Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Stewart Title Guaranty Co. v. Closure Title & Settlement Co. LLC

United States District Court, W.D. Virginia, Charlottesville Division

January 3, 2019

Stewart Title Guaranty Co., Plaintiff,
v.
Closure Title & Settlement Co., LLC, Defendant.

          MEMORANDUM OPINION

          NORMAN K. MOON SENIOR UNITED STATES DISTRICT JUDGE.

         This matter is before the Court upon Defendant Closure Title & Settlement Company's (“Closure Title”) motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and Fed.R.Civ.P. 12(b)(6). (Dkt. 6). Closure Title issues title insurance policies underwritten by Plaintiff Stewart Title Guaranty Company (“Steward Title”). Underlying errors in title policies issued by Closure Title sparked litigation that resulted in a settlement funded by Stewart Title. Stewart Title filed suit against Closure Title in this Court for breach of contract. Closure Title now moves to dismiss, arguing that (1) the Court cannot exercise diversity jurisdiction pursuant to 28 U.S.C. § 1332 because the parties' agreement and Virginia's voluntary payment doctrine preclude Stewart Title from recovering over $75, 0000 in damages; and (2) Stewart Title fails to state a claim for breach of contract under Virginia law.

         Both arguments fail. Closure Title has not met its burden of establishing, to the point of legal certainty, that Stewart Title cannot recover damages in excess of $75, 000. Thus, the Court finds that the amount in controversy is sufficient for it to exercise diversity jurisdiction. Moreover, Stewart Title pleads sufficient factual allegations to state a claim for breach of contract. Accordingly, the motion to dismiss will be denied in full.

         I.Legal Standards

         A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) tests a district court's subject matter jurisdiction. Typically, the Court must accept as true all material factual allegations in the complaint and construe the complaint in the plaintiff's favor. Warth v. Seldin, 422 U.S. 490, 501 (1975). However, when the factual basis for subject matter jurisdiction is challenged, “the burden of proving subject matter jurisdiction is on the plaintiff.” Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). A court “may consider evidence outside the pleadings without converting the proceeding into one for summary judgment, ” but the “moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Id. (citation omitted).

         A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) tests the legal sufficiency of a complaint to determine whether a plaintiff has properly stated a claim; it “does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). The Court must take all facts and reasonable inferences in favor of the plaintiff, disregard any legal conclusions, and not credit any formulaic recitations of the elements. Iqbal v. Ashcroft, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 557 (2007).

         II. Facts As Alleged

         Plaintiff Stewart Title is a title insurance underwriter incorporated in Texas, with its principal place of business in Houston, Texas. Defendant Closure Title is a limited liability company organized in Virginia, with its principal place of business in Charlottesville, Virginia. (Complaint ¶¶ 1-2). Closure Title specializes in closing real estate transactions in Virginia.

         In May 2007, Stewart Title and Closure Title entered into a Title Insurance Underwriting Agreement (“the Agreement”) authorizing Closure Title to issue title insurance policies underwritten by Stewart Title. (Id. ¶ 17). Under the Agreement, Closure Title has several duties, including (but not limited to) issuing title policies “according to the recognized underwriting practices”; issuing title policies “based on a written report of title resulting from a complete search and examination of the public records, surveys, and inspections”; and taking “appropriate exception in title policies for liens, defects, encumbrances and/or objections disclosed by a complete search and examination of title.” (Id. ¶ 18(a)-(e); dkt. 1-2 at 1-2, 4).

         This suit stems from two real estate transactions in Albemarle County, Virginia: the “Lot C3” transaction and the “Lot C6” transaction. On March 5, 2015, BD Land Properties, LLC (“BD Land”) sold “Lot C3” to Willow Lake Land Trust (“Willow Lake”). (Complaint ¶¶ 20- 21). On June 17, 2015, BD Land sold “Lot C6” to Willow Lake. (Id. ¶ 29-30). To fund construction costs for both lots, Willow Lake secured two $240, 000 loans from Friendly Rehab Funds (“Friendly Rehab”), a Virginia-based private real estate lending business, in exchange for a first priority deed of trust in each lot. (Id. ¶ 22, 31).

         Closure Title conducted the closing for both transactions, each time issuing a lender's title policy underwritten by Stewart Title to Friendly Rehab. (Id. ¶ 24, 33). Following both transactions, Closure Title recorded a deed of trust for the benefit of Friendly Rehab, but each deed erroneously listed the grantor as JB River Properties, instead of Willow Lake. (Id. ¶ 26, 34-35). After Closure Title recorded these deeds, two deeds of trust were subsequently filed for each lot, one by Closure Title for the benefit of BD Land and the other by Richmond Masonry Company (“Richmond Masonry”) for its own benefit. (Id. ¶¶ 27-28, 36-37). All four of these deeds correctly listed Willow Lake as the grantor. (Id.).

         Approximately one year after the sale of Lot C3, Friendly Rehab commenced foreclosure proceedings against Lot C3 and scheduled a foreclosure sale. (Id. ¶ 38). Richmond Masonry did the same and sent Friendly Rehab a notice that its deed of trust was defective. (Id. ¶¶ 39-40). After receiving this notice, Friendly Rehab cancelled its foreclosure sale and, with the aid of legal counsel funded by Stewart Title, moved unsuccessfully for an injunction prohibiting Richmond Masonry from proceeding with its foreclosure sale. (Id. ¶¶ 41-44). In late September 2016, Biringer Builders, Inc., an affiliate of Richmond Masonry, purchased Lot C3 at Richmond Masonry's foreclosure sale. (Id. ¶¶ 45-46).

         A month later, in October 2016, Friendly Rehab-again using legal counsel funded by Stewart Title-filed suit in Albemarle County Circuit Court seeking a declaration that (1) Biringer Builders held title to Lot C3 subject to a constructive trust for the benefit of Friendly Rehab, and (2) Friendly Rehab held title to Lot C6. (Id. ¶ 49). After two years of litigation, the case settled. The Circuit Court entered a consensual final order determining as a matter of law that (1) the errors in both the Lot C3 and Lot C6 deeds of trust were “scrivener's error[s]” committed by attorneys employed by Friendly Rehab; (2) Friendly Rehab held title to Lot C3 subject to BD Land's deed; and (3) Friendly Rehab held title to Lot C6 subject to various constructive trusts and liens. (Id. ¶ 54). Stewart Title funded a settlement in the amount of $120, 000 and paid $72, 786.98 in attorneys' fees. (Id. ¶¶ 55-56).

         Stewart Title has now sued Closure Title for breach of contract, alleging that Closure Title breached its duties under the Agreement by issuing lender's title policies in which the owner of the C3 and C6 lots did not match the owner listed on Friendly Rehab's two deeds of trust. As a result of these alleged breaches, Stewart Title asserts that it suffered $192, 786.98 in losses due to the Albemarle County litigation. Stewart Title alleges that, under the Agreement, Closure Title is obligated to indemnify Stewart Title for these losses. (Id. ¶¶ 57-62).

         III. Analysis

         Closure Title moves to dismiss under both Fed.R.Civ.P. 12(b)(1) and Fed.R.Civ.P. 12(b)(6). Applying Virginia law to its interpretation of the parties' Agreement, [1] ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.