Case Title: M & F Bank v. First American Title Insurance Company

Citation: 

Docket Number: 1111525, 1111568

State: alabama

Court: Alabama Supreme Court

Date: 2013-08-16T00:00:00Z

Document:
REL: 08/16/2013
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2013
____________________
1111525
____________________
M & F Bank
v.
First American Title Insurance Company
____________________
1111568
____________________
First American Title Insurance Company
v.
M & F Bank
Appeals from Jefferson Circuit Court
(CV-08-903787)
1111525, 1111568
STUART, Justice.
In case no. 1111525, M & F Bank ("M & F") appeals the
summary judgment entered by the Jefferson Circuit Court in
favor of First American Title Insurance Company ("FATIC") on
negligence, breach-of-contract, and bad-faith-failure-to-pay
claims M&F asserted against FATIC 
related 
to a title-insurance
policy ("the title policy") FATIC issued M & F in connection
with a mortgage loan made by M & F to a developer of property
in Auburn.  In case no. 1111568, FATIC appeals the summary
judgment entered in favor of M & F on FATIC's counterclaims
asserting abuse of process, conspiracy, breach of contract,
and negligence.  We affirm both judgments.
I.
This action was initiated in the Jefferson Circuit Court
on October 29, 2008; however, related proceedings were
subsequently conducted in the Lee Circuit Court and the United
States Bankruptcy Court for the Northern District of Alabama. 
The parties have previously sought relief in this Court on
multiple occasions as well.  In Ex parte M & F Bank, 58 So. 3d
111 (Ala. 2010), we denied a petition for the writ of mandamus
2
1111525, 1111568
filed by M & F seeking the reversal of a discovery order and
summarized the genesis of the dispute and the procedural
history up to that time:
"On December 19, 2006, a plat for a subdivision
referred to as Old Towne Station was recorded in the
office of the Judge of Probate of Lee County.  The
plat showed lots numbered 1 through 94; it did not
show a lot 95.   On December 28, 2006, The Shoppes at
1
Old Towne Station, LLC ('the debtor'), executed a
note in favor of M & F evidencing an indebtedness of
$2,855,000; the note purportedly was secured by a
mortgage on 'lot 95' of Old Towne Station.  On
January 24, 2007, First American, through its agent,
Blue Title, LLC, issued a title-insurance policy
('the policy') to M & F insuring M & F's purported
interest as mortgagee in lot 95.
"The debtor subsequently defaulted on the loan. 
As a result of the 'title work' performed in
preparation for a foreclosure on the mortgage, M &
F discovered that lot 95 was not included on the
recorded plat.  On October 29, 2008, M & F notified
First American that it was making a claim under its
title-insurance policy.  On November 19, 2008, M &
F -- represented by attorney Burt Newsome -- filed
an action against Blue Title and First American in
the Jefferson Circuit Court, alleging breach of
contract.   On April 27, 2009, M & F amended its
2
complaint to include claims of negligence and bad
faith against First American. 
"After being served with process in the action
filed by M & F, First American hired attorney Mark
Davis to file an action in the name of M & F seeking
a reformation of the mortgage held by M & F and
insured by First American; Davis filed the action in
the Lee Circuit Court on March 20, 2009, naming as
defendants 
the 
debtor 
and 
certain 
purported
lienholders.   First American purported to take this
3
1111525, 1111568
action in accordance with what it contends were
stipulations in the policy it had issued to M & F.
"On March 13, 2009, the debtor filed a petition
in the United States Bankruptcy Court for the
Northern District of Alabama ('the bankruptcy
court') declaring  bankruptcy under Chapter 7 of the
United States Bankruptcy Code.  The debtor hired
attorney Steven Altman to represent it in the
bankruptcy proceedings.  The bankruptcy court
appointed André Toffel, an attorney, as bankruptcy
trustee.  In turn, Toffel hired attorney Stephen
Porterfield to represent the trustee's interests in
the 
bankruptcy 
proceedings. 
 
First 
American
subsequently 
hired 
attorney 
Rick 
Johanson 
to
initiate an adversary proceeding in the bankruptcy
court in the name of M & F against the debtor, the
trustee, and other parties seeking reformation of
the mortgage deed; Johanson filed a complaint in the
bankruptcy court for this purpose on July 8, 2009. 
On July 27, 2009, Porterfield filed on behalf of
Toffel, as trustee, an application with the
bankruptcy court to sell the property that is the
subject of the M & F mortgage free and clear of all
liens.  In effect, Toffel sought to render the
mortgage to M & F of no effect.
"Toffel subsequently filed an answer in the
adversary proceeding initiated by Johanson on behalf
of M & F; Toffel asserted affirmative defenses,
including that he was what is known as an 'ideal
bona fide purchaser' under 11 U.S.C. § 544(a) and in
that capacity would be able to take the property at
issue free of any mortgage interest held by M & F. 
"In 
addition, 
Toffel 
and 
Johanson 
filed
competing motions for a summary judgment in the
adversary proceeding in which they debated whether
Toffel was an 'ideal bona fide purchaser' under 11
U.S.C. § 544(a) and as such would be able to take
the property free of M & F's mortgage.
  
4
1111525, 1111568
"First American asserts in its answer to this
Court:
"'In an extraordinary twist of events, M &
F's counsel, Mr. Newsome, actually had
communications with Toffel and Porterfield
regarding research he had done for them and
critiquing 
the 
brief 
Porterfield 
was
preparing in support of their motion for
summary judgment against [M & F,] Mr.
Newsome's client. ...  Mr. Newsome was
actually doing research and assisting his
client's adversary who was attempting to
have [M & F] determined to be an unsecured
creditor.'
"First American also asserts that, in the course of
preparing submissions for the bankruptcy court on
behalf of M & F, Newsome had conversations with the
debtor's attorney, Altman, concerning Toffel's
filings with the bankruptcy court.
"M & F contends that Newsome engaged in the
aforesaid communications because a resolution of M
& F's action against First American 'would have to
involve both the debtor's attorney and the Chapter
7 Trustee.'  M & F claims that Newsome 'had
negotiations looking to compromise the outstanding
controversies with the debtor's attorney [Altman],
the Chapter 7 Trustee [Toffel,] and the attorney for
the Chapter 7 Trustee [Porterfield].'  M & F also
insists that it 'shares common interests' with
Altman, Toffel, and Porterfield because it asserts
in the Jefferson Circuit Court action that the M &
F mortgage on the property is void, and the debtor
and Toffel contended in the bankruptcy court that
the mortgage is void.
"On December 10, 2009, the bankruptcy court
entered a summary judgment in favor of M & F and
against Toffel with respect to the affirmative
defenses asserted by Toffel in the adversary
5
1111525, 1111568
proceeding, including the defense that Toffel was an
'ideal bona fide purchaser' under 11 U.S.C. §
544(a).  In so doing, the bankruptcy court declined
to conclude that the M & F mortgage was invalid.
____________
" According to an affidavit from Chris Eckroate,
1
the project engineer for the Old Towne Station
subdivision development, and as conceded by M & F's
attorney in a hearing on the motion below, a lot
apparently was labeled 'Lot 95' on the plat after it
was recorded. 
" Blue Title has since been dismissed from this
2
action."
58 So. 3d at 113-15 (footnotes 3 and 4 omitted).  Following
our decision in Ex parte M & F, the trial court continued to
preside over repeated discovery disputes and a continually
increasing level of rancor between the attorneys.  Twice more,
we denied petitions for the writ of mandamus filed by M & F,
as well as a petition for permission to file an interlocutory
appeal pursuant to Rule 5, Ala. R. App. P.  
On February 28, 2011, the trial court granted FATIC's
motion to file newly acquired counterclaims pursuant to Rule
13(e), Ala. R. Civ. P.  Those counterclaims included separate
claims of abuse of process in both the instant action and the
bankruptcy proceedings, claims alleging conspiracy, breach of
contract, and negligence, and a request for attorney fees and
6
1111525, 1111568
expenses under the Alabama Litigation Accountability Act
("ALAA"), § 12-19-270 et seq., Ala. Code 1975.  These claims
are largely based on FATIC's argument that M & F improperly
acted in concert with the debtor in an attempt to have the
mortgage secured by lot 95 declared void so that FATIC would
be required to pay out money damages under the title-insurance
policy instead of merely curing the defect that existed in the
mortgage.   M & F thereafter filed an answer and moved to
1
dismiss some of FATIC's counterclaims.  On May 18, 2011, the
trial court granted that motion with respect to FATIC's claim
alleging abuse of process in the bankruptcy proceedings and
also stated that it would consider the ALAA claim as a request
for attorney fees and expenses to be heard at the conclusion
of the case.
On June 30, 2011, the trial court held a hearing on
motions filed by both M & F and FATIC seeking a summary
judgment on the claims asserted by M & F.  On August 25, 2011,
The bankruptcy-court judge summed up this case and the
1
facts underlying these counterclaims as follows during a
hearing:  "The reason [M & F] [does not] like the fact that
[it] won is pretty obvious to me. [It] [does not] want the
property because, guess what, it is probably not worth what's
owed on it and [M & F] would rather have the title insurance
money."
7
1111525, 1111568
the trial court denied M & F's summary-judgment motion and
granted FATIC's summary-judgment motion, holding that the
terms of the title-insurance policy issued to M & F by FATIC
(1) limited M & F's recovery to only breach of contract and
excluded negligence claims and (2) authorized FATIC to cure
any defects in the mortgage before paying damages under the
policy.  The trial court further held that FATIC had in fact
cured any defects by recording additional documents with the
Lee County Probate Office.  Accordingly, the trial court
entered a summary judgment in favor of FATIC on M & F's
negligence, breach–of-contract, and bad-faith claims.  The
trial court also denied M & F's ensuing motions to reconsider
and to certify the partial summary judgment as final pursuant
to Rule 54(b), Ala. R. Civ. P.
On July 5, 2012, M & F moved the trial court to enter a
summary judgment in its favor on the remaining counterclaims
that had been asserted by FATIC.  On July 27, 2012, the trial
court granted M & F's motion and dismissed FATIC's
counterclaims, thus disposing of all outstanding claims 
in 
the
action.  In its order entering a judgment in favor of M & F,
the trial court also set forth the schedule for the parties to
8
1111525, 1111568
submit evidence and arguments regarding FATIC's request for
attorney fees and expenses pursuant to the ALAA.  M & F
subsequently moved the trial court for its own award of
attorney fees and expenses pursuant to the ALAA as well.
On August 14, 2012, M & F filed its notice of appeal,
challenging the trial court's August 25, 2011, order entering
a summary judgment in favor of FATIC on M & F's negligence,
breach-of-contract, and bad-faith claims (appeal docketed as
case no. 1111525).  See Gonzalez, LLC v. DiVincenti, 844 So.
2d 1196, 1201 (Ala. 2002) (holding that a summary judgment was
final and appealable even though a request for attorney fees
and expenses pursuant to the ALAA remained pending because any
award of attorney fees is collateral to the judgment).  On
September 7, 2012, FATIC filed its cross-appeal, challenging
the 
trial court's 
dismissal of 
its 
abuse-of-process,
conspiracy, breach-of-contract, and negligence claims (appeal
docketed as case no. 1111568).  These appeals have been
consolidated for the purpose of writing one opinion.
II.
M & F and FATIC both argue that the trial court erred in
entering a summary judgment adverse to them on the claims they
9
1111525, 1111568
had asserted against the other.  We review this argument
pursuant to the following standard:  
"This Court's review of a summary judgment is de
novo.  Williams v. State Farm Mut. Auto. Ins. Co.,
886 So. 2d 72, 74 (Ala. 2003).  We apply the same
standard of review as the trial court applied.
Specifically, we must determine whether the movant
has made a prima facie showing that no genuine issue
of material fact exists and that the movant is
entitled to a judgment as a matter of law. Rule
56(c), Ala. R. Civ. P.; Blue Cross & Blue Shield of
Alabama v. Hodurski, 899 So. 2d 949, 952-53 (Ala.
2004).  In making such a determination, we must
review the evidence in the light most favorable to
the nonmovant.  Wilson v. Brown, 496 So. 2d 756, 758
(Ala. 1986).  Once the movant makes a prima facie
showing that there is no genuine issue of material
fact, the burden then shifts to the nonmovant to
produce 'substantial evidence' as to the existence
of a genuine issue of material fact.  Bass v.
SouthTrust Bank of Baldwin County, 538 So. 2d 794,
797-98 (Ala. 1989); Ala. Code 1975, § 12-21-12."
Dow v. Alabama Democratic Party, 897 So. 2d 1035, 1038-39
(Ala. 2004).
III.
In its order entering a summary judgment in favor of
FATIC on M & F's claims, the trial court recognized that
defining the terms of the contract between the parties was a
"threshold issue."  Specifically, although the parties agreed
that FATIC had issued a title-insurance policy to M & F
insuring M & F's interest as mortgagee in lot 95, they
10
1111525, 1111568
disagreed as to what documents made up the entirety of that
policy.  M & F argues that the policy consists only of
documents marked schedules A & B, plus an additional set of 11
endorsements.  M & F claims that these are the only documents
it ever received from FATIC and argues that these are also the
documents produced by FATIC's issuing agent, Blue Title, in
response to a discovery request for the policy that had been
sent to M & F following its completion.
FATIC, however, argues that the complete policy consists
not only of the documents cited by M & F, but also a jacket
that 
contains 
additional 
exclusions 
from 
coverage, 
conditions,
and stipulations.   In support of this argument, FATIC
2
In a brief submitted to this Court in Ex parte M & F
2
Bank, FATIC described the physical makeup of the jacket, which
it referred to in that brief as the "FATIC 412 policy form,"
and how a complete policy is assembled:
"It is a single piece of paper, measuring eight and
one-half inches by twenty-two inches, folded in half
with the exclusions, conditions and stipulations
being printed on the inside of the folded form, into
which the schedules are inserted.  As can readily be
seen, the exclusions, conditions and stipulations
cannot be separated from the cover except by tearing
or cutting the policy.  The schedules, any
endorsements, and the FATIC 412 policy form comprise
the complete insurance contract."
FATIC's brief in Ex parte M & F Bank, p. 7.  See R & G, LLC v.
RCH IV-WB, LLC, [Ms.  1111433, March 22, 2013] ___ So. 3d ___,
11
1111525, 1111568
submitted to the trial court, pursuant to Rule 1004(3), Ala.
R. Evid., a copy of what it alleged was the complete policy.  
3
As further evidence that the complete policy includes the
jacket, FATIC argues (1) that a copy of what it asserts was
the complete policy was found in the files of the attorneys
who represented M & F in its transaction with The Shoppes at
Old Towne Station and (2) that an M & F officer previously
submitted a copy of the front of the jacket as an exhibit to
an affidavit he filed in which he claimed that that front of
the jacket was part of the policy, thus indicating, FATIC
argues, that the entire jacket and policy was in M & F's
possession.  M & F counters by arguing that these were merely
mid-negotiation documents exchanged between the parties, that
___ (Ala. 2013) (taking judicial notice of record in previous
appellate proceedings between same parties to the extent it
pertained to issues in the current appeal).
Rule 1004(3) provides as follows:
3
"The original is not required, and other
evidence of the contents of a writing is admissible,
should there be no duplicate readily available to
the proponent or witness, if ... [a]t a time when an
original was under the control of the party against
whom offered, that party was put on notice, by the
pleadings or otherwise, that the contents would be
a subject of proof at the hearing, and that party
does not produce the original at the hearing ...."
12
1111525, 1111568
the jacket was not attached to the final policy sent to M & F,
and that any assertions M & F had made to the contrary were
mistakes.
The trial court resolved this issue as follows:
"While there is a dispute between the parties on
this point, the court finds that it is not a dispute
of fact that may preclude consideration of the
pending motions.  First, it is undisputed that M &
F's counsel, in connection with the financing of the
Old Towne Station purchase, received and had
possession of the policy in its entirety.  The court
finds that because its counsel knew of the policy in
its entirety, such knowledge must legally be imputed
to M & F.
"M & F cannot be heard to argue that this would
be an unjust result, moreover, given that it was on
notice of the policy in its entirety.  Attached to
the affidavit of [M & F officer] Craig Nelson, filed
on March 8, 2010, is what M & F claimed at that time
to be the policy.  That attachment contained the
frontispiece of the jacket, which generally declares
the terms of insurance coverage 'subject to the
exclusions from coverage, the exceptions from
coverage contained in schedule B and the conditions
and stipulations ....'  Being on notice, M & F had
the legal obligation to inquire into the nature of
such additional provisions."
We agree with this conclusion and further note that it is the
front of the jacket, which M & F undisputedly received at some
point, that contains the actual insuring provision that is
alleged to have been breached.  Thus, by asserting breach of
contract, M & F is implicitly conceding that this insuring
13
1111525, 1111568
provision is part of the contract.  Moreover, one of the
endorsements M & F concedes is part of the policy provides
that "[t]he policy is hereby amended by deleting paragraph no.
7 from the exclusions from coverage."  Paragraph no. 7, and
all the other exclusions from coverage, as well as additional
conditions and stipulations, are physically a part of the
jacket, and this endorsement is accordingly further evidence
that M & F understood those terms, with the stated exception
of paragraph no. 7, to be a part of the policy.  Finally, we
note that all parties and attorneys involved in this dispute
are sophisticated and experienced in these types of
transactions and are surely familiar with the standard
government-approved 
title-insurance 
policy 
forms. 
 
We
accordingly agree with the trial court that there is no
factual dispute but that the exclusions from coverage and
conditions and stipulations found on the jacket are part of
the policy.
That being established, § 14(b) of the conditions and
stipulations provides that "[a]ny claim of loss or damage,
whether or not based on negligence, and which arises out of
the status of the lien of the insured mortgage or of the title
14
1111525, 1111568
to the estate or interest covered hereby or by any action
asserting such claim, shall be restricted to this policy." 
FATIC argues that this provision limits M & F to a breach-of-
contract claim and precludes it from pursuing a negligence
claim.  M & F, however, cites Soutullo v. Commonwealth Land
Title Insurance Co., 646 So. 2d 1352, 1355 (Ala. 1994), in
support of its argument that a negligence claim is viable. 
("[The defendant title company] had a corresponding legal
duty, upon which a negligence or wantonness action may be
based, to exercise due care in performing its contractual
obligations to examine the probate records ....")  The trial
court agreed with FATIC, distinguishing Soutullo as follows:
"In [Soutullo], the Supreme Court held that a
title insurer could be held liable on a negligence
claim for damages resulting from its failure to
discover certain encumbrances.  In reaching this
holding, however, the Court noted the existence of
a similar provision [to § 14(b) in this case] in
that policy and then opined:
"'This 
provision 
purports 
to 
release
Commonwealth from all tort liability in
connection with the issuance of its
policies.  Neither the record, nor the
briefs, indicate that this provision could
have formed the basis for the summary
judgment.  This specific provision was not
cited by Commonwealth in its memorandum to
the trial court in support of its motion
for summary judgment or in its brief to
15
1111525, 1111568
this Court, and the trial court's judgment
does not refer to it.  Therefore, we think
that it would be improper for us to
consider for the first time on appeal the
legal effect that this provision might have
with respect to Commonwealth's potential
liability.'
"[Soutullo, 646 So. 2d] at 1356 n. 3.  By contrast,
FATIC here does rely on such language to argue
against any negligence claim.
"This court agrees that the above language of
the policy serves to bar M & F from asserting its
negligence claim against FATIC.  While M & F argues
that such a ruling would contravene public policy of
this State, this court disagrees.  Decisions from
the Alabama Supreme Court in the past few years make
clear that a contract between parties may serve to
trump what would otherwise be legal duties owing
between them.  An obvious example is a party's
ability 
to 
contract 
away 
liability 
otherwise
sounding in tort for negligent conduct by having the
other party sign a release to that effect."
We likewise agree that § 14(b) precludes M & F's negligence
claim based on FATIC's alleged breach of the duty of due care
in preparing the policy.
M & F also argues, however, that it has asserted a
separate negligence claim that is not subject to § 14(b) even
if we hold that § 14(b) is part of the policy and should be
enforced.  Specifically, M & F argues that FATIC also was
negligent in its provision of abstracting services, which, M
& F argues, were provided under a separate contract, dated
16
1111525, 1111568
December 12, 2006, from the policy, which was effective
January 24, 2007.  However, the abstracted title search that
forms the basis of M & F's claim in this regard contains the
following language:
"This title search is furnished to the agent
identified above ('Agent') by [FATIC] for the sole
purpose of examining title to the real property
described 
herein 
in 
order 
to 
determine 
the
insurability 
thereof. 
 
The 
Agent 
is 
hereby
authorized to rely upon this title search for the
issuance of a [FATIC] policy or policies pursuant to
the terms of the agency agreement between [FATIC]
and the Agent.
"THIS TITLE SEARCH IS FURNISHED BY [FATIC]
SOLELY FOR USE BY THE AGENT IN CONNECTION WITH THE
ISSUANCE OF A POLICY OR POLICIES OF TITLE INSURANCE
OF [FATIC].  ALL OTHER USES AND PURPOSES ARE
EXPRESSLY PROHIBITED, AND LIABILITY HEREUNDER IS
LIMITED TO LIABILITY ARISING UNDER SUCH [FATIC]
POLICY ISSUED IN RELIANCE UPON THIS TITLE SEARCH."
(Capitalization in original.)  The agent referred to is
elsewhere identified as Blue Title, and this language
unambiguously indicates that this abstracted title search was
performed solely for Blue Title's benefit and was not to be
relied upon by any other party for any other purpose. 
Moreover, it notes that any liability is "limited to liability
arising under such [FATIC] policy issued in reliance upon this
title search."  Accordingly, this negligence claim fares no
17
1111525, 1111568
better than the negligence claim explicitly based on the
policy, and the trial court properly entered a summary
judgment in favor of FATIC.
We next turn to M & F's breach-of-contract claim. 
Section 8(a) of the conditions and stipulations in the policy
provides as follows:
"If [FATIC] establishes the title, or removes
the alleged defect, lien or encumbrance, or cures
the lack of a right of access to or from the land,
or cures the claim of unmarketability on title, or
otherwise establishes the lien of the insured
mortgage, all as insured, in a reasonably diligent
manner by any method, including litigation and the
completion of any appeals therefrom, it shall have
fully performed its obligations with respect to that
matter and shall not be liable for any loss or
damage caused thereby."
In its order entering a partial summary judgment for FATIC,
the trial court held that FATIC had established that the
mortgage held by M & F was valid and that the property
identified as lot 95 was therefore marketable.  Thus, the
trial 
court 
concluded, 
FATIC 
had 
fulfilled 
its
responsibilities under the policy pursuant to § 8(a).  The
trial court explained its rationale as follows:
"The court here recognizes that while the
mortgage at issue clearly has a problem in that it
references lot 95, which does not appear on the
recorded plat, that deficiency does not necessarily
18
1111525, 1111568
make title unmarketable under Alabama law.  At issue
in Messer-Johnson Realty Co. v. Security Savings &
Loan Co., 208 Ala. 541, 94 So. 734 (1922), was
whether 
a 
title 
was 
good 
and 
merchantable,
notwithstanding defects in the record of title.  The
Supreme Court recognized:
"'The rule that the title  must be
free from reasonable doubt 
does not require
a title absolutely free from all suspicion
or possible defect, but only requires a
title which a reasonable purchaser, well
informed as to the facts and their legal
bearings, willing and anxious to perform
his contract, would, in the exercise of
that 
prudence 
which 
business 
men 
ordinarily
bring to bear upon such transactions, be
willing to accept and out to accept.'
"208 Ala. at 543, 94 So. at 735.  See also Barnett
v. Waddell, 248 Ala. 189, 27 So. 2d 1 (1946) (a
legal description, to be effective, need only excite
reasonable inquiry).
"This court concludes that FATIC, in exercising
its rights under section 4 of the policy's
conditions and stipulations [authorizing FATIC to
take action to secure insured's interest in insured
property], successfully established the validity of
M & F's mortgage in the bankruptcy court.  (That it
did not pursue reformation in that forum was only
because of [M & F's] instruction not to go forward.) 
Further, while there is no lot 95 on the recorded
plat, the deed from Old Towne Station, LLC, to The
Shoppes at Old Towne Station, LLC, contained certain
identifying 
information 
about 
the 
land 
being
conveyed that would excite reasonable inquiry. 
FATIC subsequently recorded in the Lee County
Probate Court an affidavit from Chris Eckroate on
March 19, 2009, which provided further information
about the land referred to as lot 95.  Finally, the
19
1111525, 1111568
bankruptcy court's orders, and the pleadings filed
therein, were also recorded.
"...  The court further declares that FATIC has
complied with its obligations under the title
insurance policy in question and that it has no
further duty or obligation to M & F Bank under the
current circumstances."
M & F argues that the trial court erred because, M & F argues,
the mortgage is invalid, regardless of any action taken in the
bankruptcy proceedings, because, M & F claims, the mortgage is
in violation of § 11-52-33, Ala. Code 1975, and the Auburn
Subdivision Regulations.   The only way the mortgage can be
4
made valid and title to the property made marketable, M & F
argues, is for the plat to be amended.  Moreover, M & F argues
that, even if the mortgage is valid, title to the property is
still unmarketable.
Section 11-52-33 forbids the owner of any land in a
4
subdivision from transferring or selling or agreeing to sell
or negotiating to sell "any land by reference to or exhibition
of or by other use of a plat of a subdivision before such plat
has been approved by the planning commission and recorded or
filed in the office of the appropriate county probate office
...."  M & F argues that § 11-52-33 invalidates the mortgage
it holds on lot 95 because the final plat that was recorded
does not contain lot 95.
Article 
III(F)(3)(f) 
of 
the 
Auburn 
Subdivision
Regulations provides that the final plat submitted to the
probate office must contain "[n]umbers to identify each block
and tract; and the area of each lot."
20
1111525, 1111568
With regard to the bankruptcy proceedings, we note that
the trustee for The Shoppes at Old Towne Station moved the
bankruptcy court to allow it to sell lot 95 free and clear of
the mortgage M & F purported to hold on it because, the
trustee argued, that mortgage was invalid.  The bankruptcy
court rejected that motion, holding that the mortgage gave
sufficient notice to any prospective purchaser of M & F's
claim to lot 95.  As we stated in Ex parte M & F Bank, "[i]n
so doing, the bankruptcy court declined to conclude that the
M & F mortgage was invalid."  58 So. 3d at 115.  M & F argues
that declining to  hold a mortgage invalid is not tantamount
to holding it valid; however, we disagree in this instance. 
The bankruptcy court did not simply decline to rule on the
validity of the mortgage; indeed, it could not have because
the validity of the mortgage was the primary issue raised by
the trustee in his motion seeking to sell lot 95.  Transcripts
of hearings conducted by the bankruptcy court in our record
make this abundantly clear as well; the bankruptcy court
definitively held that M & F's mortgage is valid.  No appeal
was taken from the bankruptcy court's judgment, and that
judgment, along with the applicable filings by M & F and the
21
1111525, 1111568
trustee, were subsequently recorded in the Lee County Probate
Office for the purpose of establishing that mortgage.  An
affidavit from the project engineer identifying the location
of lot 95 had previously been filed in the probate office
also.  Accordingly, we hold that M & F's mortgage on lot 95 is
valid.5
We also agree with the trial court's conclusion that
FATIC's actions have "cure[d] the claim of 
unmarketability" 
of
the title to lot 95, thus fulfilling its responsibilities
under § 8(a) of the policy's conditions and stipulations.  On
Although the bankruptcy court has already held M & F's
5
mortgage to be valid, we also note that we see no conflict
with § 11-52-33 or Article III(F)(3)(f) of the Auburn
Subdivision 
Regulations. 
 
As 
explained 
in 
Kilgore 
Development,
Inc. v. Woodland Place, LLC, 47 So. 3d 267, 271 (Ala. Civ.
App. 2009), the subdivision-control statutes,  § 11-52-30 et
seq., Ala. Code 1975, "are aimed at preventing developers from
selling tracts of land within a subdivision before the plat of
that subdivision has been approved and recorded."  There is no
dispute that the Old Towne Station plat had been approved and
recorded and that that plat contains the property referred to
as lot 95 in the mortgage, though it is not properly labeled
as such on the plat.  Moreover, Article III(F)(3) of the
Auburn Subdivision Regulations concerns the information that
must be on a final plat before that plat is submitted to the
planning commission for approval.  Subsection (f) provides
that numbers must identify "each block and lot" on the plat,
and, although it would have apparently been justified in
declining to approve the Old Towne Station plat based on the
failure to comply with this requirement, the planning
commission apparently elected not to do so.  
22
1111525, 1111568
this issue, both parties cite Messer-Johnson Realty Co. v.
Security Savings & Loan Co., 208 Ala. 541, 542-43, 94 So. 734,
735 (1922), in which we quoted the following excerpt from 39
Cyc. 1450(c):
"'In equity a good title means a marketable
title, and such a title is necessary and sufficient. 
And, according to the weight of authority, the same
is now true at law, although it was formerly held,
and seems to be still held in some jurisdictions,
that at law a good title is any title not absolutely
bad, and that a title which is not marketable may
still be good. ...  Accepting the prevailing rule
that a good title is a marketable title, a good or
marketable title is a title which is free from
reasonable doubt either in law or fact.  In some
jurisdictions it is held that it must be fairly
deducible of record, while elsewhere it may in a
clear case rest partly in parol unless the contract
calls for a record title.  It must consist of both
the legal and equitable title.  And it must not be
in litigation, or be such as may subject the
purchaser to the hazard and expense of future
litigation.  The rule that the title must be free
from reasonable doubt does not require a title
absolutely free from all suspicion or possible
defect, but only requires a title which a reasonable
purchaser, well informed as to the facts and their
legal bearings, willing and anxious to perform his
contract, would, in the exercise of that prudence
which business men ordinarily bring to bear upon
such transactions, be willing to accept and ought to
accept.  The fact that in the action between the
vendor and the purchaser the court may consider the
title good does not render it marketable.  In the
absence of an express stipulation therefor, a
marketable title does not mean a title which
satisfies the purchaser, or which his attorney
pronounces marketable.'"
23
1111525, 1111568
FATIC argues that, with all the additional materials it has
filed in the Lee County Probate Office, the title to lot 95 is
free from reasonable doubt and that a reasonable purchaser
ought to be willing to accept it.  M & F, however, argues that
any purchaser of lot 95 is subject to the hazard and expense
of future litigation until such time as the plat containing
lot 95 is properly amended; therefore, it argues, the title is
not marketable.  See also Boylan v. Wilson, 202 Ala. 26, 28,
79 So. 364, 366 (1918) ("A misdescription in a not too remote
deed in the chain of title, not capable of being corrected
without litigation and the aid of parol evidence, operates to
render the title unmarketable.").  M & F has also submitted
affidavits from attorneys experienced in property law
supporting its argument that the title is unmarketable.
However, in light of the materials that have been filed
in the probate office, the judgment of the trial court, our
holding in Ex parte M & F Bank, and our holding today, we do
not agree that the subject title is unmarketable.  There is no
dispute as to what parcel of real property lot 95 refers to,
and an examination of the records in the probate office
readily identifies that property.  However, if any doubt
24
1111525, 1111568
remains, the judgment we enter today should effectively quell
any concern of future litigation regarding the title to lot
95.  Although frivolous actions are always a possibility, this
Court has spoken regarding the title, and our holding in that
regard becomes the law; our judgment is not subject to being
reversed.   For these reasons also, M & F cannot support its
6
bad-faith-failure-to-pay claim.  The judgment of the trial
court entering a summary judgment in favor of FATIC on M & F's
claims is accordingly affirmed on all counts.
IV.
We next turn to FATIC's argument that the trial court
erred by entering a summary judgment in favor of M & F on its
counterclaims.  Two of those counterclaims alleged that M & F
was liable for abuse of process based on its alleged attempt
to wrongfully use the legal process to force FATIC to pay
damages under the policy when FATIC had the right under the
See In re Lee, 461 Fed. Appx. 227, 232 (4th Cir. 2012)
6
(not selected for publication in the Federal Reporter)
("Notably, real property law is an area in which federal
courts are especially deferential to state courts.  See Dayton
& M.R. Co. v. Comm'r, 112 F.2d 627, 630 (4th Cir. 1940)
(noting that even prior to Erie R. Co. v. Tompkins, 304 U.S.
64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) it was 'well settled
that we were bound by state decisions as to rights of property
and other matters of local law'); Warburton v. White, 176 U.S.
484, 496, 20 S.Ct. 404, 44 L.Ed. 555 (1900).").
25
1111525, 1111568
policy to first cure the defect in the mortgage with the legal
description of lot 95; one counterclaim alleged abuse of
process in the trial-court proceedings, and the other alleged
abuse of process in the bankruptcy proceedings.  
We have stated that "[t]he elements of the tort of abuse
of process are 1) the existence of an ulterior purpose, 2) a
wrongful use of process, and 3) malice."  C.C. & J., Inc. v.
Hagood, 711 So. 2d 947, 950 (Ala. 1998) (citing Triple J
Cattle, Inc. v. Chambers, 621 So. 2d 1221, 1225 (Ala. 1993)). 
The trial court held that FATIC failed to establish the first
element of the existence of an ulterior purpose because, it
held, there was no evidence indicating that M & F had any
motive in bringing this action against FATIC other than as
stated in its initial complaint –– to recover on the policy. 
We agree.  Ultimately the trial court held that FATIC was not
required to make payment to M & F under the policy because it
had in fact cured the defect in the mortgage; however, that
was a legitimate issue, and the fact FATIC ultimately
prevailed on this point is not evidence of an ulterior purpose
on the part of M & F.  The trial court properly entered a
26
1111525, 1111568
summary judgment on these counterclaims.   See also Duncan v.
7
Kent, 370 So. 2d 288, 290 (Ala. 1979) ("The lawsuit was
confined to its regular and legitimate function in relation to
the cause of action stated in the complaint.  The lawsuit was
not brought for some ulterior or collateral purpose.").
FATIC also asserted a counterclaim alleging that "M & F,
its agents, servants, and employees, and Fictitious 
Parties 
A,
B, C and D conspired, connived and contrived to defraud FATIC
to pay the limits of the policy when FATIC had the right to
cure any problem in the legal description of the mortgage." 
The trial court entered a summary judgment in favor of M & F
on this claim because FATIC never subsequently identified any
fictitiously named parties and the intracorporate-conspiracy
doctrine  holds that a corporation may not be held liable for
M & F also argues that it would be inappropriate for this
7
Court to consider FATIC's claim that M & F committed the tort
of abuse of process in the bankruptcy action because the
bankruptcy court is capable of policing matters within its own
jurisdiction.  See MSR Exploration, Ltd. v. Meridian Oil,
Inc., 74 F.3d 910, 916 (9th Cir. 1996) (stating that debtor's
malicious-prosecution 
claim 
against 
creditor 
"should 
have 
been
brought in the bankruptcy court itself, and not as a separate
action in the district court").  We have already determined,
however, that, as a matter of law, FATIC was not entitled to
relief on its abuse-of-process claims, so it is unnecessary
for us to consider this additional ground in support of the
trial court's judgment. 
27
1111525, 1111568
any alleged conspiracy with its own employees or agents.  See,
e.g., Grider v. City of Auburn, 618 F.3d 1240, 1261 (11th Cir.
2010) 
("Specifically, 
'[t]he 
intracorporate 
conspiracy
doctrine holds that acts of corporate agents are attributed to
the corporation itself, thereby negating the multiplicity of
actors necessary for the formation of a conspiracy.'  McAndrew
v. Lockheed Martin Corp., 206 F.3d 1031, 1036 (11th Cir.
2000).").  FATIC argues that a summary judgment should not
have been entered on this counterclaim; however, it does not
address the trial court's invocation of the intracorporate-
conspiracy doctrine in its appellate brief.  That doctrine
provides a sufficient ground for the summary judgment on this
counterclaim, and the trial court did not err in this regard.
FATIC's final two counterclaims are premised on § 4(d) of
the conditions 
and stipulations in the policy, 
which 
provides:
"In all cases where this policy permits or
required, [FATIC] to prosecute or to provide for the
defense of any action or proceeding, [M & F] shall
secure to [FATIC] the right to so prosecute or
provide defense in the action or proceeding and all
appeals therein, and permit [FATIC] to use, at its
option, the name of [M & F] for this purpose. 
Whenever requested by [FATIC], [M & F], at [FATIC's]
expense, shall give [FATIC] all reasonable aid (i)
in any action or proceeding, securing evidence,
obtaining witnesses, prosecuting or defending the
action or proceeding, or effecting the settlement,
28
1111525, 1111568
and (ii) in any other lawful act which in the
opinion of [FATIC] may be necessary or desirable to
establish the title to the estate or interest or the
lien of the insured mortgaged, as insured.  If
[FATIC] is prejudiced by the failure of [M & F] to
furnish 
the 
required 
cooperation, 
[FATIC's]
obligations to [M & F] under the policy shall
terminate, including any liability or obligation to
defend, prosecute, or continue any litigation with
regard to the matter or matters requiring such
cooperation."
FATIC argues that M & F breached this duty to cooperate and to
act reasonably and is therefore liable for both negligence and
breach of contract.  
With regard to its negligence counterclaim, FATIC argues
that "[t]he trial court determined effectively that M & F owed
and breached its duties to perform and act in a reasonable
manner pursuant to § 4 of the conditions and stipulations of
the subject policy."  FATIC's brief, p. 87.  However, in its
order entering a summary judgment in favor of M & F on this
negligence counterclaim, the trial court in fact stated that
"[a]ny obligations that either party owed to the other stem
solely from the provisions of the title insurance policy at
issue, and this court declined to recognize private duties
above and beyond the scope of any such contractual
obligations."  FATIC does not argue or cite any authorities
29
1111525, 1111568
identifying or otherwise explaining the duties M & F allegedly
breached, nor does it explain in any detail the alleged breach
of those duties; instead, it merely makes a global assertion
that a duty was owed and breached and cites general caselaw
regarding the elements of a negligence claim.  These
conclusory statements and broad arguments are insufficient to
establish that the trial court erred by entering a summary
judgment in favor of M & F on the negligence counterclaim.
FATIC's final argument is that the trial court erred by
entering a summary judgment in favor of FATIC on its breach-
of-contract counterclaim.  In the trial court, M & F argued
that, even if it did technically breach the contract by
failing to cooperate as required by § 4(d), FATIC would be
relieved of only its obligations under the policy; it would
not, M & F argued, be entitled to damages for breach of
contract.  The trial court agreed, stating:
"M & F argues that [§ 4(d)] defines only a
condition precedent to any further obligation on
FATIC's part under the policy, citing Wood v.
Allstate Ins. Co., 21 F.3d 741 (7th Cir. 1994), in
support of this interpretation.  There, the [United
States Court of Appeals for the] Seventh Circuit
recognized general law to the effect that 'breach of
the cooperation clause by the insured will operate
to relieve the insurer of liability under the
30
1111525, 1111568
policy.'  Id. at 745, quoting 8 Appleman, Insurance
Law and Practice, § 4772 (1981).
"There are numerous decisions by Alabama's
appellate courts to the effect that an insured's
failure to cooperate absolves the insurer from its
responsibilities under the policy.  For example, in
General Mut. Ins. Co. v. Dennis, 280 Ala. 434, 438,
194 So. 2d 838, 841 (1967), the Supreme Court held
that '[t]he cooperation clause, which the insurer
has a perfect right to insist upon, and which will
be enforced where the insurer shows that it has been
breached, ... means that the insured must live up to
his obligation under the contract and cooperate with
the insurer, and ... it is inherent in the word
"cooperation" as between the insured and the insurer
that there be no collusion with the plaintiff.'  The
Dennis case, however, was a suit brought by the
insurer seeking only a declaratory judgment that it
was under no further obligation to the insured. 
This court's research turns up no case in which the
insurer sued for damages based on an alleged breach
of such a cooperation clause, and FATIC has cited no
such law.
"The court therefore agrees with M & F that any
obligations it bore under § 4 are a condition
precedent to FATIC's continuing obligations under
the policy but that such obligations may not form
the basis of a breach-of-contract claim."
Like the trial court, we are aware of no case in which an 
insurer has sued for damages based on the insured's alleged
breach of a cooperation clause.  In light of that fact and the
fact that § 4(d) provides for a specific nonmonetary remedy
for such a breach –– "[FATIC's] obligations to [M & F] under
the policy shall terminate" –– we affirm the summary judgment
31
1111525, 1111568
entered by the trial court on FATIC's breach-of-contract
counterclaim.
V.
After M & F discovered a defect in the property
description of a mortgage it had made, M & F sued FATIC,
alleging 
negligence, 
breach 
of 
contract, 
and 
bad-faith 
failure
to pay based on the title-insurance policy FATIC had issued M
& F insuring M & F's lien on the property covered by the
mortgage.  FATIC thereafter asserted counterclaims alleging
abuse of process, conspiracy, breach of contract, and
negligence.  The trial court eventually entered a summary
judgment in favor of FATIC on M & F's claims and a summary
judgment in favor of M & F on FATIC's counterclaims.  Those
judgments are supported by the record and are accordingly
affirmed.
1111525 –– AFFIRMED.
1111568 –– AFFIRMED.
Moore, C.J., and Parker, Shaw, and Wise, JJ., concur.
32