Court Opinion

ID: 9763944
Source: CourtListenerOpinion
Date Created: 2023-08-29 03:03:30.698922+00
Date Added: 2024-06-11T07:29:51.679156
License: Public Domain

Judith Rogers, Judge, dissenting. The appellants in the case at bar purchased property, and only after extensive litigation was it determined that they had no right of access to it. I must respectfully dissent from the affirmance of the trial court’s finding that coverage for this loss was excepted under the terms of the title insurance policy. Before discussing my reasons for dissenting, I must first clarify what the issue before us is, and what it is not. The policy in question insured against loss or damage sustained or incurred by the insured by reason of the “lack of a right of access to and from the land.” The policy excluded from coverage defects, liens, encumbrances, adverse claims, or other matters “resulting in no loss or damage to the insured claimant.” In its ruling, the trial court found only that appellants’ claim was excepted because of this exclusion, reasoning that appellants “purchased the property for $20,000 knowing it had no access.” The trial court did not find that appellants had failed to meet their burden of proof as to the amount of damages they had sustained. Our focus on review is thus directed toward this exclusion, and the issue is whether appellants did or did not suffer any “loss or damage” by reason of this defect. The issue does not concern the proper measure of damages or whether appellant’s proof was legally sufficient to support its claim as to the monetary amount they might be entitled to recover. This distinction is one of significance because it is the insurer, not the insured, which bears the burden of proving that the insured’s claim falls within an exclusion found in the policy. Reynolds v. Shelter Mutual Ins. Co., 313 Ark. 145, 852 S.W.2d 799 (1993). At this juncture, I must add that, although appellee contends in its brief that appellants’ proof of damages was insufficient, the trial court made no alternative finding on that basis, and we cannot make such a finding ourselves on appeal, since we do not review circuit court cases de novo on the record. See Charleston School District No. 9 v. Sebastian County Board of Education, 300 Ark. 242, 778 S.W.2d 614 (1989). Turning now to the merits of this case, the trial court’s determination that appellants suffered no loss or damage is based on its view that appellants “got exactly what they paid for, a piece of property with no right of access by land.” The trial court also stated in its order that it “rejects the Plaintiffs’ argument that discovery of an old Quitclaim Deed obviated the application of the exclusions above. Plaintiffs’ written (agreed upon) acknowledgment in the Offer and Acceptance that the property had no right of access is not cured by any belief Plaintiff may have had about the affect [sic] of the old deed.” The trial court’s findings and conclusions are erroneous because they are not supported by the evidence or the law that pertains to this subject. For these reasons, I must dissent. In negotiating the purchase of this property, appellants were advised that the land had no “permanent legal easement.” For that reason, the offer and acceptance contained a special condition that gave the appellants the authority to acquire an easement, and the right to rescind the offer if they were unable to obtain an easement in six months, or if the cost of obtaining an easement exceeded $5,000. Pursuant to this agreement, appellants attempted to purchase a right of access from the surrounding landowners, without success. They then pursued an action in county court. During the course of that proceeding, one of the landowners produced a 1971 quitclaim deed, filed of record, which purported to convey a right of ingress and egress to the property. Upon the discovery of this deed, appellants went forward with the purchase of the property. After consummation of the sale, however, appellants were denied access over the right of way granted in the deed. They then filed suit, on their own, to enforce the provisions of the deed against the landowner.1 After receiving an adverse determination, they appealed to the supreme court, which affirmed the decision that the conveyance in the deed was personal, and did not run with the land. There is no dispute in the evidence that appellants purchased the property in rebanee on the 1971 deed. The appellants did not, and I repeat, did not, purchase a piece of property believing or knowing that there was no right of access. There is no evidence in this record even to suggest that appellants had any reason to believe that the deed would not provide them with access. Even a title examiner, who worked for Wilson & Associates, testified that anyone who looked at the deed would conclude that access was available to the property. Inexplicably, the trial court’s ruling was made as if the facts were frozen in time, limited to the state of affairs as they existed when the offer and acceptance was negotiated. However, the subsequent discovery of the deed, appellants’ reliance on it, and their efforts to enforce it are facts that cannot be ignored or deemed insignificant. The simple truth is that appellants relied on the deed as providing access to the property. Their innocence or good faith reb-anee on the deed is strengthened by the fact that they filed suit to enforce its provisions and pursued that action all the way to the supreme court. The only evidence that might arguably support the trial court’s finding is appellant Riffle’s testimony that the property was purchased at a discount. However, that reasoning is fallacious because the offer and acceptance was premised on access eventually being acquired, and it also took into account the cost of obtaining an easement. In order for a price reduction to take on any meaningful significance, there should be proof that the purchase price reflected the value of an unimproved piece of property in the area, without access. This record leaves us to speculate, since appellee, which bore the burden of proof, offered no evidence to support this assertion. The trial court’s finding that appellants purchased the property knowing that it was without access is clearly erroneous. The trial court gave no explanation for its conclusion that appellants had no right to rely on the deed. As discussed above, on this record it can only be said that appellants’ rebanee on the deed ultimately proved to be mistaken. Under the law, however, appellants had the right to rely on the professional judgment of their tide insurer. As we said in Bourland v. Title Ins. Co. of Minn., 4 Ark. App. 68, 627 S.W.2d 567 (1982): The purpose of title insurance is to protect a transferee of real estate from loss through defects clouding his title. The issuance of the policy is predicated upon an examination of the public records as to the insured title for when a person seeks title insurance he expects to obtain a professional tide search and opinion as to the condition of his title. Accordingly the insurer had a duty to search the records for clouds and other defects before issuing its policy. Id. at 73, 627 S.W.2d at 570 (citations omitted). Since appellants had the right to rely on the insurer’s expertise, they cannot be faulted for placing rebanee on the title examination. Although an exclusion can insulate the insurer from liability where the loss results from the insured’s own intentional, ibegal, or inequitable conduct, Mattson v. St. Paul Title Co. of the South, 277 Ark. 290, 641 S.W.2d 16 (1982), the trial court made no finding that appellants were guilty of such conduct. The pobey issued by appebee insured against loss or damage resulting from the lack of a right of access. Appebants are without access by land to the property they purchased, through no fault or contrivance of their own. It is absurd to say that appellants have sustained no “loss or damage” resulting from this defect. As written in a letter by the insurer’s own general counsel, “If the appeals court affirms the trial court’s decision, we would likely face a loss of full policy limits with few alternatives. The statutory procedure through county court to establish a road of necessity is not a guaranteed solution and the costs would likely approach policy limits.” The trial court’s decision is clearly erroneous and should be reversed. I am authorized to state that Judges Arey and Jennings join in this opinion.   Appellants’ counsel forwarded an advance copy of the complaint for declaratory judgment to Wilson & Associates, which advised appellant’s counsel that the claim was in the nature of a tort, a loss not covered under the policy.