Swanson v. Safeco Title Insurance Company

925 P.2d 1354 (1995)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Ps purchased real property and partially financed the purchase with a promissory note secured by a deed of trust in favor of the seller. Prior to that purchase, Jenkinson had been named as the beneficiary on a deed of trust involving an easement over part of the property. This deed of trust encumbering the property (the Jenkinson lien) reflected a balance due on a promissory note of $100,000. The Jenkinson lien was satisfied before the events giving rise to this action; however, no release of the deed of trust was ever recorded. Ps obtained title insurance through D. The policy insured against any loss or damages resulting from, among other things, 'any defect in or lien or encumbrance on the title.' It did not list the Jenkinson lien as an exception. The policy provided that the amount recoverable by an insured was the lesser of the actual loss to the insured or the amount of the policy. Ps attempted to refinance the loan and it was recommended to be approved. Guardian Title prepared a title report, which showed that Ps did not have clear title to the property because of the Jenkinson lien. Ps notified D of the defect in the title, which Ps claimed placed the refinancing in jeopardy. Ps received a notice of a trustee's sale. In December 1987, the trustee conducted a sale, and title to the property was conveyed to the original seller as the highest bidder. Ps sued D alleging that, because of the cloud on the title, they were unable to obtain refinancing and therefore lost the property through foreclosure. Ps moved for partial summary judgment on the issue of liability. The trial court determined that D was liable and granted the motion. The trial court determined that because the equity measure of damages was greater than the out-of-pocket loss Ps were entitled to the equity measure of damages. The trial court calculated the fair market value ($140,000) less encumbrances ($108,649.52), for a total loss of $31,350.48. Both parties appealed.