The Michigan Court of Appeals recently held that insured homeowners did not have coverage under their title insurance policy for an easement permitting city sewer pipes across the property, based in part in the city’s later disclaimer of the easement.  See Harris v. Fid. Nat’l Title Ins. Co., 2020 WL 969208 (Mich. Ct. App. 2020).  In 1956, plaintiffs’ predecessor-in-interest granted the city an easement for storm and sanitation sewers.  As part of the agreement, the City agreed that it “shall and will do as little damage to the said land and premises as possible.”  In 1961, the city disclaimed its rights to this easement, and in 1985 plaintiffs purchased the property and defendant issued a title insurance policy.  In 2013, plaintiffs began having issues with their home, including “heaving of the garage floor, cracks in the basement drywall, and water damage in the basement,” that they eventually concluded was caused by the city’s pipes.  Plaintiffs then submitted a claim to defendant, claiming that the easement constituted a “defect in or lien or encumbrance on such title” or resulted in the “unmarketability of such title.”  Defendant denied the claim, and plaintiff brought this action.  The trial court granted defendant’s motion for summary judgment, and plaintiffs appealed.

On appeal, the Court affirmed the decision.  The Court found that the 1961 disclaimer “is clear evidence of the City’s intent to release its right to the easement, thereby returning an unencumbered interest to plaintiffs’ predecessors in interest by way of abandonment.”  The Court further found that, even if the City had continued using the pipes despite this disclaimer, as alleged by plaintiffs, this continued use would be “prescriptive, and thus not covered under the policy.”  Accordingly, the Court affirmed the dismissal of the action against defendant.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.