Mattson Ridge, LLC v Clear Rock Title (Of Note)



If a vague or ambiguous legal description makes title unmarketable, a title insurance company has a duty to defend or indemnify the insured. If the title insurance breaches the contract by not defending or indemnifying, then the insured can recover damages up to the full value of the policy for the losses caused by the defect. The insured cannot, however, recover damages in excess of the policy limit.

Mattson Ridge, LLC v Clear Rock Title, LLP, --- N.W.2d ----, 2012 WL 6165949 (Minn 2012).


In March 2005 the real estate firm Mattson Ridge purchased 64 acres of farmland near Chisago City, Minnesota (“the Property”) for $1,286,000. It secured title insurance through Clear Rock Title (who acted as an issuing agent for Ticor Title Insurance) for the same amount as the purchase price of the property. In October 2005 the real estate market had improved enough that Mattson Ridge got an offer to sell the Property to Thompson Builders and Contractors for $2,900,000. After a purchase agreement was signed, Thompson attempted to acquire title insurance on the property from Commercial Partners Title. Commercial Partners, however, refused to insure the property because they found that the legal description was vague and ambiguous. In particular, a portion of the legal description of the property referred to a boundary being “at or near Charles Magnuson’s place in Sunrise City.”

Commercial Partners refused to issue title insurance unless the ambiguity was cured, but Ticor denied coverage to Mattson when it asked for help in curing the description. Mattson hired its own surveyor to draft a new legal description which was finalized in July 2007. But by this time the market had declined and Thompson was no longer able to secure financing to carry out the purchase of the Property. Thompson cancelled the purchase agreement and Mattson was not able to find another buyer.

Mattson then sued Ticor for breach of contract and asked for a declaration of Ticor’s obligations under the title insurance policy. The district court held that the title was “unmarketable” because of the ambiguous legal description and because the policy agreed to insure against loss or damage due to unmarketability of title, Ticor had breached the contract. The court awarded Mattson $1,297,169 in damages – the full amount of the policy plus the additional expenses Mattson had to pay to get the new survey done. The court found that the title defect had actually decreased the value of the property more than that, but capped the damages at only the face value of the policy. On appeal, the appellate court affirmed the finding that Ticor had breached the contract but reversed the damages award, holding that the award could exceed the face value of the policy and should compensate Mattson for all of the losses proximately caused by the breach. Ticor appealed.

Holding:  Affirmed in part, reversed in part and remanded

The Supreme Court of Minnesota first analyzed the issue of whether the title was unmarketable and whether Ticor had breached the contract by not defending and indemnifying Mattson over the unmarketability of the title. It concluded that the title was unmarketable. Because Commercial Partners believed the description was vague, a Ticor company document written by an agent characterized the legal description as vague, and the testimony of Mattson’s experts at trial stated the description was vague, the Court found that Mattson had presented sufficient facts “that a prudent person, with full knowledge of all the facts would be unwilling to accept title to the Property because the adequacy of the legal description was ‘debatable.’”  Therefore, since the legal description was vague and the title was unmarketable, the Court affirmed that Ticor had breached their contract with Mattson.

The Court then looked at the damages award. A key issue in determining whether to award Mattson only the face value of the policy or to award damages in excess of the policy was whether Ticor could have cured the defect in the legal description any sooner than Mattson did on its own. The Court determined that it could not have, and thus, the deal would have fallen through anyway. The defect itself was the proximate cause of Mattson’s loss, not Ticor’s breach. So Mattson was not entitled to recover the full amount of the lost profits on the deal with Thompson, but Ticor was still liable for not defending and indemnifying Mattson and Mattson was entitled to recover damages up to the full value of the policy.

Opinion Year: 
Of Note
By: ATG Underwriting Department | Posted on: Fri, 01/11/2013 - 2:08pm