The Court of Appeals of Wisconsin, District Three recently upheld a summary judgment finding for title insurer WFG National Title Insurance Company (“WFG”) in a title insurance coverage dispute based on clear exceptions for a driveway easement even though the title policy was issued late. See Columb v. Cox, No. 2020AP1593, 2022 Wisc. App. LEXIS 478 (Ct. App. June 7, 2022).
The dispute arose among neighbors, the Columbs and the Coxes, who owned parcels in Marinette County north of County Highway X. Willard DeGroff (“DeGroff”) formerly owned both properties, and in the mid-1990s, deeded the northern portion of his property to the Columbs, the southern portion of his property to the Peter L. and Deborah Ann Putirskis (the “Putirskises”), who later sold their property to the Coxes, and the two properties in between to other owners. The deed for the Columbs' property established an easement ("the Original Easement") starting at County Highway X and running through the Putirskises' property and onto the Columbs' property, thereby providing the Columbs with access to the highway. The deed to the Putirskises' property, reserves the Original Easement for the use of several parcels, including the parcel owned by the Columbs. In 2016, the Putirskises recorded a modification of the Original Easement ("the Modification"), purporting to reroute the easement's location to the east, away from the house and other buildings on the property, but the Columbs did not sign the Modification and apparently never agreed to move the easement from its original location. In 2017, the Putirskises sold their property to the Coxes, including an addendum to their deed stating that the property is subject to the ingress/egress easement in the deed to the Columbs as modified in the Modification.
In 2019, the Columbs sued the Coxes for wrongful interference with the easement, alleging that the Coxes blocked the Original Easement, seeking damages and an order enjoining the Coxes from interfering with their easement rights. The Coxes requested an injunction prohibiting the Columbs from further trespass and a judicial determination of the parameters of any easement in which the Columbs retained easement rights.
The Coxes tendered their defense to their title insurer, WFG, which denied the claim. Specifically, the Policy excepted coverage for disputes relating to the “rights and/or claims of others in and to,” and the “terms and provisions as to the use and maintenance of,” “that ingress/egress easement as set forth in [DeGroff Deeds 1-4] and as modified in [the Modification].”
The Coxes then filed a third-party complaint against WFG for breach of contract. WFG moved for summary judgment, arguing that there was no coverage under the Policy. The Coxes argued that WFG could not rely on the driveway exception, as WFG issued the Policy late. Specifically, WFG had issued its title commitment (the “Commitment”) to the Coxes in 2017, but through some error, did not issue the Policy until April 2020, months after the Coxes filed suit against WFG. The court rejected the lateness argument and granted WFG's motion based on the fact that the exceptions were clearly set forth in the Commitment
The Coxes appealed. The Court first rejected the Coxes’ arguments that WFG forfeited its defenses to the Policy for failing to timely issue the Policy, as no legal authority to support their argument was offered by the Coxes or found by the Court, nor was there any authority or factual support to their argument that WFG could not rely on the exceptions because it engaged in misconduct by wrongfully backdating the Policy. As to the Coxes’ remaining arguments, the Court began by noting that the Commitment merged into the Policy when the Policy was issued, per the terms of the Commitment and general legal principles. Because the Commitment contained the same exceptions to coverage that the Policy contained, the Court rejected the Coxes’ contention that they did not have notice of the exceptions. The Court further rejected the Coxes’ argument that because certain other exceptions were not in the Policy, the exception did not apply because the exceptions in the Policy did not exactly mirror the language of the exceptions in the Commitment. The Court noted that this argument would only apply if the Policy was adding an exception not set forth in the Commitment, which was not the case here. It found that the Coxes were provided information from which they could reasonably ascertain that the Policy would not provide coverage for those matters excepted under the Policy, and that WFG had no additional obligation to explain the legal effect of the Policy exceptions.
The Coxes also argued that the exceptions only refer to the Modified Easement, and that coverage is not excepted for any losses or disputes relating to the Original Easement. The Court held that a “title insurance policy is an indemnity contract, not a warranty that title is as described,” and thus held that the exceptions’ reference to "that ingress/egress easement as set forth in [DeGroff Deeds 1-4] and as modified in [the Modification]" is not a representation that the Original Easement was (or was not) validly modified or that coverage would be excepted only for an easement in some specific modified location, but rather, that WFG notified the Coxes of which title defect or encumbrance was being excepted and provided the Coxes with the information needed to determine the title defect the exception referenced.