Case Title: Kremer v. Lawyers Title Insurance Corp.

Citation: 177 Vt. 553, 2004 VT 91, 861 A.2d 1103

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2004-09-08T00:00:00Z

Document:
Kremer v. Lawyers Title Insurance Corp. (2003-419); 177 Vt. 553;
861 A.2d 1103

2004 VT 91

[Filed 08-Sep-2004]

                                 ENTRY ORDER

                                 2004 VT 91

                      SUPREME COURT DOCKET NO. 2003-419

                              APRIL TERM, 2004

  Richard Kremer, M.D. and  	       }	APPEALED FROM:
  Andrea Kremer                        }
                                       }
       v.	                       }	Windsor Superior Court
                                       }	
  Lawyers Title Insurance Corp.	       }
                                       }	DOCKET NO. 331-7-02 Wrcv

                                                Trial Judge: Alan W. Cook

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Plaintiffs, insureds, appeal an order of the superior court
  granting summary judgment for defendant insurer on plaintiff's breach of an
  insurance contract claim.  Plaintiffs contend the court erred in concluding
  that their title insurance was not triggered by what they allege to be a
  municipal permit violation, even though the town has not found or alleged
  any violation.  We affirm.

       ¶  2.  As an initial matter, the significance of our ruling in this
  case is likely limited as the Legislature has declared, subsequent to the
  facts giving rise to this case, that no encumbrance on title results from
  failure to obtain a municipal land use permit, see 27 V.S.A. § 612(a), and
  that the statute eliminating such encumbrances is to be applied
  retroactively, 1999, No. 46, § 15(b).  That legislation aside, however, in
  this unusual case where purchasers of real property contend that their own
  home was in violation of municipal septic regulations despite testimony of
  the town septic officer to the contrary, we find no permit violation as a
  matter of law, and thus no defect in title from which title insurance
  coverage could arise. (FN1)
   
       ¶  3.  The following facts are undisputed.  On July 1, 1996,
  plaintiffs Richard and Andrea Kremer purchased a home in Norwich, Vermont. 
  On the same day, they purchased a title insurance policy from defendant
  Lawyers Title Insurance Corporation ("Lawyers Title").  The policy insured
  against "[a]ny defect in or lien or encumbrance on the title" of the
  premises.  The policy excluded from coverage defects in title arising from
  any zoning law violation except to the extent that "a notice of a defect .
  . . or encumbrance resulting from a violation or alleged violation
  affecting the land has been recorded in the public records at Date of
  Policy." 

       ¶  4.  In 1995, the previous owners, Charles and Jeanne Richards,
  made improvements to the house including the addition of two bedrooms and a
  bathroom.  An additional septic drain pipe connected the new bathroom to
  the existing drain pipe.  Prior to construction, the Richardses received a
  zoning permit in 1994, the application for which appears in the Norwich
  town records. Attached to the application is a floor plan for a "Proposed
  Master Bedroom Suite" depicting a bedroom and an unlabeled space with
  features of a bathroom. The form language on the application states: "Town
  health regulations require a separate permit for new sewage disposal
  systems or replacement/repair of existing sewage disposal systems.  A
  permit from the State of Vermont may also be required."  Philip Dechert
  granted the Richardses a zoning permit, and his signature appears at the
  bottom of their application.  At the time, Dechert was both the septic
  officer and zoning administrator for the town of Norwich.  

       ¶  5.  Soon after the Kremers purchased the house in 1996, the
  septic system failed.  They brought suit against the Richardses for a
  breach of deed warranty, misrepresentation, and fraud.  These claims
  settled for $82,000.00. 

       ¶  6.  The Kremers also sued Lawyers Title, alleging that the
  Richardses' failure to obtain a septic permit was a defect in title.  The
  trial court granted Lawyers Title's summary judgment motion, agreeing with
  Lawyers Title that there was no defect or encumbrance at the time of sale
  and that the public records did not, therefore, provide notice of any
  defect  Here, the Kremers' argument turns entirely on their interpretation
  of the word "extend" as it was used in the septic regulations in effect in
  1994 .  They argue that an "extension" of a septic system unambiguously
  includes an increase in the burden on the system.  Because an increase in
  bedrooms is an increase in the burden on the septic system, they argue, the
  septic regulations required a septic permit for the addition of bedrooms to
  a home.  They also contend that the term "extend" clearly applies to the
  additional drain pipe connecting the new bathroom to the existing septic
  drain pipe.  After reviewing the applicable regulations, we find both of
  these arguments without merit.

       ¶  7.  In reviewing an award of summary judgment, we apply the same
  standard as the trial court, that is whether there are any genuine issues
  of material fact and whether any party is entitled to judgment as a matter
  of law.  White v. Quechee Lakes Landowners' Ass'n, 170 Vt. 25, 28,