Community Credit Union v AmeriTitle & Abstract, Inc. & First American Title Ins. Co. (WI)

Summary:  Expiration of a temporary access easement was a post-policy event for determination of title insurance policy coverage.

Community Credit Union v AmeriTitle & Abstract, Inc. & First American Title Ins. Co., 2011 AP 2294 (Wis. Ct. App. 2012).

Facts:  A landowner received a temporary access easement on December 15, 2004, and the following day transferred the real estate to Jamie Flannery by quitclaim deed. The easement agreement granted access for a period of five years, terminating on December 5, 2009. The quitclaim deed did not explicitly mention the easement but it did contain boilerplate language that the transfer included all appurtenant rights, title, and interests.

In early 2008, Community Credit Union (CCU) agreed to refinance Flannery’s mortgage loan. On May 9, 2008, CCU obtained a title commitment from AmeriTitle & Abstract, Inc. with the legal description of the insured property identifying the easement and its termination date. The mortgage was drafted and First American Title Insurance Company issued the title policy, both using the legal description with the easement and termination date.

Later, CCU foreclosed and took title to the property. After December 5, 2009, the surrounding landowners informed CCU that it did not have access to the premises.

CCU filed suit against AmeriTitle and First American on a negligence theory asserting that they were negligent in providing a commitment showing an access easement to the premises when one did not exist in the name of the owner, Jamie Flannery. The circuit court entered summary judgment, concluding that the easement had passed by operation of law to Flannery, so AmeriTitle was not negligent for including it in the title commitment. With respect to First American, the circuit court said the policy insured access as of the date of the policy, May 20, 2008. Because the lack of access was a condition created subsequent to that date, and known to CCU, First American was not obligated to give coverage. CCU appealed.

Holding:  The court of appeals affirmed the holding. The court held that Wisconsin Statutes Section 706.10(3) codifies the rule that when an owner conveys the dominant estate, the owner is also presumed to have conveyed any appurtenant interests in the servient estate. The court held that there was nothing in the easement agreement to suggest it did not run with the land, therefore the easement rights were appurtenant and did transfer to Flannery and the commitment was not negligently drafted.

Regarding First American’s obligation to provide coverage, the court said the language of the title policy includes numerous exclusions, this being among them. Exclusion 3(d) states that there is no coverage for defects, liens, encumbrances, adverse claims, or other matters “attaching or created subsequent to the Date of Policy…” CCU did have access at the date of policy, being May 20, 2008, but because the lack of access was created subsequent to the date of the title policy, it was excluded from coverage. Furthermore, the court agreed with the trial court’s determination that CCU was experienced and sophisticated in the matter. Having full knowledge at the time of the policy’s issuance that the easement would expire, CCU was held to the plain language of the policy, which did not say there were multiple points of access or that access was guaranteed for all times; the policy clearly advised that access was limited and due to expire.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Fri, 11/16/2012 - 1:26pm