exist.
