NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

VACC LLC, Plaintiff/Appellant,

v.

CHICAGO TITLE INSURANCE COMPANY, et al., Defendants/Appellees.

Nos. 1 CA-CV 19-0508, 1 CA-CV 20-0075

(Consolidated)

Appeal from the Superior Court in Maricopa County

No. CV2015-013762

The Honorable Daniel J. Kiley, Judge

AFFIRMED

COUNSEL

Beus Gilbert McGroder, PLLC, Phoenix

By Cory L. Broadbent, Cassandra H. Ayres

Counsel for Plaintiff/Appellant

Gust Rosenfeld, PLC, Phoenix

By Charles W. Wirken, Scott A. Malm, 

Fidelity National Law Group, Phoenix

By Nathaniel B. Rose

Co-Counsel for Defendants/Appellees Chicago Title Insurance Company and 

Chicago Title Agency, Inc.

FILED 2-23-2021
VACC v. CHICAGO TITLE, et al.

Decision of the Court

2

MEMORANDUM DECISION

Judge Kent E. Cattani delivered the decision of the Court, in which 

Presiding Judge Randall M. Howe and Judge Cynthia J. Bailey joined.

C A T T A N I, Judge:

¶1 Villages at Country Club, LLC (“VACC”), appeals the 

superior court’s grant of summary judgment in favor of Chicago Title 

Agency (“CTA”) and Chicago Title Insurance Company (“CTIC”) on 

VACC’s claims for breach of contract, breach of the duty of good faith and 

fair dealing, breach of fiduciary duty, and bad faith relating to a title 

insurance policy. For reasons that follow, we affirm.

FACTS AND PROCEDURAL BACKGROUND 

¶2 In December 2013, VACC purchased a parcel of land in Mesa 

(the “Property”) planning to develop single family residences for sale. The 

parcel had been partially developed with triple-plex townhomes intended 

to be leased as residences. VACC’s predecessor in interest recorded

covenants, conditions, and restrictions (“CC&Rs”) stating that the 

“declarant intends to lease portions of the Lots to be used as the sites for 

residential dwellings.” The Property was subject to a plat (the “Plat”) that 

incorporated the lease restriction.

¶3 The 2013 purchase agreement named CTA as the escrow 

agent, and CTA procured a title insurance policy (the “Policy”) for VACC 

from CTIC. The Policy insured a fee simple interest in the Property. It 

insured against title defects, including unmarketability of title, subject to 

certain exceptions and exclusions. VACC also negotiated with CTIC and 

received expanded coverage through additional policy endorsements.

¶4 Before closing on the Property, VACC discussed with city 

employees its intent to resize the lots and change the building elevations, 

which would require an amendment to the Plat. After these discussions, 

VACC purchased the Property, acquiring a fee simple interest in the 

Property.

¶5 VACC began construction, completing residences on 

nineteen lots that VACC then sold as separate, fee simple properties.

Thereafter, sometime in 2014, residential developer D.R. Horton expressed
VACC v. CHICAGO TITLE, et al.

Decision of the Court

3

an interest in purchasing 333 single-family residential lots within the 

Property. VACC and D.R. Horton entered into a purchase agreement in 

July 2014 to that effect.

¶6 In the fall of 2014, D.R. Horton’s title agency discovered that 

the Property was platted as one large lot, rather than individual lots. D.R. 

Horton determined that the Plat, incorporating the CC&Rs, contemplated 

that the Property would only be leased, and not subdivided into individual 

lots as VACC intended. Over the following eight months, VACC, the City 

of Mesa, and D.R. Horton worked to amend the Plat to permit the sale of 

individual lots. D.R. Horton eventually contracted with VACC to purchase 

the lots in installment contracts, rather than as a one-time purchase.

¶7 Before the City of Mesa’s approval of the amended Plat, in 

January 2015, VACC made a claim under the Policy, asserting that the 

Property was unmarketable and seeking to recover the costs associated 

with amending the Plat. CTIC investigated the claim and denied coverage 

based on its view that the Property was marketable. VACC sued CTA and 

CTIC seeking compensatory and punitive damages for alleged breach of 

the Policy, breach of the duty of good faith and fair dealing, breach of 

fiduciary duty, and bad faith.

¶8 After discovery, CTIC and CTA filed a joint motion for 

summary judgment arguing that title was marketable and that the Policy 

excepted from coverage any costs arising from amending the Plat. 

Additionally, they argued that CTIC’s denial of coverage was reasonable.

In a separate motion, CTA also argued that it should be dismissed from the 

litigation because it was not a party to the Policy. The superior court 

granted CTA’s motion and granted summary judgment in favor of CTIC on 

VACC’s bad faith and fiduciary duty claims. But the court denied CTIC’s 

request for summary judgment on VACC’s contract claim, finding that 

there were issues of fact regarding (a) the parties’ reasonable expectations

under the Policy and (b) on the marketability of the Property.

¶9 CTIC moved for reconsideration on the contract claim, 

asserting that an analysis of the parties’ “reasonable expectations” is only 

relevant in the context of a non-negotiated contract. The superior court 

granted the motion, agreeing with CTIC’s position that the reasonable 

expectations doctrine did not apply given evidence that the parties 

negotiated the contract. The court further determined that the lease 

restriction in the Plat did not make the Property unmarketable.
VACC v. CHICAGO TITLE, et al.

Decision of the Court

4

¶10 VACC timely appealed the superior court’s final judgment in 

favor of CTIC and CTA. We have jurisdiction under A.R.S. § 12-2101(A)(1).

1

DISCUSSION

¶11 The superior court properly grants summary judgment when 

there are no genuine issues of material fact and the moving party is entitled 

to judgment as a matter of law. Ariz. R. Civ. P. 56(a). We review a grant of 

summary judgment de novo and may affirm if the decision is correct for 

any reason. Logerquist v. Danforth, 188 Ariz. 16, 18 (App. 1996).

I. Summary Judgment for CTA.

¶12 VACC challenges entry of summary judgment in favor of 

CTA on its claims for (1) breach of contract, (2) breach of good faith and fair 

dealing, (3) breach of fiduciary duty, and (4) bad faith. VACC contends that 

each of these claims arise out of the Policy, and that CTA’s alleged breaches 

are actionable under the Policy.

¶13 The Policy is a contract for title insurance. See A.R.S. § 20-

1562(11). And because all VACC’s claims are premised on the rights and 

obligations created by the Policy, VACC was required to show that CTA 

was a party to that contract. See Goodman v. Physical Res. Eng’g, Inc., 229 

Ariz. 25, 28, ¶ 7 (App. 2011). VACC argues that its claims against CTA are 

actionable because (1) the purchase agreement designated CTA as the 

escrow agent, (2) CTA created a title commitment, (3) CTA procured the 

Policy from CTIC, and (4) CTA’s name appeared in the Policy. But the

Policy was issued and executed by CTIC, not CTA, and VACC admitted in 

superior court that CTA was not a party to the agreement. Although CTA’s 

name appeared on one page of the Policy, it was not a party to the contract, 

and VACC’s claims against CTA thus fail. See id.

¶14 VACC alternatively argues that CTA is liable under the Policy 

as CTIC’s agent. But even assuming an agency relationship existed, CTA 

may be liable on this basis only if CTA suggested that it (rather than CTIC) 

was the title insurer or concealed the existence and identity of the actual 

title insurer, CTIC. See Cahn v. Fisher, 167 Ariz. 219, 221 (App. 1990) (noting 

that, “[u]nless otherwise agreed, a person making or purporting to make a 

contract with another as agent for a disclosed principal does not become a 

party to the contract”) (alteration in original and citation omitted). Here, 

1 VACC’s opening brief contains 15,000 words, with additional pasted 

pdfs containing extensive quoted text. Under ARCAP 14 an opening brief 

is limited to 14,000 words. Nevertheless, we accept the brief as filed.
VACC v. CHICAGO TITLE, et al.

Decision of the Court

5

there was no question that VACC was aware that CTIC was the title insurer 

and the party with which VACC entered the contract. VACC countersigned 

the Policy with CTIC and negotiated with CTIC’s representatives. 

Accordingly, the superior court did not err by granting summary judgment 

in favor of CTA.

II. Summary Judgment for CTIC.

¶15 VACC argues the superior court erred by granting summary 

judgment to CTIC, asserting that CTIC was liable for breach of the Policy

for failing to cover the costs associated with amending the Plat and that 

CTIC’s denial of coverage was a breach of its fiduciary duty and made in 

bad faith.

A. Breach of Contract.

¶16 The interpretation of a title insurance policy is a question of 

law. First Am. Title Ins. Co. v. Johnson Bank, 239 Ariz. 348, 350, ¶ 8 (2016). 

We review interpretation of title insurance contracts de novo, and we 

construe the terms of a contract according to their plain meaning. Id.

¶17 VACC’s main contention is that title to the Property was 

unmarketable because the lease restriction in the Plat did not allow for the 

sale of individual lots and, that the Policy covered costs incurred because 

of such unmarketability. But the Policy did not provide insurance for a 

specific use and instead insured title subject to the conditions in the Plat.

¶18 VACC has not asserted that anyone else claimed an 

ownership interest in the Property, or that anything prevented VACC from 

conveying the same interest it acquired when it purchased the Property. 

Instead, VACC argues that the CC&Rs’ restrictions, as incorporated into the 

Plat, rendered the Property unmarketable for the use VACC intended. But 

as the superior court correctly noted, “VACC could . . . have sold the 

Property in the same manner that it acquired it,” and VACC’s hope, or even 

expectation, that the property could be marketed for a use inconsistent with 

the Plat is not what was insured under the Policy. Because the CC&Rs

stated that the intended use of the Property was to “lease portions of the 

lots to be used as sites for residential dwellings,” VACC had to amend the 

Plat to remove that restraint. But the Policy expressly excluded “loss or 

damage, and . . . costs, attorneys’ fees or expenses that arise” because of 

“easements, covenants, conditions, and restriction as set forth on the plat.” 

Thus, the superior court properly rejected VACC’s marketability claim.
VACC v. CHICAGO TITLE, et al.

Decision of the Court

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¶19 VACC alternatively argues that the Plat violated city 

ordinances because the city required an amendment to the Plat to sell the 

lots individually. But the City of Mesa never stated that the Plat violated 

any ordinance, and the Policy only insured against recorded violations; any 

other violations were excepted. Moreover, it was VACC’s proposed change 

in use that required an amendment to the Plat—which is distinct from a 

preexisting violation of city ordinances. Accordingly, even on this theory, 

the Policy excepted from coverage the costs VACC incurred amending the 

Plat.

¶20 VACC also argues that, under the “reasonable expectations” 

doctrine, the parties’ intent controls, and that here, the parties intended that 

the Policy would cover VACC’s ability to sell the Property in individual 

units. But the reasonable expectation doctrine applies only when there is a 

standardized non-negotiated contract. See Gordinier v. Aetna Cas. & Sur. Co., 

154 Ariz. 266, 271–72 (1987). This doctrine “relieves an insured from 

‘certain clauses of an agreement which he did not negotiate, probably did 

not read, and probably would not have understood had he read them.’” 

State Farm Fire & Cas. Ins. Co. v. Grabowski, 214 Ariz. 188, 192, ¶ 14 (App.

2007) (quoting Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 

Ariz. 383, 394 (1984); and then citing Restatement (Second) of Contracts § 

211 (1981)). Here, VACC reviewed the exceptions to coverage. VACC 

requested (and was granted) specific changes to certain exceptions and

requested (and was granted) the removal of some exceptions in the Policy.

Because the Policy was a negotiated agreement, the reasonable expectations 

doctrine does not apply and the Policy terms control, excluding VACC’s 

claims of coverage as set forth above. See id. at 193, ¶¶ 16–17 (describing 

the reasonable expectations doctrine as protecting against overreach when

the signing party did not receive full and adequate notice of an exclusion).

¶21 VACC’s final arguments relate to an alleged “no-man’s” land 

that was created because of inconsistent uses of the terms “units” and “lots” 

in the Plat. Although the Plat accurately described the entire Property, 

VACC asserts that the use of the terms “lots,” “units,” and “parcels” 

interchangeably in the Plat was improper and left portions of the Property 

inaccessible. VACC also argues for the first time on appeal that because of 

the inconsistencies in the Plat, the property was not delivered in the same 

manner as described in the Policy, and that the survey endorsement, as well 

as the subdivision and contiguity endorsements to the Policy should have 

covered the costs incurred as a result of being required to amend the Plat. 

Even assuming these arguments were not waived, see Ness v. W. Sec. Life 

Ins. Co., 174 Ariz. 497, 501 (App. 1992), they raise claims that are excepted 

from coverage.
VACC v. CHICAGO TITLE, et al.

Decision of the Court

7

¶22 VACC conflates the creation of the Plat with the contents of 

the Plat. The Plat was properly created, accepted by the city, and recorded. 

Moreover, VACC admits that there was nothing legally deficient with the 

original Plat; VACC’s complaint is that the Plat’s contents were 

inconsistent, leaving portions of the Property unconveyed. VACC asserts

that, to correct the deficient conveyance, a quit claim deed from the prior 

owner was required. But VACC did not and does not now assert that this 

issue resulted in any damages, and absent damages, VACC does not have 

a claim for breach of the Policy on this basis. See Chartone, Inc. v. Bernini, 

207 Ariz. 162, 170, ¶ 30 (App. 2004). And even assuming VACC suffered 

some degree of damages, those damages resulted from conditions in the 

Plat, and as stated above, any such deficiencies were excluded from 

coverage.

¶23 VACC also argues that title was not delivered as described in 

Schedule A of the purchase agreement. The Policy insured against title 

“being vested other than as stated [in] Schedule A.” Schedule A described

the Property as “Units 1001 through 1180, inclusive and Units 1187 through 

1375 inclusive, and Tracts A through J, inclusive, Villages at Country Club 

Amended,” of the recorded Plat. The recorded warranty deed also 

described the Property as “Units 1001 through 1375, inclusive, Tracts A 

through J, Final Plat of VILLAGES AT COUNTRY CLUB AMENDED.”

Because Schedule A and the warranty deed contain the same legal 

description, VACC was vested with exactly what was stated in Schedule A

and there was no covered loss.

¶24 VACC further asserts that the endorsements to the Policy

insured against costs arising from amending the Plat. The basis for this 

argument is the discrepancies in the Plat. But the endorsements insured 

against portions of the Property being improperly subdivided and not 

contiguous, and specifically provided that they did not “modify any terms 

and provisions of the policy.” And because the Policy excluded from 

coverage costs arising out of the Plat, the endorsements are inapplicable.

B. Bad Faith.

¶25 VACC argues that the superior court erred by entering 

summary judgment on its bad faith, breach of fiduciary duty, and breach of 

good faith and fair dealing claims, asserting that factual issues precluded 

summary judgment.

¶26 All of these claims turn on whether CTIC acted in bad faith 

because under these circumstances, bad faith is intertwined with the duty 
VACC v. CHICAGO TITLE, et al.

Decision of the Court

8

of good faith and fair dealing. See Clearwater v. State Farm Mut. Auto. Ins. 

Co., 164 Ariz. 256, 258 (1990); see also Rowland v. Great States Ins. Co., 199 

Ariz. 577, 582, ¶ 8 (App. 2001). To establish insurance bad faith, the insured 

must show the absence of a reasonable basis for denying coverage under 

the policy. Noble v. Nat’l Am. Life Ins. Co., 128 Ariz. 188, 190 (1981). The tort 

only arises when “an insurance company intentionally denies or fails to 

process or pay a claim without a reasonable basis for such action.” Aetna, 

161 Ariz. at 440 (citation omitted). Moreover, the insurer is not liable for 

bad faith—even if ultimately wrong on coverage—when there was a 

reasonable basis for denying coverage. Id.

¶27 Although a bad faith claim may be not appropriate for 

summary judgment because of factual disputes, “there are times when the 

issue of bad faith is not a question appropriate for determination by the 

jury.” Aetna Cas. & Sur. Co. v. Superior Court, 161 Ariz. 437, 440 (App. 1989). 

Here, VACC’s initial claim was for (1) a defect in title because a document 

affecting title was not properly created, (2) unmarketable title, and (3) the 

violation of an ordinance relating to the occupancy, use, or enjoyment of 

the land. CTIC investigated by contacting the City of Mesa, and city 

officials informed CTIC that the Plat was not in violation of its ordinances. 

Additionally, because the unmarketability arose from the Plat, as discussed 

above, CTIC reasonable and correctly determined that the claim was 

excluded from coverage. CTIC denied VACC’s claims after a reasonable 

investigation and had a reasonable basis for doing so. See Noble, 128 Ariz. 

at 190. Accordingly, the superior court did not err by entering summary 

judgment in favor of CTIC.

CONCLUSION

¶28 The superior court’s judgment is affirmed.

¶29 All three parties request attorney’s fees on appeal under 

A.R.S. § 12-341.01. VACC has not prevailed, so we deny its request. In an 

exercise of our discretion, we award CTIC and CTA their reasonable 

attorney’s fees upon compliance with ARCAP 21. As the prevailing parties, 

CTIC and CTA are entitled to an award of costs on appeal upon compliance 

with ARCAP 21. See A.R.S. § 12-342.