Court Opinion

ID: 4182921
Source: CourtListenerOpinion
Date Created: 2017-06-30 22:07:25.999393+00
Date Added: 2024-06-11T14:38:41.762772
License: Public Domain

2017 IL App (1st) 161765
                                              No. 1-16-1765
                                                                                         Fifth Division
                                                                                         June 30, 2017

     ______________________________________________________________________________

                                         IN THE
                             APPELLATE COURT OF ILLINOIS
                                     FIRST DISTRICT
     ______________________________________________________________________________

                                                     )
     JOSEPHINE WADE,                                 ) Appeal from the Circuit Court
                                                     ) of Cook County.
           Plaintiff-Appellant,                      )
                                                     ) No. 13 L 14015
     v.                                              )
                                                     ) The Honorable
     STEWART TITLE GUARANTY COMPANY,                 ) James E. Snyder,
                                                     ) Judge Presiding.
           Defendant-Appellee.                       )
                                                     )
     ______________________________________________________________________________

               PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion.
               Justices Hall and Lampkin concurred in the judgment and opinion.

                                                OPINION

¶1         The instant appeal arises from a breach of contract dispute regarding a title insurance

        policy for a multiunit residential building in Chicago, Illinois. Plaintiff, Josephine Wade, the

        purchaser of the property, filed suit against defendant, Stewart Title Guaranty Company,

        alleging that defendant failed to timely remove defects on the property’s title. Plaintiff

        claimed that defendant’s delay in curing the title defects resulted in the demolition of the

        property because plaintiff was unable to obtain a loan to rehabilitate the property to comply

        with the City of Chicago’s building code. Following a bench trial, the trial court found in
     No. 1-16-1765

         favor of defendant, finding that defendant did not breach any duties it owed to plaintiff under

         the policy. Plaintiff appeals the judgment entered by the trial court. We affirm.

¶2                                            BACKGROUND

¶3                                               I. Complaint

¶4           On December 11, 2013, plaintiff filed a two-count complaint 1 against defendant, alleging

         that plaintiff purchased a title insurance policy from defendant on December 6, 2006, in

         conjunction with plaintiff’s purchase of a two-unit, residential property located on

         Washington Street in Chicago (Washington property). Under the terms of the policy,

         defendant agreed to provide plaintiff title insurance in the amount of $187,200 against any

         loss or damages resulting from any defects on the title to the Washington property. The

         complaint alleges that defendant represented in the policy that the only defects on the title

         were the mortgage plaintiff had secured to purchase the Washington property and unpaid real

         estate taxes from 2005 and 2006. Relying on these representations in the policy, plaintiff

         closed on the property on November 21, 2006. 2

¶5           The complaint alleged that subsequent to the closing, plaintiff learned of two additional

         defects to the title of the property. First, she learned that on September 29, 2006, the City of

         Chicago had instituted a housing court action due to building code violations on the property

         and had recorded a lis pendens on the property. Additionally, she learned that on October 3,

         2007, Deutsche Bank had filed a foreclosure action on the Washington property due to the

         seller’s default on a second mortgage dated May 23, 2003, that had been unknown to

             1
               An amended complaint was filed on February 4, 2014, correcting defendant’s name to “Stewart
     Title Guaranty Company.”
             2
               We note that defendant did not issue its title policy until December 6, 2006, after the closing.
     However, defendant had issued a title commitment on November 7, 2006, prior to the November 21,
     2006, closing. It is presumably this title commitment that plaintiff allegedly relied on, rather than the
     subsequently issued title policy.
                                                         2
     No. 1-16-1765

        plaintiff. 3 The complaint alleges that defendant eventually paid off the second mortgage to

        Deutsche Bank under the policy in order to remove the Washington property’s title defects.

        However, the complaint alleges that the unpaid second mortgage on the title prevented

        plaintiff from obtaining a loan to finance required repairs to the property. Due to plaintiff’s

        inability to finance the repairs, the complaint alleges that the progression of the housing court

        action resulted in a demolition order entered on July 2, 2012, against the Washington

        property. The complaint alleges that plaintiff would not have closed on the Washington

        property had she been aware of the two defects against the title of the property.

¶6         The complaint set forth two counts. Count I was for breach of contract and alleged that

        defendant “breached its obligations under the Policy by failing to reimburse plaintiff for her

        direct losses in the value of the Property and the cost of its demolition due to the undisclosed,

        existing and insured (a) Deutsche Bank lien and (b) Housing Court Action.” Plaintiff alleged

        she fully performed her premium payment obligations. Plaintiff alleged she suffered damages

        as a result of defendant’s breach of the policy in excess of $100,000.

¶7         Count II was for a violation under section 155 of the Illinois Insurance Code (Insurance

        Code) (215 ILCS 5/155 (West 2012)). Plaintiff alleged that despite multiple requests to pay

        the amounts owed to Deutsche Bank and the housing court action under the policy to remove

        the title defects, defendant refused to pay and, instead, pursued litigation. The complaint

        alleged that “defendant has acted vexatiously and unreasonably” and had acted in bad faith in

        violation of the Insurance Code.

¶8         Attached to the complaint was the title insurance policy issued to plaintiff, dated

        December 6, 2006. Under the policy, defendant agreed to insure plaintiff against “loss or

           3
            The seller was plaintiff’s son.
                                                     3
       No. 1-16-1765

          damage, not exceeding the Amount of Insurance stated in Schedule A, sustained or incurred

          by the Insured by reason of any defect in or lien or encumbrance on the title.” The policy

          excluded from coverage, “defects, liens, encumbrances, adverse claims or other matters

          created, suffered, assumed or agreed to by the insured claimant.”

¶9            Section 3 of the policy was entitled “Notice of Claim to be given by Insured Claimant”

          and provided, in relevant part:

                   “The insured shall notify the Company promptly in writing[4]: *** (ii) in case

                   knowledge shall come to an insured hereunder of any claim of title or interest which

                   is adverse to the title to the estate or interest, as insured, and which might cause loss

                   or damage for which the Company may be liable by virtue of this policy.”

          Section 17 of the policy provided that “all notices required to be given to the Company and

          any statement in writing required to be furnished the Company shall include the number of

          this policy and shall be addressed to the Company at P.O. Box 2029, Houston, Texas, 77252-

          2029.”

¶ 10          Section 4 was entitled “Defense and Prosecution of Actions; Duty of Insured Claimant to

          Cooperate” and provided, in relevant part:

                   “Upon written request by the insured and subject to the options contained in Section 6

                   of these Conditions and Stipulations, the Company, at its own cost and without

                   unreasonable delay, shall provide for the defense of an insured in litigation in which

                   any third party asserts a claim adverse to the title or interest as insured, but only as to

                   those stated causes of action alleging a defect, lien or encumbrance or other matter

                   insured against by this policy.”

              4
                 Plaintiff argued in oral arguments that the policy did not contain a provision for written
       notification.
                                                         4
       No. 1-16-1765

¶ 11          Section 4 further stated: “The Company shall have the right, at its own costs, to institute

          and prosecute any action or proceeding or to do any other act which in its option may be

          necessary or desirable to establish the title to the estate or interest, as insured, or to prevent or

          reduce loss or damage to the Insured.”

¶ 12          Section 6, which was entitled “Options to Pay Or Otherwise Settle Claims; Termination

          of Liability,” provided additional options for defendant in the event a claim under the policy

          arose. Specifically, section 6(a) provided the option:

                “To pay or tender payment of the amount of Insurance under this policy together with

                any costs, attorneys fees and expenses incurred by the insured claimant, which were

                authorized by the company up to the time of payment or tender of payment and which

                the Company is obligated to pay.”

¶ 13          Section 6(b) provided defendant the option to pay or otherwise settle with parties other

          than the insured. Section 6(b) allowed defendant to:

                “(i) pay or otherwise settle with other parties for or in the name of an insured claimant

                any claim Insured against, under this policy, together with any costs, attorneys’ fees

                and expenses incurred by the insured claimant, which were authorized by [the]

                Company up to the time of payment and which [the] Company is obligated to pay; or

                (ii) to pay or otherwise settle with the insured claimant the loss or damage provided for

                under this policy, together with any costs, attorneys fees and expenses incurred by the

                insured claimant which were authorized by [the] Company up to the time of payment

                and which [the] Company is obligated to pay.”

¶ 14          Section 9, entitled “Limitation of Liability,” then provided:

                                                         5
       No. 1-16-1765

               “If the Company establishes the title, or removes the alleged defect, lien or

               encumbrance *** in a reasonably diligent matter 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 hereby.”

¶ 15         Plaintiff additionally attached to the complaint an “Agreed Order of Injunction and

          Judgment” entered on December 1, 2009, against the Washington property in connection

          with the housing court action. The order dismissed the housing court action on the

          Washington property provided that plaintiff did not “rent, use, lease, or occupy the subject

          premises and shall keep the same vacant and secure until further order of the court.” Further,

          the order required plaintiff to notify the City of Chicago and the court 30 days after any sale,

          transfer, or change in ownership. The order required plaintiff to schedule an inspection by

          June 1, 2010, to verify compliance with the order.

¶ 16         Also attached to the complaint was an “Order of Demolition,” entered on July 2, 2012, in

          which the housing court found the Washington property “dangerous, hazardous, unsafe and

          beyond reasonable repair under the Unsafe Building Statute, 65 ILCS 11-31-1 (1996).” The

          City of Chicago was ordered to demolish the building located on the property. The order also

          granted the City of Chicago costs for the demolition.

¶ 17                                       II. Motion to Dismiss

¶ 18         On March 4, 2014, defendant filed a motion to dismiss plaintiff’s amended complaint

          pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West

          2012)). Defendant argued count I of plaintiff’s complaint failed to allege sufficient facts to

          state a cause of action for breach of contract. Further, defendant argued count II of plaintiff’s

                                                       6
       No. 1-16-1765

          complaint should be dismissed, as section 155 of the Insurance Code did not apply to

          defendant as a title insurance company.

¶ 19         On June 6, 2014, the trial court granted defendant’s motion to dismiss in part. The trial

          court denied defendant’s motion to dismiss count I of plaintiff’s amended complaint, finding

          plaintiff alleged sufficient facts to state a cause of action for breach of contract. However, the

          trial court dismissed count II of plaintiff’s amended complaint with prejudice. The trial court

          found that plaintiff could not bring a claim under section 155 of the Insurance Code against

          defendant, as the Insurance Code did not apply to title insurance companies.

¶ 20                       III. Amended Complaint and Third-Party Complaint

¶ 21         On August 10, 2015, plaintiff filed a second amended complaint. Count I of the second

          amended complaint contained an identical breach of contract cause of action as previously

          alleged in plaintiff’s prior complaint. The second amended complaint included under the

          dismissed second count’s heading, “Count II was dismissed and is not pled in this Amended

          Complaint.” Plaintiff also included a third count for breach of contract. The new count

          alleged that defendant failed to provide any payments to plaintiff or for the benefit of the

          property for three years. The complaint alleged that this failure amounted to a breach of the

          title insurance policy, which required defendant to correct defects in the title “in a reasonably

          diligent manner.” The complaint further alleged that defendant’s delay caused plaintiff’s

          inability to secure a rehabilitation loan to prevent the demolition of the Washington property.

¶ 22         On August 19, 2015, defendant filed a third-party complaint against Victor Love, the son

          of plaintiff and the person from whom plaintiff had purchased the property. While the third-

          party complaint is not at issue on appeal, we nevertheless briefly discuss it, since the parties

          went to trial on both complaints. The third-party complaint contained one count for

                                                        7
       No. 1-16-1765

          subrogation, which alleged that Love had failed to disclose the second mortgage and the

          housing court action to defendant at the closing of the property. Defendant sought

          compensation from Love after defendant paid $15,000 to remove the second mortgage lien

          from the Washington property’s title.

¶ 23                                       IV. Motion to Dismiss

¶ 24         On September 11, 2015, defendant filed a motion to dismiss count III of plaintiff’s

          second amended complaint pursuant to section 2-615 of the Code, arguing that count III was

          duplicative of count I of plaintiff’s complaint as both were claims for breach of contract and

          were supported by the same allegations. On October 7, 2015, the trial court granted

          defendant’s motion without prejudice. The trial court did not provide its reasoning.

¶ 25                                   V. Third Amended Complaint

¶ 26         On October 14, 2015, plaintiff filed her third amended complaint. The new complaint

          consisted only of one count for breach of contract. The complaint alleged that defendant was

          obligated under the title insurance policy to insure plaintiff against any losses resulting from

          title defects in the Washington property. The complaint alleged that after the closing, plaintiff

          learned of two defects in the title of the Washington property: the Deutsche Bank lien and the

          housing court action. Defendant had an obligation under the policy to remove these defects in

          the title in a “reasonable diligent manner,” and the complaint alleged that the three-year

          period for defendant to remove the title defects constituted a breach of the title insurance

          policy. The delay in defendant’s removal of the title defects resulted in plaintiff’s inability to

          obtain a rehabilitation loan to make necessary repairs to the property. The complaint alleged

          that the delay additionally caused the ultimate deterioration of the Washington property and

          the loss of the value of the property in an amount in excess of $150,000 due to the demolition

                                                        8
       No. 1-16-1765

          of the property. The earlier count II, arising under the Insurance Code, was not pled, and the

          third amended complaint specifically stated that “Count II was dismissed and is not pled in

          this Amended Complaint.” On November 20, 2015, defendant filed its answer to count I of

          plaintiff’s third amended complaint, denying the allegations.

¶ 27                                          VI. Bench Trial

¶ 28         On April 19, 2016, the trial court conducted a one-day bench trial on plaintiff’s third

          amended complaint and defendant’s third-party complaint. The trial court heard testimony

          from plaintiff and third-party defendant Victor Love, as well as from Eleanor Sharp,

          defendant’s claims counsel. The parties stipulated to the admission of several documents into

          evidence, including defendant’s title commitment and title policy issued to plaintiff.

¶ 29                                            A. Plaintiff

¶ 30         Plaintiff testified that she had worked as a part-time mortgage broker since the 1980s.

          She testified that she had purchased approximately 15 to 20 properties within Chicago and

          currently owned several properties, including a commercial property, two houses, one

          condominium, and the land for the Washington property. Plaintiff first discussed purchasing

          the Washington property from her son, Love, in May 2006. Plaintiff testified she knew Love

          had experienced difficulties with prior tenants that had damaged the Washington property.

          Plaintiff observed the property prior to the purchase only from the outside, but plaintiff

          testified she only noticed the broken and boarded-up windows.

¶ 31         Plaintiff desired to assist her son, and Love provided plaintiff with the contact

          information for his mortgage company. Upon contacting the mortgage company, plaintiff

          learned Love was behind in mortgage payments in the amount of $13,000. Plaintiff then

                                                       9
       No. 1-16-1765

           provided $13,000 to Love in order to pay off the past-due amount. Plaintiff testified that to

           the best of her knowledge, Love paid this amount to the mortgage company. 5

¶ 32           Plaintiff testified that she then entered into an agreement with Love to purchase the

           Washington property. Plaintiff planned to purchase the Washington property in order to

           assist her son and to rehabilitate the property as an investment. In order to finance the

           purchase of the Washington property, plaintiff obtained a mortgage loan from Amalgamated

           Bank in the amount of $77,470. Plaintiff also acquired $111,000 in cash from Amalgamated

           Bank upon refinancing an additional property owned by plaintiff, which she also used

           towards the purchase of the Washington property. Plaintiff provided Amalgamated Bank

           with a copy of the title commitment issued by defendant. At the closing of the property on

           November 21, 2006, plaintiff understood that the funds from the purchase price were used to

           pay off the mortgages taken out by Love that appeared on the title commitment. 6 Plaintiff

           testified that at the closing on the Washington property, she was only aware of her own

           mortgage on the property from Amalgamated Bank.

¶ 33           However, plaintiff became aware of an additional mortgage on the Washington property

           when a representative from Amalgamated Bank contacted her approximately three weeks

           after the closing. Plaintiff learned that her son, Love, had previously obtained an undisclosed

           mortgage from Deutsche Bank in the amount of $39,000. 7 After receiving this information,

               5
                 We note that this testimony conflicts with the testimony of Love, who testified that plaintiff
       provided the payment directly to the mortgage company, not to him.
               6
                 The closing statement and HUD settlement statement, which were stipulated to by the parties
       and admitted into evidence, indicated that the purchase price of $184,500 was used to pay off Love’s debt
       owed to Litton Loan Servicing in the amount of $174,671.55 and Chicago Community Ventures in the
       amount of $5000. No additional mortgage loans were listed on the documents. Love conveyed the
       Washington property to plaintiff in a warranty deed, dated November 21, 2006, and recorded December
       5, 2006, which was also stipulated to and admitted into evidence.
               7
                 The record demonstrates that, in order to finance his initial purchase of the Washington property,
       Love acquired two mortgages on the property with Chapel Mortgage on May 23, 2003: one mortgage in
                                                           10
       No. 1-16-1765

          plaintiff testified that she went to defendant’s office on Southwest Highway in December

          2006, where she was told she would have to retain an attorney. Plaintiff testified she was

          given a claim number, but had no further communications with defendant.

¶ 34          Plaintiff testified that she attempted to obtain additional financing for the rehabilitation of

          the property from Amalgamated Bank, but was unsuccessful due to the undisclosed Deutsche

          Bank lien. She also testified that she was unable to obtain a rehabilitation loan from either

          Illinois Federal Savings or Highland Community Bank. However, plaintiff subsequently

          testified that she was able to obtain a $20,000 rehabilitation loan in April 2007 from Illinois

          Federal Savings to replace the windows on the second floor and in the basement of the

          property. Plaintiff also testified she hired an architect for $7000 to draw plans for the

          rehabilitation of the Washington property. Plaintiff additionally testified she hired an

          individual to decorate the condominium for $4000. Plaintiff maintained the landscaping;

          however, no other rehabilitation efforts were completed. Plaintiff testified she attempted to

          sell the property in either 2009 or 2010. Although plaintiff received offers for the property,

          plaintiff never reached an agreement with any prospective buyers.

¶ 35          On cross-examination, plaintiff admitted that she inspected the inside of the property as

          well as the outside of the property prior to the closing. She testified that she knew the

          property required a substantial amount of work. Plaintiff denied that she was aware of the

          code violations at the time of the purchase. However, plaintiff reviewed the appraisal for the

          property on the stand and agreed with a majority of the dilapidated descriptions of the

          property.

       the amount of $146,250 and one mortgage in the amount of $39,000. The first mortgage was paid off
       during the closing of the Washington property on November 21, 2006. The second mortgage was, at some
       point, sold or transferred to Wilshire Mortgage Company as the servicer for Deutsche Bank. This second
       mortgage loan was not paid off in the closing of the Washington property and did not appear in
       defendant’s title commitment or title policy.
                                                        11
       No. 1-16-1765

¶ 36         Further on cross, plaintiff first denied that she attempted to sell the Washington property

          as early as the summer of 2007. However, upon viewing a contract for the Washington

          property dated June 12, 2007, for the amount of $380,000, plaintiff retracted her testimony.

          Plaintiff testified that she entered into a contract with a prospective purchaser for the

          Washington property. Plaintiff then admitted that the building code violations were disclosed

          to the prospective buyer. Plaintiff testified that the prospective buyer under the contract

          rescinded due to the inability to obtain proper financing.

¶ 37         Plaintiff additionally admitted that she was aware that Deutsche Bank filed a lawsuit

          against Love and his wife, as well as Amalgamated Bank, concerning the Washington

          property in the fall of 2007. Plaintiff testified that her attorney notified defendant by letter,

          disclosing the existence of the Deutsche Bank second mortgage and building code violations.

          Plaintiff testified she was unaware that defendant responded to the letter.

¶ 38         Additionally, plaintiff testified that defendant retained an attorney to represent plaintiff in

          the housing court action. Plaintiff approved of the attorney and was pleased with his efforts.

          Plaintiff testified that the housing court action was dismissed on December 1, 2009, on the

          condition that plaintiff would keep the property secured and vacant until the multiple code

          violations were satisfied. Plaintiff was shown a City of Chicago’s emergency motion brought

          against her to reinstate the demolition of the Washington property when the City discovered

          that the property was not kept secure and was open and fire-damaged with holes in the

          interior floors. Plaintiff then admitted she went to court and was told of the new violations,

          and admitted that she made no effort to satisfy the code violations from 2009 through 2012.

¶ 39         Plaintiff testified she knew that defendant eventually paid Deutsche Bank to remove the

          mortgage lien from the title of the Washington property. Plaintiff also testified that she knew

                                                       12
       No. 1-16-1765

          that defendant paid Amalgamated Bank to remove her own mortgage lien from the title of the

          Washington property. However, plaintiff testified that she did not become aware that the

          Deutsche Bank mortgage was not paid off until November 2011.

¶ 40                              B. Victor Love, Third-Party Defendant

¶ 41         Third-party defendant Victor Love testified that he and plaintiff, his mother, had regular

          contact as they worked together in a restaurant. Love testified that he originally purchased

          the Washington property as an investment property and that this was his first real estate

          investment property. Love rented the Washington property to tenants as two separate units.

          Love experienced difficulties with the tenants, including drug use and damage to the

          property. The Washington property eventually became vacant and was further vandalized and

          damaged.

¶ 42         Love testified that he discussed these difficulties with plaintiff, who then expressed a

          desire to assist Love. Love gave plaintiff the information to contact his mortgage company.

          Love testified that plaintiff and Love did not discuss or agree to a price for the sale of the

          Washington property; the sale price was set by the mortgage company. Love testified that it

          was his understanding that plaintiff made payments to the mortgage company, including the

          payments Love had missed, to bring his mortgage on the Washington property current. Love

          testified that plaintiff did not personally pay him $13,000 for the defaulted mortgage. Love

          testified that he was not aware of the second mortgage on the property from Deutsche Bank

          at the time he issued a deed to the Washington property to plaintiff at the closing. As a result,

          he did not disclose the second mortgage from Deutsche Bank to plaintiff.

¶ 43         On cross-examination, Love testified that prior tenants vandalized the Washington

          property prior to the transfer of ownership to plaintiff. He testified that the tenants vandalized

                                                       13
       No. 1-16-1765

          the plumbing, windows, and toilets. Love denied that plaintiff viewed the interior portions of

          the property prior to purchase, despite impeachment from his deposition testimony that

          indicated she did make a visual inspection. Additionally, Love denied that he received the

          complaint filed by the City of Chicago concerning the Washington property in September

          2006. Love testified that he was not at the property on July 11, 2006, when an inspection by

          the City occurred, and testified that the last time he visited the property was in 2005. Love

          reviewed the document that indicated a notice was issued regarding the dangerous and unsafe

          conditions to the property. However, Love testified he never received this notice, though he

          admitted the notice was sent to his correct post office box.

¶ 44         Love was shown a court order dated November 14, 2006, which required him to be

          present for an inspection of the property. Love testified he did not recall being present at the

          court hearing. Love admitted that the court order read, “Victor Love is granted 28 days to

          answer,” and further that default was not entered against him. Love also admitted that his

          signature was on a document, entitled “Affidavit of Title, Covenant and Warranty,” dated

          November 21, 2006. Love testified that he truthfully signed the affidavit because at the time

          of the signing he had not received notice of the housing court action. Love testified that he

          believed he signed the documents at defendant’s office; however, he admitted it was possible

          that it could have been at the office of another title company.

¶ 45                            C. Eleanor Sharp, Claims Counsel for Defendant

¶ 46         Eleanor Sharp testified that she worked for defendant as a claims counsel and was the

          claims attorney assigned to plaintiff’s claim. Sharp testified that defendant’s policy requires

          insureds to provide written notice of the title defects to be sent to the address listed on the

          policy. Sharp testified she received a written notice of the title defects in a letter from

                                                       14
       No. 1-16-1765

          plaintiff’s attorney, dated December 27, 2007. The letter contained defendant’s incorrect

          address; however, Sharp eventually came into possession of the letter. Sharp issued a letter in

          reply upon receipt, dated January 15, 2008. The letter indicated that defendant would begin

          processing plaintiff’s claim.

¶ 47         Sharp testified that she first determined that the Deutsche Bank mortgage was covered

          under the terms of plaintiff’s title insurance policy and that an exclusion did not apply. Sharp

          testified that Love did not disclose the second mortgage from Deutsche Bank on the

          Washington property. Sharp did not suspect any collusion between plaintiff and Love

          because she was unaware that Love was plaintiff’s son. Sharp testified she did not personally

          examine the title search that defendant conducted on the Washington property.

¶ 48         Sharp testified that defendant cured all of the title defects on the Washington property by

          December 2009. She further testified that defendant asserted an equitable subrogation claim

          on behalf of Amalgamated Bank. This claim formed the basis of defendant’s settlement with

          Deutsche Bank to remove the lien against the property. Additionally, an appraisal of the

          Washington property was conducted in May 2009, wherein it was valued between $25,000

          and $35,000. Sharp testified that defendant came to an agreement for the removal of the

          Deutsche Bank mortgage in the amount of $15,000 in July 2009. Defendant also retained an

          attorney to represent plaintiff in the housing court action, and defendant paid $17,000 in

          attorney fees. The housing court action was resolved on December 1, 2009. Sharp

          additionally testified that payments were also made in the amount of $44,000 to

          Amalgamated Bank to pay off plaintiff’s own mortgage on the property.

¶ 49         Sharp relayed the information regarding the curing of the title defects on the property to

          plaintiff’s attorney in either 2009 or early 2010. Sharp also testified that if plaintiff had given

                                                        15
       No. 1-16-1765

          defendant notice that she desired to obtain a rehabilitation loan, defendant could have

          provided an indemnity letter to Amalgamated Bank. This would have allowed defendant to

          obtain the rehabilitation loan. Yet, plaintiff failed to do so.

¶ 50                                      D. Trial Court’s Findings

¶ 51          On May 19, 2016, the trial court entered judgment in favor of defendant and judgment in

          favor of Love. The court found that plaintiff failed to provide evidence to establish the

          required elements of her breach of contract claim, including that defendant’s conduct

          constituted a breach of the title insurance policy, proximate cause, and cognizable damages.

          The trial court recognized that plaintiff argued that the three-year period in which defendant

          cured the defects constituted a breach of contract, but found that plaintiff failed to provide

          evidence to establish when this period commenced and concluded. The court found

          plaintiff’s arguments merely attempted to place the burden on defendant to prove that the title

          defect claims were resolved within a reasonable period of time under the policy. As a result,

          plaintiff failed to prove by a preponderance of the evidence that defendant’s conduct

          constituted a breach of the insurance policy.

¶ 52          Furthermore, the court found that plaintiff did not prove damages proximately caused by

          the breach. The trial court noted that plaintiff argued she sustained damages in the amount of

          $110,000. However, the trial court found that the evidence did not establish a basis for this

          amount other than the amount pertained to plaintiff’s investment expenses in the property.

          These amounts included window replacements in the amount of $20,000; architect fees in the

          amount of $7000; condominium attorney fees in the amount of $4000; and other attorney

          fees in the amount of $6000. The trial court found that these expenses were merely related to

          plaintiff’s commercial real estate investment in the property and were not recoverable

                                                         16
       No. 1-16-1765

          damages for the alleged breach of the title insurance policy. The court noted that, to the

          extent plaintiff’s damages included plaintiff’s loan used to obtain the property, the evidence

          indicated that defendant had already paid that amount. Additionally, the court denied

          plaintiff’s claims of $441,000 in exemplary damages, as plaintiff failed to offer any basis for

          the award of these damages. Therefore, plaintiff failed in her burden of proof to satisfy the

          preponderance of the evidence standard for her claim against defendant for breach of the title

          insurance policy.

¶ 53         On June 16, 2016, plaintiff filed her notice of appeal from the order of the trial court on

          May 19, 2016, entering judgment in favor of defendant and against plaintiff. This appeal

          follows.

¶ 54                                           ANALYSIS

¶ 55         On appeal, plaintiff raises a number of arguments with respect to the trial court’s findings

          on plaintiff’s breach of contract claim. Plaintiff challenges the trial court’s holding with

          respect to the finding that plaintiff failed to prove a breach of the title insurance policy

          requiring defendant to remove defects in a “reasonably diligent manner.” Plaintiff also

          contests the trial court’s finding that plaintiff failed to prove proximate cause and damages.

          Plaintiff additionally raises new issues that were not addressed in the bench trial, including

          the applicability of section 155 of the Insurance Code and the implied covenant of good faith

          and fair dealing.

¶ 56                                      I. Standard of Review

¶ 57         The parties disagree as to our standard of review of the trial court’s decision. Defendant

          contends that the “manifest weight of the evidence” is the proper standard, while plaintiff

          argues that the standard that must apply is the “clearly erroneous” standard.

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       No. 1-16-1765

¶ 58         Our supreme court has limited the clearly erroneous standard to the review of

          administrative decisions on mixed questions of fact and law. Samour, Inc. v. Board of

          Election Commissioners, 224 Ill. 2d 530, 542 (2007). “In all other civil cases, we review

          legal issues de novo and factual issues under a manifest weight of the evidence standard.”

          Samour, 224 Ill. 2d at 542. The Illinois Supreme Court has accepted the application of the

          clearly erroneous standard of review to the review of decisions other than that of an

          administrative agency in limited situations, such as a trial court’s ruling on allegations of

          discrimination in jury preemptory challenges. See McDonnell v. McPartlin, 192 Ill. 2d 505,

          527 (2000). However, plaintiff fails to properly address this issue and further fails to provide

          a legal basis as to why this court should expand this narrow standard of review to apply to the

          review of the trial court’s decision in the bench trial of this matter. Plaintiff cites only to

          Illinois case law involving review of administrative decisions to which the clearly erroneous

          standard applies.

¶ 59         The standard of review that this court applies to a trial court’s decision following a bench

          trial is to determine if the judgment is based on facts that are against the manifest weight of

          the evidence. Gambino v. Boulevard Mortgage Corp., 398 Ill. App. 3d 21, 51 (2009). “A

          decision is against the manifest weight of the evidence only when an opposite conclusion is

          apparent or when the findings appear to be unreasonable, arbitrary, or not based on the

          evidence.” Eychaner v. Gross, 202 Ill. 2d 228, 252 (2002). The manifest weight of the

          evidence standard affords great deference to the trial court because the trial court is in a

          superior position to determine and weigh the credibility of the witnesses, observe witnesses’

          demeanor, and resolve conflicts in their testimony. People v. Jones, 215 Ill. 2d 261, 268

          (2005).

                                                      18
       No. 1-16-1765

¶ 60         The parties agree that this case also involves the interpretation of the terms of a title

          insurance policy contract, which presents an issue of law that is reviewed de novo. Crum &

          Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 391 (1993). “Under the

          de novo standard of review, the reviewing court does not need to defer to the trial court’s

          judgment or reasoning.” Platinum Partners Value Arbitrage Fund, Ltd. Partnership v.

          Chicago Board Options Exchange, 2012 IL App (1st) 112903, ¶ 12. “De novo review is

          completely independent of the trial court’s decision.” Platinum Partners Value Arbitrage

          Fund, Ltd. Partnership, 2012 IL App (1st) 112903, ¶ 12. De novo consideration means we

          perform the same analysis that a trial judge would perform. Khan v. BDO Seidman, LLP, 408
Ill. App. 3d 564, 578 (2011).

¶ 61                   II. Delay in Removing Encumbrances on the Title of the Property

¶ 62         Plaintiff claims that defendant failed to cure title defects against the Washington property

          in a “reasonably diligent manner.” The trial court found that plaintiff failed to offer evidence

          that the defects in the title were not cured in a “reasonable diligent manner.”

¶ 63         “[T]he rules applicable to contract interpretation govern the interpretation of an insurance

          policy.” Founders Insurance Co. v. Munoz, 237 Ill. 2d 424, 433 (2010). However, an

          insurance contract will be liberally construed in favor of the insured. First Chicago Insurance

          Co. v. Molda, 2015 IL App (1st) 140548, ¶ 33. When analyzing an insurance policy, the

          primary objective is to give effect to the intent of the parties. Valley Forge Insurance Co. v.

          Swiderski Electronics, Inc., 223 Ill. 2d 352, 362 (2006). An insurance policy is construed as a

          whole in order to give effect to every provision, as it must be assumed that every provision

          was intended to serve a purpose. Valley Forge Insurance Co., 223 Ill. 2d at 362. “[W]here

          policy provisions are unambiguous, the court must give the words of the provisions their

                                                       19
       No. 1-16-1765

          plain and ordinary meaning.” Indiana Insurance Co. v. Liaskos, 297 Ill. App. 3d 569, 573

          (1998).

¶ 64          Under the title insurance policy, defendant agreed to insure plaintiff against “any defect

          in or lien or encumbrance on the title” of the Washington property. Defendant does not

          dispute the fact that the Deutsche Bank mortgage and the housing court action were defects

          in title, and plaintiff does not dispute the fact that defendant resolved these defects. Instead,

          plaintiff argues that defendant breached section 9(a) of the title insurance policy, which

          required defendant to remove the encumbrances on the title “in a reasonably diligent

          manner,” claiming that defendant took three years to remove the title defects. Plaintiff’s

          argument requires us to consider both (1) the point in time that triggered defendant’s

          obligations under the policy to initiate the removal of the title defects and (2) defendant’s

          actions once its obligations to remove the title defects arose. We consider each issue in turn.

¶ 65          First, the trial court found that plaintiff failed to provide sufficient evidence to establish

          the date upon which plaintiff provided sufficient notice to defendant in order to trigger the

          claim process under the policy. On appeal, plaintiff claims that defendant’s obligations were

          triggered when she provided oral notice of the claim to defendant through a personal

          encounter with a representative from defendant’s office where plaintiff was issued a claim

          number. Plaintiff testified this encounter occurred in December 2006, shortly after plaintiff

          first discovered the Deutsche Bank lien through a representative of Amalgamated Bank.

          Plaintiff did not provide any evidence that she had any further contact with defendants after

          this initial encounter.

¶ 66          In response, defendant argues that plaintiff did not provide proper written notice to

          defendant until December 27, 2007, as required under the policy to trigger the claims

                                                       20
       No. 1-16-1765

           process. Additionally, defendant argues that plaintiff’s appearance before an unknown party

           regarding the title defect claim was not proper notice under the policy. 8 Sharp, defendant’s

           claim counsel, testified she received a written letter, dated December 27, 2007, from

           plaintiff’s attorney. Sharp confirmed receipt of this written notice by responding in a letter,

           dated January 15, 2008, which indicated that defendant would initiate an investigation to

           begin curing the title defects. 9

¶ 67           Under the terms of the title insurance policy, plaintiff was required to submit written

           notice in order to trigger the claim process. Section 3 of the policy required the insured to

           “notify the Company promptly in writing” in the event a claim arose. If the policy language

           is clear and unambiguous, the court will apply the provisions of the agreement using their

           plain and ordinary meaning. Indiana Insurance Co., 297 Ill. App. 3d at 573. In the case at

           bar, plaintiff failed to provide written notice to defendant until December 27, 2007. Plaintiff

           does not argue that she provided written notice prior to this date. Defendant entered into a

           settlement to remove the disputed Deutsche Bank mortgage from the title by July 2009,

           within 18 months of December 27, 2007. In fact, defendant removed all title defects against

           the Washington property, including plaintiff’s own mortgage lien on the property, by

           December 2009, within a two-year period. Therefore, we cannot find that it was against the

           manifest weight of the evidence for the trial court to conclude that plaintiff had failed to

           establish that defendant’s obligations were triggered prior to December 2007, as she claimed.

               8
                  During the bench trial, it was alluded to during opening arguments and in an objection during
       plaintiff’s testimony that plaintiff appeared to the affiliated offices of “Stewart Title,” rather than “Stewart
       Title Guaranty Company.” However, no witness testified to the name of the company where plaintiff
       appeared.
                9
                  Plaintiff’s letter, dated December 27, 2007, and defendant’s letter, dated January 15, 2008, were
       stipulated to and entered into evidence at the bench trial.
                                                             21
       No. 1-16-1765

¶ 68         The issue is whether the 18-month period in which defendant cured the title defects were

          performed within a “reasonable diligent manner” as required under the policy. The trial court

          found that plaintiff failed to prove that defendant did not cure the title defects in a reasonably

          diligent manner by a preponderance of the evidence. We cannot find that this conclusion was

          against the manifest weight of the evidence. The question of whether an 18-month period

          constitutes a “reasonable” period of time cannot be decided as a matter of law, as this is an

          issue of fact to be resolved by the trial court. See Brown v. State Farm Fire & Casualty

          Corp., 33 Ill. App. 3d 889, 894 (1975) (finding that a reasonable period of time for an insurer

          to resolve a claim depends on the circumstances of each case and is a question of fact unless

          the period of time constitutes a period so brief or so long as to be clearly reasonable or

          unreasonable).

¶ 69         In the case at bar, plaintiff admits that whether this period of time is reasonable for

          defendant to cure the defects is a question of fact for the trial court’s determination.

          However, plaintiff argues that other courts in other cases have determined much shorter

          periods of time to be unreasonable. To support her argument, plaintiff cites only to case law

          applying section 155 of the Insurance Code, which allows for the recovery of punitive

          damages in the event an insurance company is liable for the unreasonable delay in settling a

          claim where the court deems the delay “vexatious and unreasonable.” 215 ILCS 5/155 (West

          2012). We do not find this persuasive as it is not applicable to the case at bar.

¶ 70         First, on June 6, 2014, the trial court dismissed plaintiff’s count II, which stated her claim

          under section 155 of the Insurance Code. On October 14, 2015, plaintiff filed an amended

          complaint wherein count II was not pled and merely stated “Count II was dismissed and is

          not pled in this Amended Complaint.” Appellate review is forfeited if a party fails to refer to,

                                                       22
       No. 1-16-1765

          adopt, or otherwise incorporate prior pleadings in amended complaints. Barnett v. Zion Park

          District, 171 Ill. 2d 378, 384 (1996). Plaintiff failed to adopt or incorporate count II in her

          amended complaint. In fact, plaintiff’s amended complaint clearly stated that the claim was

          not pled. Plaintiff proceeded solely on her breach of contract claim. As a result, plaintiff

          forfeited this claim, which is unreviewable on appeal.

¶ 71         We further note that plaintiff fails to establish that the Insurance Code is applicable to

          defendant in the case at bar. The Insurance Code expressly precludes its application to

          “companies now or hereafter organized or transacting business under the Title Insurance Act

          [(215 ILCS 155/1 et seq. (West 2012))].” 215 ILCS 5/451 (West 2012). Defendant claims

          that it is organized and transacts business under the Title Insurance Act, and plaintiff does not

          dispute this fact. Thus, by its express terms, the Insurance Code does not apply. Additionally,

          the Title Insurance Act does not contain a similar provision, holding title insurance

          companies liable for an unreasonable delay in settling a claim. See 215 ILCS 155/1 et seq.

          (West 2012).

¶ 72         Instead, Illinois courts have held that “[t]he scope of a title insurer’s liability is properly

          defined by contract.” First Midwest Bank, N.A. v. Stewart Title Guaranty Co., 218 Ill. 2d
326, 341 (2006). In the case at bar, the insurance policy at issue does not define or provide

          any additional clarity as to the appropriate length of time for the cure in the title defect to be

          removed to be in a “reasonably diligent manner.” As a result, we cannot say as a matter of

          law that the 18-month period constituted a breach of the policy, regardless of whether courts

          in other cases have found shorter periods to be unreasonable. Accordingly, whether

          defendant acted in a “reasonably diligent manner” depends on the particular facts concerning

          defendant’s conduct.

                                                       23
       No. 1-16-1765

¶ 73          Plaintiff argues that once defendant’s obligations to cure the title defects arose,

          defendant’s conduct amounted to a breach of the policy because defendant pursued time-

          intensive litigation designed to settle the liens for less money, rather than immediately

          tendering the full face value of the lien. We do not find this argument persuasive.

¶ 74          The title insurance policy grants defendant discretion in the manner in which claims are

          to be resolved. Section 4(b) of the policy expressly allows defendant the ability “to institute

          or prosecute any action or proceeding *** to establish the title to the estate or interest, as

          insured, or to prevent or reduce loss or damage to the insured.” Additionally, section 6(b)

          allows defendant the option “to pay or otherwise settle with other parties for or in the name

          of an insured claimant any claim insured against under this policy.” See Sabatino v. First

          American Title Insurance Co., 308 Ill. App. 3d 819, 824 (1999) (recognizing that the title

          insurance company had the right to elect alternative methods to resolve its claims as provided

          for in the terms of the policy). Under the terms of the policy, defendant was not required to

          remove the Deutsche Bank mortgage solely by immediately tendering the full face value of

          the lien.

¶ 75          Plaintiff presented no evidence that defendant acted in an unreasonable manner that

          would constitute a breach of the title insurance policy. Plaintiff merely argued that the

          process that defendant used prejudiced plaintiff. Defendant’s claim representative, Sharp,

          testified that defendant initiated an equitable subrogation claim after Sharp determined that

          the Deutsche Bank mortgage was covered under plaintiff’s title insurance policy. Sharp

          testified that this equitable subrogation claim formed the basis of the agreement with

          Deutsche Bank for the removal of the second mortgage from plaintiff’s title for the amount

          of $15,000. Defendant also retained an attorney to represent plaintiff in the housing court

                                                      24
       No. 1-16-1765

          action wherein defendant paid $17,000 in attorney fees. Sharp additionally testified that

          payment was also made in the amount of $44,000 to Amalgamated Bank to pay off plaintiff’s

          own mortgage on the property. Thus, defendant’s conduct was permissible under the policy.

          Plaintiff never advised defendant that time was a factor in settling the liens because the liens

          were affecting her ability to obtain a rehabilitation loan.

¶ 76         Thus, the trial court’s finding that plaintiff failed to prove that defendant’s conduct

          amounted to a breach of the title insurance policy, which required the removal of title defects

          in “reasonably diligent manner,” is not against the manifest weight of the evidence. We

          therefore affirm the trial court’s judgment.

¶ 77                   III. Failure to Prove Damages Proximately Caused by Delay

¶ 78         We next address plaintiff’s argument that the trial court erred in finding plaintiff failed to

          establish cognizable damages proximately caused by defendant’s conduct.

¶ 79         “The purpose of title insurance is to protect a transferee of real estate from the

          possibilities of loss through defects that may cloud title.” First National Bank of Northbrook,

          N.A. v. Stewart Title Guaranty Co., 279 Ill. App. 3d 188, 192 (1996). However, title

          insurance does not provide coverage of the loss of value to the land itself. Rackouski v.

          Dobson, 261 Ill. App. 3d 315, 318 (1994). “If the value of the property appreciates or

          depreciates, the title policy is not affected.” McLaughlin v. Attorneys’ Title Guaranty Fund,

          Inc., 61 Ill. App. 3d 911, 916 (1978). Instead, a title insurance policy insures the title against

          defects, which may damage the insured’s interest in the property. McLaughlin, 61 Ill. App.
3d at 916.

¶ 80         In the case at bar, plaintiff argues she produced sufficient evidence of her damages at

          trial, including the costs of demolition, as well as various other expenses lost in her

                                                         25
       No. 1-16-1765

          investment in the Washington property, including fees incurred by installing new windows

          and hiring an architect. However, these are not recoverable damages under the title insurance

          policy. Title insurance only protects against damages caused by undisclosed defects in

          plaintiff’s title to the Washington property. See First National Bank of Northbrook, N.A., 279
Ill. App. 3d at 192. Plaintiff does not dispute that defendant cured the undisclosed defects

          that existed at the time of plaintiff’s purchase of the property. Since plaintiff failed to

          produce evidence at the trial of damages properly related to a timely failure to cure defects in

          title to the Washington property, we cannot say the trial court’s finding as to damages is

          against the manifest weight of the evidence.

¶ 81          Additionally, the title insurance policy evinces an intent by the parties to preclude

          defendant from liability from the loss in value to plaintiff’s property. Section 9 of the

          insurance policy limits the defendant’s liability to only the removal of the title defect, and

          states: “If the Company establishes the title, or removes the alleged defect, lien or

          encumbrance *** in a reasonably diligent manner by any method, including litigation *** it

          shall have fully performed its obligations to that matter.” The policy further indicates that

          once defendant cures the title defects, the defendant “shall not be liable for any loss or

          damage caused thereby.” See First Midwest Bank, N.A. v. Stewart Title Guaranty Co., 218
Ill. 2d 326, 341 (2006) (“[t]he scope of a title insurer’s liability is properly defined by

          contract”). Thus, under the policy agreement, defendant cannot be held liable for damages or

          defects to the property itself, not caused by the title defects.

¶ 82          Plaintiff also failed to produce evidence to establish that defendant’s conduct was a

          proximate cause to her damages. Plaintiff testified that she was aware that the Washington

          property required substantial repairs. Plaintiff knew prior tenants had severely damaged the

                                                         26
       No. 1-16-1765

           property. Even if defendant had disclosed the title defects to plaintiff prior to her purchase of

           the Washington property, plaintiff still would have been obligated to pay the cost for repairs

           to prevent the demolition of the Washington property. Due to the severely dilapidated

           condition of the Washington property, the amount required to repair the Washington property

           may have been cost-prohibitive. Plaintiff presented no evidence to establish she possessed

           the financial means to satisfy the building code violations upon purchase of the property, or

           even what the work would require in time or expense.

¶ 83           Plaintiff testified that she attempted and was unable to secure a loan from multiple

           financing institutions in order to finance the rehabilitation of the Washington property.

           However, plaintiff failed to produce completed loan applications or other documents to show

           that she attempted and was denied financing due to the title defects. Plaintiff merely

           produced one letter from Amalgamated Bank, which requested plaintiff to submit a number

           of listed documents in order for the bank to reevaluate her request for a rehabilitation loan.10

           However, there is no evidence that plaintiff complied with this request, nor is there evidence

           to suggest that plaintiff was ever denied the loan based on the title defects. Even if plaintiff

           was unable to secure a rehabilitation loan due to the title defects, Sharp testified that

           defendant would have insured over the Deutsche Bank lien to allow plaintiff the opportunity

           to secure the rehabilitation loan while the litigation was pending. Plaintiff only needed to

           provide defendant with a request to do so. Sharp testified that plaintiff failed to do so.

¶ 84           After the title defects were cured, plaintiff testified that she made no effort to satisfy the

           code violations from 2009 through 2012. Plaintiff testified that she did not even attempt to

           obtain financing to rehabilitate the Washington property. Plaintiff had a sufficient period of

               10
                 We note that this letter was not disclosed to defendant until the date of the trial. The letter was
       admitted into evidence over defendant’s objection.
                                                            27
       No. 1-16-1765

          time to secure the premises and obtain new financing, yet plaintiff failed to take any action

          whatsoever.

¶ 85         Furthermore, the evidence at the bench trial revealed that plaintiff’s own conduct may

          have contributed to the demolition of the Washington property. The housing court action was

          resolved on December 1, 2009, when the court issued an injunction against the City of

          Chicago on the condition that plaintiff would keep the Washington property secure and

          vacant. However, the City of Chicago filed an emergency motion claiming plaintiff violated

          this order on November 29, 2011, when an inspection revealed that plaintiff failed to secure

          the premises and that the property was open, which resulted in fire damage and holes in the

          flooring caused by unknown persons living on the premises. The demolition order was then

          entered on July 2, 2012, against the Washington property as a public safety hazard.

¶ 86         Therefore, the decision of the trial court finding that plaintiff failed to produce evidence

          of cognizable damages that were proximately caused by defendant’s conduct is not against

          the manifest weight of the evidence.

¶ 87                      IV. Implied Covenant of Good Faith and Fair Dealing

¶ 88         Finally, plaintiff argues that we must address the issue as to whether defendant’s delay in

          removing the encumbrances on the title also violated defendant’s duty of good faith and faith

          dealing. The trial court did not rule on this issue, as plaintiff argues this claim for the first

          time on appeal. A party “cannot properly raise a new theory for recovery for the first time on

          appeal.” Federal Insurance Co. v. Turner Construction Co., 277 Ill. App. 3d 262, 268

          (1995). Plaintiff failed to plead this theory in her complaint and failed to argue this issue

          before the trial court. Thus, plaintiff forfeited this claim and this issue cannot be considered

          on appeal.

                                                       28
       No. 1-16-1765

¶ 89                                           CONCLUSION

¶ 90         The judgment entered in favor of defendant title insurance company is affirmed, where

          plaintiff failed to produce evidence establishing that defendant’s conduct in curing title

          defects constituted a breach of the title insurance policy, which required removal of defects

          in a “reasonably diligent manner.”

¶ 91         Affirmed.

                                                     29